New Syllabus JIGL 2023

INDEX
Sr. No. Chapter Page no.

1. Sources of Law 1.1 – 1.14
2. Constitution of India 2.1 – 2.27

3. Interpretation of Statutes 3.1 – 3.19
General clause Act 1897
4. Administrative Laws 4.1 – 4.21
5. Law of Torts 5.1 – 5.10
6. Civil Procedure Code, 1908 6.1 – 6.17
7.1 Indian Penal Code, 1860 7.1 – 7.18
7.2 Criminal Procedure Code, 1973 7.19 – 7.35

8. Indian Evidence Act, 1872 8.1 – 8.16
9. Specific Relief Act 9.1 – 9.18

10. Limitation Act, 1963 10.1 – 10.5
11. Arbitration and Conciliation Act, 1996 11.1 – 11.24
12. Indian Stamp Act, 1899 12.1 – 12.11

13. Registration Act, 1908 13.1 – 13.7
14. Right to Information Act, 2005 14.1 – 14.10
15. Information Technology Act, 2000 15.1 – 15.9
16. Indian Contract Act 1872 16.1 – 16.42

17. Sales of Goods Act 1930 17.1 – 17.34
18. Negotiable Instrument Act 1882 18.1 – 18.27
www.cscartindia.com CS Praveen Choudhary
Sources of Law
SOURCES OF LAW
The nature and meaning of law has been described by various jurists. However, there is
no unanimity of opinion regarding the true nature and meaning of law. The reason for
lack of unanimity on the subject is that the subject has been viewed and dealt with by
different jurists so as to formulate a general theory of legal order at different times and
from different points of view, that is to say, from the point of view of nature, source,
function and purpose of law, to meet the needs of some given period of legal development.
The various definitions of law propounded by legal theorists serve to emphasize the
different facets of law and build up a complete and rounded picture of the concept of law.
Various definitions of law can be classified in to following 5 classes:
1. Natural School
• Ulpine defined Law as “the art or science of what is equitable and good.”
• Cicero said that Law is “the highest reason implanted in nature.”
• Justinian’s Digest defines Law as “the standard of what is just and unjust.”
In above definitions “justice” is the main and guiding element of law. Ancient
Hindu view was that ‘law’ is the command of God and not of any political
sovereign. Everybody including the ruler, is bound to obey it. Thus, ‘law’ is a part
of “Dharma”. The idea of “justice” is always present in Hindu concept of law.
• Salmond, defines law as “the body of principles recognised and applied by the
State in the administration of justice.”
In other words, the law consists of rules recognised and acted upon by the courts
of Justice. It may be noted that there are 2 main factors of the definition.
1stà To understand law, one should know its purpose:
2ndà In order to ascertain the true nature of law, one should go to the courts and
not to the legislature.
• Vinogradoff described Law as “A set of rules imposed and enforced by society
with regard to the attribution and exercise of power over persons and things.”
2. Positivistic Definition of Law

• According to John Austin, “Law is the aggregate of rules set by man as politically
superior, or sovereign, to men as political subject.” OR law is the “command of the
sovereign”. It obliges a certain course of conduct or imposes a duty and is backed
by a sanction. Thus, the command, duty and sanction are the 3 elements of law.
• Kelsen gave a ‘pure theory of law’. According to him, law is a ‘normative science’.
The legal norms are ‘Ought’ norms as distinct from ‘Is’ norms of physical and
natural sciences. Law does not attempt to describe what actually occurs but only
prescribes certain rules. The science of law to Kelson is the knowledge of
hierarchy of normative relations. All norms derive their power from the ultimate
1.1
Sources of Law
norm called Grund norm.
3. Historical Definition of Law

Savigny’s theory of law can be summarised as follows:
ü That law is a matter of unconscious and organic growth. Therefore, law is found
and not made.
ü Law is not universal in its nature. Like language, it varies with people and age.
ü Custom not only precedes legislation but it is superior to it. Law should always
conform to the popular consciousness.
ü Law has its source in the common consciousness (Volkgeist) of the people.
ü Legislation is the last stage of law making, and, therefore, the lawyer or the jurist
is more important than the legislator.
According to Sir Henry Maine, “The word ‘law’ has come down to us in close
association with two notions, the notion of order and the notion of force”.
4. Sociological Definition of Law

• Duguit defines law as “essentially and exclusively as social fact.”
• Ihering defines law as “the form of the guarantee of the conditions of life of
society, assured by State’s power of constraint”. There are 3 essentials of this
definition -
1st à In this definition law is treated as only one means of social control.
2ndà Law is to serve social purpose.
3rdà It is coercive in character.
5. Realist Definition of Law

• Realists define law in terms of judicial process.
• According to Holmes à “Law is a statement of the circumstances in which public
force will be brought to bear upon through courts.”
• According to Cardozo à “A principle or rule of conduct so established as to
justify a prediction with reasonable certainty that it will be enforced by the courts
if its authority is challenged, is a principle or rule of law.”
Main features of Law:

a) Law presupposes a state
b) The state makes or authorises to make rules
c) For the rules to be effective, there are sanctions behind them
d) These rules are made to serve some purpose
e) The purpose may be a social purpose, or any other purpose.
Laws are made effective:

i. By requiring damages to be paid for an injury due to disobedience
1.2
Sources of Law
ii. By requiring one, in some instances, to complete an obligation he has failed to

perform
iii. By preventing Disobedience
iv. By administering some form of punishment
SOURCES OF INDIAN LAW

Austin contends that law originates from the sovereign. Savigny traces the origin in
Volkgeist (general consciousness of the people). The sociologists find law in numerous
heterogeneous factors. For theologians, law originates from God. Vedas and the Quran
which are the primary sources of Hindu and Mohammedan Law respectively are
considered to have been revealed by God. Precisely, whatever source of origin may be
attributed to law, it has emanated from almost similar sources in most of the societies.
The modern Indian law as administered in courts is derived from various sources and
these sources fall under the following two heads:
A. Principle or Primary source

1. Customary or custom law
2. Judicial decisions or Precedents
3. Statutes or Legislations
4. Personal Law
1. Customs or Customary Law

Custom is the most ancient of all the sources of law and has held the most important
place in the past, though its importance is now diminishing with the growth of
legislation and precedent.
In ancient times, the lives of the people were regulated by customs. When the same
thing is done again and again in a particular way, it becomes a custom. The Smritis
have strongly recommended that the customs should be followed and recognised.
Classification of Customs
The customs may be divided into two classes:
ü Customs without sanction à which are non-obligatory and are observed due to
the pressure of public opinion. These are called as “positive morality”.
ü Customs having sanction à which are enforced by the State. It is with these
customs that we are concerned here. These may be divided into two classes:
(i) Legal, and
(ii) Conventional.
1.3
Sources of Law
(i) Legal Customs: These customs operate as a binding rule of law. They have been
recognised and enforced by the courts and therefore, they have become a part of
the law of land.
Legal customs are again of 2 kinds:
a. Local Customs
b. General Customs.
(a) Local Customs: Local custom is the custom which prevails in some definite
locality and constitutes a source of law for that place only. But there are
certain sects or communities which take their customs with them wherever
they go. They are also local customs. Thus, local customs may be divided into
2 classes:
– Geographical Local Customs
– Personal Local Customs
These customs are law only for a particular locality, section or community.
(b) General Customs: A general custom is that which prevails throughout the
country and constitutes one of the sources of law of the land. The Common
Law in England is equated with the general customs of the realm.
(ii) Conventional Customs: These are also known as “usages”. These customs are
binding due to an agreement between the parties, and not due to any legal
authority independently possessed by them. Before a Court treats the
conventional custom as incorporated in a contract, following conditions must be
satisfied:
Ø It must be shown that the convention is clearly established and it is fully
known to the contracting parties. There is no fixed period for which a
convention must have been observed before it is recognised as binding.
Ø Convention cannot alter the general law of the land.
Ø It must be reasonable.
Requisites of a Valid Custom

A custom will be valid at law and will have a binding force only if it fulfills the
following essential conditions, namely:
i. Immemorial (Antiquity): A custom to be valid must be proved to be
immemorial; it must be ancient.
ii. Certainty: The custom must be certain and definite, and must not be vague
and ambiguous.
iii. Reasonableness: A custom must be reasonable. It must be useful and
convenient to the society. A custom is unreasonable if it is opposed to the
principles of justice, equity and good conscience.
iv. Compulsory Observance: A custom to be valid must have been
continuously observed without any interruption from times immemorial
1.4
Sources of Law
and it must have been regarded by those affected by it as an obligatory or

binding rule of conduct.
v. Conformity with Law and Public Morality: A custom must not be
opposed to morality or public policy nor must it conflict with statute law.
If a custom is expressly forbidden by legislation and abrogated by a statute,
it is inapplicable.
vi. Unanimity of Opinion: The custom must be general or universal. If
practice is left to individual choice, it cannot be termed as custom.
vii. Peaceable Enjoyment: The custom must have been enjoyed peaceably
without any dispute in a law court or otherwise.
viii. Consistency: There must be consistency among the customs. Custom must
not come into conflict with the other established customs.
2. Judicial Decision or Precedents

In general use, the term “precedent” means some set pattern guiding the future
conduct. In the judicial field, it means the guidance or authority of past decisions of
the courts for future cases. Only such decisions which lay down some new rule or
principle are called judicial precedents.
Judicial precedents are an important source of law. They have enjoyed high authority
at all times and in all countries. The rule that a court decision becomes a precedent to
be followed in similar cases is known as doctrine of stare decisis.
Kinds of Precedents
(i) Declaratory and Original Precedents: a declaratory precedent is one which
is merely the application of an already existing rule of law. An original
precedent is one which creates and applies a new rule of law. In the case of a
declaratory precedent, the rule is applied because it is already a law. In the
case of an original precedent, it is law for the future because it is now applied.
(ii) Persuasive Precedents: A persuasive precedent is one which the judges are
not obliged to follow but which they will take into consideration and to which
they will attach great weight as it seems to them to deserve. A persuasive
precedent, therefore, is not a legal source of law; but is regarded as a historical
source of law. Thus, in India, the decisions of one High Court are only
persuasive precedents in the other High Courts.
(iii) Absolutely Authoritative Precedents: An authoritative precedent is one

which judges must follow whether they approve of it or not. Its binding force
is absolute and the judge’s discretion is altogether excluded as he must follow
1.5
Sources of Law
it. Such a decision has a legal claim to implicit obedience, even if the judge
considers it wrong.
Unlike a persuasive precedent which is merely historical, an authoritative
precedent is a legal source of law.
Absolutely authoritative precedents in India: Every court in India is absolutely
bound by the decisions of courts superior to itself. The subordinate courts are
bound to follow the decisions of the High Court to which they are subordinate.
A single judge of a High Court is bound by the decision of a bench of two or
more judges. All courts are absolutely bound by decisions of the Supreme
Court.
(iv) Conditionally Authoritative Precedents: A conditionally authoritative

precedent is one which, though ordinarily binding on the court before which it
is cited, is liable to be disregarded in certain circumstances.
The court is entitled to disregard a decision if it is a wrong one, i.e., contrary to
law and reason. In India, for instance, the decision of a single Judge of the High
Court is absolutely authoritative so far as subordinate judiciary is concerned,
but it is only conditionally authoritative when cited before a Division Bench of
the same High Court.
Doctrine of Stare Decisis

Ø The doctrine of stare decisis means “adhere to the decision and do not unsettle
things which are established”.
Ø It is a useful doctrine intended to bring about certainty and uniformity in the
law.
Ø Under the stare decisis doctrine, a principle of law which has become settled
by a series of decisions generally is binding on the courts and should be
followed in similar cases.
Ø In simple words, the principle means that like cases should be decided alike.
Ø This rule is based on public policy and expediency.
Ø Although generally the doctrine should be strictly adhered to by the courts, it
is not universally applicable.
Ø The doctrine should not be regarded as a rigid and inevitable doctrine which
must be applied at the cost of justice.
Ratio Decidendi
The underlying principle of a judicial decision, which is only authoritative, is
termed as ratio decidendi. The proposition of law which is necessary for the
decision or could be extracted from the decision constitutes the ratio. The
concrete decision is binding between the parties to it. The abstract ratio decidendi
alone has the force of law as regards the world at large. In other words, the
authority of a decision as a precedent lies in its ratio decidendi.
1.6
Sources of Law
Ratio decidendi contains the following basic ingredients:

1. Findings or material facts, both direct and inferential
2. Statements of the principles of law applicable to the legal problems
disclosed by the facts; and
3. A judgement (or judgements) based on the combined effect or 1 & 2
Obiter Dicta
Ø The literal meaning of this Latin expression is “said by the way”.
Ø The expression is used especially to denote those judicial utterances in the
course of delivering a judgement which taken by themselves, were not strictly
necessary for the decision of the particular issue raised.
Ø These statements thus go beyond the requirement of a particular case and
have the force of persuasive precedents only.
Ø The judges are not bound to follow them although they can take advantage of
them. They some times help the cause of the reform of law.
Obiter Dicta are of different kinds and of varying degree of weight. Some obiter
dicta are deliberate expressions of opinion given after consideration on a point
clearly brought and argued before the court. It is quite often too difficult for
lawyers and courts to see whether an expression is the ratio of judgement or just
a causal opinion by the judge. It is open, no doubt, to other judges to give a decision
contrary to such obiter dicta.
3. Statutes or Legislation
• Legislation is that source of law which consists in the
declaration or promulgation of legal rules by an
authority duly empowered by the Constitution in that
behalf.
• It is sometimes called Jus scriptum (written law) as
contrasted with the customary law or jus non-scriptum (unwritten law).
Salmond prefers to call it as “enacted law”. Statute law or statutory law is what is
created by legislation, for example, Acts of Parliament or of State Legislature.
Legislation is either supreme or subordinate (delegated).
• Supreme Legislation is that which proceeds from the sovereign power in the
State or which derives its power directly from the Constitution. It cannot be
replealed, annulled or controlled by any other legislative authority.
• Subordinate Legislation is that which proceeds from any authority other than
the sovereign power. It is dependent for its continued existence and validity on
some superior authority.
1.7
Sources of Law
• The Parliament of India possesses the power of supreme legislation. Legislative

powers have been given to the judiciary, as the superior courts are allowed to
make rules for the regulation of their own procedure.
• The executive, whose main function is to enforce the law, is given in some cases
the power to make rules. Such subordinate legislation is known as executive or
delegated legislation. Municipal bodies enjoy by delegation from the legislature, a
limited power of making regulations or bye-laws for the area under their
jurisdiction. Sometimes, the State allows autonomous bodies like universities to
make bye-laws which are recognised and enforced by courts of law.
4. Personal Law
In many cases, the courts are required to apply the personal law of the parties where
the point at issue is not covered by any statutory law or custom.
Hindu Sources Shruti and Smriti

Matters governed by Hindus are governed by their personal law in
hindu law in case of all matters relating to inheritance, succession,
Hindus marriage, adoption, co parcenary, partition of
joint family property, pious obligations of sons
to pay their father’s debts, guardianship,
maintenance and religious and charitable
endowments.
Muslim Law Sources • The holy kuran
• Hadis
• Ijmas
• Kiyas
• Digests and commentaries on
Mohammedan law
Matters governed by Mohammedans are governed by their
muslim law in case of personal law in all matters relating to
Mohammedans inheritance, wills, succession, legacies,
marriage, dowry, divorce, gifts, wakfs,
guardianship and pre emption.
B. Secondary source of Law

1. Justice, Equity and Good Conscience
The concept of “justice, equity and good conscience” was introduced by Impey’s
Regulations of 1781. In personal law disputes, the courts are required to apply the
personal law of the defendant if the point at issue is not covered by any statute or
custom.
1.8
Sources of Law
In the absence of any rule of a statutory law or custom or personal law, the Indian
courts apply to the decision of a case what is known as “justice, equity and good
conscience”, which may mean the rules of English Law in so far as they are applicable
to Indian society and circumstances.
2. Sources of English Law

a) Common Law: The Common Law, in this context is the name given to those
principles of law evolved by the judges in making decisions on cases that are
brought before them. These principles have been built up over many years so as
to form a complete statement of the law in particular areas.
b) Law Merchant: The Law Merchant is the most important source of the
Merchantile Law. Law Merchant means those customs and usages which are
binding on traders in their dealings with each other. But before a custom can have
a binding force of law, it must be shown that such a custom is ancient, general as
well as commands universal compliance. In all other cases, a custom has to be
proved by the party claiming it.
c) Principle of Equity: Equity is a body of rules, the primary source of which was
neither custom nor written law, but the imperative dictates of conscience and
which had been set forth and developed in the Courts of Chancery. The procedure
of Common Law Courts was very technical and dilatory. Action at Common Law
could be commenced by first obtaining a writ or a process.
d) Statute Law: “Statute law is that portion of law which is derived from the
legislation or enactment of Parliament or the subordinate and delegated
legislative bodies.” It is now a very important source of Mercantile Law. A written
or statute law overrides unwritten law, i.e., both Common Law and Equity.
Mercantile Law or Commercial Law

It is that branch of law which is applicable to or concerned with trade and commerce in
connection with various mercantile or business transactions. Mercantile Law is a wide
term and embraces all legal principles concerning business transactions. The most
important feature of such a business transaction is the existence of a valid agreement,
express or implied, between the parties concerned.
The following are the main sources of Mercantile Law in India:

1. English Mercantile Law:
The Indian Mercantile Law is mainly an adaptation of English Mercantile Law.
However, certain modifications wherever necessary, have been incorporated in it to
provide for local customs and usages of trade and to suit Indian conditions. Its
dependence on English Mercantile Law is so much that even now in the absence of
1.9
Sources of Law
provisions relating to any matter in the Indian Law, recourse is to be had to the
English Mercantile Law.
2. Acts enacted by Indian Legislature or Statute Law:

The Acts enacted by the Indian legislature from time to time which are important for
the study of Indian Mercantile Law include, (i) The Indian Contract Act, 1872,(ii) The
Sale of Goods Act, 1930, (iii) The Indian Partnership Act, 1932, (iv) The Negotiable
Instruments Act, 1881, (v) The Arbitration and Conciliation Act, 1996, (vi) The
Insurance Act, 1938.
3. Judicial Decisions:
• Judges interpret and explain the statutes. Whenever the law is silent on a point,
the judge has to decide the case according to the principles of justice, equity and
good conscience. It would be accepted in most systems of law that cases which are
identical in their facts, should also be identical in their decisions. That principle
ensures justice for the individual claimant and a measure of certainty for the law
itself.
• The English legal system has developed a system of judicial precedent which
requires the extraction of the legal principle from a particular judicial decision
and, given the fulfilment of certain conditions, ensures that judges apply the
principle in subsequent cases which are indistinguishable. The latter provision
being termed “binding precedents”. Such decisions are called as precedents and
become an important source of law
4. Customs and Trade Usages:

Most of the Indian Law has been codified. But even then, it has not altogether done
away with customs and usages. Many Indian statutes make specific provisions to the
effect that the rules of law laid down in a particular Act are subject to any special
custom or usages of trade.
For example, Section 1 of the Indian Contract Act, 1872, lays down that, “Nothing
herein contained shall effect the provisions of any Statute, Act or Regulation not
hereby expressly repealed, nor any usage or custom of trade, nor any incident of any
contract, not inconsistent with the provisions of this Act”.
JURISPRUDENCE
The word Jurisprudence is derived from the word ‘juris’ meaning law and ‘prudence’
meaning knowledge.
Jurisprudence is the study of the science of law. The study of law in jurisprudence is not
about any particular statute or a rule but of law in general, its concepts, its principles and
the philosophies underpinning it.
1.10
Sources of Law
Jurisprudence is the study of the science of law. The study of law in jurisprudence is not
about any particular statute or a rule but of law in general. The meaning of jurisprudence
has changed over period of time.
According to salmond, the term jurisprudence means the science where the word law
includes all species of obligatory rules of human action. He said that jurisprudence in this
sense can be further divided into 3 categories
a. Civil
b. International
c. Natural
Prof. Julius stone defined jurisprudence as the lawyer’s extraversion.
Legal theory
Legal theory is a field of intellectual enterprise within jurisprudence that involves the
development and analysis of the foundations of law. Two most prominent legal theories
are the normative legal theory and the positive legal theory. Positive legal theory seeks
to explain what the law is and why it is that way, and how laws affect the world, whereas
normative legal theories tell us what the law ought to be. There are other theories of law
like the sociological theory, economic theory, historical theory, critical legal theory as
well.
John Austin’s command theory of law

Austin differentiated between ‘Law properly so called’ and ‘laws improperly so called’
and said that laws properly so called are general commands but not all of it is given by
men for men. A specie of Laws properly so called are given by political superiors to
political inferiors.
According to Austin law is the command of sovereign that is backed by sanction. Austin
has propagated that law is a command which imposes a duty and the failure to fulfill the
duty is met with sanctions (punishment).
Thus Law has three main features:
a. It is a command.
b. It is given by a sovereign authority.
c. It has a sanction behind it.
In order to properly appreciate Austin’s theory of law, we need to understand his
conception of command and sovereign.
Command
It is an expression of wish or desire of an intelligent person, directing another person to
do or to forbear from doing some act, and the violation of this wish will be followed by
evil consequences on the person so directed. Command requires the presence of two
parties- the commander (political superior) and the commanded (political inferior).
1.11
Sources of Law
Sovereign
In Austin’s theory, sovereign is politically superior. He has defined sovereign as an
authority that receives habitual obedience from the people but itself does not obey some
other authority habitually. According to Austin, the sovereign is the source of all laws.
Sanction
Is the evil consequence that follows on the violation of a command. To identify a law, the
magnitude of the sanction is not relevant but the absence of sanction disentitles an
expression of the sovereign from being a law in Austinian sense. Sanction should not also
be confused with a reward that might be on offer if a given conduct is followed or
refrained from. Reward confers a positive right whereas a sanction is a negative
consequence.
Roscoe pound Theory

Roscoe Pound drew a similarity between the task of a lawyer and an engineer and gave
his theory of social engineering. The goal of this theory was to build such a structure of
society where the satisfaction of maximum of wants was achieved with the minimum of
friction and waste. Such a society according to Roscoe Pound would be an ‘efficient’
society. Realisation of such a social structure would require balancing of competing
interests. Roscoe Pound defined interests as claims or wants or desires which men assert
de facto, and about which law must do something, if organised societies are to endure.
For any legal order to be successful in structuring an efficient society, there has to
be:
1. A recognition of certain interests- individual, public and social.
2. A definition of the limits within which such interest will be legally recognized and
given effect to.
3. Securing of those interests within the limits as defined.
Roscoe pound’s classify interest in following 3 categories

1. Individual Interest
2. Public Interest
3. Social Interest
John William Salmond’s theory

Salmond was a theorist of normative school because salmond claimed that the purpose
of law was deliverance of justice to the people and in this sense he differed from bentham
and austin who went into the analysis of law without going into its purpose.
According to Salmond law is the body of principles which are recognized and applied by
the state in the administration of justice
1.12
Sources of Law
His other definition said that law consists of a set of rules recognised and acted on in
courts of justice.
Salmond argued that the administration of justice was the primary task of a state and the
laws were made to achieve that objective. Administration of justice was thus antecedent
to the laws. Laws thus are secondary, accidental, unessential. Law consists of the pre-
established and authoritative rules which judges apply in the administration of justice, to
the exclusion of their own free will and discretion. Salmond further said that the
administration of justice is perfectly possible without laws though such a system is not
desirable. A court with an unfettered discretion in the absence of laws is capable of
delivering justice if guided by equity and good conscience.
Hans Kelson’s pure theory of Law

Hans Kelson was an Austrian philosopher and jurist who is known for his ‘Pure Theory
of Law’. Kelsen believed that the contemporary study and therories of law were impure
as they were drew upon from various other fields like religion and morality to explain
legal concepts. Kelson, like Austin was a positivist, in that he focused his attention on what
the law was and divested moral, ideal or ethical elements from law. He discarded the,
notion of justice as an essential element of law because many laws, though not just, may
still continue as law.
Kelsen described law as a “normative science’ as distinguished from natural sciences

which are based on cause and effect, such as law of gravitation. The laws of natural
science are capable of being accurately described, determined and discovered whereas
the science of law is knowledge of what law ought to be.
Kelson considered legal science as pyramid of norms with grund norms at the top. The
subordinate norms are controlled by norms superior to them in hierarchical order. The
Grundnorm is however, independent or any other norm being at the apex. Thus, the
system of norms proceeds from downwards to upwards and finally it closes at the
grundnorms at the top. Grund norm gives validity to other norms though the grundnorm
itself does not derive its validity from any other norm and its validity must be
presupposed.
For example, A law is valid because it derives its legal authority from the legislative body,
which in its own turn derive its authority from a norm i.e. constitution. As to the question
from where does the constitutuion derive its validity theres is no answer and therefeore
it is the grund norm.
Jaremy Banthem’s theory of Law

Jeremy Bentham was the pioneer of analytical jurisprudence in Britain. According to him
‘a law’ may be
1.13
Sources of Law
defined as an assemblage of signs, declarative of volition, conceived or adopted by a

sovereign in a state,
concerning the conduct to be observed in a certain case by a certain person or a class of
persons, who in the
case in question are or are supposed to be subject to his power. Thus, Bentham’s concept
of law is an
imperative one.
Bentham said that every law may be considered in eight different respects:
1. Source: The source of a law is the will of the sovereign, who may conceive laws which
he personally issues, or adopt laws previously issued by sovereigns or subordinate
authorities, or he may adopt laws to be issued in future by subordinate authorities.
2. Subjects: These may be persons or things. Each of these may be active or passive
subjects, i.e., the agent with which an act commences or terminates.
3. Objects: The goals of a given law are its objects.
4. Extent: Direct extent means that a law covers a portion of land on which acts have
their termination; indirect extent refers to the relation of an actor to a thing.
5. Aspects: Every law has ‘directive’ and a ‘sanctional’ part. The former concerns the
aspects of the sovereign will towards an act-situation and the latter concerns the
force of a law. The four aspects of the soverign will are command, prohibition, non-
prohibition and non-command and the whole range of laws are covered under it.
These four aspects are related to each other by opposition and concomitancy.
6. Force: The motivation to obey a law is generated by the force behind the law.
7. Remedial appendage: These are a set of subsidiary laws addressed to the judges
through which the judges cure the evil (compensation), stop the evil or prevent
future evil.
8. Expression: A law, in the ultimate, is an expression of a sovereign’s will. The
connection with will raises the problem of discovering the will from the expression.
1.14
Constitution of India
2.1
The Constitution of India came into force on January 26, 1950. It is a comprehensive
document containing 395 Articles (divided into 22 Parts) and 12 Schedules. Apart from
dealing with the structure of Government, the Constitution makes detailed provisions for
the rights of citizens and other persons in a number of entrenched provisions and for the
principles to be followed by the State in the governance of the country, labelled as
“Directive Principles of State Policy”. All public authorities – legislative, administrative
and judicial derive their powers directly or indirectly from it and the Constitution derives
its authority from the people.
Structure
Constitution of India is basically federal but with certain unitary features.
The essential features of a Federal Polity or System are—

• Dual Government,
• Distribution of powers,
• Supremacy of the Constitution,
• Independence of Judiciary,
• Written Constitution, and
• A rigid procedure for the amendment of the Constitution.
The political system introduced by our Constitution possesses all the aforesaid
essentials of a federal polity as follows:
(a) In India, there are Governments at different levels, like Union and States.
(b) Powers to make laws have been suitably distributed among them by way of various
lists as per the Seventh Schedule.
(c) Both Union and States have to follow the Constitutional provisions when they make
laws.
(d) The Judiciary is independent with regard to judicial matters and judiciary can test
the validity of law independently. The Supreme Court decides the disputes between
the Union and the States, or the States inter se.
(e) The Constitution is supreme and if it is to be amended, it is possible only by
following the procedure explained in Article 368 of the Constitution itself.
Fundamental rights
The Constitution seeks to secure to the people “liberty of thought, expression, belief, faith
and worship; equality of status and of opportunity; and fraternity assuring the dignity of
the individual”. With this object, the fundamental rights are envisaged in Part III of the
Constitution.
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The Nehru Committee recommended the inclusion of Fundamental Rights in the

Constitution for the country. Although that demand of the people was not met by the
British Parliament under the Government of India Act, 1935, yet the enthusiasm of the
people to have such rights in the Constitution was not impaired. As a result of that
enthusiasm they were successful in getting a recommendation being included in the
Statement of May 16, 1946 made by the Cabinet Mission-(which became the basis of the
present Constitution) to the effect that the Constitution-making body may adopt the
rights in the Constitution. Therefore, as soon as Constituent Assembly began to work in
December, 1947, in its objectives resolution Pt. Jawahar Lal Nehru moved for the
protection of certain rights to be provided in the Constitution
Part III of the Indian Constitution guarantees 6 categories of fundamental rights.

These are:
a. Right to Equality – Articles 14 to 18;
b. Right to Freedom – Articles 19 to 22;
c. Right against Exploitation – Articles 23 and 24;
d. Right to Freedom of Religion – Articles 25 to 28;
e. Cultural and Educational Rights – Articles 29 and 30;
f. Right to Constitutional Remedies – Articles 32.
Note:
a) Articles 15, 16, 19 and 30 are guaranteed only to citizens.
b) Articles 14, 20, 21, 22, 23, 25, 27 and 28 are available to any person on the soil of
India—citizen or foreigner.
c) The rights guaranteed by Articles 15, 17, 18, 20, 24 are absolute limitations upon the
legislative power.
Concept of State
With a few exceptions, all the fundamental rights are available against the State. Under
Article 12, unless the context otherwise requires, “the State” includes –
a. The Government and Parliament of India;
b. The Government and the Legislature of each of the States; and
c. All local or other authorities:
i. within the territory of India; or
ii. under the control of the Government of India.
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Case Laws
1. The expression ‘local authorities’ refers to authorities like Municipalities, District
Boards, Panchayats, Improvement Trusts, Port Trusts and Mining Settlement Boards.
The Supreme Court has held that ‘other authorities’ will include all authorities created
by the Constitution or statute on whom powers are conferred by law and it is not
necessary that the authority should engage in performing government functions
(Electricity Board, Rajasthan v.Mohanlal).
2. The Calcutta High Court has held that the electricity authorities being State within the
meaning of Article 12, their action can be judicially reviewed by this Court under
Article 226 of the Constitution of India. (In re: Angur Bala Parui). It has also been held
that a university is an authority (University of Madras v. Shanta Bai,).
3. The Gujarat High Court has held that the President is “State” when making an order
under Article 359 of the Constitution (Haroobhai v. State of Gujarat).
4. The words “under the control of the Government of India” bring, into the definition of
State, not only every authority within the territory of India, but also those functioning
outside, provided such authorities are under the control of the Government of India.
5. In Bidi Supply Co. v. Union of India, State was interpreted to include its Income-tax
department.
6. The Supreme Court in Sukhdev Singh v. Bhagatram and in R.D. Shetty v. International
Airports Authority, has pointed out that corporations acting as instrumentality or
agency of government would become ‘State’ because obviously they are subjected to
the same limitations in the field of constitutional or administrative law as the
government itself, though in the eye of law they would be distinct and independent
legal entities.
7. In Satish Nayak v. Cochin Stock Exchange Ltd., the Kerala High Court held that since a
Stock Exchange was independent of Government control and was not discharging any
public duty, it cannot be treated as ‘other authority’ under Article 12.
8. In Zee Telefilms Ltd. v. Union of India, the Supreme Court applying the tests laid down
in Pardeep Kumar Biswas case held that the Board of Control for cricket in India
(BCCI) was not State for purposes of Article 12 because it was not shown to be
financially, functionally or administratively dominated by or under the control of the
Government and control exercised by the Government was not pervasive but merely
regulatory in nature.
9. Judiciary although an organ of State like the executive and the legislature, is not
specifically mentioned in Article 12. However, the position is that where the Court
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performs judicial functions, e.g. determination of scope of fundamental rights vis-a-

vis legislature or executive action, it will not occasion the infringement of fundamental
rights and therefore it will not come under ‘State’ in such situation (A.R. Antualay v.
R.S. Nayak.
While in exercise of non-judicial functions e.g. in exercise of rule-making powers,

where a Court makes rules which contravene the fundamental rights of citizens, the
same could be challenged treating the Court as ‘State’.
Test for instrumentality or agency of the State

In Ajay Hasia v. Khalid Mujib, the Supreme Court has enunciated the following test for
determining whether an entity is an instrumentality or agency of the State:
ü If the entire share capital of the Corporation is held by the Government, it would go a
long way towards indicating that the corporation is an instrumentality or agency of
the Government.
ü Where the financial assistance of the State is so much as to meet almost the entire
expenditure of the corporation it would afford some indication of the corporation
being impregnated with government character.
ü Whether the corporation enjoys a monopoly status which is conferred or protected by
the State.
ü Existence of deep and pervasive State control may afford an indication that the
corporation is a State agency or an instrumentality.
ü If the functions of the corporation are of public importance and closely related to
government functions, it would be a relevant factor in classifying a corporation as an
instrumentality or agency of government.
ü If a department of government is transferred to a corporation, it would be a strong
factor supporting an inference of the corporation being an instrumentality or agency
of government
Justifiability of Fundamental Rights

Article 13 gives teeth to the fundamental rights. It lays down the rules of interpretation
in regard to laws inconsistent with or in derogation of the Fundamental Rights.
Exsiting Laws: Article 13(1) relates to the laws already existing in force, i.e. laws which
were in force before the commencement of the Constitution (pre constitutional laws). A
declaration by the Court of their invalidity, however, will be necessary before they can be
disregarded and declares that pre-constitution laws are void to the extent to which they
are inconsistent with the fundamental rights.
Future Laws: Article 13(2) relates to future laws, i.e., laws made after the commencement
of the Constitution (post constitutional laws). After the Constitution comes into force the
State shall not make any law which takes away or abridges the rights conferred by Part
III and if such a law is made, it shall be void to the extent to which it curtails any such
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right. The word ‘law’ according to the definition given in Article 13 itself includes –“. any
Ordinance, order, bye-law, rule, regulation, notification, custom or usage having in the
territory of India, the force of law.”
Doctrine of Severability
It is not the entire law which is affected by the provisions in Part III, but on the other hand,
the law becomes invalid only to the extent to which it is inconsistent with the
Fundamental Rights. So only that part of the law will be declared invalid which is
inconsistent, and the rest of the law will stand. However, on this point a clarification has
been made by the Courts that invalid part of the law shall be severed and declared invalid
if really it is severable, i.e., if after separating the invalid part the valid part is capable of
giving effect to the legislature’s intent, then only it will survive, otherwise the Court shall
declare the entire law as invalid. This is known as the rule of severability.
The doctrine has been applied invariably to cases where it has been found possible to
separate the invalid part from the valid part of an Act. Article 13 only says that any law
which is inconsistent with the fundamental rights is void “to the extent of inconsistency”
and this has been interpreted to imply that it is not necessary to strike down the whole
Act as invalid, if only a part is invalid and that part can survive independently.
In A.K. Gopalan v. State of Madras, the Supreme Court ruled that where an Act was partly
invalid, if the valid portion was severable from the rest, the valid portion would be
maintained, provided that it was sufficient to carry out the purpose of the Act. From
above, it is clear that this doctrine applies only to pre constitutional laws as according to
Article 13(2), State cannot even make any law which is contrary to the provisions of this
Part.
Doctrine of Eclipse
An existing law inconsistent with a fundamental right becomes in-operative from the date
of the commencement of the Constitution, yet it is not dead altogether. A law made before
the Commencement of the Constitution remains eclipsed or dormant to the extent it
comes under the shadow of the fundamental rights, i.e. is inconsistent with it, but the
eclipsed or dormant parts become active and effective again if the prohibition brought
about by the fundamental rights is removed by the amendment of the Constitution. This
is known as the doctrine of eclipse.
The doctrine was first evolved in Bhikaji Narain Dhakras v. State of M.P. In this case, the
validity of C.P. and Berar Motor Vehicles Amendment Act, 1947, empowering the
Government to regulate, control and to take up the entire motor transport business, was
challenged. The Act was perfectly a valid piece of legislation at the time of its enactment.
But on the commencement of the Constitution, the existing law became inconsistent
under Article 13(1), as it contravened the freedom to carry on trade and business under
Article 19(1)(g). To remove the infirmity the Constitution (First Amendment) Act, 1951
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was passed which permitted creation by law of State monopoly in respect of motor
transport business. In case of a pre-Constitution law or statute, it was held, that the
doctrine of eclipse would apply.
Waiver
The doctrine of waiver of rights is based on the premise that a person is his best judge
and that he has the liberty to waive the enjoyment of such rights as are conferred on him
by the State. However, the person must have the knowledge of his rights and that the
waiver should be voluntary. The doctrine was discussed in Basheshar Nath v. C.I.T., where
the majority expressed its view against the waiver of fundamental rights. It was held that
it was not open to citizens to waive any of the fundamental rights. Any person aggrieved
by the consequence of the exercise of any discriminatory power, could be heard to
complain against it.
Single Person Law

A law may be constitutional, even though it relates to a single individual, if that single
individual is treated as a class by himself on some peculiar circumstances.
The case is Charanjit Lal Chowdhary v. Union of India, in this case, the petitioner was an
ordinary shareholder of the Sholapur Spinning and Weaving Co. Ltd. The company
through its directors had been managing and running a textile mill of the same name.
Later, on account of mismanagement, a situation had arisen that brought about the
closing down of the mill, thus affecting the production of an essential commodity, apart
from causing serious unemployment amongst certain section of the community. The
Central Government issued an Ordinance which was later replaced by an Act, known as
Sholapur Spinning & Weaving Co. (Emergency Provisions) Act, 1950
The petitioner filed a writ petition on the ground that the said Act infringed the rule of
equal protection of laws as embodied in Article 14, because a single company and its
shareholders were subjected to disability as compared with other companies and their
shareholders. The Supreme Court dismissed the petition and held the legislation as valid.
It laid down that the law may be constitutional even though it applies to a single individual
if on account of some special circumstances or reasons applicable to him only, that single
individual may be treated as a class by himself. However, in subsequent cases the Court
explained that the rule of presumption laid down in Charanjit Lal’s case is not absolute,
but would depend on facts of each case.
For a valid classification there has to be a rational nexus between the classification made
by the law and the object sought to be achieved. For example a provision for district-wise
distribution of seats in State Medical colleges on the basis of population of a district to the
population of the State was held to be void (P. Rajandran v. State of Mysore).
Right of Equality
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Article 14: Equality before the law and equal protection of the laws
“the State shall not deny to any person equality before the law or the equal protection of
the laws within the territory of India”.
The expression ‘equality before the law’ which is barrowed from English Common Law is
a declaration of equality of all persons within the territory of India, implying thereby the
absence of any special privilege in favour of any individual. Every person, whatever be his
rank or position is subject to the jurisdiction of the ordinary courts.
The second expression “the equal protection of the laws” which is based on the last clause
of the first section of the Fourteenth Amendment to the American Constitution directs
that equal protection shall be secured to all persons within the territorial jurisdiction of
the Union in the enjoyment of their rights and privileges without favouritism or
discrimination. Article 14 applies to all persons and is not limited to citizens. A
corporation, which is a juristic person, is also entitled to the benefit of this Article
(Chiranjit Lal Chowdhurary v. Union of India). The right to equality is also recognised as
one of the basic features of the Constitution (Indra Sawhney v. Union of India)
Legislative classification
A right conferred on persons that they shall not be denied equal protection of the laws
does not mean the protection of the same laws for all. To separate persons similarly
situated from those who are not, legislative classification or distinction is made carefully
between persons who are and who are not similarly situated. Article 14 does not forbid
classification or differentiation which rests upon reasonable grounds of distinction.
The Supreme Court in State of Bihar v. Bihar State ‘Plus-2’ lectures Associations, held that
now it is well settled and cannot be disputed that Article 14 of the Constitution guarantees
equality before the law and confers equal protection of laws. It prohibits the state from
denying persons or class of person’s equal treatment; provided they are equals and are
similarly situated. It however, does not forbid classification. In other words, what Article
14 prohibits is discrimination and not classification if otherwise such classification is
legal, valid and reasonable.
Test of valid classification

Permissible classification must satisfy 2 conditions, namely;
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i. the classification must be founded on an intelligible differentia which must distinguish

persons or things that are grouped together from others leaving out or left out; AND
ii. Such a differentia must have rational nexus to the object sought to be achieved by the
statute or legislation in question
The classification may be founded on different basis, such as, geographical, or according
to objects or occupation or the like. What is necessary is that there must be a nexus
between the basis of classification and the object of the Act under consideration. A law
based on a permissible classification fulfils the guarantee of the equal protection of the
laws and is valid. On the other hand if it is based on an impermissible classification it
violates that guarantee and is void.
Scope of Article 14
The true meaning and scope of Article 14 has been explained in several decisions of the
Supreme Court. The rules with respect to permissible classification as evolved in the
various decisions have been summarised by the Supreme Court in Ram Kishan Dalmiya
v. Justice Tendulkar as follows;
i. Article 14 forbids class legislation, but does not forbid classification.
ii. Permissible classification must satisfy two conditions, namely,
a) It must be founded on an intelligible differentia which distinguishes persons or
things that are grouped together from others left out of the group, and
b) The differentia must have a relation to the object sought to be achieved by the
statute in question.
iii. The classification may be founded on different basis, namely geographical, or according
to objects or occupations or the like.
iv. In permissible classification, mathematical nicety and perfect equality are not required.
Similarly, non identity of treatment is enough.
v. Even a single individual may be treated a class by himself on account of some special
circumstances or reasons applicable to him and not applicable to others; a law may be
constitutional even though it relates to a single individual who is in a class by himself.
vi. Article 14 condemns discrimination not only by substantive law but by a law of
procedure.
vii. There is always a presumption in favour of the constitutionality of an enactment and
the burden is upon him who attacks it to show that there has been a clear transgression
of the constitutional principles.
Article 14 invalidates discrimination not only in substantive law but also in procedure.
Further, it applies to executive acts also.
Possession of higher qualification can be treated as a valid base or classification of two

categories of employees, even if no such requirement is prescribed at the time of
recruitment. If such a distinction is drawn no complaint can be made that it would violate
Article 14 of the Constitution (U.P. State Sugar Corpn. Ltd. v. Sant Raj Singh.
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Article 15: Prohibition of discrimination on grounds of religion etc.

State cannot discriminate against any citizen on grounds only of -
i. Religion
ii. Race
iii. Caste
iv. Sex
v. Place of birth
vi. Any of them
Article 15(2) lays down that no citizen shall be subjected to any disability, restriction or
condition with regard to—
1. Access to shops, public restaurants, hotels and places of public entertainment; or
2. The use of wells, tanks, bathing ghats, roads and places of public resort, maintained
wholly or partially out of State funds or dedicated to the use of the general public.
Article 15(3) and 15(4) create certain exceptions to the right guaranteed by Article 15(1)
and 15(2). Under Article 15(3) the State can make special provision for women and
children. It is under this provision that courts have upheld the validity of legislation or
executive orders discriminating in favour of women (Union of India v. Prabhakaran).
Article 15(4) permits the State to make special provision for the advancement of—
i. Socially and educationally backward classes of citizens;
ii. Schedule caste and
iii. schedule tribes
Article 16: Equality of opportunity in matters of public employment.

1. All citizens shall have equal opportunity in matters relating to employment or
appointment of office under the State.
2. There shall be no discrimination against a citizen on the grounds of religion race caste,
sex descent, place of birth or residence.
Exceptions:
ü Parliament can make a law that in regard to a class or classes of employment or
appointment to an office under the Government of a State on a Union Territory, under
any local or other authority within the State or Union Territory, residence within that
State or Union Territory prior to such employment or appointment shall be an
essential qualification.
ü A provision can be made for the reservation of appointments or posts in favour of any
backward class of citizens which in the opinion of the State is not adequately
represented in the services under the State.
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ü A law shall not be invalid if it provides that the incumbent of an office in connection
with the affair of any religious or denominational institution or any member of the
governing body thereof shall be a person professing a particular religion or belonging
to a particular denomination.
The Supreme Court in Secy. of State of Karnataka v. Umadevi held that adherence to the
rule of equality in public employment is a basic feature of the Constitution and since the
rule of law is the core of the Constitution, a Court would certainly be disabled from
passing an order upholding a violation of Article 14. Equality of opportunity is the
hallmark and the Constitution has provided also for affirmative action to ensure that un
equals are not treated as equals. Thus any public employment has to be in terms of the
Constitutional Scheme.
Article 17: Abolition of untouchability

Article 17 says that “Untouchability” is abolished and its practice in any form is forbidden.
The enforcement of any disability arising out of “Untouchability” shall be an offence
punishable in accordance with law.
Untouchability does not include an instigation to social boycott (Davarajiah v.

Padamanna). Punishment for violation of Article 17 is to be provided by Parliament under
Article 35(a)(ii).
Article 18: Abolition of titles

Article 18 is more a prohibition rather than a fundamental right. British Government used
to confer titles upon persons who showed special allegiance to them. Many persons were
made Sir, Raj Bahadur, Rai Saheb, Knight, etc. These titles had the effect of creating a class
of certain persons which was regarded superior to others and thus had the effect of
perpetuating inequality.
To do away with that practice, now Article 18 provides as under:

i. No title, not being a military or academic distinction, shall be conferred by the State.
ii. No citizen of India shall accept any title from any foreign State.
iii. No person, who is not a citizen of India shall, while he holds any office or trust under
the State, accept without the consent of the President, any title from any foreign State.
iv. No person, holding any office of profit or trust under State shall without the consent
of the President, accept any present, emolument or office of any kind from or under a
foreign State.
Rights Relating to Freedom

Articles 19-22 guarantee certain fundamental freedoms.
Article 19(1), of the Constitution, guarantees to the citizens of India six freedoms,
namely;
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a. Right to freedom of speech and expression

b. Freedom of assembly
c. Freedom of association
d. Freedom of movement
e. Freedom of residence
f. Right to acquire, hold and dispose of property — deleted by 44th Amendment in 1978.]
g. Freedom to trade and occupations
The Constitution under Articles 19(2) to 19(6) permits the imposition of restrictions on
these freedoms subject to the following conditions:
1. The restriction can be imposed by law and not by a purely executive order issued
under a statute;
2. The restriction must be reasonable;
3. The restriction must be imposed for achieving one or more of the objects specified in
the respective clauses of Article 19.
Reasonableness
It is very important to note that the restrictions should be reasonable. If this word
‘reasonable’ is not there, the Government can impose any restrictions and they cannot be
challenged. This word alone gives the right to an aggrieved person to challenge any
restriction of the freedoms granted under this Article.
The following factors are usually considered to assess the reasonableness of a law:
i. The objective of the restriction.
ii. The nature, extent and urgency of the evil sought to be dealt with by the law in
question.
iii. How far the restriction is proportion to the evil in question.
iv. Duration of the restriction.
v. The conditions prevailing at the time when the law was framed.
The onus of proving to the satisfaction of the Court that the restriction is reasonable is
upon the State.
Procedural and Substantiveness

In determining the reasonableness of a law, the Court will not only see the surrounding
circumstances, but all contemporaneous legislation passed as part of a single scheme. It
is the reasonableness of the restriction and not of the law that has to be found out, and if
the legislature imposes a restriction by one law but creates countervailing advantages by
another law passed as part of the same legislative plan, the court can take judicial notice
of such Acts forming part of the same legislative plan (Lord Krishna Sagar Mills v. Union of
India).
a) Freedom of speech and expression;
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i. The right to speech and expression includes right to make a good or bad speech
and even the right of not to speak.
ii. May express oneself even by signs.
iii. The freedom of press and right to publish one’s opinion,
iv. Right to circulation and propagation of one’s ideas,
v. Freedom of peaceful demonstration,
vi. Dramatic performance and cinematography.
The freedom of speech and expression under Article 19(1)(a) means the right to express
one’s convictions and opinions freely by word of mouth, writing, printing, pictures or any
other mode.
Article 19(2) specifies the limits up-to which the freedom of speech and expression may
be restricted. It enables the Legislature to impose by law reasonable restrictions on the
freedom of speech and expression under the following heads;
i. Sovereignty and integrity of India
ii. Security of the State
iii. Friendly relation with foreign state
iv. Public order
v. Decency or morality or
vi. Contempt of court
vii. Defamation
viii. Incitement to an offence
b) Assemble peaceably and without arms
The right of citizens to assemble peacefully and without arms. Calling an assembly and
putting one’s views before it is also intermixed with the right to speech and expression
discussed above, and in a democracy it is of no less importance than speech. The fact that
the assembly must be peaceful and without arms, the State is also authorised to impose
reasonable restrictions on this right in the interests of:
ü The sovereignty and integrity of India, or
ü Public order.
c) Form associations or unions

The freedom of association includes freedom to hold meeting and to takeout processions
without arms. Right to form associations for unions is also guaranteed so that people are
free to have the members entertaining similar views [Art. 19(1) (c)]. This right
necessarily implies a right not to be a member of an association. This right is also,
however, subject to reasonable restrictions which the State may impose in the interests
of -
a. The sovereignty and integrity of India, or
b. Public order or,
c. Morality.
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d) Move freely, throughout the territory of India

Right to move freely throughout the territory of India is another right guaranteed under
Article 19(1)(d). This right, however, does not extend to travel abroad, and like other
rights stated above, it is also subject to the reasonable restrictions which the State may
impose:
§ in the interests of the general public, or
§ for the protection of the interests of any scheduled tribe.
e) Reside and settle in any part of the territory of India

Article 19(1)(e) guarantees to a citizens the right to reside and settle in any part of the
territory of India. This right overlaps the right guaranteed by clause (d). This freedom is
said to be intended to remove internal barriers within the territory of India to enable
every citizen to travel freely and settle down in any part of a State or Union territory.
Subject to reasonable restrictions:
ü in the interests of the general public, or
ü For the protection of the interests of any scheduled tribe.
f) Practise any profession, or to carry on any occupation, trade or business

Article 19(1) (g) provides that all citizens shall have the right to practise any profession,
or to carry on any occupation, trade or business. Article 19(1)(g) of the Constitution
guarantees that all citizens have the right to practice any profession or to carry on any
occupation or trade or business.
The freedom is not uncontrolled, for, clause (6) of the Article authorises legislation
which-
(i) Imposes reasonable restrictions on this freedom in the interests of the general public;
(ii) Prescribes professional or technical qualifications necessary for carrying on any
profession, trade or business; and
(iii) Enables the State to carry on any trade or business to the exclusion of private citizens,
wholly or partially.
Protection in respect of conviction for offences

Articles 20, 21 and 22 provide a system of protection, relevant to the criminal law. Article
20 guarantees to all persons — whether citizens or non-citizens - 3 rights namely—
i. protection against ex-post facto laws
ii. protection against double jeopardy
iii. protection against self-incrimination
1) Protection against ex-post facto laws

According to Article 20(1), no person shall be convicted of any offence except for violation
of a law in force at the time of the commission of the act charged as an offence, nor be
subjected to a penalty greater than that which might have been inflicted under the law in
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force at the time of the commission of the offence. Even the penalty for the commission of
an offence cannot be increased with retrospective effect.
For Example, suppose for committing dacoity the penalty in 1970 was 10 years
imprisonment and a person commits dacoity in that year. By a law passed after his
committing the dacoity the penalty, for his act cannot be increased from 10 to 11 years or
to life imprisonment.
2) Protection against double jeopardy

According to Article 20(2), no person can be prosecuted and punished for the same
offence more than once. It is, however, to be noted that the conjunction "and" is used
between the words prosecuted and punished, and therefore, if a person has been let off
after prosecution without being punished, he can be prosecuted again.
3) Protection against self-incrimination

According to Article 20(3), no person accused of any offence shall be compelled to be a
witness against himself. In other words, an accused cannot be compelled to state anything
which goes against him. But it is to be noted that a person is entitled to this protection,
only when all the three conditions are fulfilled -
a. that he must be accused of an offence;
b. that there must be a compulsion to be a witness; and
c. such compulsion should result in his giving evidence against himself
So, if the person was not an accused when he made a statement or the statement was not
made as a witness or it was made by him without compulsion and does not result as a
statement against himself, then The ‘right against self-incrimination’ protects persons
who have been formally accused as well as those who are examined as suspects in
criminal cases. It also extends to cover witnesses who apprehend that their answers could
expose them to criminal charges in the ongoing investigation or even in cases other than
the one being investigated. [Selvi v. State of Karnataka]. The protection available under
this provision does not extend to such person or to such statement.
Protection of life and personal liberty

Article 21 confers on every person the fundamental right to life and personal liberty. It
says that,
“No person shall be deprived of his life or personal liberty except according to
procedure established by law.”
The right to life includes those things which make life meaningful. For example, the right
of a couple to adopt a son is a constitutional right guaranteed under Article 21 of the
Constitution (Philips Alfred Malvin v. Y.J. Gonsalvis and others,). The right to life
enshrined in Article 21 guarantees right to live with human dignity. Right to live in
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freedom from noise pollution is a fundamental right protected by Article 21 and noise
pollution beyond permissible limits is an inroad into that right.
Article 21A Right to education

This was introduced by the constitution (86th amendment) Act, 2002. According to this,
the state shall provide free and compulsory education to all children of the age of 6 to 14
years.
Right against illegal arrest and preventive detention

Article 22 lays down the last right to freedom which relates to protection against illegal
arrest and preventive detention.
Article 22 does not apply uniformly to all persons and makes a distinction between:
a. Alien enemies,
b. Person arrested or detained under preventive detention law, and
c. Other persons.
Person arrested or detained other than under preventive detention law-

(1) A person who is arrested cannot be detained in custody unless he has been informed,
as soon as he may be, of the grounds for such arrest.
(2) The person arrested has right to consult an advocate of his choice.
(3) A person who is arrested and detained must be produced before the nearest
magistrate within a period of 24 hours of such arrest, excluding the time of journey.
And such a person shall not be detained in custody beyond 24 hours without the
authority of magistrate.
Person arrested or detained under preventive detention law

Preventive detention means detention of a person without trial. The object of preventive
detention is not to punish a person for having done something but to prevent him from
doing it. No offence is proved nor any charge formulated and yet a person is detained
because he is likely to commit an act prohibited by law.
Following are the rights available to person detained under preventive detention
laws:
a) He cannot be detained more than 3 months unless authorized by –
i. Advisory board
ii. Parliament by way of law
b) The authority ordering the detention of a person under the preventive detention law
shall:
i. communicate to him, as soon as may be, the grounds on which the order for his
detention has been made, and
ii. Afford him the earliest opportunity of making the representation against the order.
2.16
Right against exploitation (Article 23 & 24)

They provide for rights against exploitation of all citizens and non-citizens. Taking them
one by one they guarantee certain rights by imposing certain prohibitions not only
against the State but also against private persons.
• Prohibition of traffic in human beings and forced labour
• Prohibition of employment of children
Prohibition of traffic in human beings and forced labour-

Article 23 imposes a complete ban on traffic in human beings, begar and other similar
forms of forced labour. The contravention of these provisions is declared punishable by
law. Thus the traditional system of beggary particularly in villages, becomes
unconstitutional and a person who is asked to do any labour without payment or even a
labourer with payment against his desire can complain against the violation of his
fundamental right under Article 23.
Prohibition of employment-
Article 24 prohibits the employment of children below the age of 14 in any factory or
mine. The Employment of Children Act, 1938; The Factories Act, 1948; The Mines Act,
1952; The Apprentices’ Act, 1961; and the Child Labour (Prohibition and Regulation) Act,
1986 are some of the important enactments in the statute book to protect the children
from exploitation by unscrupulous employers.
Right to freedom of religion-

India does not accept any religion as state religion. It maintains absolute neutrality and
impartiality towards all religion. The provision relating to right of freedom of religion are
preserved in articles 25 to 28 of the constitution of India. With Article 25 begins a group
of provisions ensuring equality of all religions thereby promoting secularism.
Article 25 gives to every person the:

• Freedom of conscience, and
• The right freely to profess, practice and propagate religion.
Freedom is subject to restrictions imposed by the State on the following grounds:

• Public order, morality and health,
• Other provisions in Part III of the Constitution,
• Any law regulating or restricting any economic, financial; political or other secular
activity which may be associated with religious practice, and
• Any law providing for social welfare and reform or the throwing open of Hindu
religious institutions of a public character to all classes and sections of Hindus.
2.17
Article 26 provides following rights to every religious denomination;

1) Right to establish and maintain institutions of religious charitable purposes;
2) To manage its own affairs in matters of religion;
3) To own and acquire movable and immovable property and ;
4) To administer such property in Accordance with law.
ARTICLE 27-
Any person shall not be compelled to pay any taxes, the proceed of which will be used to
meet expenses for promotion of any particular religion.
ARTICLE 28-
• An educational institute which is wholly maintained by state fund shall not give any
religious institutions.
• Any person shall not be compelled in any educational institutions run by state fund
without his consent or his guardians consent to -
1. To take part in religious institution given
2. To attend any religious worship conducted.
CULTURAL AND EDUCATIONAL RIGHT [Right of Minorities]

Minority
The word ‘minority’ has not been defined in the Constitution. The Supreme Court in D.A.V.
College, Jullundur v. State of Punjab, seems to have stated the law on the point. It said that
minority determined in relation to a particular impugned legislation. The determination
of minority should be based on the area of operation of a particular piece of legislation. If
it is a State law, the population of the State should be kept in mind and if it is a Central
Law the population of the whole of India should be taken into account.
The 2 article guarantee the following rights:

1) Protection of interests of Minorities
Article 29 guarantees 2 rights:
i. Any section of the citizens residing in the territory of Indian or any part thereof
having a distinct language, script or culture of its own has the right of conserve
the same. Thus, citizens from Tamil Nadu or Bengal has the right to conserve their
language or culture if they are living in Delhi, a Hindi speaking area and vice versa.
ii. No citizen can be denied admission into any educational institution maintained
by the State or receiving aid out of State funds on grounds only of religion, race,
caste, language, or any of them. This provision is general and applies to each
citizen individually and is not confined to a group of citizens. An exception is
made to this right to the effect that if a special provision is made for the admission
of persons belonging to educationally or/and socially backward classes or
scheduled castes or scheduled tribes it shall be valid.
2) Right of Minorities to establish and administer educational institutions
2.18
Following rights are declared in Article 30:

i. All minorities, whether based on religion or on language, shall have the right to
establish and administer educational institutions of their choice. It may be noted
here that this right is not limited only to linguistic minorities but it extends to
religious minorities also. Both of them have been given the freedom to establish
and administer educational institutions of their own choice.
ii. The State cannot, in granting aid to educational institutions, discriminate against
any educational institution on the ground that it is under the management of a
minority, whether based on religion or language. It has been held that the State
cannot impose conditions in granting aid to such institutions.
AMENDABILITY OF FUNDAMENTAL RIGHTS

The question about amendability of fundamental right has been raised in various cases
and the courts have decided the matter in a different way in diverse cases. Let us see the
history and conclusion of amendability of the fundamental right.
1. Initially the Supreme Court had a view that no part of our constitution was
unamendable and that parliament in compliance with the requirement of article 368,
may amend any provision of the constitution, including fundamental rights. This
decision was upheld in shankari prasad v. union of India, 1951 and Sajjan singh v. state
of rajasthan, 1964/Rights and article 368.
2. In gokal nath v. state of Punjab, 1967, the petitioner challenged the validity of the
Punjab security of land tenures act, 1953 and of the mysore land reforms act. The
Supreme Court reversing its earlier decision in shankari prasad and Sajjan singh cases,
contended that parliament had no power to amend fundamental rights.
3. 24th amendment act, 1971 - reacting to this judgement of the Supreme Court, the
parliament through the 24th amendment act, 1971 brought certain changes to the
amendability of the fundamental rights. The act declared that the parliament has the
power to amend any of the fundamental rights under article 368.
4. In keshavanand Bharati v. state of karela, 1973, the petitioner challenged the validity
of 24th amendment act, 1971 and karela land reforms act, 1963. The Supreme Court
upheld the validity of 24th amendment act and held that the parliament can amend any
part of the constitution including fundamental rights.
5. 42nd amendment act, 1976 - in reaction to the above decision this amendment was
done during the period of emergency and gave unlimited amending power to
parliament by removing the exception of basic structure of constitution. As a result
the parliament can amend the constitution even by altering its basic structure.
6. In Minerva mills v. union of India, 1980, the petitioner challenged the unlimited
amendability power given to parliament under 42nd amendment act, by destroying the
basic structure of the constitution. The Supreme Court was convinced that basic
structure of the constitution should be preserved and the unlimited power given
under 42 amendment act should not prevail.
2.19
Conclusion: PARLIAMENT’S POWER TO AMEND THE CONSTITUTION (INCLUDING

FUNDAMENTAL RIGHTS) IS NOT ABSOLUTE AND THE BASIC STRUCTURE OF THE
CONSTITUTION SHOULD BE MAINTAINED.
Directive Principle of State Policy

Meaning
Directive principle are the ideals which the union and state governments must keep in
mind while formulating policies or pass law. The articles included in part IV of the
constitution (article 36 to 51) contain certain directives which are the guidelines for the
future government to lead the country.
Importance
The directive principle are not enforceable by the courts yet they are fundamental in the
governance of the country. It is the duty of the state to apply these principle in making
laws. If any government ignores them they will be answerable before electorate at the
time elections. Therefore in-spite of not being enforced by law these principle are
important for the long run and future of any government.
Important directive principle of state

1. State to secure a social order for the promotion of welfare of the people
2. Principles and policies to be followed by state
ü Equal right for men and women
ü Equal pay for equal work for men and women.
ü Distribution of ownership of material resources for common good.
ü Prevention of concentration of wealth to the common detriment
ü Ensure health of citizens at workplace.
ü Protection of child and youth against exploitation.
3. Equal justice and free legal aid.
4. Organize village panchayats.
5. Right to work, education and public assistance in certain case.
6. Just and human condition of work
7. Living wages and securing standard of living to workers.
8. Participation of workers in management of industries.
9. Uniform civil code
10. Free and compulsory education for children
11. Promote the educational and economic interests of scheduled castes, scheduled tribes
and other weaker sections.
12. Protection of environment, forest and wildlife
13. Protection of monuments and places of national importance.
14. Separation of judiciary from executive
15. Promotion of international peace and security
2.20
Relationship between fundamental rights & directive principle

If there is conflict between fundamental rights & directive principles, both have to be
complied.
If there is a conflict between fundamental rights and directive principles of state, initially
directive principles were totally ignored. Directive principle cannot override
fundamental rights was decided in state of madras v. chanpakram dorairajan. But later
court emphasized on harmonious construction to resolve the conflict. But if still conflict
cannot be resolved then as decided in various cases and article inserted in constitution
by amendment.
Present sequence of precedence to resolve conflict between fundamental rights

and directive principle;
First preference - Fundamental rights except article 14 &19
Second preference - Directive principle given under article 39(b) & 39(c)
Third preference - Fundamental rights given under article 14&19
Last preference - Other directive principle [i.e. other than given under
article 39(b) & 39(c)]
Fundamental Duties
a. To abide by the constitution and respect its ideals and institutions, the National Flag
and the National Anthem.
b. To cherish and follow the nobel ideals which inspired our national struggle for
freedom.
c. To uphold and protect the sovereignty, unity and integrity of India.
d. To defend the country and render national service when called upon to do so.
e. To Promote harmony and the spirit of common brotherhood amongst all the people
of India transcending religious, linguistic and regional or sectional diversities; to
renounce practices derogatory to the dignity of women;
f. To value and preserve the rich heritage of our composite culture;
g. To protect and improve the natural environment including forests, lakes, rivers and
wild life, and to have compassion for living creatures;
h. To develop the scientific temper, humanism and the spirit of inquiry and reform;
i. To safeguard public property and to abjure violence;
j. To strive towards excellence in all spheres of individual and collective activity so that
the nation constantly rises to higher levels of endeavour and achievement;
k. To provide opportunities for education to one’s child or, as the case may be, ward
between the age of 6 and 14 years.
Power of the president and of the governor
1) Of the president-
2.21
In Article 53 the Constitution lays down that the “executive power of the Union shall be
vested in the President”. The President of India shall, thus, be the head of the ‘executive
power’ of the Union. The various powers that are included within the comprehensive
expression ‘executive power’ in a modern state have been classified under various heads
as follows:
i. Administrative power, i.e., the execution of the laws and the administration of the
departments of Government.
ii. Military power, i.e., the command of the armed forces and the conduct of war.
iii. Legislative power, i.e., the summoning; prorogation, etc. of the legislature.
iv. Judicial power, i.e., granting of pardons, reprieves etc. to persons convicted of
crime.
These powers vest in the President under each of these heads, subject to the limitations
made under the Constitution.
Ordinance-making power-
The most important legislative power conferred on the President is to promulgate
Ordinances. Article 123 of the Constitution provides that the President shall have the
power to legislate by Ordinances at any time when it is not possible to have a
parliamentary enactment on the subject, immediately. This is a special feature of the
Constitution of India.
This independent power of the executive to legislate by Ordinance has the

following peculiarities:
ü The Ordinance-making power will be available to the President only when both the
Houses of Parliament have been prorogued or is otherwise not in session, so that it is
not possible to have a law enacted by Parliament. However, Ordinance can be made
even if only one House is in Session because law cannot be made by that House in
session alone. Both the Houses must be in session when Parliament makes the law.
The President’s Ordinance making power under the Constitution is not a co-ordinate
or parallel power of legislation along with Legislature.
ü This power is to be exercised by the President on the advice of his Council of Ministers.
ü The President must be satisfied about the need for the Ordinance and he cannot be
compelled
ü The Ordinance must be laid before Parliament when it re-assembles, and shall
automatically cease to have effect at the expiration of 6 weeks from the date of re-
assembly or before resolutions have been passed disapproving the Ordinance.
ü The period of 6 weeks will be counted from the latter date if the Houses reassemble
on different dates.
2) Of the governor-
The ordinance making power is granted to governor to governor in case of state list u/a
213 the power is on same grounds as of ordinance making power of president.
2.22
Legislature power-
While exercising this power Governor must act with the aid and advise of the Council of
Ministers. But in following cases the Governor cannot promulgate any Ordinance without
instructions from the President:
ü If a Bill containing the same provisions would under this Constitution have required
the previous section of the President.
ü He would have deemed it necessary to reserve a Bill containing the same provisions
for the consideration of the President.
ü An Act of the State legislature containing the same provisions would under this
Constitution have been invalid under having been reserved for the consideration of
the President, it had received the assent of the President.
The Ordinance must be laid before the state legislature (when it re-assembles) and shall
automatically cease to have effect at the expiration of six weeks from the date of the re-
assembly unless disapproved earlier by that legislature.
Chapter I of Part XI (Articles 245 to 255) of the Indian Constitution read with Seventh
Schedule thereto covers the legislative relationship between the Union and the States.
Analysis of these provisions reveals that the entire legislative sphere has been divided on
the basis of:
a. Territory with respect to which the laws are to be made, and
b. Subject matter on which laws are to be made.
Territorial jurisdiction
Parliament may make laws for the whole of India and the legislature of a state may make
laws for the whole or any part of the state.
Note - parliament in some cases can make laws which are effective even outside India.
Subject matter jurisdiction

On the basis of subject matter jurisdiction is divided on the following 3 basis:
• Union List - This list contains the subject matter in which parliament has power to
legislate. In no case state has power to legislate on the given matters. The main
subjects of the union list are of national interest and importance like defence, foreign
affairs, currency and coinage, war and peace, atomic energy, etc.
• State list - this list contains the subject-matter in which state legislature has power to
legislate. But at the time of proclamation of emergency the power of the state shifts to
the parliament. The main subjects of the state list are public order, police, state court
fees, prisons, local government, public health and sanitation, hospitals and
dispensaries, etc.
• Concurrent List - this list contains the subject matter in which both parliament and
state legislature can legislate. However, when there is a conflict between such laws
made by centre and state on same subject-matter then the law made by parliament
2.23
shall prevail over the law made by the state legislature. The main subjects listed in this
list are criminal law, criminal procedure, marriage and divorce, transfer of property,
etc.
• Residuary list - With respect to all those matters which are not included in any of the
3 lists, parliament has the exclusive power to make laws. It is called the residuary
legislative power of parliament.
Power of Parliament to make Laws on State List

Legislatures have the exclusive powers to make laws with respect to the subjects included
in the State List and Parliament has no power to encroach upon them. However, our
Constitution makes a few exceptions to this general rule by authorising Parliament to
make law even on the subjects enumerated in the State List
1. In the National Interest - whenever parliament feels that it is necessary to legislate

on the state list in public interest, it can do so
2. During a proclamation of emergency - Parliament shall have power to make laws

for the whole or any part of the territory of India with respect to all matters in the
State List. These laws will cease to have effect on the expiration of six months after the
proclamation ceases to operate.
3. Breakdown of Constitutional Machinery in a State - In case the Governor of a State

reports to the President, or he is otherwise satisfied that the Government of a State
cannot be carried on according to the provisions of the Constitution, then he
(President) can make a proclamation to that effect.
4. On the request of two or more States - The exercise of such power is conditional
upon an agreement between two or more States requesting Parliament to legislate for
them on a specified subject. The law so made may be adopted by other States also, by
passing resolutions in their legislatures. Once, however, such law has been made, the
power of those State legislatures which originally requested or which later on adopted
such law is curtailed as regards that matter;
5. Legislation for enforcing international agreements - Parliament has exclusive

power with respect to foreign affairs and entering into treaties and agreements with
foreign countries and implementing of treaties and agreements and conventions with
foreign countries and to give effect to the agreement parliament needs to pass a law
on the subject-matter which originally belongs to the state, it can do so.
Interpretation of the Legislative Lists

Plenary Powers: The first and foremost rule is that if legislative power is granted with
respect to a subject and there are no limitations imposed on the power, then it is to be
2.24
given the widest scope that its words are capable of, without, rendering another item
nugatory.
Thus, a legislature to which a power is granted over a particular subject may make law on
any aspect or on all aspects of it; it can make a retrospective law or a prospective law and
it can also make law on all matters ancillary to that matter. For example, if power to collect
taxes is granted to a legislature, the power not to collect taxes or the power to remit taxes
shall be presumed to be included within the power to collect taxes.
Harmonious Construction: Different entries in the different lists are to be interpreted

in such a way that a conflict between them is avoided and each of them is given effect. It
must be accepted that the Constitution does not want to create conflict and make any
entry nugatory.
Pith and Substance Rule: The rule of pith and substance means that where a law in
reality and substance falls within an item on which the legislature which enacted that law
is competent to legislate, then such law shall not become invalid merely because it
incidentally touches a matter outside the competence of legislature.
Colourable Legislation: Doctrine of colourable legislation states, ‘whatever legislature

can’t do directly, it cant do indirectly.’ When a legislature seeks to do something in an
indirect manner what it cannot do directly, the court struck such law.
Freedom of Trade, Commerce and Intercourse

ARTICLE 301
Article 301 of the constitution lays down the trade, commerce and intercourse throughout
the territory of India shall be free. Restrictions in the form of taxes can be imposed. The
freedom of trade and commerce guaranteed under article 301 applies throughout the
territory of India; it is not only applicable to inter-state but also to inter-state trade,
commerce and intercourse. The intension is to make whole territory of India as one for
free flow trade and commerce.
ARTICLE 302
However, parliament can impose restriction on freedom of trade, commerce and
intercourse in public interest.
ARTICLE 303
While imposing restrictions, the parliament should not discriminate between the state.
Discrimination can only be done in case of scarcity of goods.
ARTICLE 304
State legislature can impose taxes on goods which comes into their state from other states
if those goods are subject to taxation in their respective states.
2.25
ARTICLE 305
The laws which create state monopoly in any trade, etc. are valid irrespective of the fact
that they directly impede or restrict the freedom of trade and commerce.
The Judiciary
The Supreme Court-supreme court can issue a writ against any person or government
within the territory of India. Supreme Court can issue writ to enforce fundamental rights.
Supreme Court issue writ under article 32 which in itself is a fundamental right thus
Supreme Court cannot refuses to exercise its writ jurisdiction.
The high court - High court can issue writs against a person residing or against a
government located within its territorial jurisdiction or if the cause of action arises within
its territorial jurisdiction. High court can issue writ to enforce fundamental rights and for
any other purpose. Whereas article 226 is discretionary thus high court can refuse to
exercise its writ jurisdiction.
Types of Writs
A brief description of the various types of writs is given below:
i. Habeas corpus
ii. Mandamus
iii. Prohibition
iv. Certiorari
v. Quo-warranto
HABEAS CORPUS
The words ‘Habeas Corpus’ literally mean “to have the body’’. If a person is detained
whether in prison or private custody without any justification for detention then he
himself or through his representative may seek relief under this writ. The Supreme Court
or high court will then issue this writ to produce the person who has been detained before
a court and to release him if such detention is found illegal. This writ is issued in order to
protect individual liberties against state and other individuals.
MANDAMUS
Mandamus means ‘we command’. It is issued when a public official or a person holding a
public office has failed to perform his/her public or statutory duty. Mandamus can be
issued against any public authority. But it cannot be issued against the president or the
governor of a state for the exercise of their duties and power.
PROHIBITION
A writ of prohibition is issued to an inferior court preventing it from assuming
jurisdiction which is not legally vested in it. When a tribunal or lower court acts without
or in excess of jurisdiction writ of prohibition can be demanded. It is generally issued
2.26
before the trial of the case or during pendency of proceeding, but never after the order is
made. While mandamus commands activity, prohibition commands inactivity, it is
available only against judicial or quasi-judicial authorities and is not available against a
public officer.
CERTIORARI
The writ of certiorari can be filed to high court or Supreme Court if a subordinate court
i. acts without or in excess of jurisdiction or
ii. acts in contravention of the rules of natural justice or
iii. Commits an error apparent on the face of the record.
Although the object of both the writs of prohibition and of certiorari is the same,
prohibition is available at an earlier stage whereas certiorari is available at a later stage
when the order is made.
QUO-WARRANTO
The term ‘quo-warranto’ means ‘what is your authority’. If a public office is held by any
one not qualified to hold it, it can be challenged by any person. Under this writ, the person
is ordered by the court to explain under what valid grounds he is holding such a position.
If it is found on investigation that he is not entitled to the office, the court may restrain
him from acting in the office and order to vacate the office.
2.27
Interpretation of Statutes
INTERPRETATION OF STATUTES
Introduction
• Interpretation is the process of establishing the true meaning of the words of the
law.
• A statute is thus a written “will” of the legislature expressed according to the form
necessary to constitute it as a law of the State, and rendered authentic.
• It is a well settled principle of law that as the statute is an edict of the Legislature, the
conventional way of interpreting or construing a statute is to seek the intention of
legislature.
• The intention of legislature assimilates two aspects
Ø one aspect carries the concept of ‘meaning’, and
Ø another aspect conveys the concept of ‘purpose’ and
‘object’ or the ‘reason’ or ‘spirit’ pervading through the
statute.
The process of construction, therefore, combines both the
literal and purposive approaches.
• The Constitution of India does not use the term ‘statute’ but it employs the term “law”
to describe an exercise of legislative power
Statutes are commonly divided into following classes:

1. codifying, when they codify the unwritten law on a subject;
2. declaratory, when they do not profess to make any alteration in the existing law, but
merely declare or explain what it is;
3. remedial, when they alter the common law, or the judge made (non-statutory) law;
4. amending, when they alter the statute law;
5. consolidating, when they consolidate several previous statutes relating to the same
subject matter, with or without alternations of substance;
6. enabling, when they remove a restriction or disability;
7. disabling or restraining, when they restrain the alienation of property;
8. penal, when they impose a penalty or forfeiture.
Need and object of Interpretation

The following has been observed in Seaford Court Estates Ltd. v. Asher, on the need for
statutory interpretation
Ø “It is not within human powers to forsee the manifold sets of facts which may arise;
and that; even if it were, it is not possible to provide for them in terms free from all
ambiguity.
3.1
Ø The Judge must set to work on the constructive task of finding the intention of
Parliament, and he must do this, not only from the language of the statute, but also
from a consideration of the social conditions which gave rise to it, and of the mischief
which it was passed to remedy, and then he must supplement the written word so as
to give ‘force and life’ to the intention of the legislature.
Ø To put into other words, a Judge should ask himself the question - If the makers of
the Act had themselves come across this luck in the texture of it, how would they have
straight ended it out?
Ø A judge must not alter the material of which it is woven, but he can and should iron
out the creases.
The object of interpretation has been explained in Halsbury’s Laws of England in the
following words:
Ø The function of the court is to ascertain what the parties meant by the words which
they have used; to declare the meaning of what is written in the instrument, and not
of what was intended to have been written; to give effect to the intention as expressed,
the expressed meaning being, for the purpose of interpretation, equivalent of the
intention.
Ø It is not possible to guess at the intention of the parties and substitute the presumed
for the expressed intention. The ordinary rules of construction must be applied,
although by doing so the real intention of the parties may, in some instances be
defeated.
Ø The object of interpretation, thus, in all cases is to see what is the intention expressed
by the words used. The words of the statute are to be interpreted so as to ascertain
the mind of the legislature from the natural and grammatical meaning of the words
which it has used.
Principles of Interpretation
It is only when the intention of the legislature as expressed in the statute is not clear,
that the Court in interpreting it will have any need for the rules of interpretation of
statutes.
A. Primary Rules
1. The Primary Rule: Literal Construction
• According to this rule, the words, phrases and sentences of a statute are ordinarily
to be understood in their natural, ordinary or popular and grammatical
meaning unless such a construction leads to an absurdity or the content or object
of the statute suggests a different meaning.
• If there is nothing to modify, alter or qualify the language which the statute
contains, it must be construed according to the ordinary and natural meaning of
the words.
3.2
• It is a corollary to the general rule of literal construction that nothing is to be

added to or taken from a statute unless there are adequate grounds to justify the
inference that the legislature intended something which it omitted to express.
• Some of the other basic principles of literal construction are:
Ø Every word in the law should be given meaning as no word is unnecessarily
used.
Ø One should not presume any omissions and if a word is not there in the
Statute, it shall not be given any meaning.
Ø The Court has no power to legislate.
• While discussing rules of literal construction the Supreme Court in State of H.P v.
Pawan Kumar held that One of the basic principles of interpretation of statutes is
to construe them according to plain, literal and grammatical meaning of the words.
2. The Mischief Rule or Heydon’s Rule

• In Heydon’s Case, it was resolved “that for the sure and true interpretation of all
statutes in four things are to be considered:
i. What was the Common Law before the making of the Act;
ii. What was the mischief and defect for which the Common Law did not
provide;
iii. What remedy the Parliament had resolved and appointed to cure the
disease of the Commonwealth; and
iv. The true reason of the remedy.
• The rule directs that the Courts must adopt that construction which “shall
suppress the mischief and advance the remedy”. But this does not mean that a
construction should be adopted which ignores the plain natural meaning of the
words or disregard the context and the collection in which they occur.
• The Supreme Court in Sodra Devi’s case, has expressed the view that the rule in
Heydon’s case is applicable only when the words in question are ambiguous
and are reasonably capable of more than one meaning.
• The correct principle is that after the words have been construed in their context
and it is found that the language is capable of bearing only one construction, the
rule in Heydon’s case ceases to be controlling and gives way to the plain meaning
rule.
3. Rule of Reasonable Construction i.e. Ut Res Magis Valeat Quam Pareat

• This is the golden rule of interpretation.
• While, interpreting the provision, it becomes necessary to have regard to the
subject matter of the statute and the object which it is intended to achieve.
• According to this rule, the words of a statute must be construed ut res magis valeat
quam pareat, so as to give a sensible meaning to them and the intention of law
maker should be given utmost importance,
3.3
• It is the duty of a Court in constructing a statute to give effect to the intention of

the legislature.
• If the Court considers that the litera legis is not clear, it, must interpret
according to the purpose, policy or spirit of the statute (ratio-legis). It is, thus,
evident that no invariable rule can be established for literal interpretation.
• In RBI v. Peerless General Finance and Investment Co. Ltd. The Supreme Court
stated that if a statute is looked at in the context of its enactment, with the glasses
of the statute makers provided by such context, its scheme, the sections, clauses,
phrases and words may take colour and appear different than when the statute is
looked at without the glasses provided by the context. With these glasses we must
look at the Act as a whole and discover what each section, each clause, each phrase
and each word is meant and designed to say as to fit into the scheme of the entire
Act.
4. Rule of Harmonious Construction

• A statute must be read as a whole effect should be given to every provision.
• Such a construction has the merit of avoiding any inconsistency or repugnancy
either within a section or between a section and other parts of the statute.
• It is the duty of the Courts to avoid “a head on clash” between two sections of the
same Act and, “whenever it is possible to do so, to construct provisions which
appear to conflict so that they harmonise”
• Where in an enactment, there are two provisions which cannot be reconciled with
each other, they should be so interpreted that, if possible, effect may be given to
both. This is what is known as the “rule of harmonius construction”.
5. Rule of Ejusdem Generis

• Ejusdem Generis, literally means “of the same kind or species”.
• In other words, the ejusdem generis rule is that, where there are general words
following particular and specific words, the general words must be confined to
things of the same kind as those specified, unless there is a clear manifestation of
a contrary purpose.
• To apply the rule the following conditions must exist:
i. The statute contains an enumeration by specific words,
ii. The members of the enumeration constitute a class,
iii. The class is not exhausted by the enumeration,
iv. A general term follows the enumeration,
v. There is a distinct genus which comprises more than one species, and
vi. There is no clearly manifested intent that the general term be given a
broader meaning that the doctrine requires.
• The rule of ejusdem generis must be applied with great caution because, it
implies a departure from the natural meaning of words, in order to give them
a meaning or supposed intention of the legislature.
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• The rule must be controlled by the fundamental rule that statutes must be
construed so as to carry out the object sought to be accomplished. The rule
requires that specific words are all of one genus, in which case, the general words
may be presumed to be restricted to that genus.
• For example – If a law refers to yatchs, ships, cruise, boat and other vehicles,
“vehicles” would not include trucks, since the list was of water-based
transportation.
B. Other Rules of Interpretation

1. Expressio Unis Est Exclusio Alterius
• The rule means that express mention of one thing implies the exclusion of
another.
• At the same time, general words in a statute must receive a general construction,
unless there is in the statute some ground for limiting and restraining their
meaning by reasonable construction; and it is not to be assumed that anything not
specifically included is for that reason alone excluded from the protection of the
statute.
• In other words, when something is mentioned expressly in a statute it should be
presumed that the things not mentioned are excluded.
2. Contemporanea Expositio Est Optima Et Fortissima in Lege

• The maxim means that a contemporaneous exposition is the best and strongest in
law. Where the words used in a statute have undergone alteration in meaning in
course of time, the words will be construed to bear the same meaning as they
had when the statute was passed on the principle expressed in the maxim.
• In simple words, old statutes should be interpreted as they would have been at the
date when they were passed and prior usage and interpretation by those who have
an interest or duty in enforcing the Act, and the legal profession of the time, are
presumptive evidence of their meaning when the meaning is doubtful.
3. Noscitur a Sociis
• The ‘Noscitur a Sociis’ i.e. “It is known by its associates”. In other words, meaning
of a word should be known from its accompanying or associating words.
• It is not a sound principle in interpretation of statutes, to lay emphasis on one
word disjuncted from its preceding and succeeding words. A word in a statutory
provision is to be read in collocation with its companion words.
• The rule states that where two or more words which have analogous meaning are
coupled together, they are understood in their cognate sense. It is only where the
intention of the legislature in associating wider words with words of narrower
significance, is doubtful that the present rule of construction can be usefully
applied. The same words bear the same meaning in the same statute.
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• For example – The word ‘plant’ if used in ‘plant and trees’ should be interpreted
as shrub, herbs, bushes etc. Whereas if used in ‘plant and machinery’ it would
mean some kind of equipment.
• But this rule will not apply:
i. when the context excluded that principle.
ii. if sufficient reason can be assigned, it is proper to construe a word in one part
of an Act in a different sense from that which it bears in another part of the Act.
iii. where it would cause injustice or absurdity.
iv. where different circumstances are being dealt with.
v. where the words are used in a different context.
4. Strict and Liberal Construction

• What is meant by ‘strict construction’ is that “Acts, are not to be regarded as
including anything which is not within their letter as well as their spirit, which is
not clearly and intelligibly described in the very words of the statute, as well as
manifestly intended”,
In other words, statute has to construed in its strict sense.
Generally, criminal laws are given strict interpretation.
• ‘Liberal construction’ is meant that “everything is to be done in advancement of
the remedy that can be done consistently with any construction of the statute”.
Generally, Labour and Welfare laws are given liberal interpretation as the
primary focus of the acts are to provide benefit.
• “Although the literal rule is the one most frequently referred to in express terms,
the Courts treat all three (viz., the literal rule, the golden rule and the mischief
rule) as valid and refer to them as occasion demands, but do not assign any
reasons for choosing one rather than another.
Presumptions
Where the meaning of the statute is clear, there is no need for presumptions. But if the
intention of the legislature is not clear, there are number of presumptions.
These are:
a) that the words in a statute are used precisely and not loosely.
b) that vested rights, i.e., rights which a person possessed at the time the statute was
passed, are not taken away without express words, or necessary implication or
without compensation.
c) that “mens rea”, i.e., guilty mind is required for a criminal act. There is a very
strong presumption that a statute creating a criminal offence does not intend to
attach liability without a guilty intent.
d) that the state is not affected by a statute unless it is expressly mentioned as
being so affected.
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e) that a statute is not intended to be inconsistent with the principles of

International Law. Although the judges cannot declare a statute void as being
repugnant to International Law, yet if two possible alternatives present
themselves, the judges will choose that which is not at variance with it.
f) that the legislature knows the state of the law.
g) that the legislature does not make any alteration in the existing law unless by
express enactment.
h) that the legislature knows the practice of the executive and the judiciary.
i) legislature confers powers necessary to carry out duties imposed by it.
j) that the legislature does not make mistake. The Court will not even alter an
obvious one, unless it be to correct faulty language where the intention is clear.
k) the law compels no man to do that which is futile or fruitless.
l) legal fictions may be said to be statements or suppositions which are known, to
be untrue, but which are not allowed to be denied in order that some difficulty
may be overcome, and substantial justice secured. It is a well settled rule of
interpretation that in construing the scope of a legal fiction, it would be proper
and even necessary to assume all those facts on which alone the fiction can
operate.
m) where powers and duties are inter-connected and it is not possible to separate one
from the other in such a way that powers may be delegated while duties are
retained and vice versa, the delegation of powers takes with it the duties.
n) the doctrine of natural justice is really a doctrine for the interpretation of
statutes, under which the Court will presume that the legislature while granting a
drastic power must intend that it should be fairly exercised.
Internal and External Rules of Interpretation
A. Internal Aids in Interpretation

1. Title
Ø The long title of an Act is a part of the Act and is admissible as an aid to its
construction. It sets out the general terms, the purpose of the Act and it often
precedes the preamble.
Ø The Short Title cannot be used for interpretation as short title implies only an
abbreviation for purposes of reference.
Ø The true nature of the law is determined not by the name given to it but by its
substance. However, the long title is a legitimate aid to the construction.
2. Preamble
Ø Where the enacting part is clear and unambiguous, the preamble cannot be
used but where the enacting part is ambiguous, the preamble can be referred to
for interpretation.
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Ø Supreme Court in Kamalpura Kochunni v. State of Madras, pointed out that the
preamble may be legitimately consulted in case any ambiguity arises in the
construction of an Act and it may be useful to fix the meaning of words used so as
to keep the effect of the statute within its real scope.
3. Heading and Title of a Chapter

Ø It has been settled that the headings or titles prefixed to sections or group of
sections can be referred to in construing an Act of the legislature.
Ø The Supreme Court observed that “the headings prefixed to sections or entries (of
a Tariff Schedule) cannot control the plain words of the provision; they cannot also
be referred to for the purpose of construing the provision when the words used in
the provision are clear and unambiguous; nor can they be used for cutting down
the plain meaning of the words in the provision. Only in the case of ambiguity or
doubt the heading or the sub-heading may be referred to as an aid for
construing the provision but even in such a case aid could not be used for cutting
down the wide application of the clear words used in the provision
4. Marginal Notes
Ø The Supreme Court in Western India Theatres Ltd. v. Municipal Corporation of
Poona, has also held, that a marginal note cannot be invoked for construction
where the meaning is clear.
Ø Marginal notes appended to the Articles of the Constitution have been held to
constitute part of the Constitution as passed by the Constituent Assembly and
therefore, they have been made use of in consulting the Articles.
Ø When reference to marginal note is relevant? The Supreme Court has held that the
marginal note although may not be relevant for rendition of decisions in all types
of cases but where the main provision is sought to be interpreted differently,
reference to marginal note would be permissible in law
5. Interpretation Clauses
Ø The definition given under the Act is a “key to interpretation”.
Ø Definition may be of following types: -
i. Exhaustive Definition – It is a restrictive definition which means there is
nothing that can be included in the meaning beyond what has been stated.
The words ‘means’ and ‘means and includes’ indicates such definition.
ii. Inclusive Definition – Here, the definition of the word has the scope and
ambit to go beyond what has been stated. The words ‘includes’, ‘to apply to
and include’ and ‘so deemed to include’ indicates such definition.
iii. Exclusive Definition- When definition excludes certain things from its
ambit, it is exclusive definition.
Ø A definition is not to be read in isolation. It must be read in the context of the
phrase which it defines, realising that the function of a definition is to give
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precision and certainty to a word or a phrase which would otherwise be vague and
uncertain but not to contradict or supplement it altogether.
Ø When a word is defined to bear a number of inclusive meanings, the sense in which
the word is used in a particular provision must be ascertained from the context of
the scheme of the Act, the language, the provision and the object intended to be
served thereby.
6. Proviso
Ø As stated by Hidayatullah, J.“As a general rule, a proviso is added to an enactment
to qualify or create an exception to what is in the enactment, and ordinarily, a
proviso is not interpreted as stating a general rule”.
Ø A distinction is said to exist between the provisions worded as ‘proviso’,
‘exception’ or ‘saving clause’.
Ø ‘Exception’ is intended to restrain the enacting clause to particular cases; ‘proviso’
is used to remove special cases from the general enactment and provide for them
specially; and ‘saving clause’ is used to preserve from destruction certain rights,
remedies or privileges already existing.
7. Illustrations or Explanation
Ø “Illustrations are examples that are attached to sections are part of the statute
and they are useful so far as they help to furnish same indication of the presumable
intention of the legislature.
Ø But illustrations cannot have the effect of modifying the language of the section
and they cannot either curtail or expand the ambit of the section which alone
forms the enactment.
Ø An explanation is at times appended to a section to explain the meaning of
words contained in the section. It becomes a part and parcel of the enactment.
Ø An explanation, normally, should be so read as to harmonise with and clear up any
ambiguity in the main section and should not be so construed as to widen the
ambit of the section.
8. Schedules
Ø The schedules form a part of the statute and must be read together with it for all
purposes of construction
Ø There are two principles which ought to be applied to the combination of an Act
and its schedule.
• If the Act says that the schedule is to be used for a certain purpose and the
heading of the part of the schedule in question shows that it is prima facie at
any rate devoted to that purpose, then the Act and the schedule must be read
as if the schedule were operating for that purpose only.
• If Schedule and Act are inconsistent to each other, first an attempt should be
made to harmonize both but if conflict is not resolved the Act shall prevail.
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Ø The statement of objects and reasons as well as the ‘notes on clauses of the
Bill relating to any particular legislation may be relied upon for construing any
of its provisions where the clauses have been adopted by the Parliament without
any change in enacting the Bill, but where there have been extensive changes
during the passage of the Bill in Parliament, the objects and reasons of the changed
provisions may or may not be the same as of the clauses of the original Bill and it
will be unsafe to attach undue importance to the statement of objects and reasons
or notes on clauses.
B. External Aids in Interpretation

Apart from the intrinsic aids, such as preamble and purview of the Act, the Court can
consider resources outside the Act, called the extrinsic aids, in interpreting and finding
out the purposes of the Act.
1. Parliamentary History
Ø It has already been noticed that the Court is entitled to take into account “such
external or historical facts as may be necessary to understand the subject-matter
of the statute”, or to have regard to “the surrounding circumstances” which existed
at the time of passing of the statute.
Ø Like any other external aid, the inferences from historical facts and surrounding
circumstances must give way to the clear language employed in the enactment
itself
2. Reference to Reports of Committees

Ø The report of a Select Committee or other Committee on whose report an
enactment is based, can be looked into “so as to see the background against which
the legislation was enacted, the fact cannot be ignored that Parliament may, and
often does, decide to do something different to cure the mischief. So oneshould not
be unduly influenced by the Report
Ø When Parliament has enacted a statute as recommended by the Report of a
Committee and there is ambiguity or uncertainty in any provision of the statute,
the Court may have regard to the report of the Committee for ascertaining the
intention behind the provision.
Ø But where the words used are plain and clear, no intention other than what the
words convey can be imported in order to avoid anomalies.
3. Reference to other Statutes

Ø It has already been stated that a statute must be read as a whole as words are to
be understood in their context. Extension of this rule of context, permits reference
to other statutes in pari materia, i.e. statutes dealing with the same subject matter
or forming part of the same system.
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Ø Words in a later enactment cannot ordinarily be construed with reference to the

meaning given to those or similar words in an earlier statute. But the later law is
entitled to weight when it comes to the problem of construction.
Ø Generally speaking, a subsequent Act of a legislature affords no useful guide to the
meaning of another Act which comes into existence before the later one was ever
framed.
Ø Both must be laws on the same subject and the part of the earlier Act which is
sought to be construed must be ambiguous and capable of different meanings.
Ø Although a repealed statute has to be considered, as if it had never existed, this
does not prevent the Court from looking at the repealed Act in pari materia on a
question of construction.
4. Dictionaries
Ø When a word is not defined in the Act itself, it is permissible to refer to dictionaries
to find out the general sense in which that word is understood in common
parlance. However, in selecting one out of the various meanings of the word,
regard must always be had to the context as it is a fundamental rule that “the
meaning of words and expressions used in an Act must take their colour from the
context in which they appear”. Therefore, when the context makes the meaning of
a word quite clear, it becomes unnecessary to search for and select a particular
meaning out of the diverse meanings a word is capable of”.
Ø Judicial decisions expounding the meaning of words in construing statutes in pari
materia will have more weight than the meaning furnished by dictionaries.
5. Use of Foreign Decisions

Ø Use of foreign decisions of countries following the same system of jurisprudence
as ours and rendered on statutes in pari materia has been permitted by practice
in Indian Courts.
Ø The assistance of such decisions is subject to the qualification that prime
importance is always to be given to the language of the relevant Indian Statute, the
circumstances and the setting in which it is enacted and the Indian conditions
where it is to be applied.
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General Clauses Act, 1897
GENERAL CLAUSES ACT, 1897

Introduction
• The general definitions provided under the General Clauses Act is applicable to all
Central Acts and Regulations where there is no definition in the Act that conflicts with
provisions of Central Acts or regulations
• The General Clauses Act 1897 belongs to the class of Acts which may be called as
Interpretation Acts.
• Interpretation Act provides a standard set of definitions or extended definitions of
words and expressions commonly used in legislation. It also provides a set of rules
which regulate certain aspects of operation of other enactments.
Object of General Clauses Act
1. Shorten the language of Central legislations.

2. Provide uniformity by defining common legal terminology.
3. Provide for various definitions which help to interpret various
statutes.
4. Avoid unnecessary repetitions of same words in various Acts.
5. Provide for general definitions of words which are not specifically
defined under an Act.
6. Helps to resolve any conflict between 2 or more Central legislations.
Key Definitions
Section 3 of the General Clause Act provides that in this Act, and in all Central Acts and
Regulations made after the commencement of this Act, unless there is anything repugnant
in the subject or context –
1. "Act", used with reference to an offence or a civil wrong, shall include a series of acts,
and words which refer to acts done extend also to illegal omissions;
2. "Affidavit" shall include affirmation and declaration in the case of persons by law
allowed to affirm or declare instead of swearing
3. "Central Act" shall means an Act of Parliament and shall include
• An Act of the Dominion legislature or of the Indian Legislature passed before the
commencement of the Constitution, and
• An Act made before such commencement by the Governor General in Council or
the Governor General, acting in a legislative capacity;
4. "Central Government" shall, -
a) In relation to anything done before the commencement of the Constitution, mean
the Governor General or the Governor General in Council, as the case may be; and shall
include,-
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i. In relation to functions entrusted under sub-section (1) of Section 124 of the

Government of India Act, 1935, to the Government of a Province, the Provincial
Government acting within the scope of the authority given to it under that sub-
section; and
ii. in relation to the administration of a Chief Commissioner’s Province, the Chief
Commissioner acting within the scope of the authority given to him under sub-
section (3) of section 94 of the said Act; and
b) In relation to anything done or to be done after the commencement of the
Constitution, mean the President; and shall include,-
i. in relation to Functions entrusted under clause (1) of article 258 of the
Constitution, to the Government of a State, the State Government acting within the
scope of the authority given to it under that clause;
ii. In relation to the administration of a Part C State before the Commencement of the
Constitution (Seventh Amendment) Act, 1956, the Chief Commissioner or the
Lieutenant-governor or the Government of a neighboring State or other authority
acting within the scope of the authority acting within the authority given to him
or it under Article 239 or Article 243 of the Constitution, as the case may be; (and)
iii. In relation to the administration of a Union territory, the administrator thereof
acting within the scope of the authority given to him under article 239 of the
Constitution;
5. "Commencement" used with reference to an Act or regulation, shall mean the day on
which the Act or regulation comes into force
6. "Constitution" shall mean the Constitution of India
7. "District Judge" shall mean the Judge of a principal civil court of original jurisdiction,
but shall not include a High Court in the exercise of its ordinary or extraordinary
original civil jurisdiction;
8. "document" shall include any matter written, expressed or described upon any
substance by means of letters, figures or marks, or by more than one of those means
which is intended to be used, or which may be used, for the purpose of recording that
matter;
9. "Financial year" shall mean the year commencing on the first day of April
10. A thing shall be deemed to be done in "good faith" where it is in fact done honestly,
whether it is done negligently or not
11. "Government" or "the Government" shall include both the Central Government and
any State Government;
12. "Government securities" shall mean securities of the Central Government or of any
State Government, but in any Act or regulation made before the commencement of
the Constitution shall not include securities of the government of any Part B State
13. "Immovable property" shall include land, benefits to arise out of land, and things
attached to the earth, or permanently fastened to anything attached to the earth
14. "local authority" shall mean a municipal committee, district board, body of port
commissioners or other authority legally entitled to, or entrusted by the government
with the control or management of a municipal or local fund;
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15. "Magistrate" shall include every person exercising all or any of the powers of a
Magistrate under the Code of Criminal Procedure for the time being in force
16. "Month" shall mean a month reckoned according to the British calendar;
17. "Movable property" shall mean property of every description, except immovable
property;
18. "Oath" shall include affirmation and declaration in the case of persons by law allowed
to affirm or declare instead of swearing;
19. "Offence" shall mean any act or omission made punishable by any law for the time
being in force;
20. "Person" shall include any company or association or body of individuals, whether
incorporated or not;
21. "Registered", used with reference to a document, shall mean registered in 6[India]
under the law for the time being in force for the registration of documents
22. "Regulation" shall mean a Regulation made by the President under article 240 of the
Constitution and shall include a Regulation made by the President under article 243
thereof and a regulation made by the Central Government under the Government of
India Act, 1870, or the Government of India Act, 1915, or the Government of India Act,
1935;
23. "Rule" shall mean a rule made in exercise of a power conferred by any enactment, and
shall include a Regulation made as a rule under any enactment;
24. "Schedule" shall mean a schedule to the Act or Regulation in which the word occurs;
25. "Section" shall mean a section of the Act or Regulation in which the word occurs
26. "State Act" shall mean an Act passed by the Legislature of a State established or
continued by the Constitution
27. "State Government"-
a) As respects anything done before the commencement of the Constitution, shall
mean, in a Part A State, the Provincial Government of the corresponding Province,
in a Part B State, the authority or person authorized at the relevant date to exercise
executive government in the corresponding Acceding State, and in a Part C State,
the Central Government;
b) As respects anything done after the commencement of the Constitution and before
the commencement of the Constitution (Seventh Amendment) Act, 1956, shall
mean, in a Part A State, the Governor in a Part B State, the Rajpramukh, and in a
Part C State, the Central Government;
c) As respects anything done or to be done after the commencement of the
Constitution (Seventh Amendment) Act, 1956, shall mean, in a State, the Governor,
and in a Union Territory, the Central Government; and shall, in relation to
functions entrusted under Article 258A of the Constitution to the Government of
India, include the Central Government acting within the scope of the authority
given to it under that article;
28. "Sub-section" shall mean a sub-section of the section in which the word occurs
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29. "Union Territory" shall mean any Union Territory specified in Schedule I to the
Constitution and shall include any other territory comprised within the territory of
India but not specified in that Schedule
30. "Will" shall include a codicil and every writing making a voluntary posthumous
disposition of property;
31. Expression referring to "writing" shall be construed as including references to
printing, lithography, photography and other modes of representing or reproducing
words in a visible form; and
32. "Year" shall mean a year reckoned according to the British calendar
General Rule of Construction

• Rule of Construction is a rule used for interpreting legal instruments, especially
contracts and statutes.
• A rule of construction is a principle that either governs the effect of the ascertained
intention of a document or agreement containing an ambiguous term or establishes
what a court should do if the intention is neither express nor implied.
• A regular pattern of decisions concerning the application of a particular provision of
a statute is a rule of construction that governs how the text is to be applied in similar
cases.
• Contra proferentem and Ejusdem Generic are two examples of rules of construction.
Ø According to Contra Proferentem Rule, if a clause in a contract appears to be
ambiguous, it should be interpreted against the interests of the person who
insisted that the clause be included.
Ø Likewise Ejusdem Generis Rule states that where a law lists specific classes of
persons or things and then refers to them in general, the general statements only
apply to the same kind of persons or things specifically listed
• In the rule of construction of a statute, the office of the judge is simply to ascertain and
declare what is, in terms or in substance, contained therein, not to insert what has
been omitted, or to omit what has been inserted; and where there are several
provisions or particulars such construction is, if possible, to be adopted as will give
effect to all.
Kinds of Rule of Construction and Interpretation
1. The Literal Rule of Interpretation:

Ø The primary and important rule of interpretation is called the Literal Rule.
Ø This rule stated that The only rule for the construction of Acts of Parliament is,
that they should be construed according to the intent of the Parliament which
passed the Act.
Ø If the words of the statute are in themselves precise and unambiguous, then
nothing else necessary than to explain those words in their natural and ordinary
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sense. The words themselves alone do, in such case; best declare the intention of
the lawgiver.
2. Purposive Rule of Interpretation
Ø An ‘enactment shall remedy a particular mischief and it is therefore presumed that
Parliament intends that the court, when considering, in relation to the facts of the
instant case, which of the opposing constructions of the enactment corresponds
to its legal meaning, should find a construction which applies the remedy provided
by it in such a way as to suppress that mischief.
Ø In Heydon’s Case, it was resolved “that for the sure and true interpretation of all
statutes in four things are to be considered:
i. What was the Common Law before the making of the Act;
ii. What was the mischief and defect for which the Common Law did not
provide;
iii. What remedy the Parliament had resolved and appointed to cure the
disease of the Commonwealth; and
iv. The true reason of the remedy
3. Harmonious Construction
Ø A statute must be read as a whole effect should be given to every provision.
Ø Such a construction has the merit of avoiding any inconsistency or repugnancy
either within a section or between a section and other parts of the statute.
Ø It is the duty of the Courts to avoid “a head on clash” between two sections of the
same Act and, “whenever it is possible to do so, to construct provisions which
appear to conflict so that they harmonise”
Ø Where in an enactment, there are two provisions which cannot be reconciled with
each other, they should be so interpreted that, if possible, effect may be given to
both. This is what is known as the “rule of harmonius construction”.
4. Rule of Beneficial Construction:

Ø Beneficent construction involves giving the widest meaning possible to the
statutes.
Ø When there are two or more possible ways of interpreting a section or a word, the
meaning which gives relief and protects the benefits which are purported to be
given by the legislation, should be chosen.
Ø A beneficial statute has to be construed in its correct perspective so as to know the
legislative intent.
Ø Also, beneficial construction does not permit rising of any presumption that
protection of widest amplitude must be deemed to have been conferred on those
for whose benefit the legislation may have been enacted.
Ø Beneficial Construction of statutes have enormously played an important role in
the development and beneficial interpretation of socio – economic legislations.
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5. Strict Construction of Penal Statutes

Ø The general rule for the construction of a penal statute is that it would be strictly
interpreted, that is, if two possible and reasonable constructions can be put upon
a penal provision, the Court must lean towards that construction which exempts
the subject from penalty rather than the one which imposes a penalty.
Ø A penal statute has to be construed narrowly in favor of the person proceeded
against.
Ø This rule implies a preference for the liberty of the subject, in case of ambiguity in
the language of the provision.
Ø In constructing a penal Act, if a reasonable interpretation in a particular case can
avoid the penalty the Court adopts that construction.
Retrospective Amendments
Where a particular date of enforcement of the Act is specified – The Act will become
effective on given specified date.
Where no particular date of enforcement of the Act is specified –
If Act is made before commencement of The Act will become effective on the date
the Indian Constitution it receives the assent of the Governor
General
If Act is made after commencement of the The Act will become effective on the date
Indian Constitution it receives the assent of the President
The regulation shall come into force instantly on the ending of the day prior to its
commencement unless expressly provided.
Effect of Repealment
Where any Central legislation or any regulation enacted after the commencement of this
Act repeals any Act made or yet to be made, unless another purpose exists, the repeal
shall not:
Ø Renew anything not enforced or prevailed during the period at which repeal is
effected or;
Ø Affect the prior management of any legislation that is repealed or anything
performed or undergone or;
Ø Affect any claim, privilege, responsibility or debt obtained, ensued or sustained
under any legislation so repealed or;
Ø Affect any punishment, forfeiture or penalty sustained with regard to any offence
committed as opposed to any legislation or
Ø Affect any inquiry, litigation or remedy with regard to such claim, privilege, debt
or responsibility or any inquiry, litigation or remedy may be initiated, continued
or insisted.
3.17
In any Central legislation or regulation framed subsequent to the enforcement of the

legislation, it shall be essential to revive any legislation either entirely or partly repealed
expressly to provide the purpose.
In simple words, if one Act is repealed by second, which is subsequently repealed by third
Act, the first Act will not automatically revive on repealing of second Act unless third Act
does not expressly provided that
Powers and Functionaries

The Power and Functionaries are provided under section 14 to section 19 of the General
Clause Act, 1897.
Powers conferred to be exercisable from time to time [Section 14]

(1) Where, by any Central Act or Regulation made after the commencement of this Act,
any power is conferred, then unless a different intention appears that power may be
exercised from time to time as occasion requires.
(2) This section applies also to all Central Acts and Regulations made on or after the
fourteenth day of January, 1887
Power to appoint to include power to appoint ex officio [Section 15]

Where, by any Central Act or Regulation, a power to appoint any person to fill any office
or execute any function is conferred, then, unless it is otherwise expressly provided, any
such appointment, if it is made after the commencement of this Act, may be made either
by name or by virtue of office.
Power to appoint to include power to suspend or dismiss [Section 16]

Where, by any Central Act or Regulation, a power to make any appointment is conferred,
then, unless a different intention appears, the authority having for the time being power
to make the appointment shall also have power to suspend or dismiss any person
appointed whether by itself or any other authority in exercise of that power.
Substitution of functionaries [Section 17]

(1) In any Central Act or Regulation, made after the commencement of this Act, it shall be
sufficient, for the purpose of indicating the application of a law to every person or
number of persons for the time being executing the function of an office, to mention
the official title of the officer at present executing the functions, or that of the officer
by whom the functions are commonly executed.
(2) This section applies also to all Central Acts made after the third day of January, 1868,
and to all Regulations made on or after the fourteenth day of January, 1887.
Successors [Section 18]

(1) In any Central Act or Regulation made after the commencement of this Act, it shall be
sufficient, for the purpose of indicating the relation of a law to the successors of any
3.18
functionaries or of corporations having perpetual succession, to express its relation

to the functionaries or corporations.
and to all Regulations made on or after the fourteenth day of January, 1887.
Officials chiefs and sub-ordinates [Section 19]

(1) In any Central Act or Regulation made after the commencement of this Act, it shall be
sufficient, for the purpose of expressing that a law relative to the chief or superior of
an office shall apply to the deputies or subordinates lawfully performing the duties of
that office in the place of their superior, to prescribe the duty of the superior.
and to all Regulations made on or after the fourteenth day of January, 1887. Power as
to Orders, Rules etc., made under Enactments
Section 21 of the General Clause Act deals with power to issue, to include power to add
to, amend, vary or rescind notifications, orders, rules or bye-laws.
It says where, by any Central Act or Regulation, a power to issue notifications, orders,
rules or bye-laws is conferred, then that power includes a power, exercisable in the like
manner and subject to the like sanction and conditions (if any), to add to, amend, vary
or rescind any notifications, orders, rules or bye-laws so issued.
LESSON
3.19
Administrative Law
Administrative law
Introduction
The study of Administrative law involves analysis of the
institutions and legal rules through which governmental
decision making is authorized, affected, limited and
reviewed.
Administrative law is that branch of law that deals with powers, functions and
responsibilities of various organs of the state.
Administrative law is the by-product of ever increasing functions of the Governments.
There is no single universal definition of ‘administrative law’ because it means
different things to different theorists. Some of the definitions by theorists are given
below:
1. Kenneth Culp Davis
Ø Kenneth defines administrative law as the law concerning the powers and
procedures of administrative agencies, including especially the law governing
the judicial review of administrative action.
Ø An administrative agency, according to him, is a government authority, other
than a court and a legislative body, which affects the rights of private
parties either through adjudication or rule-making.
Ø He further adds that apart from judicial review, the manner in which public
officials handle business unrelated to adjudication or rule-making is not a part of
administrative law.
Ø The formulation of administrative agency in this definition is restrictive as it
seeks to exclude agencies having administrative authority pure and simple and
not having adjudicative or legislative functions.
Ø This definition also does not cover purely discretionary functions which may
be called (administrative) of administrative agencies not falling within the
category of legislative or quasi-judicial.
2. Albert Venn Dicey

Ø According to him, administrative law relates to that portion of a nation’s legal
system which determines the legal status and liabilities of all state officials,
which defines the rights and liabilities of private individuals in their dealings
with public officials, and which specifies the procedure by which those rights and
liabilities are enforced.
Ø Dicey’s formulation focuses on one aspect of administrative law, i.e., judicial
control over public officials.
Ø This definition is narrow as it leaves out of consideration many aspects of
administrative law, e.g., Public Corporations would not be covered under this
definition because, strictly speaking, they are not state officials.
4.1
Administrative Law
Need for Administrative Law

The modern state typically has three organs- legislative, executive and judiciary.
• Legislature is unable to come up with the required quality and quantity of

legislations because of limitations of time, the technical nature of legislation and the
rigidity of their enactments.
• The traditional administration of justice through judiciary is technical, expensive
and dilatory.
• The states have empowered their executive (administrative) branch to fill in the
gaps of legislature and judiciary. This has led to an all pervasive presence of
administration in the life of a modern citizen. In such a context, a study of
administrative law assumes great significance.
• The ambit of administration is wide and embraces following elements within its
ambit:-
• It makes policies,
• It executes, administers and adjudicates the law
• It exercises legislative powers and issues rules, bye- laws and orders of a general
nature.
• Since the whole purpose of bestowing the administration with larger powers is to
ensure a better life for the people, it is necessary to keep a check on the
administration, consistent with the efficiency, in such a way that it does not violate
the rights of the individual
• It is the demand of prudence that when large powers are conferred on
administrative organs, effective control-mechanism be also evolved so as to
ensure that the officers do not use their powers in an undue manner or for an
unwarranted purpose.
• It is the task of administrative law to ensure that the governmental functions
are exercised according to law and legal principles and rules of reason and
justice.
• The goal of administrative law is to ensure that the individual is not at receiving end
of state’s administrative power and in cases where the individual is aggrieved by any
action of the administration, he or she can get it redressed.
A careful and systematic study and development of administrative law becomes a

desideratum as administrative law is an instrument of control on the exercise of
administrative powers.
Sources of Administrative Law

There are four principal sources of administrative law in India.
1. Constitution of India
4.2
Administrative Law
Ø It is the primary source of administrative law.

Ø Article 73 of the Constitution provides that the executive power of the Union
shall extend to matters with respect to which the Parliament has power to make
laws. Similar powers are provided to States under Article 62.
Ø Indian Constitution has not recognized the doctrine of separation of powers in its
absolute rigidity.
Ø The Constitution also envisages tribunals, public sector and government liability
which are important aspects of administrative law.
2. Acts/ Statutes
Ø Acts passed by the central and state governments for the maintenance of peace
and order, tax collection, economic and social growth empower the
administrative organs to carry on various tasks necessary for it.
Ø These Acts list the responsibilities of the administration, limit their power in
certain respects and provide for grievance redressal mechanism for the people
affected by the administrative action.
3. Ordinances, Administrative directions, notifications and Circulars

Ø Ordinances are issued when there are unforeseen developments and the
legislature is not in session and therefore cannot make laws.
Ø The ordinances allow the administration to take necessary steps to deal with
such developments.
Ø Administrative directions, notifications and circulars are issued by the executive
in the exercise of power granted under various Acts.
4. Judicial decisions
Ø Judiciary is the final arbiter in case of any dispute between various wings of
government or between the citizen and the administration. In India, we have the
supremacy of Constitution and the Supreme Court is vested with the authority to
interpret it.
Ø The courts through their various decisions on the exercise of power by the
administration, the liability of the government in case of breach of contract or
tortuous acts of Governments servants lay down administrative law which guide
their future conduct.
Administrative Discretion
• It means the freedom of an administrative authority to choose from amongst
various alternatives but with reference to rules of reason and justice and not
according to personal whims. The exercise of discretion should not be arbitrary,
vague and fanciful, but legal and regular.
4.3
Administrative Law
• The government cannot function without the exercise of some discretion by its
officials. It is necessary because it is humanly impossible to lay down a rule for every
conceivable eventuality that may arise in day to-day affairs of the government. It is,
however, equally true that discretion is prone to abuse. Therefore there needs to
be a system in place to ensure that administrative discretion is exercised in the right
manner.
• Freedom to choose from various alternatives allows the administration to fashion its
best response to various situations. If a certain rule is found to be unsuitable in
practice, the administration can change, amend or abrogate it without much delay.
Even if the administration is dealing with a problem on a case to case basis it can
change its approach according to the exigency of situation and the demands of
justice.
Judicial Control over Administrative Actions

In India the modes of judicial control of administrative action can be conveniently
grouped into three heads
A. CONSTITUTIONAL
• The Constitution of India is supreme and all the organs of state derive their
existence from it.
• Consequently, an Act passed by the legislature is required to be in conformity
with the requirements of the Constitution and it is for the judiciary to decide
whether or not that Act is in conformity with the Constitutional requirements. If
it is found in violation of the Constitutional provisions the Court has to declare it
unconstitutional and therefore, void.
Judicial Review
Ø Judicial review is the authority of Courts to declare void the acts of the
legislature and executive, if they are found in violation of provisions of the
Constitution.
Ø Judicial Review is the power of the highest Court of a jurisdiction to
invalidate on Constitutional grounds, the acts of other Government agency
within that jurisdiction.
Ø The doctrine of judicial review has been originated and developed by the
American Supreme Court
Ø The judicial review is not an appeal from a decision but a review of the manner
in which the decision has been made. The judicial review is concerned not with
the decision but with the decision making process.
Ø The power of judicial review controls not only the legislative but also the
executive or administrative act.
Ø The Court interferes when the uncontrolled and unguided discretion is vested in
the executive or administrative authorities or the repository of the power abuses
its discretion.
4.4
Administrative Law
In Mansukhlal Vithaldas Chauhan v State of Gujarat, AIR 1997 SC 3400, the

Supreme Court held that while exercising the power of judicial review it does sit
as a court of appeal but merely reviews the manner in which the decision was
made, particularly as the court lacks the expertise to correct the administrative
decision and if a review of the administrative decision is permitted, it will be
substituting its own decision which itself may Constitutional Statutory Ordinary
or Equitable be fallible. The court is to confine itself to the question of legality. Its
concern should be:
1. whether a decision making authority exceeding its power?
2. committed an error of law?
3. committed a breach of rules of natural justice?
4. reached a decision which no reasonable tribunal would have reached, or
5. abused its power?
Judicial review is exercised at two stages:
1. Judicial review at the stage of delegation of discretion
The court exercise control over delegation of discretionary powers to the

administration by adjudicating upon the constitutionality of the law under which
such powers are delegated with reference to the fundamental rights enunciated in Part
III of the Indian Constitution. Therefore, if the law confers vague and wide
discretionary power on any administrative authority, it may be declared ultra vires
Article 14, Article 19 and other provisions of the Constitution
In certain situations, the statute though does not give discretionary power to the
administrative authority to take action, may still give discretionary power to frame
rules and regulations affecting the rights of citizens. The court can control the
bestowing of such discretion on the ground of excessive delegation. The fundamental
rights thus provide a basis to the judiciary in India to control administrative discretion
to a large extent.
Administrative Discretion and Article 14
Ø Article14 of the Constitution of India provides for equality before law. It prevents
arbitrary discretion being vested in the executive.
Ø Article 14 strikes at arbitrariness in state action and ensures fairness and equality of
treatment. Right to equality affords protection not only against discretionary laws
passed by legislature but also prevents arbitrary discretion being vested in the
executive.
4.5
Administrative Law
Ø In a number of cases, the statute has been challenged on the ground that it
conferred on an administrative authority wide discretionary powers of selecting
persons or objects discriminately and therefore, it violated Article 14. The Court in
determining the question of validity of such statute examines whether the statute
has laid down any principle or policy for the guidance of the exercise of discretion by
the government in the matter of selection or classification. The Court will not
tolerate the delegation of uncontrolled power in the hands of Executive to such an
extent as to enable it to discriminate.
Ø In State of West Bengal v. Anwar Ali, AIR 1952 SC 75 it was held that in so far as the
Act empowered the Government to have cases or class of offences tried by special
courts, it violated Article 14 of the Constitution. The court further held the Act
invalid as it laid down “no yardstick or measure for the grouping either of persons or
of cases or of offences” so as to distinguish them from others outside the purview of
the Act. Moreover, the necessity of “speedier trial” was held to be too vague,
uncertain and indefinite criterion to form the basis of a valid and reasonable
classification
Administrative Discretion and Article 19
Ø Article 19 guarantees certain freedoms to the citizens of India, but they are not
absolute. Reasonable restrictions can be imposed on these freedoms under the
authority of law.
Ø In Dr. Ram Manohar v. State of Delhi, AIR 1950 SC 211, where the D.M. was
empowered under East Punjab Safety Act, 1949, to make an order of externment
from an area in case he was satisfied that such an order was necessary to prevent a
person from acting in any way prejudicial to public peace and order, the Supreme
Court upheld the law conferring such discretion on the executive on the grounds,
inter alia, that the law in the instant case was of temporary nature and it gave a right
to the externee to receive the grounds of his externment from the executive.
Ø In a large number of cases, the question as to how much discretion can be conferred
on the executive to control and regulate trade and business has been raised. The
general principle laid down is that the power conferred on the executive should
not be arbitrary, and that it should not be left entirely to the discretion of any
authority to do anything it likes without any check or control by any higher
authority.
Ø Where the Act provides some general principles to guide the exercise of discretion
and thus saves it from being arbitrary and unbridled, the court will uphold it, but
where the executive has been granted unfettered power to interfere with the
freedom of property or trade and business, the court will strike down such provision
of law.
2. Judicial review at the stage of exercise of discretion
4.6
Administrative Law
Ø No law can clothe administrative action with a complete finality even if the law says
so, for the courts always examine the ambit and even the mode of its exercise to
check its conformity with fundamental rights.
Ø The courts in India have developed various formulations to control the exercise of
administrative discretion, which can be grouped under two broad heads, as under:
a) Authority has not exercised its discretion properly- ‘abuse of discretion’.
i. Mala fides:
Ø If the discretionary power is exercised by the authority with bad faith or
dishonest intention, the action is quashed by the court.
Ø Malafide exercise of discretionary power is always bad and taken as
abuse of discretion.
Ø Malafide (bad faith) may be taken to mean dishonest intention or corrupt
motive. In relation to the exercise of statutory powers it may be said to
comprise dishonesty (or fraud) and malice.
Ø A power is exercised fraudulently if its repository intends to achieve an
object other than that for which he believes the power to have been
conferred.
Ø The intention may be to promote another public interest or private
interest.
Ø In Tata Cellular v. Union of India, AIR 1996 SC 11 the Supreme Court has
held that the right to refuse the lowest or any other tender is always
available to the Government but the principles laid down in Article 14 of
the Constitution have to be kept in view while accepting or refusing a
tender. There can be no question of infringement of Article 14 if the
Government tries to get the best person or the best quotation. The right to
choose cannot be considered to be an arbitrary power.
ii. Irrelevant considerations:
Ø If a statute confers power for one purpose, its use for a different purpose
is not regarded as a valid exercise of power and is likely to be quashed by
the courts.
Ø If the administrative authority takes into account factors, circumstances
or events wholly irrelevant or extraneous to the purpose mentioned in
the statute, then the administrative action is vitiated.
iii. Leaving out relevant considerations:
The administrative authority exercising the discretionary power is
required to take into account all the relevant facts. If it leaves out relevant
consideration, its action will be invalid.
iv. Arbitrary orders:
The order made should be based on facts and cogent reasoning and not on
the whims and fancies of the adjudicatory authority.
v. Improper purpose:
4.7
Administrative Law
The discretionary power is required to be used for the purpose for which
it has been given. If it is given for one purpose and used for another
purpose it will amount to abuse of power.
vi. Colourable exercise of power:
Where the discretionary power is exercised by the authority on which it
has been conferred ostensibly for the purpose for which it has been given
but in reality for some other purpose, it is taken as colourable exercise of
the discretionary power and it is declared invalid.
vii. Non-compliance with procedural requirements and principles of
natural justice:
If the procedural requirement laid down in the statute is mandatory and it
is not complied, the exercise of power will be bad. Whether the
procedural requirement is mandatory or directory is decided by the court.
Principles of natural justice are also required to be observed.
viii. Exceeding jurisdiction:
The authority is required to exercise the power within the limits or the
statute. Consequently, if the authority exceeds this limit, its action will be
held to be ultra vires and, therefore, void.
b) Authority is deemed not to have exercised its discretion at all- ‘non-application

of mind
i. Acting under dictation:
Ø Where the authority exercises its discretionary power under the
instructions or dictation from superior authority it is taken as non-
exercise of power by the authority and its decision or action is bad.
Ø In such condition the authority purports to act on its own but in
substance the power is not exercised by it but by the other authority. The
authority entrusted with the powers does not take action on its own
judgment and does not apply its mind.
ii. Self restriction:
Ø If the authority imposes fetters on its discretion by announcing rules of
policy to be applied by it rigidly to all cases coming before it for decision,
its action or decision will be bad.
Ø The authority entrusted with the discretionary power is required to
exercise it after considering the individual cases and the authority should
not imposes fetters on its discretion by adopting fixed rule of policy to be
applied rigidly to all cases coming before it.
iii. Acting mechanically and without due care:
Non-application of mind to an issue that requires an exercise of discretion
on the part of the authority will render the decision bad in law.
B. STATUTORY
4.8
Administrative Law
The method of statutory review can be divided into two parts:
1. Statutory appeals: There are some Acts, which provide for an appeal from statutory
tribunal to the High Court on point of law. e.g. Section 30 Workmen’s Compensation
Act, 1923.
2. Reference to the High Court or statement of case: There are several statutes,
which provide for a reference or statement of case by an administrative tribunal to
the High Court. Under Section 256 of the Income-tax Act, 1961 where an application
is made to the Tribunal by the assessee and the Tribunal refuses to state the case the
assessee may apply to the High Court and if the High Court is not satisfied about the
correctness of the decision of the Tribunal, it can require the Tribunal to state the
case and refer it to the Court.
C. ORDINARY OR EQUITABLE
The ordinary courts in exercise of the power provide the ordinary remedies under the
ordinary law against the administrative authorities. These remedies are also called
equitable remedies and include:
1. Injunction
An injunction is a preventive remedy. It is a judicial process by which one who has

invaded or is threatening to invade the rights of another is restrained from continuing
or commencing such wrongful act.
In India, the law with regard to injunctions has been laid down in the Specific Relief Act,
1963.
An action for declaration lies where a jurisdiction has been wrongly exercised or where
the authority itself was not properly constituted. Injunction is issued for restraining a
person to act contrary to law or in excess of its statutory powers.
An injunction can be issued to both administrative and quasi-judicial bodies.
Injunction is highly useful remedy to prevent a statutory body from doing an ultra vires
act, apart from the cases where it is available against private individuals e.g. to restrain
the commission or torts, or breach of contract or breach of statutory duty.
Injunction may be prohibitory or mandatory.
a) Prohibitory Injunction:
Prohibitory injunction forbids the defendant to do a wrongful act, which would
infringe the right of the plaintiff. A prohibitory injunction may be interlocutory or
temporary injunction or perpetual injunction.
i. Interlocutory or temporary injunction:
Ø Temporary injunctions are such as to continue until a specified time or
until the further order of the court.
4.9
Administrative Law
Ø It is granted as an interim measure to preserve status quo until the case is

heard and decided.
Ø Temporary injunction may be granted at any stage of a suit.
Ø Temporary injunctions are regulated by the Civil Procedure Code and are
provisional in nature.
Ø It does not conclude or determine a right.
Ø Besides, a temporary injunction is a mere order. The granting of
temporary injunction is a matter of discretion of the court.
ii. Perpetual injunction:
Ø A perpetual injunction is granted at the conclusion of the proceedings and
is definitive of the rights of the parties, but it need not be expressed to
have perpetual effect
Ø It may be awarded for a fixed period or for a fixed period with leave to
apply for an extension or for an indefinite period terminable when
conditions imposed on the defendant have been complied with; or its
operation may be suspended for a period during which the defendant is
given the opportunity to comply with the conditions imposed on him, the
plaintiff being given leave to reply at the end of that time.
b) Mandatory injunction:
When to prevent the breach of an obligation it is necessary to compel the
performance of certain acts which the court is capable of enforcing, the court may in
its discretion grant an injunction to prevent the breach complained of and also to
compel performance of the requisite acts.
The mandatory injunction may be taken as a command to do a particular act to
restore things to their former condition or to undo, that which has been done. It
prohibits the defendant from continuing with a wrongful act and also imposes duty
on him to do a positive act.
2. Declaratory Action
Ø In some cases where wrong has been done to a person by an administrative act,
declaratory judgments may be the appropriate remedy.
Ø Declaration may be taken as a judicial order issued by the court declaring rights
of the parties without giving any further relief.
Ø Thus a declaratory decree declares the rights of the parties. In such a decree
there is no sanction, which an ordinary judgment prescribes against the
defendant.
Ø By declaring the rights of the parties it removes the existing doubts about the
rights and secures enjoyment of the rights. It is an equitable remedy. It is a
discretionary remedy and cannot be claimed as a matter of right.
3. Action for damages
4.10
Administrative Law
If any injury is caused to an individual by wrongful or negligent acts of the

Government servant, the aggrieved person can file suit for the recovery of damages
from the Government concerned.
Principles of Natural Justice

• Natural justice is a concept of Common Law and represents
procedural principles developed by judges. Though it enjoys no
express constitutional status, it is one of the most important
concepts that ensure that people retain their faith in the system of
adjudication.
• Principles of natural justice are not precise rules of unchanging content; their scope
varies according to the context. Nevertheless it provides the foundation on which
the whole super-structure of judicial control of administrative action is based
• In the course of time many sub-rules were added.
1. Rule against bias (nemojudex in causa sua):
Ø According to this rule no person should be made a judge in his own cause.
Ø Bias means an operative prejudice whether conscious or unconscious in relation
to a party or issue. It is a presumption that a person cannot take an objective
decision in a case in which he has an interest.
Ø The rule against bias has two main aspects- one, that the judge must not have
any direct personal stake in the matter at hand and two, there must not be any
real likelihood of bias.
Ø Bias can be of the following three types:
a) Pecuniary bias: The judicial approach is unanimous on the point that any
financial interest of the adjudicatory authority in the matter, howsoever
small, would vitiate the adjudication. Thus a pecuniary interest, howsoever
insufficient, will disqualify a person from acting as a Judge.
b) Personal bias: There are number of situations which may create a personal
bias in the Judge’s mind against one party in dispute before him. He may be
friend of the party, or related to him through family, professional or business
ties. The judge might also be hostile to one of the parties to a case. All these
situations create bias either in favour of or against the party and will operate
as a disqualification for a person to act as a Judge.
The leading case on the matter of personal bias is Mineral Development Ltd. V.
State of Bihar, AIR 1960 SC 468. In this case, the petitioner company was
owned by Raja Kamakhya Narain Singh, who was a lessee for 99 years of
3026 villages, situated in Bihar, for purposes of exploiting mica from them.
The Minister of Revenue acting under Bihar Mica Act cancelled his license.
The owner of the company Raja Kamakhya Narain Singh, had opposed the
minister in general election of 1952 and the minister had filed a criminal case
under section 500, Indian Penal Code, against him. The act of cancellation by
the Minister was held to be a quasi- judicial act. Since the personal rivalry
4.11
Administrative Law
between the owner of the petitioner’s company and the minister concerned
was established, the cancellation order became vitiated in law.
c) Subject matter bias: A judge may have a bias in the subject matter, which
means that he himself is a party, or has some direct connection with the
litigation. To disqualify on the ground of bias there must be intimate and
direct connection between adjudicator and the issues in dispute. To vitiate
the decision on the ground of bias as for the subject matter there must be real
likelihood of bias. Such bias can be classified into four categories.
• Partiality or connection to the issue
• Departmental bias
• Prior utterances and pre-judgment of issues
• Acting under dictation
2. Rule of fair hearing (audi alteram partem):
Ø The second principle of natural justice is audi alteram partem (hear the other
side) i.e. no one should be condemned unheard. It requires that both sides should
be heard before passing the order.
Ø This rule implies that a person against whom an order to his prejudice is passed
should be given information as to the charges against him and should be given
opportunity to submit his explanation thereto.
Ø Following are the ingredients of the rule of fair hearing:
a) Right to notice:
• Hearing starts with the notice by the authority concerned to the affected
person. Unless a person knows the case against him, he cannot defend
himself. Therefore, before the proceedings start, the authority concerned
is required to give to the affected person the notice of the case against
him.
• The proceedings started without giving notice to the affected party, would
violate the principles of natural justice.
• The notice is required to be served on the concerned person properly.
• However, the omission to serve notice would not be fatal if the notice has
not been served on the concerned person on account of his own fault. The
notice must give sufficient time to the person concerned to prepare his
case.
• The notice must be adequate and reasonable.
• The notice is required to be clear and unambiguous. If it is ambiguous or
vague, it will not be treated as reasonable or proper notice.
• If the notice does not specify the action proposed to be taken, it is taken as
vague and therefore, not proper.
b) Right to present case and evidence: The party against whom proceedings
have been initiated must be given full opportunity to present his or her case
4.12
Administrative Law
and the evidence in support of it. The reply is usually in the written form and
the party is also given an opportunity to present the case orally though it is
not mandatory.
c) Right to rebut adverse evidence: For the hearing to be fair the adjudicating
authority is not only required to disclose to the person concerned the
evidence or material to be taken against him but also to provide an
opportunity to rebut the evidence or material.
1. Cross-examination:
Examination of a witness by the adverse party is called cross-
examination. The main aim of cross-examination is the detection of
falsehood in the testimony of the witness.
The rules of natural justice say that evidence may not be read against a
party unless the same has been subjected to cross-examination or at least
an opportunity has been given for cross examination.
2. Legal Representation:
• Ordinarily the representation through a lawyer in the administrative
adjudication is not considered as an indispensable part of the fair hearing.
However, in certain situations denial of the right to legal representation
amounts to violation of natural justice.
• Thus where the case involves a question of law or matter which is
complicated and technical or where the person is illiterate or expert
evidence is on record or the prosecution is conducted by legally trained
persons, the denial of legal representation will amount to violation of
natural justice because in such conditions the party may not be able to
meet the case effectively and therefore he must be given the opportunity
to engage professional assistance to make his right to be heard
meaningful.
d) Disclosure of evidence: A party must be given full opportunity to explain

every material that is sought to be relied upon against him. Unless all the
material (e.g. reports, statements, documents, evidence) on which the
proceeding is based is disclosed to the party, he cannot defend himself
properly.
e) Speaking orders:
• When the adjudicatory bodies give reasons in support of their decisions, the
decisions are treated as reasoned decision. It is also called speaking order.
• Reasoned decision introduces a check on the administrative powers because
the decisions need to be based on cogent reasons. It excludes or at least
minimizes arbitrariness. It has been asserted that a part of the principle of
natural justice is that a party is entitled to know the reason for the decision
apart from the decision itself.
• Reason based judgments and orders allow the party affected by it to go into
the merits of the decision and if not satisfied, exercise his right to appeal
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Administrative Law
against the judgment/ order. In the absence of reasons, he might not be able
to effectively challenge the order.
• In Sunil Batra v. Delhi administration AIR 1980 SC 1579, the Supreme Court
while interpreting section 56 of the Prisons Act, 1894, observed that there is
an implied duty on the jail superintendent to give reasons for putting bar
fetters on a prisoner to avoid invalidity of that provision under Article 21 of
the constitution. Thus the Supreme Court laid the foundation of a sound
administrative process requiring the adjudicatory authorities to substantiate
their order with reasons.
Exceptions to Natural Justice

1. Statutory Exclusion:
Ø The principle of natural justice may be excluded by the statutory provision.
Ø Where the statute is silent as to the observance of the principle of natural justice,
such silence is taken to imply the observance thereto.
Ø However, the principles of natural justice are not incapable of exclusion. The
statute may exclude them.
Ø When the statute expressly or by necessary implication excludes the application
of the principles of natural justice the courts do not ignore the statutory
mandate.
Ø But one thing may be noted that in India, Parliament is not supreme and
therefore statutory exclusion is not final. T
Ø he statute must stand the test of constitutional provision.
Ø Even if there is no provision under the statute for observance of the principle of
natural justice, courts may read the requirement of natural justice for sustaining
the law as constitutional.
2. Emergency:
Ø In exceptional cases of urgency or emergency where prompt and preventive
action is required the principles of natural justice need not be observed.
Ø Thus, the pre-decisional hearing may be excluded where the prompt action is
required to be taken in the interest of the public safety or public morality and
any delay in administrative order because of pre-decisional hearing before the
action may cause injury to the public interest and public safety.
Ø However, the determination of the situation requiring the exclusion of the rules
of natural justice by the administrative authorities is not final and the court may
review such determination.
Ø In Maneka Gandhi v. Union of India (AIR 1978 SC 597) the Supreme Court
observed that a passport may be impounded in public interest without
compliance with the principles of natural justice but as soon as the order
impounding the passport has been made, an opportunity of post decisional
hearing, remedial in aim, should be given to the person concerned. In the case, it
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Administrative Law
has also been held that “public interest” is a justiciable issue and the
determination of administrative authority on it is not final.
3. Interim disciplinary action:
Ø The rules of natural justice are not attracted in the case of interim disciplinary
action.
Ø For example, the order of suspension of an employee pending an inquiry against
him is not final but interim order and the application of the rules of natural
justice is not attracted in the case of such order.
Ø In Abhay Kumar v. K. Srinivasan AIR 1981 Delhi 381 an order was passed by the
college authority debarring the student from entering the premises of the college
and attending the class till the pendency of a criminal case against him for
stabbing a student. The Court held that the order was interim and not final. It
was preventive in nature. It was passed with the object to maintain peace in the
campus. The rules of natural justice were not applicable in such case.
4. Academic evaluation:
Where a student is removed from an educational institution on the grounds of
unsatisfactory academic performance, the requirement of pre-decisional hearing is
excluded. The Supreme Court has made it clear that if the competent academic
authority assess the work of a student over the period of time and thereafter declare
his work unsatisfactory the rule of natural justice may be excluded but this exclusion
does not apply in the case of disciplinary matters.
5. Impracticability:
Ø Where the authority deals with a large number of person it is not practicable to
give all of them opportunity of being heard and therefore in such condition the
court does not insist on the observance of the rules of natural justice.
Ø In P. Radhakrishna v. Osmania University, AIR 1974 AP 283, the entire M.B.A.
entrance examination was cancelled on the ground of mass copying. The court
held that it was not possible to give all the examinees the opportunity of being
heard before the cancellation of the examination.
Effect of Failure of Natural Justice

• Generally speaking, a voidable order means that the order was legally valid at its
inception, and it remains valid until it is set aside or quashed by the courts, that is, it
has legal effect up to the time it is quashed.
• On the other hand, a void order is no order at all from its inception; it is a nullity and
void ab initio.
• In most cases a person affected by such an order cannot be sure whether the order is
really valid or not until the court decided the matter. Therefore, the affected person
cannot just ignore the order treating it as a nullity. He has to go to a Court for an
authoritative determination as to the nature of the order is void.
• The most significant case in the series is Nawabkhan v. Gujarat. Section 56 of the
Bombay Police Act, 1951 empowers the Police Commissioner to extern any
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Administrative Law
undesirable person on certain grounds set out therein. An order passed by the
Commissioner on the petitioner was disobeyed by him and he was prosecuted for
this in a criminal court. During the pendency of his case, on a writ petition filed by
the petitioner, the High Court quashed the internment order on the ground of failure
of natural justice. The trial court then acquitted the appellant. The government
appealed against the acquittal and the High Court convicted him for disobeying the
order. The High Court took the position that the order in question was not void ab
initio; the appellant had disobeyed the order much earlier than date it was infringed
by him; the High Court’s own decision invalidating the order in question was not
retroactive and did not render it a nullity from its inception but it was invalidate
only from the date the court declared it to be so by its judgment. However, the
matter came in appeal before the Supreme Court, which approached the matter from
a different angle. The order of internment affected a Fundamental Right (Article 19)
of the appellant in a manner which was not reasonable. The order was thus illegal
and unconstitutional and hence void. The court ruled definitively that an order
infringing a constitutionally guaranteed right made without hearing the party
affected, where hearing was required, would be void ab initio and ineffectual to bind
the parties from the very beginning and a person cannot be convicted for non
observance of such an order. The Supreme Court held that where hearing is
obligated by statute which affects the fundamental right of a citizen, the duty to give
the hearing sound in constitutional requirement and failure to comply with such a
duty is fatal.
Liability of State or Government in Contract

According to its provisions a contract with the Government of the Union or state will be
valid and binding only if the following conditions are followed:
1. The contract with the Government must be made in the name of the President or
the Governor, as the case may be.
2. The contract must be executed on behalf of the President or the Governor of the
State as the case may be. The word executed indicates that a contract with the
Government will be valid only when it is in writing.
3. A person duly authorized by the President or the Governor of the State, as the
case may be, must execute the contract.
Article 299 (2) of the Constitution makes it clear that neither the President nor the
Governor shall be personally liable in respect of any contract or assurance made or
executed for the purposes of the Constitution or for the purposes of any enactment
relating to the Government of India. Subject to the provisions of Article 299 (1), the
other provisions of the general law of contract apply even to the Government contract.
The Supreme Court has made it clear that the provisions of Article 299 (1) are
mandatory and therefore the contract made in contravention thereof is void and
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Administrative Law
therefore cannot be ratified and cannot be enforced even by invoking the doctrine of
estoppel.
According to section 65 of the Indian Contract Act, 1872, when an agreement is

discovered to be void, or when a contract becomes void, any person who has received
any advantage under such agreement or contract is bound to restore it, or to make
compensation for it to the person from whom he received it. Therefore if the agreement
with the Government is void as the requirement of Article 299(1) have not been
complied, the party receiving the advantage under such agreement is bound to restore it
or to make compensation for it to the person from whom he has received it.
Effect of a valid contract with Government

As soon as a contract is executed with the Government in accordance with Article 299,
the whole law of contract as contained in the Indian Contract Act, 1872 comes into
operation. In India the remedy for the breach of a contract with Government is simply a
suit for damages.
Earlier the writ of mandamus could not be issued for the enforcement of contractual
obligations but the Supreme Court in its pronouncement in Gujarat State Financial
Corporation v. Lotus Hotels, 1983 3 SCC 379, has taken a new stand and held that the writ
of mandamus can be issued against the Government or its instrumentality for the
enforcement of contractual obligations. The Court ruled that it cannot be contended that
the Government can commit breach of a solemn undertaking on which other side has
acted and then contend that the party suffering by the breach of contract may sue for
damages and cannot compel specific performance of the contract through mandamus.
Quasi-Contractual Liability
Ø According to section 70 of the Indian Contracts Act, 1872, where a person lawfully
does anything for another person or delivers anything to him such other person
enjoys the benefit thereof, the latter is bound to make compensation to the former in
respect of or to restore, the thing so done or delivered.
Ø If the requirements of section 70 of the Indian Contract Act are fulfilled, even the
Government will be liable to pay compensation for the work actually done or
services rendered by the State.
Ø Section 70 is not based on any subsisting contract between the parties but is based
on quasi-contract or restitution.
Ø Section 70 enables a person who actually supplies goods or renders some services
not intending to do gratuitously, to claim compensation from the person who enjoys
the benefit of the supply made or services rendered. It is a liability, which arise on
equitable grounds even though express agreement or contract may not be proved.
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Administrative Law
Suit against State in Torts

Ø A tort is a civil wrong arising out of breach of a civil duty or breach of non-
contractual obligation and the only remedy for which is damages.
Ø The essential requirement for the tort is beach of duty towards people in general.
Ø Although tort is a civil wrong, yet it would be wrong to think that all civil wrongs are
torts.
Ø A civil wrong which arises out of the breach of contact cannot be put in the category
of tort as it is different from a civil wrong arising out of the breach of duty towards
public in general.
Ø When the responsibility of the act of one person falls on another person, it is called
vicarious liability. For example, when the servant of a person harms another person
through his act, we held the servant as well as his master liable for the act done by
the servant.
Ø Similarly, sometimes the state is held vicariously liable for the torts committed by its
servants in the exercise of their duty. The State would of course not be liable if the
acts done were necessary for protection life or property. Acts such as judicial or
quasi-judicial decisions done in good faith would not invite any liability.
Ø There are specific statutory provisions which protect the administrative authorities
from liability. Such protection, however, would not extend to malicious acts. The
burden of proving that an act was malicious would lie on the person who assails the
administrative action.
Ø The principles of law of torts would apply in the determination of what is a tort and
all the defenses available to the respondent in a suit for tort would be available to
the public servant also.
Ø In India Article 300 of the Constitution declares that the Government of India or of a
State may be sued for the tortious acts of its servants in the same manner as the
Dominion of India and the corresponding provinces could have sued or have been
sued before the commencement of the Constitution. This rule is, however, subject to
any such law made by the Parliament or the State Legislature.
The first important case involving the tortious liability of the Secretary of State for
India-in-Council was raised in P. and O. Steam Navigation v. Secretary of State for
India (5 Bom HCR App 1). The question referred to the Supreme Court was whether
the Secretary of State for India is liable for the damages caused by the negligence of
the servants in the service of the Government. The Supreme Court answered the
question in the affirmative. The Court pointed out the principle of law that the
Secretary of State for India in Council is liable for the damages occasioned by the
negligence of Government servants, if the negligence is such as would render an
ordinary employer liable. According to the principle laid down in this case the
Secretary of State can be liable only for acts of non sovereign nature, liability will not
accrue for sovereign acts. The Court admitted the distinction between the sovereign
and non sovereign functions of the government and said that here was a great and
4.18
Administrative Law
clear distinction between acts done in exercise of what are termed sovereign
powers, and acts done in the conduct of undertakings which might be carried on by
private individuals without having such powers delegated to them
Then came the important case of Kasturi Lal v. State of U. P., AIR 1965 SC 1039, where
the Government was not held liable for the tort committed by its servant because
the tort was said to have been committed by him in the course of the discharge of
statutory duties. The statutory functions imposed on the employee were referable to
and ultimately based on the delegation of sovereign powers of the State. The Court
held that the 140 EP-JI&GL Government was not liable as the activity involved was a
sovereign activity. The Court affirmed the distinction between sovereign and non-
sovereign function drawn in the P. and O. Steam Navigation’s case.
Damages
Ø It may happen that a public servant may be negligent in exercise of his duty. It may,
however, be difficult to recover compensation from him. From the point of view of
the aggrieved person, compensation is more important than punishment. Therefore,
like all other employers the State must be made vicariously liable for the wrongful
acts of its servants.
Ø The Courts in India are now becoming conscious about increasing cases of excesses
and negligence on the part of the administration resulting in the negation of
personal liberty.
Ø Hence, they are coming forward with the pronouncements holding the Government
liable for damages even in those cases where the plea of sovereign function could
have negative the governmental liability.
One such pronouncement came in the case of Rudal Shah v. State of Bihar, AIR 1983 SC
1036. Here the petitioner was detained illegally in the prison for over fourteen years
after his acquittal in a full dressed trail. The court awarded Rs. 30,000 as damages to the
petitioner.
Another landmark case namely, C. Ramkonda Reddy v. State, AIR 1989 AP 235, has been
decided by the Andhra Pradesh, in which State plea of sovereign function was turned
down and damages were awarded despite its being a case of exercise of sovereign
function.
Liability of the Public Servant

Ø Liability of the State must be distinguished from the liability of individual officers of
the State. So far as the liability of individual officers is concerned, if they have acted
outside the scope of their powers or have acted illegally, they are liable to same
extent as any other private citizen would be. The ordinary law of contact or torts or
criminal law governs that liability.
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Administrative Law
Ø An officer acting in discharge of his duty without bias or malafides could not be held
personally liable for the loss caused to other person. However, such acts have to be
done in pursuance of his official duty and they must not be ultra vires his powers.
Where a public servant is required to be protected for acts done in the course of his
duty, special statutory provisions are made for protecting them from liability.
Liability of Public Corporation

The term ‘Statutory Corporation’ (or Public Corporation) refers to such organisations
which are incorporated under the special Acts of the Parliament/State Legislative
Assemblies.
Its management pattern, its powers and functions, the area of activity, rules and
regulations for its employees and its relationship with government departments, etc.
are specified in the concerned Act.
It may be noted that more than one corporation can also be established under the same
Act.
The main features of Statutory Corporations are as follows:
Ø The principal benefits of the Public Corporation as an organizational device are

its freedom from government regulations and controls and its high degree of
operating and financial flexibility.
Ø In this form, there is a balance between the autonomy and flexibility enjoyed by
private enterprise and the responsibility to the public as represented by elected
members and legislators.
Ø The public corporation (statutory corporation) is a body having an entity
separate and independent from the Government. It is not a department or organ
of the Government.
Ø Consequently, its employees are not regarded as Government servants and
therefore they are not entitled to the protection of Article 311 of the
Constitution.
Ø It is to be also noted that a public corporation is included within the meaning of
‘State’ under Article12 and therefore the Fundamental Rights can be enforced
against it.
Ø Public corporation are included with the meaning of ‘other authorities’ and
therefore it is subject to the writ jurisdiction of the Supreme Court under Article
32 and of the High Court under Article 226 of the Constitution.
Ø For the validity of the corporation contract, the requirements of a valid contract
laid down in Article 299 are not required to be complied with.
Ø On principles of vicarious liability, corporation is liable to pay damages for
wrong done by their officers or servants.
Ø They are liable even for tort requiring a mental element as an ingredient, e.g.
malicious prosecution.
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Administrative Law
4.21
Law of Torts
LAW OF TORTS
Introduction
• The word tort is derived from Latin language from the
word Tortum.
• "Tort" means a civil wrong which is not exclusively the
breach of a contract or the breach of trust
• Thus, simply stated ‘tort’ means wrong. But every
wrong or wrongful act is not a tort.
• Section 2(m) of the Limitation Act, 1963, states: “Tort means a civil wrong which is
not exclusively a breach of contract or breach of trust.”
• Two important elements can be derived from all the definitions, namely:
(i) that a tort is a species of civil injury of wrong as opposed to a criminal wrong,
and
(ii) that every civil wrong is not a tort.
General Conditions of Liability for a Tort

In general, a tort consists of some act or omission done by the defendant (tortfeasor)
whereby he has without just cause or excuse caused some harm to plaintiff.
To constitute a tort, there must be:
1. Wrongful act:
Ø The act complained of, should under the circumstances, be legally wrongful as
regards the party complaining.
Ø In other words, it should prejudicially affect any of the above mentioned interests,
and protected by law.
Ø Thus, every person whose legal rights are violated without legal excuse, has a
right of action against the person who violated them, whether loss results from
such violation or not.
2. Legal damages:
Ø There must be a damage which the law recognizes as such.
Ø In other words, there should be legal injury or invasion of the legal right. In the
absence of an infringement of a legal right, an action does not lie.
Ø Also, where there is infringement of a legal right, an action lies even though no
damage may have been caused.
Ø Two maxims, namely: (i) Damnum sine injuria, and (ii) injuria sine damnum,
explain this proposition.
i. Damnum Sine Injuria
§ Damnum means harm, loss or damage in respect of money, comfort, health, etc.
§ Injuria means infringement of a right conferred by law on the plaintiff.
5.1
Law of Torts
§ The maxim means that in a given case, a man may have suffered damage and
yet have no action in tort, because the damage is not to an interest protected
by the law of torts.
§ Therefore, causing damage, however substantial to another person is not
actionable in law unless there is also a violation of a legal right of the plaintiff.
§ Thus, if Mr. A owns a shop and Mr. B opens a shop in the neighbourhood, as a
result of which Mr. A loses some customers and his profits fall off, he cannot
sue Mr. B for the loss in profits, because Mr. B is exercising his legal right.
ii. Injuria Sine Damnum
§ It means injury without damage, i.e., where there is no damage resulted yet it
is an injury or wrong in tort, i.e. where there is infringement of a legal right not
resulting in harm but plaintiff can still sue in tort.
§ Thus when there is an invasion of an “absolute” private right of an individual,
there is an injuria and the plaintiff’s action will succeed even if there is no
Damnum or damages..
§ Injuria sine domno covers such cases and action lies when the right is violated
even though no damage has occurred.
§ Thus the act of trespassing upon another’s land is actionable even though it
has not caused the plaintiff even the slightest harm.
Maxim Meaning Tort

Damnum Sine Injuria Damage without Injury Not a tort
Injuria Sine Damnum Injury without Damage Is a tort
3. Legal remedy:
Ø The third condition of liability for a tort is legal remedy. This means that to
constitute a tort, the wrongful act must come under the law.
Ø The main remedy for a tort is an action for unliquidated damages, although
some other remedies, e.g., injunction, may be obtained in addition to damages or
specific restitution may be claimed in an action for the detention of a chattel.
Ø Self-help is a remedy of which the injured party can avail himself without going
to a law court. It does not apply to all torts and perhaps the best example of these
to which it does apply is trespass to land.
Mens Rea
How far a guilty mind of persons is required for liability for
tort?
The General principle lies in the maxim “actus non facit reum nisi mens sit rea” i.e. the act
itself creates no guilt in the absence of a guilty mind. It does not mean that for the law or
Torts, the act must be done with an evil motive, but simply means that mind must concur
in the Act, the act must be done either with wrongful intention or negligence.
Cases of absolute or strict liability are exceptions to this principle.
5.2
Law of Torts
Kinds of Tortious Liability
A. Strict or Absolute Liability

In some torts, the defendant is liable even though the harm to the plaintiff occurred
without intention or negligence on the defendant’s part. In other words, the
defendant is held liable without fault. These cases fall under the following
categories:
i. Liability for Inevitable Accident
Such liability arises in cases where damage is done by the escape of dangerous
substances brought or kept by anyone upon his land. Such cases are where a man is
made by law an insurer of other against the result of his activities.
ii. Liability for Inevitable Mistake
Such cases are where a person interferes with the property or reputation of another.
iii. Vicarious Liability for Wrongs committed by others
Responsibility in such cases is imputed by law on grounds of social policy or
expediency. These case involve liability of master for the acts of his servant.
Rule in Rylands v. Fletcher

The rule in Rylands v. Flethcer is that a man acts at his peril and is the insurer of the
safety of his neighbour against accidental harm. Such duty is absolute because it is
independent of negligence on the part of the defendant or his servants.
It was held in that case that: “If a person brings or accumulates on his land anything
which, if it should escape may cause damage to his neighbours, he does so at his own
peril. If it does not escape and cause damage he is responsible, however careful he may
have been, and whatever precautions he may have taken to prevent damage.”
Later in the caser of Read v. Lyons [(1946) 2 All. E.R. 471 (H.L.)], it has been explained
that two conditions are necessary in order to apply the rule in Ryland v. Fletcher, these
are:
Ø Escape from a place of which the defendant has occupation or over which he has a
control to a place which is outside his occupation or control or something likely to
do mischief if it escapes; and
Ø Non-natural use of Land: The defendant is liable if he makes a non-natural use of
land.
If either of these conditions is absent, the rule of strict liability will not apply
Exceptions to the Rule of Strict Liability
a) Damage due to Natural Use of the Land
5.3
Law of Torts
§ In Ryland v. Fletcher water collected in the reservoir in such large quantity, was
held to be non-natural use of land. Keeping water for ordinary domestic purpose
is ‘natural use’.
§ Things not essentially dangerous which is not unusual for a person to have on his
own land, such as water pipe installations in buildings, the working of mines and
minerals on land, the lighting of fire in a fire-place of a house, and necessary wiring
for supplying electric light, fall under the category of “natural use” of land.
b) Consent of the plaintiff
Where the plaintiff has consented to the accumulation of the dangerous thing on the
defendant’s land, the liability under the rule in Ryland v. Flethcher does not arise. Such
a consent is implied where the source of danger is for the ‘common benefit’ of both
the plaintiff and the defendant.
c) Act of Third Party
§ If the harm has been caused due to the act of a stranger, who is neither defendant’s
servant nor agent nor the defendant has any control over him, the defendant will
not be liable.
§ But if the act of the stranger, is or can be foreseen by the defendant and the damage
can be prevented, the defendant must, by due care prevent the damage. Failure on
his part to avoid such damage will make him liable.
d) Statutory Authority
§ Sometimes, public bodies storing water, gas, electricity and the like are by statute,
exempted from liability so long as they have taken reasonable care.
§ Thus, in Green v. Chelzea Water Works Co. the defendant company had a statutory
duty to maintain continuous supply of water. A main belonging to the company
burst without any fault on its part as a consequence of which plaintiff’s premises
were flooded with water. It was held that the company was not liable as the
company was engaged in performing a statutory duty.
e) Act of God
If an escape is caused, through natural causes and without human intervention
circumstances which no human foresight can provide against and of which human
prudence is not bound to recognize the possibility, there is then said to exist the
defence of Act of God.
f) Escape due to plaintiff’s own Default
Damage by escape due to the plaintiff’s own default was considered to be good
defence in Rylands v. Fletcher itself. Also, if the plaintiff suffers damage by his own
intrusion into the defendant’s property, he cannot complain for the damage so caused.
Applicability of the rule in Rylands v. Fletcher in cases of enterprises engaged in

a hazardous or inherently dangerous industry.
The Supreme Court has discussed the applicability of the rule of Reylands v. Fletcher in
the case of M.C. Mehta v. Union of India and Others. while determining the principles on
5.4
Law of Torts
which the liability of an enterprise engaged in a hazardous or inherently dangerous

industry depended if an accident occurred in such industry.
It held that -
“An enterprise which is engaged in a hazardous or inherently dangerous industry
which poses a potential threat to the health and safety of the persons working in the
factory and residing in the surrounding areas, owes an absolute and non-delegable
duty to the community to ensure that no harm results to anyone on account of
hazardous or inherently dangerous nature of the activity which it has undertaken. The
enterprise must be held to be under an obligation to provide that the hazardous or
inherently dangerous activity in which it is engaged, must be conducted with the
highest standards of safety; and if any harm results on account of such activity, the
enterprise must be absolutely liable to compensate for such harm; and it should be no
answer to the enterprise to say that it had taken all reasonable care and that the harm
occurred without negligence on its part.”
Thus, while imposing absolute liability for manufacture of hazardous substances, the
Supreme Court intended that the requirement of non-natural use or the aspect of
escape of a dangerous substance, commonly regarded as essential for liability under
Rylands v. Fletcher, need not be proved in India.
B. Vicarious Liability
Normally, the tortfeasor is liable for his tort. But in some cases a person may be held
liable for the tort committed by another. This is know as vicarious liability in tort.
The common examples of such a liability are:
a) Principal and Agent [Specific authority]
§ When an agent commits a tort in the ordinary course of his duties as an agent, the
principal is liable for the same.
§ In Lloyd v. Grace, Smith & Co. (1912) A.C. 716, the managing clerk of a firm of
solicitors, while acting in the ordinary course of business committed fraud, against
a lady client by fraudulently inducing her to sign documents transferring her
property to him. He had done so without the knowledge of his principal who was
liable because the fraud was committed in the course of employment.
b) Partners
§ For the tort committed by a partner in the ordinary course of the business of the
firm, all the other partners are liable therefore to the same extent as the guilty
partner. The liability of the partners is joint and several.
§ In Hamlyn v. Houston & Co., one of the two partners bribed the plaintiff’s clerk and
induced him to divulge secrets relating to his employer’s business. It was held that
both the partners were liable for the tort committed by only one of them.
5.5
Law of Torts
c) Master and Servant [Authority by relation]

§ A master is liable for the tort committed by his servant while acting in the course
of his employment. The servant, of course, is also liable; their liability is joint and
several.
§ A master is liable not only for the acts which have been committed by the servant,
but also for acts done by him which are not specifically authorized, in the course
of his employment.
§ The basis of the rule has been variously stated: on the maxim Respondeat
Superior (Let the principal be liable) or on the maxim Qui facit per alium facit
per se (he who does an act through another is deemed to do it himself).
§ The master is liable even though the servant acted against the express
instructions, for the benefit of his master, so long as the servant acted in the course
of employment.
d) Employer and Independent Contractor

§ It is to be remembered that an employer is vicariously liable for the torts of his
servants committed in the course of their employment, but he is not liable for the
torts of those who are his independent contractors.
§ An independent contractor is one who works for another but who is not controlled
by that other in his conduct in the performance of that work.
§ A person is a servant where the employer “retains the control of the actual
performance” of the work.
e) Where Employer is Liable for the acts of Independent Contractor

The employer is not liable merely because an independent contractor commits a tort
in the course of his employment; the employer is liable only if he himself is deemed to
have committed a tort. This may happen in one of the following three ways:
Ø When employer authorizes him to commit a tort.
Ø In torts of strict liability
Ø Negligence of independent contractor
f) Where Employer is not Liable for the acts of an Independent Contractor

§ An employer is not liable for the tort of an independent contractor if he has taken
care in the appointment of the contractor.
§ Employers of independent contractors are liable for the “collateral negligence”
of their contractors in the course of his employment.
§ For example - Where A employed B to fit casement windows into certain
premises. B’s servant negligently put a tool on the still of the window on which he
was working at the time. The wind blew the casement open and the tool was
knocked off the still on to a passer by. The employer was held to be liable, because
the harm was caused by the work on a highway and duty lies upon the employer
to avoid harm.
5.6
Law of Torts
g) Liability for the acts of Servants

§ An employer is liable whenever his servant commits a tort in the course of his
employment. An act is deemed to be done in the course of employment if it is
either:
Ø a wrongful act authorized by the employer, or
Ø a wrongful and unauthorized mode of doing some act authorized by the
employer.
§ In Century Insurance Co. Ltd. v. Northern Ireland Road Transport Board (1942) A.C.
509, the director of a petrol lorry, while transferring petrol from the lorry to an
underground tank at a garage, struck a match in order to light a cigarette and then
threw it, still alight on the floor. An explosion and a fire ensued. The House of Lords
held his employers liable for the damage caused, for he did the act in the course of
carrying out his task of delivering petrol; it was an unauthorized way of doing
what he was employed to do.
C. Vicarious Liability of the State

1. The Position in England
At Common Law the Crown could not be sued in tort, either for wrongs actually
authorized by it or committed by its servants, in the course of their employment.
With the passing of the Crown Proceeding Act, 1947, the Crown is liable for the
torts committed by its servants just like a private individual. Thus, in England, the
Crown is now vicariously liable for the torts of its servants.
2. The Position in India
We have no statutory provision with respect to the liability of the State in India.
When a case of Government liability in tort comes before the courts, the question
is whether the particular Government activity, which gave rise to the tort, was the
sovereign function or non-sovereign function. It is a sovereign function it could
claim immunity from the tortuous liability, otherwise not. Generally, the activities
of commercial nature or those which can be carried out by the private individual
are termed as non-sovereign functions
Torts or wrongs to personal safety and freedom

An action for damages lies in the following kinds of wrongs which are styled as
injuries to the person of an individual:
a) Battery
§ Any direct application of force to the person of another individual without his
consent or lawful justification is a wrong of battery.
§ To constitute a tort of battery, therefore, two things are necessary:
Ø use of force, however, trivial it may be without the plaintiff’s consent, and
Ø without any lawful justification.
5.7
Law of Torts
§ Even though the force used is very trivial and does not cause any harm, the wrong
is committed. Thus, even to touch a person in anger or without any lawful
justification is battery.
b) Assault
§ Assault is any act of the defendant which directly causes the plaintiff immediately
to apprehend a contact with his person.
§ Thus, when the defendant by his act creates an apprehension in the mind of the
plaintiff that he is going to commit battery against him, the tort of assault is
committed.
§ The law of assault is substantially the same as that of battery except that
apprehension of contact, not the contact itself has to be established.
c) Bodily Harm
A willful act (or statement) of defendant, calculated to cause physical harm to the
plaintiff and in fact causing physical harm to him, is a tort.
d) False Imprisonment
§ False imprisonment consists in the imposition of a total restraint for some period,
however short, upon the liberty of another, without sufficient lawful justification.
It means unauthorized restraint on a person’s body.
§ What happens in false imprisonment is that a person is confined within certain
limits so that he cannot move about and so his personal liberty is infringed. It is a
serious violation of a person’s right and liberty whether being confined within the
four walls or by being prevented from leaving place where he is.
§ If a man is restrained, by a threat of force from leaving his own house or an open
field there is false imprisonment.
e) Malicious Prosecution
§ Malicious prosecution consists in instigating judicial proceedings (usually
criminal) against another, maliciously and without reasonable and probable
cause, which terminate in favour of that other and which results in damage to his
reputation, personal freedom or property.
§ The following are the essential elements of this tort:
i. There must have been a prosecution of the plaintiff by the defendant.
ii. There must have been want of reasonable and probable cause for that
prosecution.
iii. The defendant must have acted maliciously (i.e. with an improper motive
and not to further the end of justice).
iv. The plaintiff must have suffered damages as a result of the prosecution.
v. The prosecution must have terminated in favour of the plaintiff.
§ To be actionable, the proceedings must have been instigated actually by the
defendant. If he merely states the fact as he believes them to a policeman or a
5.8
Law of Torts
magistrate he is not responsible for any proceedings which might ensue as a result
of action by such policeman or magistrate on his own initiative.
f) Nervous Shock
This branch of law is comparatively of recent origin. It provides relief when a person
may get physical injury not by an impact, e.g., by stick, bullet or sword but merely by
the nervous shock through what he has seen or heard. Causing of nervous shock itself
is not enough to make it an actionable tort, some injury or illness must take place as a
result of the emotional disturbance, fear or sorrow.
g) Defamation
§ Defamation is an attack on the reputation of a person. It means that something is
said or done by a person which affects the reputation of another.
§ Defamation may be classified into two heads: Libel and Slander.
Ø Libel is a representation made in some permanent form, e.g. written words,
pictures, caricatures, cinema films, effigy, statue and recorded words. In a
cinema films both the photographic part of it and the speech which is
synchronized with it amount to tort.
Ø Slander is the publication of a defamatory statement in a transient form;
statement of temporary nature such as spoken words, or gestures.
§ Generally, the punishment for libel is more severe than for slander.
§ Defamation is tort as well as a crime in India.
§ In India both libel and slander are treated as a crime.
REMEDIES IN TORTS
1. Judicial Remedies
Three types of judicial remedies are available to the plaintiff in an action for tort
namely:
a) Damages,
b) Injunction, and
c) Specific Restitution of Property.
2. Extra Judicial Remedies

In certain cases, it is lawful to redress one’s injuries by means of self help without
recourse to the court. These remedies are:
a) Self Defence
It is lawful for any person to use reasonable forces to protect himself, or any other
person against any unlawful use of force.
b) Prevention of Trespass
An occupier of land or any person with his authority may use reasonable force to
prevent trespassers entering or to eject them but the force should be reasonable
for the purpose.
5.9
Law of Torts
c) Re-entry on Land
A person wrongfully disposed of land may retake possession of land if he can do
so in a peaceful and reasonable manner.
d) Re-caption of Goods
It is neither a crime nor a tort for a person entitled to possession of a chattel to
take it either peacefully or by the use of a reasonable force from one who has
wrongly taken it or wrongfully detained it.
e) Abatement of Nuisance
The occupier of land may lawfully abate (i.e. terminate by his own act), any
nuisance injuriously affecting it.
Thus, he may cut overhanging branches as spreading roots from his neighbour’s
trees, but (i) upon giving notice; (ii) by choosing the least mischievous method;
(iii) avoiding unnecessary damage.
f) Distress Damage Feasant
An occupier may lawfully seize any cattle or any chattel which are unlawfully on
his land doing damage there and detain them until compensation is paid for the
damage. The right is known as that of distress damage feasant-to distrain things
which are doing damage.
5.10
CPC 1908
CODE OF CIVIL PROCEDURE 1908
Laws can be divided into 2 groups:
(i) Substantive law; and

(ii) Procedural law.
Types OF
LAW
Procedural law. Substantive law
Substantive law determines rights and liabilities of parties and procedural or adjective
law prescribes practice, procedure and machinery for the enforcement of those rights and
liabilities. Procedural law is thus an adjunct or an accessory to substantive law.
The Civil Procedure Code consolidates and amends the law relating to the procedure of
the Courts of Civil jurisdiction. The Code of Civil Procedure is an adjective law it neither
creates nor takes away any right. It is intended to regulate the procedure to be followed
by Civil Courts.
Scheme of the code

The Civil Procedure Code consists of two parts. 158 Sections form the first part and the
rules and orders contained in Schedule I form the second part. The object of the Code
generally is to create jurisdiction while the rules indicate the mode in which the
jurisdiction should be exercised. Thus the two parts should be read together, and in case
of any conflict between the body and the rules, the former must prevail.
INSTITUTION OF SUIT
Suit ordinarily is a civil action started by presenting a plaint in duplicate to the Court
containing concise statement of the material facts, on which the party pleading relies for
his claim or defence. In every plaint the facts must be proved by an affidavit.
The main essentials of the suit are –
6.1
CPC 1908
(1) the opposing parties,

(2) the cause of action,
(3) the subject matter of the suit, and
(4) the relief(s) claimed.
The plaint consists of a heading and title, the body of plaint and the relief(s) claimed.
Every suit shall be instituted in the Court of the lowest grade competent to try it, as to be
determined with regard to the subject matter being either immovable or movable
property or to the place of abode or of business or the defendant.
Where a plaintiff omits to sue in respect of or intentionally relinquishes any portion of

his claim, he shall not afterwards sue in respect of the portion so omitted or relinquished.
Misjoinder of Parties – Where more than one persons joined in one suit as plaintiffs or
defendants in whom or against whom any right to relief does not arise or against whom
separate suits are brought, no common question of law or fact would arise, it is a case of
‘misjoinder of parties’.
To avoid such misjoinder, two factors are essential

1. The right to relief must arise out of the same act or transaction brought by the
plaintiffs or against the defendants, there is a common question of law or fact.
2. The Code does not require that all the questions of law or of fact should be common
to all the parties. It is sufficient that if there is one common question.
IMPORTANT STAGES IN PROCEEDINGS OF A SUIT

• Filling of a plaint in the civil court by the plaintiff based on certain cause of action for
claiming rights
• The civil court issues summon to the defendant.
• After receiving summon, the defendant has the opportunities to file reply in the court.
• The civil court starts cross-examination and review the evidence.
• The civil court decides the rights of the parties based on the evidence or written
statement submitted by the plaintiff and defendant.
• The civil court passes decree and judgement.
Cause of action
Cause of action” means every fact that it would be necessary for the plaintiff to prove in
order to support his right to the judgement of the Court. Under Order 2, Rule 2, of the Civil
Procedure Code it means all the essential facts constituting the rights and its
infringement.
A cause of Action is based on 2 factors

i. A Right
ii. An infringement for which relief is claimed.
6.2
CPC 1908
Decree (Sec 2(2))

i. the formal expression of an adjudication which, so far as regards the Court
expressing it; conclusively;
ii. determines the rights of the parties;
iii. with regard to all or any of the matters in controversy;
iv. in the suit and may be either preliminary (i.e. when further proceedings have to
be taken before disposal of the suit) or final
But decree does not include:

a) any adjudication from which an appeal lies as an appeal from an Order, or
b) any order of dismissal for default
Essentials of a decree are:
i. There must be a formal expression of adjudication;
ii. There must be a conclusive determination of the rights of parties;
iii. The determination must be with regard to or any of the matters in contravention
in the suit;
iv. The adjudication should have been given in the suit.
Type of Decree
Preliminary Decree
A decree is preliminary when further proceedings have to be taken before the suit can be
completely disposed of. The preliminary decree is not dependent on the final.
Final Decree
Final decree is dependent and subordinate to the preliminary decree, and gives effect to
it. If the preliminary decree is set aside the final decree is automatically superseded.
Note: Every decree is appealable except those which are specifically barred and even
second appeal is possible in decree.
Decree-holder
“Decree-holder” means any person in whose favour a decree has been passed or an order
capable of execution has been made.
Order [Sec 2(14)]

The formal expression of any decision of a Civil Court which is not a decree. No appeal
lies against orders other than what is expressly provided in the Code or any other law for
the time being in force.
Essential of order:
i. An order can be passed by the court at any time during existence of the suit.
ii. There is no limit for passing an order by the court.
6.3
CPC 1908
iii. No appeal lies against the orders except law provides otherwise.
Interlocutory order
Interlocutory order is given in an intermediate stage between the commencement and

termination of a suit. It is used to provide a temporary or provisional decision on an issue.
Difference between decree and order

Decree Order
It is passed in a suit made on the It is passed in a suit made on the
presentation of plaint presentation of plaint, application and
petition
It has conclusive determination of right It may or may not be conclusive
There can be one decree in a suit. Or max There can be many orders in a suit.
2, if there is a preliminary decree involved
Decrees are always appealable until Orders are generally not appealable until
specifically forbidden by law specifically provided by law
Judgement [Sec 2(9)]

The statement given by the Judge on the grounds of a decree or order. Thus a judgement
must set out the grounds and reasons for the Judge to have arrived at the decision.
Essential elements of Judgement
a) A concise statement of the case

b) The points for determination
c) The decision thereon
d) The reason for the decision
Decree Order Judgement

Sec 2(2) Sec 2(14) Sec(9)
Formal expression of an Formal expression of any Statement given by judge
adjudication which decision of civil court, on the ground of decree or
conclusively determine the which is not decree order.
right of parties with
regarding to the matter in
controversy using suit
Decree can be of 2 types - Judgement set out in the

ground and the reason for
Preliminary
the judge to have arrived at
Final the decision.
Jurisdiction of Courts
6.4
CPC 1908
Jurisdiction means the authority of the court to decide matters that are brought before it
for adjudication.
The jurisdiction of civil court is decided on following basis-

MAIN GROUNDS
(i) Jurisdiction over the subject matter: The jurisdiction to try certain matters by
certain Court is limited by statute; e.g. a small cause court can try suits for money
due under a promissory note or a suit for price of work done.
(ii) Place of suing or territorial jurisdiction: A territorial limit of jurisdiction for
each court is fixed by the Government. Thus, it can try matters falling within the
territorial limits of its jurisdiction.
(iii) Jurisdiction over persons: All persons of whatever nationality are subject to the
jurisdiction of the Civil Courts of the country except a foreign State, its Ruler or its
representative except with the consent of Central Government.
(iv) Pecuniary jurisdiction: depending on pecuniary value of the suit Section 6 deal
with Pecuniary jurisdiction and lays down that save in so far as is otherwise
expressly provide
ADDITIONAL GROUNDS
a) Original Jurisdiction — A Court tries and decides suits filed before it.
b) Appellate Jurisdiction — A Court hears appeals against decisions or decrees passed
by sub-ordinate Courts.
c) Original and appellate Jurisdiction — The Supreme Court, the High Courts and the
District Courts have both original and appellate jurisdiction in various matters.
Appearance of parties and consequence of non-appearance

Appearance and nonappearance is an important issue to settle a dispute. Order 9 of CPC
lays down the provision of consequences of appearance and nonappearance of parties in
a civil cases.
Effect of Nonappearance of parties

Nonappearance of Defendant
* The court may decide the order Ex parte
However,
A defendant has four remedies available if an ex-parte decree is passed against him:
a. He may file an appeal against the ex-parte decree
b. He may file an application for review of the judgement.
c. He may apply for setting aside the ex-parte decree.
d. A suit can also be filed to set aside an ex-parte decree obtained by fraud but no suit
shall lie for non-service of summons.
Nonappearance of plaintiff
* If the defendant accept the claim against him à The defendant will require to meet the
claim
6.5
CPC 1908
* If the defendant does not accept the claim against him à The suit will be dismissed
Note:
a) Ex parte means an order or decree passed on the basis of documents, evidences and
records available in the absence of one party.
b) If both parties do not appear then suit shall be dismissed
IMPORTANT DOCTRINES
STAY OF SUIT (RES SUB JUDICE)
No Court shall proceed with the trial of any suit in which the matter in issue is also directly
and substantially in issue in a previously instituted suit between the same parties or
between parties under whom they or any of them claim, litigating under the same title,
where such suit is pending in the same or any other Court (in India) having jurisdiction
to grant the relief claimed, or in any Court beyond the limits of India established or
continued by the Central Government and having like jurisdiction, or before the Supreme
Court.
OBJECT
• To avoid wastage of time as they are already burdened.
• To avoid wastage of resources of the court.
• To avoid conflicting decisions.
CASE LAW : suit was instituted by the plaintiff company alleging infringement by the
defendant company by using trade name of medicine and selling the same in wrapper and
carton of identical design with same colour combination etc. as that of plaintiff company.
A subsequent suit was instituted in different Court by the defendant company against the
plaintiff company with same allegation. The Court held that subsequent suit should be
stayed as simultaneous trial of the suits in different Courts might result in conflicting
decisions as issue involved in two suits was totally identical (M/s. Wings Pharmaceuticals
(P) Ltd. and another v. M/s. Swan Pharmaceuticals and others)
Conditions for stay of suits

a) There must be two suits instituted at different times;
b) The matter in issue in the later suit should be directly and substantially in issue in the
earlier suit;
c) Such suit should be between the same parties;
d) Such earlier suit is still pending either in the same Court or in any other competent
Court but not before a foreign Court.
Bar on Suits (RES JUDICATA)

Section 11 of the Civil Procedure Code deals with the doctrine of Res Judicata that is, bar
or restraint on repetition of litigation of the same issues. It is a pragmatic principle
6.6
CPC 1908
accepted and provided in law that there must be a limit or end to litigation on the same
issues.
The doctrine underlines the general principle that no one shall be twice vexed for the
same cause (S.B. Temple v. V.V.B. Charyulu).
For the applicability of the principle of res judicata, the following requirements are
necessary:
• There are 2 suits filed at 2 different time
• Both the matters are substantially the same
• Parties are the same
• Previously instituted suit is conclusively decided.
• The court in which previous suit is a competent court.
The doctrine of res judicata is based on the following public policy

i. There should be an end to litigation
ii. The parties to a suit shall not be harassed for the same matters
iii. The time of court should not be wasted over the matters that ought to have been and
should have been decided in the former suit between the parties.
Territorial Jurisdiction of Courts

Every suit shall be instituted in the Court of the lowest grade to try it. Subject to the
pecuniary or other limitations prescribed by any law, the following suits (relating to
property) shall be instituted in the Court within the local limits of whose jurisdiction the
property is situated:
i. for recovery of immovable property
ii. for partition of immovable property
iii. for foreclosure of sale or redemption in the case of a mortgage
iv. for the determination of any other right to or interest in immovable property;
v. for compensation for wrong to immovable property;
vi. for the recovery of movable property
Note:
i. Where immovable property is situated within the jurisdiction of different Courts, the
suit may be filed in any court
ii. Where local limits of jurisdiction of Courts are uncertain, a plaintiff may file suit in
any court and the courts may proceed to entertain the suit after having recorded a
statement to the effect that is satisfied that there is ground for such alleged
uncertainty.
iii. Where wrong done to the person or to movable property, a plaintiff may file a case in
any court on the following grounds:
ü Where wrong is committed
ü Where defendant resides
6.7
CPC 1908
ü Where defendant carries on business.

ü Where the defendant personally works for gain.
Body corporate
In the case of a body corporate or company it shall be deemed to carry on business at its
sole or principal office in India, or in case of any cause of action arising at any other place,
if it has a subordinate office, at such place.
CASE LAW: Where there might be 2 or more competent courts which could entertain a
suit consequent upon a part of cause of action having arisen therewith if the parties to
the contract agreed to vest jurisdiction in one such court to try the dispute. Such an
agreement would be valid (Angile Insulations v. Davy Ashmore India Ltd.)
Set-off, Counter Claim, Equitable set-off
Set-off
Set-off is a reciprocal acquittal of debts between the plaintiff and defendant. It has the
effect of extinguishing the plaintiff’s claim to the extent of the amount claimed by the
defendant as a counterclaim. In short, both parties extinguish their rights and claims.
Where the defendant claims to set off against the plaintiff’s demand, in a suit for recovery
of money, any ascertained sum of money legally recoverable by him from the plaintiff, the
defendant may present a written statement containing the particulars of the debt sought
to be set off.
A defendant may claim set off, if following conditions are satisfied:

ü Suit must be for recovery of money
ü Sum of money must be ascertained
ü Such sum must be legally recoverable by the defendant from plaintiff
ü It must not exceed the pecuniary limits of the court in which the suit is brought.
Effect of Set-off
the written statement shall have the same effect as a plaint in a cross-suit so as to enable
the Court to pronounce a final judgement in respect both of the original claim and of the
set-off, but this shall not affect the lien, upon the amount decreed, of any pleader in
respect of the costs payable to him under the decree.
Equitable set-off
Sometimes, the defendant is permitted to claim set-off in respect of an unascertained sum
of money where the claim arises out of the same transaction, or transactions which can
be considered as one transaction, or where there is knowledge on both sides of an existing
debt due to one party and a credit by the other party found on and trusting to such debt
as a means of discharging it.
6.8
CPC 1908
Generally the suits emerge from cross-demands in the same transaction and this doctrine
is intended to save the defendant from having to take recourse to a separate cross-suit.
In India distinction between legal and equitable set-off is recognised.
Essentials
i. There is no sum specified for claim
ii. The claims must be originated form the same transaction
Difference between Set off and Equitable set off

Set off Equitable set off
The claim is of ascertained amount of The claim can be of ascertained or
money unascertained sum of money
Claims need not arise out of same Both the claims should arise out of same
transaction transaction
It is a right of party It is discretion of the court to grant
equitable set off or not.
Counter-claim
A defendant in a suit may, in addition to his right of pleading a set-off under Rule 6, set up
by way of counterclaim against the claim of the plaintiff, any right or claim in respect of a
cause of action accruing to the defendant against the plaintiff either before or after the
filling of the suit but before the defendant has delivered his defence or before the time
limited for delivering his defence has expired, whether such counter-claim is in the nature
of claim for damages or not. Such counter-claim must be within the pecuniary jurisdiction
of the Court.
Temporary injunction
The Court may grant temporary injunction to restrain any act for the purpose of staying
and preventing the wasting, damaging, alienation or sale or removal or disposition of the
property or dispossession of the plaintiff, or otherwise causing injury to the plaintiff in
relation to any property in dispute in the suit.
The court may grant temporary injunction order on the following grounds;
(a) that any property in dispute in a suit is in danger of being wasted, damaged or
alienated by any party to the suit, or wrongfully sold in execution of a decree, or
(b) that the defendant threatens, or intends to remove or dispose of his property with a
view to defrauding his creditors, or
(c) That the defendant threatens to dispossess the plaintiff or otherwise cause injury to
the plaintiff in relation to any property in dispute in the suit.
It would be necessary for the plaintiff to satisfy the Court that substantial and irreparable
harm or injury would be suffered by him if such temporary injunction (till the disposal of
the suit) is not granted and that such loss or damage or harm cannot be compensated by
damages.
6.9
CPC 1908
Interlocutory orders
Power to order interim sale The Court may, on the application of any party to a suit order
the sale, by any person named in such order, and in such manner and on such terms as it
thinks fit, of any movable property, being the subject-matter of such suit, or attached
before judgement in such suit, which is subject to speedy and natural decay, or which for
any other just and sufficient cause it may be desirable to be sold at once.
DELIVERY OF SUMMONS BY COURT

Code of Civil Procedure (Amendment) Act, 2002 provides that –
(1) The Court in which the suit is instituted, or has an agent resident within that
jurisdiction who is empowered to accept the service of the summons, the summons
shall, unless the Court otherwise directs, be delivered or sent either to the proper
officer, who may be an officer of a Court other than that in which the suit is instituted,
to be served by him or one of his subordinates or to such courier services as are
approved by the Court.
(2) The services of summons may be made by delivering or transmitting a copy thereof
by registered post acknowledgement due, addressed to the defendant or his agent
empowered to accept the service or by speed post or by such courier services as are
approved by the High Court or other authorised court or
(3) By any other means to transmission of documents (including fax message or

electronic mail service) provided by the High Court. Provided that the service of
summons under this sub-rule shall be made at the expenses of the plaintiff.
When an acknowledgement or any other receipt purporting to be signed by the defendant

or his agent is received by the Court or postal article containing the summons is received
back by the Court with an endorsement purporting to have been made by a postal
employee or by any person authorised by the courier service to the
effect that the defendant or his agent had refused to take delivery of the postal article
containing the summons or had refused to accept the summons by any other means when
tendered or transmitted to him, the Court issuing the summons shall declare that the
summons had been duly served on the defendant
Where the Court is satisfied that there is reason to believe that the person summoned is
keeping out of the way for the purpose of avoiding service or that for any other reason
the summons cannot be served in the ordinary way the Court shall order the service of
the summons to be served by affixing a copy thereof in some conspicuous place in the
Court house and also upon some conspicuous part of the house in which the person
summoned is known to have last resided or carried on business or personally worked for
gain, or in such other manner as the Court thinks fit. (O.5, R.20, ‘substituted service’)
6.10
CPC 1908
Where defendant resides in another province, a summons may be sent for service in
another state to such court and in such manner as may be prescribed by rules in force in
that State.
In the case of a defendant who is a public officer, servant of railways or local authority,
the Court may, if more convenient, send the summons to the head of the office in which
he is employed.
In the case of a suit being instituted against a corporation, the summons may be
served
a) on the secretary or on any director, or other principal officer of the corporation or
b) by leaving it or sending it by post addressed to the corporation at the registered office
or if there is no registered office, then at the place where the corporation carries on
business.
Where persons are to be sued as partners in the name of their firm, the summons shall be
served either
a) upon one or more of the partners or
b) at the principal place at which the partnership business is carried on within India or
upon any person having the control or management of the partnership business.
Where a partnership has been dissolved the summons shall be served upon every person
whom it is sought to make liable.
Defence – The defendant has to file a written statement of his defence within a period of
thirty days from the date of service of summons. If he fails to file the written statement
within the stipulated time period he is allowed to file the same on such other day as may
be specified by the Court for reasons to be recorded in writing. The time period for filing
the written statement should not exceed 90 days.
Where the defendant bases his defence upon a document or relies upon any document in
his possession in support of his defence or claim for set-off or counter claim, he has to
enter such document in a list and produce it in Court while presenting his written
statement and deliver the document and a copy thereof to be filed within the written
statement.
Any document which ought to be produced in the Court but is not so produced, such
document shall not be received in evidence at the time of hearing of the suit without the
leave of the Court.
However this rule does not apply to documents produced for the cross-examination of
the plaintiff witnesses or handover to a witness merely to refresh his memory. Besides,
particulars of set-off must be given in the written statement. A plea of set-off is set up
6.11
CPC 1908
when the defendant pleads liability of the plaintiff to pay to him, in defence in a suit by
the plaintiff for recovery of money. Any right of counter claim must be stated. In the
written statement new facts must be specifically pleaded.
Discovery and interrogatories and production of documents

“Discovery” means finding out material facts and documents from an adversary in order
to know and ascertain the nature of the case or in order to support his own case or in
order to narrow the points at issue or to avoid proving admitted facts. Discovery may be
of 2 kinds —
i. By interrogatories
ii. By documents.
Discovery by interrogations
Any party to a suit, by leave of the Court, may deliver interrogatories in writing for the
examination of the opposite parties. But interrogatories will not be allowed for the
following purposes:
a. For obtaining discovery of facts which relates exclusively to the evidence of the
adversary’s case or title.
b. To interrogate any confidential communications between the adversary and his
counsel.
c. To obtain disclosures injurious to public interests.
d. Interrogatories that are of a ‘fishing’ nature i.e. which do not relate to some definite
and existing state of circumstances but are resorted to in a speculative manner to
discover something which may help a party making the interrogatories.
Discovery by documents
All documents relating to the matters in issue in the possession or power of any adversary
can be inspected by means of discovery by documents. Any party may apply to the Court
for an order directing any other party to the suit to make discovery on oath the
documents which are or which have been in his possession or powers relating to any
matter in question. The Court if it thinks fit in its discretion, it may make order for
discovery limited to certain classes of documents. Every party to a suit may give notice to
the other party at or before the settlement of issues to produce for his inspection any
document referred to in the pleadings or affidavits of the other party.
If the other party refuses to comply with this order he shall not be allowed to put any
such document in evidence
A party may refuse to produce the document for inspection on the following
grounds:
a. where it discloses a party’s evidence
6.12
CPC 1908
b. when it enjoys a legal professional privilege

c. when it is injurious to public interest
d. Denial of possession of document.
If a party denies by an affidavit the possession of any document, the party claiming
discovery cannot cross examine upon it, nor adduce evidence to contradict it, because in
all questions of discovery the oath of the party making the discovery is conclusive
(Kedarnath v. Vishwanath).
Admission by parties
“Admission” means that one party accepts the case of the other party in whole or in part
to be true. Admission may be either in pleadings or by answers to interrogatories, by
agreement of the parties or admission by notice.
Issues
Issues arise when a material proposition of fact or law is affirmed by one party and denied
by the other. Issues may be either of fact or of law. Where the Court is of the opinion that
the suit can be disposed of on issues of law only, it shall try those issues first and postpone
the framing of the other issues until after that issue has been determined and may deal
with the suit in accordance with the decision of that issue.
Issues are to be framed on material proportions of fact or law which are to be

gathered from the following—
a. Allegations made in the plaint and written statement,
b. Allegations made by the parties or persons present on their behalf or their pleaders
on oath,
c. Allegations in answer to interrogatories,
d. Contents of documents produced by the parties,
e. Statements made by parties or their representatives when examined,
f. From examination of a witness or any documents ordered to be produced.
Hearing of the suit – The plaintiff has the right to begin unless the defendant admits the
fact alleged by the plaintiff and contends that either in point of law or on some additional
facts alleged by the defendant, the plaintiff is not entitled to any part of the relief sought
by him and in such a case the defendant has a right to begin (O.18, R.1).
Where there are several issues, the burden of proving some of which lies on the other
party, the party beginning has an option to produce his evidence on those issues or
reserve it by way of an answer to the evidence produced by the other party, and in the
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CPC 1908
latter case, the party beginning may produce evidence on those issues after the other
party has produced all his evidence
Care must be taken that no part of the evidence should be produced on those issues for
which the plaintiff reserves a right to produce evidence after the defence has closed his
evidence, otherwise the plaintiff shall lose his right of reserving evidence
Affidavit
An affidavit is a written statement of the deponent on oath duly affirmed before any Court
or Magistrate or any Oath Commissioner appointed by the Court or before the Notary
Public. An affidavit can be used in the following cases:
1) The Court may at any time of its own motion or on application of any party order that
any fact may be proved by affidavits.
2) The Court may at any time order that the affidavit of any witness may be read at the
hearing unless either party bona-fide desires to cross-examine him or he can be
produced.
3) Upon application by a party, evidence of a witness may be given on affidavit, but the
court may at the instance of either party, order the deponent to attend the court for
cross-examination unless he is exempted from personal appearance. Affidavits are
confined to such facts as the deponent is able of his own knowledge to prove except
on interlocutory applications.
Execution
Execution is the enforcement of decrees or orders of the Court. A decree may be executed
either by the Court which passed it or by the Court to which it is sent for execution.
Other Important Concepts

REFERENCE (Sec 113)
Whenever a subordinate or lower court has a reasonable doubt on any question of Law,
it can make reference to the higher courts. But such application for reference to be made
only by the lower court, either suo moto or on an application made by any party to the
suit to the lower court.
Review (Sec 114)

Review means to re consider, re-assess or re-examine a given matter. Any person
aggrieved by a decree or order may apply for a review of judgement to the same court
which passed the decree or made the order, when -
(i) the decree or order passed is non appealable
(ii) the decree or order passed is appealable but the aggrieved party did not file it.
Revision (Sec 115)
6.14
CPC 1908
Revision means to go through and to look again through an order or decree. The High
Court may call for the record of any case which has been decided by any Court
subordinate to such High Court and in which no appeal lies thereto, and if such
subordinate Court appears –
a. To have exercised a jurisdiction not vested in it by law, OR
b. To have failed to exercise a jurisdiction so vested, OR
c. To have acted in the exercise of its jurisdiction illegally or with material irregularity
The High Court may make such order as it thinks fit.
APPEALS
The word appeal is not defined under the CPC but generally it means an application by an
aggrieved party to an appellate court, asking it to set aside or reverse a decision of
subordinate court. Right of appeal is not a natural or inherent right attached to litigation.
Such a right is given by the statute or by rules in force.
There are 4 kinds of appeals provided under the Civil Procedure Code:
a. Appeals from original Decrees: Appeals from original decree may be preferred in
the court superior to the court passing the decree. An appeal may lie from an original
decree passed ex parte. Where the decree has been passed with the consent of parties,
no appeal lies.
b. Second Appeals: An appeal lies to the High Court from every decree passed in appeal
by any subordinate Court if the High Court is satisfied that the case involves a
substantial question of law. The memorandum of Appeal must precisely state the
substantial question of law involved in the appeal. If the high court is satisfied that a
substantial question of law is involved, such question shall be formulated by it and the
appeal is to be heard on the question so formulated.
c. Appeals from Orders: Orders are generally not appealable until and unless it has
been specifically provided in the law. But in no case 2nd Appeal can be made in the
case of orders.
Appeal from orders would lie only from the following orders on grounds of
defect or irregularity in law –
i. An order refusing leave to Institute a suit.
ii. An order for compensation for obtaining attachment or injunction on insufficient
ground.
iii. An order under CPC imposing a fine or directing the detention or arrest of any
person except in execution of decree.
iv. Other appealable orders as specified in CPC.
d. Appeals to the Supreme Court: Appeals to the Supreme Court would lie in the
following cases:
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CPC 1908
a. from any decree or order of Civil Court when the case is certified by the Court deciding
it to be fit for appeal to the Supreme Court or when special leave is granted by the
Supreme Court itself,
b. from any judgement, decree or final order passed on appeal by a High Court or by any
other court of final appellate jurisdiction,
c. From any judgement, decree or final orders passed by a High Court in exercise of
original civil jurisdiction.
Note:
No appeal lies in any suit of the nature cognizable by Courts of small causes when the
amount or value of the subject matter of the original suit does not exceed ten thousand
rupees.
The general rule is that the parties to an appeal shall not be entitled to produce additional
evidence whether oral or documentary. But the appellate court has a discretion to
allow additional evidence in the following circumstances:
a. When the lower court has refused to admit evidence which ought to have been
admitted.
b. The appellate court requires any document to be produced or any witness to be
examined to enable it to pronounce judgement.
c. For any other substantial cause but in all such cases the appellate court shall record
its reasons for admission of additional evidence.
The essential factors to be stated in an appellate judgement are

I. the points for determination.
II. the decision thereon.
III. the reasons for the decision. and
IV. where the decree appealed from is reversed or varied, the relief to which the
appellant is entitled.
SUITS BY OR AGAINST MINORS

A minor is a person
(i) who has not completed the age of 18 years and
(ii) For whose person or property a guardian has been appointed by a Court, for
whose property is under a Court of Wards, the age of majority is completed at the
age of 21 years.
If Plaintiff is Minor
Every suit by a minor shall be instituted in his name by a person who in such suit shall be
called the next friend of the minor. The next friend should be a person who is of sound
mind and has attained majority.
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CPC 1908
However, the interest of such person is not adverse to that of the minor and that he is not
in the case of a next friend, a defendant for the suit.
If the defendant is a minor;

the Court, on being satisfied of the fact of his minority, shall appoint a proper person to
be guardian for the suit for such minor.
A person appointed as guardian for the suit for a minor shall continues as such
throughout all proceeding arising out of the suit including proceedings in any appellate
or revisional court and any proceedings in the execution of a decree.
When minor attain majority:

When the minor plaintiff attains majority he may elect to proceed with the suit or
application or elect to abandon it. If he elects to proceed, he shall apply for an order
discharging the next friend and for leave to proceed in his own name and the title of the
suit will be corrected. If he elects to abandon the suit or application, he shall, if a sole
plaintiff or sole applicant apply for an order to dismiss the suit on repayment of the costs
incurred by the defendant or opposite party etc.
SUMMARY PROCEDURE
The object of summary suit or summary procedure is to summaries or shorten the
procedure of suit in those cases where the defendant does not have any defense. It is to
avoid unnecessary destruction by the defendant. A procedure by way of summary suit
applies to suits upon bill of exchange, hundies or promissory notes or to suits to recover
debt under a written contract.
The rules for summary procedure are applicable to the following Courts:
1. High Courts, City Civil Courts and Small Courts;
2. Other Courts: In such Courts the High Courts may restrict the operation of order 37 by
issuing a notification in the Official Gazette.
Leave to defend
The defendant is not entitled to defend the suit unless he enters an appearance within 10
days from the service of summons. Such leave to defend may be granted unconditional or
upon such term as the Court or the Judge may think fit.
However, such leave shall not be granted where:

i. The Court is satisfied that the facts disclosed by the defendant do not indicate that he
has a substantial defence or that the defences are frivolous or not veracious, and
ii. The part of the amount claimed by the plaintiff and admitted by the defendant to be
due from him is deposited by him in the Court.
6.17
IPC, 1860
INDIAN PENAL CODE, 1860

Introduction
• Crime is a social phenomenon. It is a wrong committed by an
individual in a society.
• It arises first when a state is organized, people set up rules,
the breaking of which is an act called crime.
• For determination of crime there is no fixed rule. Crime is
what the law says it is.
• The difference between a criminal offence and a civil wrong is that while the former
is considered a wrong against the society because of their grave nature, a civil wrong
is a wrong done to an individual.
Indian penal code, 1860

The Indian penal code, 1860 is a substantive law of crimes. It defines acts which are
offence and lays down punishment for the same. It came into force on 1st Jan 1862.
Jurisdiction of the code,1860

Indian penal code has 2 jurisdictions, intra-territorial jurisdiction and extra-
territorial jurisdiction which are explained as follows:
1. Intra-territorial jurisdiction (applies to all human being)-
Where a crime under any provision of IPC is committed within the territory of India
the IPC applies and the courts can try and punish irrespective of the fact that the
person who had committed the crime is an Indian national or foreigner. This is called
‘intra-territorial jurisdiction’ because the submission to the jurisdiction of the court
is by virtue of the crime being committed within the Indian territory.
The Code applies to any offence committed:
Ø Within the territory of India as defined in Article 1 of Constitution of India.
Ø Within the territorial waters of India, or
Ø On any ship or aircraft either owned by India or registered in India.
Exemption from intra-territorial jurisdiction of IPC:
Ø President or Governor of a state in any court, during the time they hold office.
Ø Foreign sovereigns are exempt from criminal proceedings in India.
Ø Ambassadors and diplomats of foreign countries who have official status in India.
Ø All secretaries and political and military attaches, who are formally part of the
missions.
Example:
1. Gunjan, a citizen of India murdered Ranjan in India.,
2. Glory, a foreigner murdered Ranjan in India.
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IPC, 1860
2. Extra –territorial jurisdiction-

Where a crime is committed outside the territory of India by an Indian national, such
a person may be tried and punished by the India courts.
Example: Chetan, who is a citizen of India, commits a murder in dubai. He can be tried
and convicted of murder in any place in India under IPC.
The fundamental elements of crime
The basic function of criminal law is to punish the offender and to

deter the incidence of crime in the society. A criminal act must contain
the following elements:
1. Human being-
The first requirement for commission of crime is that the act must be
committed by a human being. Only a human being is subject of IPC.
Example: if a lion killed a man, the lion will not be punishable under IPC, as the crime
is done by lion, who is not a human being.
2. Mens rea-
Ø ‘Mens rea’ is a latin word which means a guilty mind.
Ø The basic principle of criminal liability is embodied in the legal maxim ‘actus non
facitreum, nisi mens sit rea’ which means ‘the act alone does not amount to guilt;
the act must be accompanied by a guilty mind’.
Ø Mens rea is defined as the mental element necessary to constitute criminal
liability.
Ø In simple words, a bad intention or guilt is an essential ingredient in every crime.
Ø The act is judged not from the mind of the wrong-doer, but the mind of the wrong-
doer is judged from the act.
Forms of mens rea
a) Intention:
§ Intention is defined as ‘the purpose or design with which an act is done’.
§ Intention indicates the position of mind, condition of someone at particular time
of commission of offence and also will of the accused to see effects of his unlawful
conduct. Criminal intention does not mean only the specific intention but it
includes the generic intention as well.
§ Example: A poisons the food which B was supposed to eat with the intention of
killing B. C eats that food instead of B and is killed. A is liable for killing C although
A never intended it.
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IPC, 1860
b) Negligence
§ Negligence is the second form of mens rea. Negligence is not taking care, where
there is a duty to take care.
§ Negligence or carelessness indicates a state of mind where there is absence of a
desire to cause a particular consequence.
§ The standard of care established by law is that of a reasonable man in identical
circumstances. What amounts to reasonable care differs from thing to thing
depending situation of each case. In criminal law, the negligent conduct amounts
to means rea.
§ Example: for every medical negligence, a doctor can be tried under IPC.
c) Recklessness
Recklessness occurs when the person does not desire the consequence, but foresees
the possibility and consciously takes the risk. It is a total disregard for the
consequences of one’s own actions.
Example: drink and drive is prohibited and once a person does that he shall be
punshiable for recklessness.
Exception to mens rea

There are many exceptional cases where mens rea is not required in criminal law.
Some of them are as follows:
i. Liabilities imposed by statutes
Where a statute imposes liability , the presence or absence of a guilty mind is
irrelevant.
ii. Petty cases
Where it is difficult to prove mens rea and penalties are petty fines. In such petty
cases, speedy disposal of cases is necessary and the proving of mens rea is not easy.
An accused may be fined even without any proof of mens rea.
iii. Public interest
In the interest of public safety, strict liability is imposed and whether a person
causes public nuisance with a guilty mind or without guilty mind, he is punished.
iv. Ignorance of law
If a person violates a law even without the knowledge of the existence of the law,
it can still be said that he has committed an act which is prohibited by law. In such
cases, the fact that he was not aware of the law and hence did not intend to violate
it is no defense and he would be liable as if he was aware of the law. This follows
from the maxim 'ignorance of the law is no excuse'.
3. Actus Reus (act or omission):

Ø A human being and an evil intent are not enough to constitute a crime for one
cannot know the intentions of a man.
Ø Actus Reus means overt (done openly) act or unlawful commission must be done
in carrying out a plan with the guilty intention.
7.3
IPC, 1860
Ø Actus Reus is defined as a result of voluntary human conduct which law prohibits.
It is the doing of some act by the person to be held liable. An ‘act’ is a willed
movement of body.
Ø Example: a number of people conspire to murder a person and only one of them
actually shoots the person, every conspirator would be held liable for it.
4. Injury to Another: There should be injury to another due to Actus Rea.
Stages of crime
The commission of a crime consists of some significant stages. If a person commits a crime
voluntarily, it involves four important stages, viz.
1. Criminal Intention
§ Criminal intention is the first stage in the commission of offence. Intention is the
conscious exercise of mental faculties of a person to do an act for the purpose of
accomplishing or satisfying a purpose.
§ Law does not as a rule punish individuals for their evil thoughts or criminal
intentions.
§ The criminal court does not punish a man for mere guilty intention because it is
very difficult for the prosecution to prove the guilty intention of a man.
§ Example: if a man drives in a rash and reckless manner resulting in an accident
causing death of a person, the reckless driver cannot plead innocence by stating
that he never intended to cause the death of the person. It may be true in the strict
sense of term. But a reckless driver should know that reckless driving is likely to
result in harm and can even cause death of the persons on the road. Further
recklessness is a type of mens rea. Therefore, a reckless driver who causes death
of a person can be presumed or deemed to have intended to causes the death of
the person.
2. Preparation
Preparation means to arrange necessary measures for commission of intended
criminal act. Preparation itself is not punishable as it is difficult to prove that
necessary preparations were made for commission of the offence. In certain
exceptional cases mere preparation is also punishable, under IPC.
i. Preparation to wage war against the Government
ii. Preparation for counterfeiting of coins or Government Stamps
iii. Possessing counterfeit coins, false weights or measurements and forged
documents
iv. Making preparation to commit dacoity
3. Attempt
Attempt, which is the third stage in the commission of a crime, is punishable. Attempt
has been called as a preliminary crime. Attempt means the direct movement towards
7.4
IPC, 1860
commission of a crime after necessary preparations have been made. Successful

attempt becomes an actual commission of crime, otherwise it is just an attempt. The
act constituting attempt must be proximate to the intended result.
4. Commission of Crime or Accomplishment

The last stage in the commission of crime is its accomplishment. If the accused
succeeds in his attempt, the result is the commission of crime and he will be guilty of
the offence. If his attempt is unsuccessful, he will be guilty for an attempt only. If the
offence is complete, the offender will be tried and punished under the specific
provisions of the IPC.
Punishment
The punishments to which offenders are liable under the provisions of IPC are –
1. Death
A death sentence is the harshest of punishments provided in the IPC, which involves
the judicial killing or taking the life of the accused as a form of punishment. The
Supreme Court has ruled that death sentence ought to be imposed only in the ‘rarest
of rare cases’.
The IPC provides for capital punishment for the following offences:
1. Murder
2. Dacoity with Murder.
3. Waging War against the Government of India.
4. Abetting mutiny actually committed.
5. Giving or fabricating false evidence upon which an innocent person suffers death
6. Abetment of a suicide by a minor or insane person;
7. Attempted murder by a life convict.
The capital punishment is awarded only in two categories of offences, namely treason
(Betrayal of Trust) and murder.
2. Life imprisonment
Imprisonment for life meant rigorous imprisonment, that is, till the last breath of the
convict.
3. Imprisonment
Imprisonment which is of two descriptions namely –
a) Rigorous Imprisonment, that is hard labour;
b) Simple Imprisonment
4. Forfeiture of property
Forfeiture is the divestiture of specific property without compensation in
consequence of some default or act forbidden by law. The Courts may order for
forfeiture of property of the accused in certain occasions.
5. Fine
7.5
IPC, 1860
Fine is forfeiture of money by way of penalty. It should be imposed individually and

not collectively. When court sentences an accused for a punishment, which includes a
fine amount, it can specify that in the event the convict does not pay the fine amount,
he would have to suffer imprisonment for a further period as indicated by the court,
which is generally referred to as default sentence.
Criminal Conspiracy (Sec 120A & 120B)
Definition of criminal conspiracy (Section 120A)

When 2 or more persons agree to do, or cause to be done—
1. an illegal act, or
2. an act which is not illegal by illegal means,
Provided that no agreement except an agreement to commit an offence shall amount to a

criminal conspiracy unless some act besides the agreement is done by one or more
parties to such agreement in pursuance thereof. It is immaterial whether the illegal act is
the ultimate object of such agreement, or is merely incidental to that object.
Essential of criminal conspiracy
1. an agreement between 2 or more persons;

2. An Illegal act OR an act which is not illegal in itself but is done by illegal means.
Note: Merely an agreement will not be termed as Criminal Conspiracy.
Punishment of criminal conspiracy (Section 120B)

If a person conspires to commit an offence He shall be punished in the same manner
which is punishable with as if he had abetted(supported) such offence.
-death
-imprisonment for life In simple words, the punishment for
-rigorous imprisonment for a term of 2 yrs conspirancy is the same as if the
or more conspirator had abetted(supported) or
assisted the offence.
If a person conspires to commit an offence He shall be punished with imprisonment
other than the above up to 6 months or fine or both
Dishonest misappropriation of property (Section 403)

Whoever dishonestly misappropriates or converts to his own use any movable property,
shall be punished with imprisonment of either description for a term which may extend
to 2 years, or with fine, or with both.
Ingredients of dishonest misappropriation of property

1. There should be misappropriation or conversion of property.
2. The misappropriation or conversion should be dishonest.
7.6
IPC, 1860
3. The property should be movable property.
Illustrations
a. A takes property belonging to Z out of Z's possession, in good faith believing at the
time when he takes it, that the property belongs to himself. A is not guilty of theft; but
if A, after discovering his mistake, dishonestly appropriates the property to his own
use, he is guilty of an offence under this section.
b. A, being on friendly terms with Z, goes into Z's library in Z's absence, and takes away
a book without Z's express consent. Here, if A was under the impression that he had
Z's implied consent to take the book for the purpose of reading it, A has not committed
theft. But, if A afterwards sells the book for his own benefit, he is guilty of an offence
under this section.
c. A and B, being, joint owners of a horse, A takes the horse out of B's possession,
intending to use it. Here, as A has a right to use the horse, he does not dishonestly
misappropriate it. But, if A sells the horse and appropriates the whole proceeds to his
own use, he is guilty of an offence under this section.
Notes:
1. A dishonest misappropriation for a time only is a misappropriation within the

meaning of this section.
2. If a person finds any property which is not in possession of any other person and takes
such property for the purpose of protecting it, or restoring it to the owner, or does not
take it dishonestly he will not be guilty of this offence.
3. If a person appropriates it to his own use inspite of knowing the real owner or has
means to discover the owner he will be guilty of this offence.
Illustration
a. A finds a rupee on the high road, not knowing to whom the rupee belongs, A picks up
the rupee. Here A has not committed the offence defined in this section.
b. A finds a letter on the road, containing a bank note. From the direction and contents
of the letter he learns to whom the note belongs. He appropriates the note. He is guilty
of an offence under this section.
c. A finds a cheque payable to bearer. He can form no conjecture as to the person who
has lost the cheque. But the name of the person, who has drawn the cheque, appears.
A knows that this person can direct him to the person in whose favour the cheque was
drawn. A appropriates the cheque without attempting to discover the owner. He is
guilty of an offence under this section.
d. A sees Z drop his purse with money in it. A picks up the purse with the intention of
restoring it to Z, but afterwards appropriates it to his own use. A has committed an
offence under this section.
7.7
IPC, 1860
e. A finds a purse with money, not knowing to whom it belongs; he afterwards discovers
that it belongs to Z, and appropriates it to his own use. A is guilty of an offence under
this section.
f. A finds a valuable ring, not knowing to whom it belongs. A sells it immediately without
attempting to discover the owner. A is guilty of an offence under this section.
U. dhar v. State of Jharkhan

There were 2 contracts
One between principal and contractor and another between contractor and sub
contractor. On completion of work sub contractor demanded money for completion of
work and on non payment filed a criminal complaint alleging that contractor having
received the payment from principal had misappropriated the money.
The SC observed that money paid by the principal to the contractor was not money
belonging to the complainant, sub – contractor, hence there was no question of mis
appropriation. The complaint was not maintainable and was liable to be quashed.
Bhagiram Dome v. Abar Dome

The property was possessed innocently but due to change in circumstances the retaning
became wrongful and fraudulent.
Guilty u/s 403, criminal even if the possession was innocent and subsequently the
retaining become wrongful and fraudulent.
Dishonest misappropriation of property possessed by deceased person at the time

of his death (Sec 404)
Whoever dishonestly misappropriates or converts to his own use property, knowing that
such property was in the possession of a deceased person at the time of that person's
death, and has not since been in the possession of any person legally entitled to such
possession, shall be punished with imprisonment of either description for a term which
may extend to 3 years, and shall also be liable to fine, and if the offender at the time of
such person's death was employed by him as a clerk or servant, the imprisonment may
extend to 7 years.
Illustration
Z dies in possession of furniture and money. His servant A, before the money comes into
the possession of any person entitled to such possession, dishonestly misappropriates it.
A has committed the offence defined in this section.
Criminal Breach of Trust
Criminal breach of trust (Sec 405)

Whoever, being in any manner entrusted with property, or with any dominion over
property, dishonestly misappropriates or converts to his own use that property, or
dishonestly uses or disposes of that property in violation of any direction of law
7.8
IPC, 1860
prescribing the mode in which such trust is to be discharged, or of any legal contract,
express or implied, which he has made touching the discharge of such trust, or wilfully
suffers any other person so to do, commits “criminal breach of trust”.
Criminal breach of trust-essential ingredients

1. The accused must be entrusted with the property or with dominion over it,
2. The person so entrusted must use that property, or;
3. The accused must dishonestly use or dispose of that property or wilfully suffer any
other person to do so in violation,
ü of any direction of law prescribing the mode in which such trust is to be
discharged, or;
ü of any legal contract made touching the discharge of such trust.
Illustrations
a. A, being executor to the will of a deceased person, dishonestly disobeys the law which
directs him to divide the effects according to the will, and appropriates them to his
own use. A has committed criminal breach of trust.
b. A is a warehouse-keeper. Z going on a journey, entrusts his furniture to A, under a
contract that it shall be returned on payment of a stipulated sum for warehouse room.
A dishonestly sells the goods. A has committed criminal breach of trust.
Punishment for criminal breach of trust (Sec 406)

406 General Punishment Imprisonment up to 3 years OR fine OR
both
407 When breach of trust is done by Imprisonment up-to 7 years AND fine
a carrier, wharfinger or
warehouse-keeper
408 When breach of trust is done by Imprisonment up to 7 years AND fine
clerk or servant
409 When breach of trust is done by Imprisonment for life OR imprisonment
public servant or Banker, up-to 10 years AND fine
merchant, factor broker,
attorney or agent
Cheating (Sec 415 to Sec 420)

Section 415 provides that:
whoever, by deceiving any person, fraudulently or dishonestly induces the person so
deceived to deliver any property to any person, or to consent that any person shall retain
any property, or intentionally induces the person so deceived to do or omit to do anything
which he would not do or omit if he were not so deceived, and which act or omission
7.9
IPC, 1860
causes or is likely to cause damage or harm to that person in body, mind, reputation or
property, is said to “cheat”.
Cheating – Main Ingredients

The main ingredients of cheating are as under:
1. The accused must deceive another person.
2. The act of deceiving was done intentionally.
3. The person who is deceived should be induced to deliver any property to any person;
or to consent that any person shall retain any property; or
4. Such inducement should be fraudulent or dishonest
Cheating by personation Section 416

As per this section a person is said to “cheat by personation” if he cheats by pretending
to be some other person, or by knowingly substituting one person for another, or
representing that he or any other person is a person other than he or such other person
really is. The offence is committed whether the individual personated is a real or
imaginary person.
Illustrations
1. A cheats by pretending to be a certain rich banker of the same name. A cheats by
personation.
2. A cheats by pretending to be B, a person who is deceased. A cheats by personation.
Punishment for cheating Section 417

It provides that whoever cheats shall be punished with imprisonment of either
description for a term which may extend to 1 year, or with fine, or with both.
Cheating with knowledge that wrongful loss may ensue to person whose interest
offender is bound to protect Section 418
It provides that whoever cheats shall be with imprisonment of either description for a
term which may extend to 3 years, or with fine, or with both.
Punishment for cheating by personation Section 419

it states that whoever cheats by personation shall be punished with imprisonment of
either description for a term which may extend to 3 years, or with fine, or with both.
Cheating and dishonestly inducing delivery of property Section 420

This section comes into operation when there is delivery or destruction of any property
or alteration or destruction of any valuable security resulting from the act of the person
deceiving. shall be punished with imprisonment of either description for a term which
may extend to 7 years, and shall also be liable to fine.
FRAUDULENT DEEDS & DISPOSITION OF PROPERTY

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Dishonest or fraudulent removal or concealment of property to

prevent distribution among creditors (Section 421)
Whoever dishonestly or fraudulently removes, conceals or delivers to any person, or

transfers or causes to be transferred to any person, without adequate consideration, any
property, intending thereby to prevent, or knowing it to be likely that he will thereby
prevent, the distribution of that property according to law among his creditors or the
creditors of any other person, shall be punished with imprisonment of either description
for a term which may extend to 2 years, or with fine, or with both.
Essential ingredients of section 421
(1) The accused has done any of the following act

• Removed the property
• Concealed the property or
• Delivered the property, or
• Transferred the property, or
• Caused it to be transferred to someone;
(2) The such a transfer was without adequate consideration;
(3) That the accused thereby intended to prevent or knew that he was thereby likely to
prevent the distribution of that property according to law among his creditors or
creditors of another person;
(4) That he acted dishonestly and fraudulently.
Dishonestly or fraudulently preventing debt being available for

creditors (Section 422)
Whereby a person has the means of returning his loan but he is not availing such means
is fraudulently preventing debt being available for creditors. In simple words, where a
person fraudulently prevents the payment of debt amount to the creditor, it will be
covered under this section.
Punishment under section 422

A person accused under section 422 be punished with imprisonment upto 2 years, or with
fine or with both.
Dishonest or fraudulent execution of deed of transfer containing false

statement of consideration (Section 423)
Whoever dishonestly or fraudulently signs, executes or becomes a party to any deed or
instrument which purports to transfer or subject to any charge on property, or any
interest therein, and which contains any false statement relating to the consideration for
such transfer or charge, or relating to the person or persons for whose use or benefit it is
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IPC, 1860
really intended to operate, shall be punished with imprisonment of either description for
a term which may extend to 2 years, or with fine, or with both.
Dishonest or fraudulent removal or concealment of property (Section 424)

Whoever dishonestly or fraudulently conceals or removes any property of himself or any
other person, or dishonestly or fraudulently assists in the concealment or removal
thereof, or dishonestly releases any demand or claim to which he is entitled, shall be
punished with imprisonment of either description for a term which may extend to 2
years, or with fine, or with both.
Forgery (Section 463-465)
Whoever makes any false document or false electronic record

or part of a document or electronic record, with intent to cause
damage or injury, to the public or to any person, or to support
any claim or title, or to cause any person to part with property,
or to enter into any express or implied contract, or with intent
to commit fraud or that fraud may be committed, commits forgery.
Essentials ingredients of Forgery
1. The accused have made a false document/ electronic record or a part of it.
2. The intention of making the false document may be as follows:
a. To cause damage or injury to public or any person
b. To support any claim or title
c. To separate a person from his property
d. To enter into any express or implied contract
e. To commit fraud
Punishment of forgery
Whoever commits forgery shall be punished with imprisonment of either description for
a term which may extend to 2 years, or with fine, or with both.
Defamation (Sec 499)

Whoever, by words either spoken or intended to be read, or by signs or by visible
representations, makes or publishes any imputation concerning any person intending to
harm, or knowing or having reason to believe that such imputation will harm, the
reputation of such person, is said, except in the cases hereinafter excepted, to defame that
person.
Explanation
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(1) It may amount to defamation to impute anything to a deceased person, if the

imputation would harm the reputation of that person if living, and is intended to be
hurtful to the feelings of his family or other near relatives.
(2) It may amount to defamation to make an imputation concerning a company or an
association or collection of persons as such.
(3) An imputation in the form of an alternative or expressed ironically, may amount to
defamation.
(4) No imputation is said to harm a person's reputation, unless that imputation directly
or indirectly, in the estimation of others, lowers the moral or intellectual character of
that person, or lowers the character of that person in respect of his caste or of his
calling, or lowers the credit of that person, or causes it to be believed that the body of
that person is in a lothsome state, or in a state generally considered as disgraceful.
Illustrations
1. A says — “Z is an honest man; he never stole B's watch”; intending to cause it to
be believed that Z did steal B's watch. This is defamation, unless it fall within one
of the exceptions.
2. A is asked who stole B's watch. A points to Z, intending to cause it to be believed
that Z stole B's watch. This is defamation, unless it fall within one of the exceptions.
3. A draws a picture of Z running away with B's watch, intending it to be believed
that Z stole B's watch. This is defamation, unless it fall within one of the exceptions.
Exceptions
1. Imputation of truth which public good requires to be made or published

It is not defamation to impute anything which is true concerning any person, if it be
for the public good that the imputation should be made or published. Whether or not
it is for the public good is a question of fact.
2. Public conduct of public servants
It is not defamation to express in good faith any opinion whatever respecting the
conduct of a public servant in the discharge of his public functions, or respecting his
character, so far as his character appears in that conduct, and no further.
3. Conduct of any person touching any public question
conduct of any person touching any public question, and respecting his character, so
far as his character appears in that conduct, and no further.
4. Publication of reports of proceedings of courts
It is not defamation to publish substantially true report of the proceedings of a Court
of justice, or of the result of any such proceedings.
5. Merits of case decided in Court or conduct of witnesses and others concerned
merits of any case, civil or criminal, which has been decided by a Court of Justice, or
respecting the conduct of any person as a party, witness or agent, in any such case, or
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IPC, 1860
respecting the character of such person, as far as his character appears in that
conduct, and no further.
6. Merits of public performance
It is not defamation to express in good faith any opinion respecting the merits of any
performance which its author has submitted to the judgment of the public, or
respecting the character of the author so far as his character appears in such
performance, and no further.
7. Censure passed in good faith by person having lawful authority over another
It is not defamation in a person having over another any authority, either conferred
by law or arising out of a lawful contract made with that other, to pass in good faith
any censure on the conduct of that other in matters to which such lawful authority
relates
8. Accusation preferred in good faith to authorised person.
It is not defamation to prefer in good faith an accusation against any person to any of
those who have lawful authority over that person with respect to the subject-matter
of accusation
9. Imputation made in good faith by person for protection of his or other's
interests
It is not defamation to make an imputation on the character of another provided that
the imputation be made in good faith for the protection of the interests of the person
making it, or of any other person, or for the public good.
10. Caution intended for good of person to whom conveyed or for public good
It is not defamation to convey a caution, in good faith, to one person against another,
provided that such caution be intended for the good of the person to whom it is
conveyed, or of some person in whom that person is interested, or for the public good.
Punishment for defamation
According to section 500 whoever defames another shall be punished with simple
imprisonment for a term which may extend to 2 years, or with fine, or with both.
Kinds of Defamation
§ The wrong of defamation is of two kinds- libel and slander.
§ In libel, the defamatory statement is made in some permanent
and visible form, such as writing, printing or pictures.
§ In it is made in spoken words or in some other transitory form,
whether visible or slander audible, such as gestures or
inarticulate but significant sounds.
§ The ambit of ‘publish’ is very wide. The publication of
defamatory matter means that it is communicated to some
person other than the person about whom it is addressed.
Printing or engraving matter known to be defamatory[Sec 501]
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Ø It provides that whoever prints or engraves any matter, knowing or having good
reason to believe that such matter is defamatory of any person, shall be punished with
simple imprisonment for a term which may extend to two years, or with fine, or with
both.
Ø A person printing or engraving defamatory matter abets the offence of defamation
and is guilty.
Ø Printing or engraving of defamatory material is not sufficient and the court is required
to be satisfied that the accused knew or had good reasons to believe that such a matter
was defamatory before holding a person guilty.
Ø In Sankaran v. Ramkrishna Pillai, the defamatory matter was printed in Malayalam
and the accused did not know the language, his mens rea was absent and he was not
guilty.
Sale of printed or engraved substance containing defamatory

matter
Whoever sells or offers for sale any printed or engraved substance containing defamatory
matter, knowing that it contains such matter, shall be punished with simple
imprisonment for a term which may extend to two years, or with fine, or with both.
To bring an offence u/s 502, it must be:
a. That the published material was defamatory as per section 499 of the IPC.
b. That the published material was either printed or engraved.
c. That the accused knew that such matter contained defamatory imputation
d. That the accused sold or offered for sale the defamatory matter
General Exceptions
The Indian Penal Code, 1860 also provides for general exceptions for a person accused of
committing any offence under the Code to plead in his defense. General defences or
exceptions are contained in sections 76 to 106 of the IPC.
The exceptions strictly speaking came within the following 6 categories.
Ø Judicial acts
Ø Mistake of fact
Ø Accident
Ø Trifling Act
Ø Consent
Ø Absence of Criminal Intention.
1. Mistake of Fact- bound by law:-
According to section 76, if any one commits any act which he is bound to do or
mistakenly believes in good faith that he is bound by law to do it, he is not guilty. The
mistake or ignorance must be of fact, but not of law. If the mistaken facts were true,
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the act would not be an offence. Mistake of fact, is a general defence based on the
Common Law maxim –ignorantia facit excusat; igoranita juris non excusat- (Ignorance
of fact excuses; Ignorance of law does not excuse). In mistake of fact the accused does
not possess mens rea or guilty mind.
2. Act of Judge when acting judicially (section 77):-
If any judge in his authority in good faith believing authorized by law commits any act,
no offence is attracted.
3. Act done pursuant to the judgment or order of Court (section 78):-
When any act is committed on judgment or order of the Court of Justice which is in
force, it is no offence even if the judgment or order of the Court is without any
jurisdiction, though the person who executes the judgment and order must believe
that the Court has the jurisdiction. Section 77 protects judges from any criminal
liability for their judicial acts. Section 78 extends this protection to ministerial and
other staff, who may be required to execute orders of the court. If such immunity was
not extended, then executing or implementing court orders would become
impossible.
4. Mistake of Fact-justified by law:-
According to section 79 of the IPC, if any one commits any act which is justified by law
or by reason of mistake of fact and not by reason of mistake of law believes himself to
be justified by Law.
5. Accident in doing a lawful act:-
According to section 80, if any one commits any offence by accident or misfortune
without malafide or without knowledge in performance of his legal duty in legal
manner with proper care and caution is no offence. The protection under this section
will apply only if the act is a result of an accident or a misfortune. It rather means an
unintentional, an unexpected act. Thus, injuries caused due to accidents in games and
sports are all covered by this section.
6. Act likely to cause harm, but done without criminal intent, and to prevent other
harm (section 81):-
Any act done by anyone without any criminal intent for saving or preventing harm to
third person or property in good faith is no offence. According to the ‘explanation’ to
this section, it is a question of fact in such a case whether the harm to be prevented or
avoided was of such a nature and so imminent as to justify or excuse the risk of doing
the act with the knowledge that it was likely to cause harm.
7. Act of a child under seven years of age (section 82):-
If any child who is below seven years of age commits any offence, he is not guilty
because it is the presumption of law that that a child below 7 years of age is incapable
to having a criminal intention (mens rea) necessary to commit a crime.
8. Act of a child above seven and under twelve of immature understanding
(section 83):-
If any minor child is in between seven and twelve years of age and not attained the
maturity of what is wrong and contrary to law at the time of commission of offence in
not liable to be convicted and punished.
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IPC, 1860
9. Act of a person of unsound mind (section 84):-

Nothing done by any person of unsound mind is an offence if at the time of doing it,
by reason of unsoundness of mind, is incapable of knowing the nature of the act, or
that he is doing what is either wrong or contrary to law.
10. Act of a person incapable of judgment by reason of intoxication caused against
his will (section 85):-
Nothing is an offence which is done by a person who, at the time of doing it, is, by
reason of intoxication, incapable of knowing the nature of the act, or that he is doing
what is either wrong, or contrary to law: provided that the thing which intoxicated
him was administered to him without his knowledge or against his will.
11. Offence requiring a particular intent or knowledge committed by one who is
intoxicated (section 86):-
In cases where an act done is not an offence unless done with a particular knowledge
or intent, a person who does the act in a state of intoxication shall be liable to be dealt
with as if he had the same knowledge as he would have had if he had not been
intoxicated, unless the thing which intoxicated him was administered to him without
his knowledge or against his will. If the accused himself takes and consumes
intoxicated thing or material with knowledge or intention and under intoxication he
commits any offence he is liable for punishment.
12. Act not intended and not known to be likely to cause death or grievous hurt,
done by consent (section 87):-
When anyone commits any act without any intention to cause death or grievous hurt
and which is not within the knowledge of that person to likely to cause death or
grievous hurt to any person who is more than eighteen years of age and has consented
to take the risk of that harm, the person doing the act has committed no offence. This
section is based on the principle of ‘volenti-non-fit injuria’ which means he who
consents suffers no injury. The policy behind this section is that everyone is the best
judge of his own interest and no one consents to that which he considers injurious to
his own interest.
13. Act not intended to cause death, done by consent in good faith for person's
benefit (section 88):-
Nothing, which is not intented to cause death, is an offence by reason of any harm
which it may cause, or be intended by the doer to cause, or be known by the doer to
be likely to cause, to any person for whose benefit it is done in good faith, and who
has given a consent, whether express or implied, to suffer that harm, or to take the
risk of that harm.
Section 88 extends the operation of consent to all acts except that of causing death
intentionally provided that the act is done in good faith for the benefit of the
consenting party.
14. On consent of guardian if any act is done in good faith to it (section 89):-
This section gives power to the guardian of a child under 12 years of age or a person
of unsound mind to consent to do an act done by a third person for the benefit of the
child or a person of unsound mind. Anything done by the third person will not be an
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offence provided that it is done in good faith and for the benefit of the child or a person
of unsound mind. This section gives protection to the guardians as well as other
person acting with the consent of a guardian of a person under 12 years of age or a
person of unsound mind.
15. Consent (section 90):-
The consent is not valid if it is obtained from a person who is under fear of injury, or
under a misconception of fact and if the person doing the act knows, or has reason to
believe, that the consent was given in consequence of such fear or misconception. The
consent is also not valid if it’s given by a person who, from unsoundness of mind, or
intoxication, is unable to understand the nature and consequence of that to which he
gives his consent. The consent is given by a person who is under twelve years of age
is also not valid unless the contrary appears from the context.
16. Exclusion of acts which are offences independently of harm caused (section
91):-
The exceptions in sections 87, 88 and 89 do not extend to acts which are offences
independently of any harm which they may cause, or be intended to cause, or be
known to be likely to cause, to the person giving the consent, or on whose behalf the
consent is given.
17. Act done in good faith for benefit of a person without consent (section 92):-
Nothing is an offence by reason of any harm which it may cause to a person for whose
benefit it is done in good faith, even without that person's consent, if the
circumstances are such that it is impossible for that person to signify consent, or if
that person is incapable of giving consent, and has no guardian or other person in
lawful charge of him from whom it is possible to obtain consent in time for the thing
to be done with benefit. This defense is subject to certain exceptions.
18. Communication made in good faith (section 93):-
No communication made in good faith is an offence by reason of any harm to the
person to whom it is made, if it is made for the benefit of that person. For example: A,
a surgeon, in good faith, communicates to a patient his opinion that he cannot live.
The patient dies in consequence of the shock. A has committed no offence, though he
knew it to be likely that the communication might cause the patient's death.
19. Act to which a person is compelled by threats (section 94):-
Except murder, and offences against the State punishable with death, nothing is an
offence which is done by a person who is compelled to do it by threats, which, at the
time of doing it, reasonably cause the apprehension that instant death to that person
will otherwise be the consequence. For this defense to be valid the person acting
under threat should not have himself put under such a situation.
20. Act causing slight harm (section 95):-
Nothing is an offence by reason that it causes, or that it is intended to cause, or that it
is known to be likely to cause, any harm, if that harm is so slight that no person of
ordinary sense and temper would complain of such harm.
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THE CODE OF CRIMINAL PROCEDURE, 1973
The Code of Criminal Procedure, 1898 (Cr. P.C.) was repealed by the Code of 1973 enacted
by Parliament on 25th January, 1974 and made effective from 1.4.1974 so as to
consolidate and amend the law relating to Criminal Procedure.
It’s object is to provide a machinery for determining the guilt of and imposing punishment
on offenders under the substantive criminal law, for example, the Indian Penal Code
(I.P.C.)
Definitions
Offence
Section 2(n) of the Cr.P.C. defines the word “offence” to mean any act or omission made
punishable by any law for the time being in force and includes any act in respect of which
a complaint may be made under Section 20 of the Cattle-trespass Act, 1871
Mens rea
Mens rea means a guilty mind. The fundamental principle of penal liability is embodied
in the maxim actus non facit ream nisi mens sit rea. The act itself does not constitute guilt
unless done with a guilty intent. Thus, unless an act is done with a guilty intention, it will
not be criminally punishable. The general rule to be stated is “there must be a mind at
fault before there can be a be a crime”.
The motive is not an intention. Intention involves foresight or knowledge of the probable
or likely consequences of an injury
Bailable Offence and Non-bailable Offence

A “bailable offence” means an offence which is shown as bailable in the 1st Schedule or
which is made bailable by any other law for the time being in force. “Non-bailable” offence
means any other offence.
Cognizable Offence and Non-cognizable Offence
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“Cognizable offence” means an offence for which, and “cognizable case” means a case in
which, a police officer may, in accordance with the 1st Schedule or under any other law
for the time being in force, arrest without warrant.
“Non-cognizable offence” means an offence for which, and “non-cognizable” case means
a case in which, a police officer has no authority to arrest without warrant. Thus, a non-
cognizable offence needs special authority to arrest by the police officer.
Complaint
“Complaint” means any allegation made orally or in writing to a
Magistrate, with a view to his taking action under this Code that
some person, whether known or unknown, has committed an
offence, but it does not include a police report. [Section 2(d)]
A complaint in a criminal case is what a plaint is in a civil case. The

requisites of a complaint are:
I. an oral or a written allegation;
II. some person known or unknown has committed an offence;
III. it must be made to a magistrate; and
IV. it must be made with the object that he should take action.
Police report is expressly excluded from the definition of complaint but the explanation
to Section 2(d) makes it clear that such report shall be deemed to be a complaint where
after investigation it discloses commission of a non-cognizable offence
Bail
It means the release of the accused from the custody of the officers of law and entrusting
him to the private custody of persons who are sureties to produce the accused to answer
the charge at the stipulated time or date.
Inquiry
It means every inquiry other than a trial, conducted under this Code by a Magistrate or
Court. [Section 2(g)]. It carries the following three features:
(i) the inquiry is different from a trial in criminal matters;
(ii) inquiry is wider than trial;
(iii) it stops when trial begins.
Investigation
It includes all the proceedings under this Code for the collection of evidence conducted
by a police officer or by any person (other than a Magistrate) who is authorised by a
Magistrate in this behalf. [Section 2(h)]
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The three terms – ‘investigation’, ‘inquiry’ and ‘trial’ denote three different stages of a
criminal case. The first stage is reached when a police officer either on his own or under
orders of a Magistrate investigates into a case (Section 202).
If he finds that no offence has been committed, he submits his report to the Magistrate
who drops the proceedings. But if he is of different opinion, he sends that case to a
Magistrate and then begins the second stage – a trial or an inquiry
Judicial Proceeding
It includes any proceeding in the course of which evidence is or may be legally taken on
oath. The term judicial proceeding includes inquiry and trial but not investigation.
[Section 2(i)]
Pleader
With reference to any proceedings in any Court, it means a person authorised by or under
any law for the time being in force, to practise in such Court and includes any other person
appointed with the permission of the Court to act in such proceeding. [Section 2(q)]
It is an inclusive definition and a non-legal person appointed with the permission of the
Court will also be included.
Public Prosecutor
A “public prosecutor” means any person appointed under Section 24, and includes any
person acting under the directions of a Public Prosecutor. [Section 2(u)]
Summons and Warrant Cases

“Summons case” means a case relating to an offence and not being a warrant case.
[Section 2(w)] A “Warrant case” means a case relating to an offence punishable with
death, imprisonment for life or imprisonment for a term exceeding 2 years.
Those cases which are punishable with imprisonment for two years or less are summons
cases, the rest are all warrant cases. Thus, the division is based on punishment which can
be awarded.
Classes of Criminal courts

Following are the different classes of criminal courts:
I. High Courts;
II. Courts of Session;
III. Judicial Magistrates of the first class, and, in any metropolitan area; Metropolitan
Magistrates;
IV. Judicial Magistrates of the second class; and
V. Executive Magistrates;
VI. Besides this, the Courts may also be constituted under any other law
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Power of courts
Chapter III of Cr.P.C. deals with power of Courts. One of such power is to try offences.
Offences are divided into two categories:
a) those under the Indian Penal Code; and
b) those under any other law.
According to Section 26, any offence under the Indian Penal Code, 1860 may be tried by
the High Court or the Court of Session or any other Court by which such offence is shown
in the First Schedule to be triable, whereas any offence under any other law shall be tried
by the Court mentioned in that law
Power of the Court to pass sentences

Sentences which High Courts and Sessions Judges may pass
(a) According to Section 28, a High Court may pass any sentence authorised by law.
(b) A Sessions Judge or Additional Sessions Judge may pass any sentence authorised by
law, but any sentence of death passed by any such judge shall be subject to
confirmation by the High Court
(c) An Assistant Sessions Judge may pass any sentence authorised by law except a
sentence of death or of imprisonment for life or of imprisonment for a term exceeding
ten years.
Sentences which Magistrates may pass

The powers of individual categories of Magistrates to pass the sentence are as under:
I. The Court of a Chief Judicial Magistrate may pass any sentence authorised by law
except a sentence of death or of imprisonment for life or of imprisonment for a
term exceeding 7 years.
II. A Magistrate of the first class may pass a sentence of imprisonment for a term not
exceeding 3 years or of a fine not exceeding Rs. 10,000 or of both.
III. A Magistrate of the 2nd class may pass a sentence of imprisonment for a term not
exceeding 1 year, or of fine not exceeding Rs. 5000 or of both.
IV. A Chief Metropolitan Magistrate shall have the powers of the Court of a Chief
Judicial Magistrate and that of a Metropolitan Magistrate, and the powers of the
Court of a Magistrate of the First class.
Sentence of imprisonment in default of fine

Where a fine is imposed on an accused and it is not paid, the law provides that he can be
imprisoned for a term in addition to a substantive imprisonment awarded to him, if any.
Section 30 defines the limits of Magistrate’s powers to award imprisonment in default of
payment of fine.
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It provides that the Court of a Magistrate may award such term of imprisonment in
default of payment of fine as is authorised by law provided the that the term:
I. is not in excess of the powers of the Magistrate under Section 29; and
II. where imprisonment has been awarded as part of the substantive sentence, it
should not exceed 1/4th of the term of imprisonment which the Magistrate is
competent to inflict as punishment for the offence otherwise than as
imprisonment in default of payment of the fine.
Sentences in cases of conviction of several offences at one trial

Section 31 relates to the quantum of punishment which the Court is authorised to impose
where the accused is convicted of two or more offences at one trial.
Arrest of Persons
Arrest without warrant (Section 41)
(a) who has been concerned in any cognizable offence or against whom a reasonable
complaint has been made, or credible information has been received, or a
reasonable suspicion exists, of his having been so concerned; or
(b) who has in his possession without lawful excuse, the burden of proving which excuse
shall lie on such person, any implement of housebreaking; or
(c) who has been proclaimed as an offender either under this Code or by order of the
State Government; or
(d) in whose possession anything is found which may reasonably be suspected to be
stolen property and who may reasonably be suspected of having committed an
offence with reference to such thing; or
(e) who obstructs a police officer while in the execution of his duty, or who has
escaped, or attempts to escape, from lawful custody; or
(f) who is reasonably suspected of being a deserter from any of the Armed Forces of
the Union; or
(g) who has been concerned in, or against whom a reasonable complaint has been
made, or credible information has been received, or a reasonable suspicion exists,
of his having been concerned in, any act committed at any place out of India which,
if committed in India, would have been punishable as an offence, and for which he
is, under any law relating to extradition, or otherwise, liable to be apprehended or
detained in custody in India; or
(h) who being a released convict, commits a breach of any rule, relating to notification
of residence or
(i) change of or absence from residence; or
(j) for whose arrest any requistion, whether written or oral, has been received from
another police officer, provided that the requisition specifies the person to be
arrested and the offence or other causes for which the arrest is to be made and it
appears therefrom that the person might lawfully be arrested without a warrant
by the officer who issued the requisition.
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Arrest on refusal to give name and residence (Section 42)

If any person who is accused of committing a non-cognizable offence does not give his
name, residence or gives a name and residence which the police officer feels to be false,
he may be taken into custody. However, such person cannot be detained beyond 24 hours
if his true name and address cannot be ascertained or fails to
execute a bond or furnish sufficient sureties. In that event he shall be forwarded to the
nearest Magistrate having jurisdiction.
Arrest by a private person (Section 43)

A private person may arrest or cause to be arrested any person who in his presence
commits a non-bailable and cognizable offence or who is a proclaimed offender
Arrest how made (Section 46)

The Section authorises a police officer or other person making an arrest to actually touch
or confine the body of the person to be arrested and such police officer or other person
may use all necessary means to effect the arrest if there is forcible resistance.
The Section does not give a right to cause the death of a person who is not accused of an
offence punishable with death sentence or life imprisonment
The word “arrest” consists of taking into custody of another person under authority
empowered by law, for the purpose of holding or detaining him to answer a criminal
charge and preventing the commission of a criminal offence.
Section 48 authorises a police officer to pursue the offender in to any place in India for
the purpose of effecting his arrest without warrant.
Arrest out of India

Ordinarily, a police officer is not at liberty to go outside India and to arrest an offender
without a warrant, but if he can arrest an offender without warrant who escapes into any
place in India, he can be pursued and arrested by him without warrant.
Period of Custody
Persons arrested are to be taken before the Magistrate or officer-in-charge of a police
station without unnecessary delay and subject to the provisions relating to bail, Article
22(2) of the Constitution of India also provides for producing the arrested person before
the Magistrate within 24 hours.
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When a person is arrested under a warrant, Section 76 becomes applicable, and when he
is arrested without a warrant, he can be kept into custody for a period not exceeding 24
hours, and before the expiry of that period he is to be produced before the nearest
Magistrate, who can under Section 167 order his detention for a term not
exceeding 15 days, or he can be taken to a Magistrate, under whose jurisdiction he is to
be tried, and such Magistrate can remand him to custody for a term which may exceed 15
days but not more than 60 days.
Officers in-charge of the concerned police stations shall report to the Magistrate the cases
of all persons arrested without warrant, within the limits of their respective police
stations whether such persons have been admitted to bail or otherwise. (Section 58)
A person arrested by a police officer shall be discharged only on his own bond or on bail
or under the special order of a Magistrate, (Section 59).
If a person in lawful custody escapes or is rescued, the person, from whose custody he
escaped or was rescued, is empowered to pursue and arrest him in any place in India and
although the person making such arrest is not acting under a warrant and is not a police
officer having authority to arrest, nevertheless, the provisions of section 47 are applicable
which stipulates provisions relating to search of a place entered by the person sought to
be arrested.
Summons and Warrants

The general processes to compel appearance are:
(a) Summons (Section 61)
(b) Warrants (Section 70) S
Summon
A summon is issued either for appearance or for producing a document or thing which
may be issued to an accused person or witness. Every summons issued by the Court shall
be in writing, in duplicate, signed by the Presiding Officer of such Court or by such officer
as is authorised by the High Court and shall bear the seal of the Court (Section 61).
The summons should be clear and specific in its terms as to the title of the Court, the
place at which, the day and time of the day when, the attendance of the person
summoned is required.
Service of summons
(a) The summons shall be served by a police officer or by an officer of the Court or
other public servant (Section 62).
(b) When personal service of summons cannot be affected under Section 62, the
extended service under Section 64 can be secured by leaving one of the duplicates
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with some adult male member of his family residing with him who may also be
asked to sign the receipt for that. A servant is not a member of the family within
the meaning of Section 64.
(c) In case the service cannot be effected by the exercise of due diligence, the serving
officer can perform substituted service by affixing one of the duplicates of the
summons to some conspicuous part of the house or homestead in which person
summoned ordinarily resides, and thereupon the Court, after making such
enquiries as it thinks fit may either declare that the summons has been duly served
or order fresh service, as it considers proper (Section 65).
The service of summons on corporate bodies, and societies (Section 63)

The service of summons on a corporation may be effected by serving it on the secretary,
local manager or other principal officer of the corporation, or by letter sent by registered
post, addressed to the Chief Officer of the corporation in India, in which case the service
shall be deemed to have been effected when the letter would
arrive in ordinary course of post.
In the case of a Government Servant (Section 66)

In the case of a Government Servant, the duplicate copy of the summons shall be sent to
the head of the office by the Court and such head shall thereupon cause the summons to
be served in the manner provided by Section 62 and shall return it to the Court under his
signature with the endorsement required by Section 62. Such signature shall be evidence
of due service. A
Warrant of Arrest(Section 70)

Every warrant of arrest issued by a Court under this Code shall be in writing, signed by
the presiding officer of such Court, and shall bear the seal of the Court. Such warrant shall
remain in force until it is cancelled by the Court which issued it, or until it is executed.
The form of warrant of arrest is Form No. 2 of the Second Schedule.
The requisites of a warrant are as follows:

1. It must be in writing.
2. It must bear the name and designation of the person who is to execute it;
3. It must give full name and description of the person to be arrested;
4. It must state the offence charged;
5. It must be signed by the presiding officer; and
6. It must be sealed. N
Procedure after arrest (Section 76)
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The police officer or other person executing the warrant of arrest shall bring the person
arrested before the Court without unnecessary delay provided that such delay shall not
in any case exceed 24 hours exclusive of the time necessary for the journey from the place
of arrest to the Magistrate’s Court. D
Where a warrant remains unexecuted, the Code provides for two remedies:
(1) issuing a proclamation (Section 82); and

(2) attachment and sale of property (Section 83)
Issuing a proclamation
If a Court has reason to believe that any person against whom a warrant has been issued
by it has absconded or is concealing himself so that such warrant cannot be executed, the
Court may publish a written proclamation requiring him to appear at a specified place
and at a specified time not less than 30 days from the date of publishing such
proclamation. (Section 82)
While issuing proclamation, the Magistrate must record to his satisfaction that the
accused has absconded or is concealing himself. The object of attaching property is not to
punish him but to compel his appearance.
Production of Documents
Sometimes it is necessary that a person should produce a document or other thing which
may be in his possession or power for the purposes of any investigation or inquiry under
this Code. This can be compelled to be produced by issuing summons (Sections 91 and
92) or a warrant (Sections 93 to 98).
According to Section 93, a search warrant can be issued only in the following cases:
a. where the Court has reason to believe that a person summoned to produce any
document or other thing will not produce it;
b. where such document or thing is not known to the Court to be in the possession of
any person; or
c. where a general inspection or search is necesary. However, a search warrant may be
general or restricted in its scope as to any place or part thereof.
But such warrant shall not be issued for searching a document, parcel or other thing in
the custody of the postal or telegraph authority, by a magistrate other than a District
Magistrate or Chief Judicial Magistrate
Security for keeping the peace and for good behaviour
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The provisions of Chapter VIII are aimed at persons who are a danger to the public by
reason of the commission of certain offences by them. The object of this chapter is
prevention of crimes and disturbances of public tranquillity and breach of the peace.
Security for keeping the peace on conviction

When a Court of Session or Court of a Magistrate of first class convicts a person of any of
the offences or of abetting any such offence and is of opinion that it is necessary to take
security from such person for keeping the peace, the Court may, at the time of passing
sentence on such person, order him to execute a bond, with or without sureties, for
keeping the peace for such period, not exceeding three years, as itthinks fit.
The offences specified under are as follows:

a) any offence punishable under Chapter VIII of the India Penal Code 1860.
b) any offence which consists of or includes, assault or using criminal force or
committing mischief;
c) any offence of criminal intimidation;
d) any other offence which caused, or was intended or known to be likely to cause a
breach of the peace.
However, if the conviction is set-aside on appeal or otherwise, the bond so executed shall
become void. (Section 106)
Security for keeping the peace in other cases

When an Executive Magistrate receives information that any person is likely to:
i. commit a breach of peace; or
ii. disturb the public tranquillity; or
iii. do any wrongful act that may probably occasion a breach of the peace; or disturb
the public tranquillity;
he may require such person to show cause why he should not be ordered to execute a
bond for keeping the peace for a period not exceeding one year as the Magistrate deem
fit. (Section 107)
A–Unlawful assemblies
Dispersal of assembly by use of civil force
Any Executive Magistrate or office in-charge of a police station or, in the absence of such
officer in-charge, any other officer not below the rank of sub-inspector may command
any unlawful assembly or any assembly of five or more persons likely to cause a
disturbance of the public peace, to disperse and it shall be thereupon the duty
of the members of such assembly to disperse accordingly.
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If any such assembly does not disperse or conducts itself in a manner as to show a
determination not to disperse, any Executive Magistrate or police officer referred to
above may proceed to disperse such assembly by force and may require the assistance of
any male person not being an officer or member of the armed forces and acting as such,
for the purpose of dispersing such assembly and if necessary arresting and confining the
persons who form part of it, in order to disperse such assembly. (Section 129)
No prosecution shall be instituted against such persons in any criminal Court except with
the sanction of Central Government if the person is an officer or member of the armed
forces or with the sanction of State Government in any other case.(Section 130)
B–Public nuisances
Conditional order for removal of nuisance Section 133 lays down the following public
nuisances which can be proceeded against:
(a) the unlawful obstruction or nuisance should be removed from any public place or
from any way, river or channel which is or may be lawfully used by the public; or
(b) carrying on any trade or occupation, or keeping of any goods or merchandise,
injurious to the health of the community; or
(c) the construction of any building or the disposal of any substance, as is likely to cause
conflagration or explosion; etc.
(d) the building, tent or structure near a public place.
(e) the dangerous animal requiring destroying, confining or disposal.
For initiating prevention under this Section the Magistrate should keep in mind that he is
acting purely in the public interest. For the applicability of clause A, the public must have
the right of way which is being obstructed.
Power to issue order in urgent cases of nuisance or apprehended danger

As per Section 144 of the Code where in the opinion of a District Magistrate, a Sub-
divisional Magistrate or any other Executive Magistrate specially empowered by the State
Government in this behalf, there is sufficient ground for proceeding under this Section
and immediate prevention or speedy remedy is desirable, in such cases the Magistrate
may by a written order stating the material facts of the case and served in the manner
provided by Section 134, direct any person to abstain from a certain act or to take certain
order with respect to certain property in his possession or under his management, if such
Magistrate considers that such direction is likely to prevent or tends to prevent,
obstruction, annoyance of injury to any person lawfully employed, or danger to human
life, health or safety or a disturbance of the public tranquillity, or a riot, or an affray.
An order under this Section may be passed ex-parte in cases of emergency or in cases
where the circumstances do not admit of the serving of notice in due time upon the
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person against whom the order is directed. An order under this Section can remain in
force for two months, and may be extended further for a period not exceeding 6 months
by the State Government if it considers necessary.
Preventive Detention
Section 149 authorises a police officer to prevent the commission of any cognizable
offence. If the police officer receives the information of a design to commit such an
offence, he can communicate such information to his superior police officer and to any
other officer whose duty it is to prevent or take cognizance of the commission of any such
offence. The police officer may arrest the person without orders from Magistrate and
without a warrant if the commission of such offence cannot be otherwise prevented.
The arrested person can be detained in custody only for 24 hours unless his further
detention is required under any other provsions of this Code or of any other law.
Inspection of weights and measures (Section 153)

Any officer incharge of the police station may without a warrant enter any place within
the limits of such station for the purpose of inspecting or searching for any weights or
measures or instruments for weighing, used or kept therein, whenever he has reason to
believe that there are in such place any weights, measures or instruments for weighing
which are false, and if he finds in such place any false weights, measures or instruments
he may seize the same and shall give information of such seizure to a Magistrate having
jurisdiction.
INFORMATION TO THE POLICE AND THEIR POWERS TO INVESTIGATE
Information in cognizable cases (Section 154)

(a) Every information relating to the commission of a cognizable offence, if given orally
to an officer in charge of a police station, shall be reduced to writing by him or under
his direction and be read over to the informant.
(b) Every such information shall be signed by the person giving it and the substance
thereof shall be entered ina book kept by such officer in such form as may be
prescribed by the State Government in this behalf.
(c) The above information given to a police officer and reduced to writing is known as
First Information Report (FIR).The investigation of the case proceeds on this
information only. Thus, the principal object of this Section is to set the criminal law in
motion and to obtain information about the alleged criminal activities so as to punish
the guilty.
(d) Any person aggrieved by a refusal on the part of an officer in charge of a police station
to record the information may send the substance of such information in writing and
by post to the Superintendent of Police concerned who if satisfied that such
information discloses the commission of a cognizable offence shall either investigate
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the case himself or direct an investigation to be made by any police officer

subordinate to him
(e) A copy of the information as recorded under sub-section (1) shall be given to the
informant free of cost.
Information as to non-cognizable cases and investigation of such cases (Section 155)

(a) When information is given to an officer in charge of a police station of the commission
within the limits of such station of a non-cognizable offence, he shall enter or cause to
be entered the substance of the information in a book to be kept by such officer in
such form as the State Government may prescribe in this behalf and refer the
informant to the Magistrate.
(b) The police officer is not authorised to investigate a non-cognizable case without the
order of Magistrate having power to try such cases, and on receiving the order, the
police officer may exercise the same powers in respect of investigation as he may
exercise in a cognizable case.
(c) Where a case relates to two or more offences of which at least one is cognizable, the
case shall be deemed to be a cognizable case, notwithstanding that the other offences
are non-cognizable. [Section 155(4)]
Police officer’s powers to investigate cognizable case

In case of a cognizable offence the police officer may conduct investigations without the
order of a Magistrate. Investigation includes all proceedings under the Code for the
collection of evidence by the police officer or by any person who is authorised by the
Magistrate in this behalf.
Any Magistrate empowered under Section 190 may order such investigation as above
mentioned. Sections 160 and 161 authorise a police officer making an investigation to
require the attendance of and may examine orally any person who appears to be
acquainted with the facts and circumstances of the case. (Section 156)
Search by police officer

This Section authorises general search if the police officer has reason to believe that
anything necessary for the purpose of an investigations may be found. The officer acting
under this sub-section must record in writing his reasons for making of a search. But, the
illegality of search will not affect the validity of the articles or in any way vitiate the
recovery of the articles and the subsequent trial. (Section 165)
Whenever any person is arrested or detained in custody and it appears that the
investigation cannot be completed within the period of twenty four hours as laid down in
Section 57 The Magistrate may authorise the detention of the accused in custody for a
term not exceeding of fifteen days. (Section 167)
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On completion of investigation, the competent police officer under the Code shall forward
a police report with the prescribed details to a Magistrate empowered to take cognizance
of the offence and send along with the report all documents or relevant extracts
(Section173)
Cognizance of an offence by Magistrate Section 190
Any Magistrate of first class and of the second class specially empowered may take
cognizance of an offence upon:
a. receiving a complaint of facts constituting such offence;
b. a police report of such facts;
c. information received from any person other than a police officer;
d. His own knowledge that such offence has been committed.
Complaints to Magistrates
(a) A Magistrate taking cognizance of an offence on complaint examines the complainant
and the witnesses if any upon oath and then the substance of such examination is
reduced to writing and signed by the complainant and witnesses and also by the
Magistrate.
(b) The Magistrate enquiring into a case may take evidence of witnesses on oath but
where the offence is triable by the Court of Session, he shall call upon the complainant
to produce all his witnesses and examines them on oath.
(c) He may dismiss the complaint if after considering the statement on oath and the result
of the investigation or enquiry, there is no sufficient ground for proceeding and may
record his reasons for doing so.
(d) On the other hand if the Magistrate is of opinion that there is sufficient ground for
taking cognizance of an offence he may either issue summons for attendance of the
accused
(e) If the case appears to be a summons-case or he may in a warrant case issue a warrant
or summons for the accused to be produced at a certain time before such Magistrate.
(f) It is important that no summon or warrant shall be issued against the accused unless
a list of prosecution witnesses has been filed.
(g) Every charge under this Code shall state the offence with which the accused is charged
specifying the law and the name of the offence, particulars of time and place of the
alleged offence.
(h) For every distinct offence of which any person is accused there shall be a separate
charge and every such charge shall be tried separately.
(i) If more than one offence is committed by the same person in one series of acts so
connected together as to form the same transaction, he may be charged with and tried
at one trial for every such offence.
(j) Persons accused of the same offence, committed in the course of the same
transaction, or abetment of such offence may be charged jointly and tried together.
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(k) The judgement in every trial in any Criminal Court of original jurisdiction shall be
pronounced by the presiding officer by delivering or reading out the whole of the
judgement or the operative part of the judgement in open Court. (Section 353)
(l) Every judgement should be written in the language of the Court and should contain
the point or points for determination, the decision thereon and the reasons for the
decision.
(m) It should specify the offence and the Section of Indian Penal Code or other law under
which the accused is convicted and the punishment to which he is sentenced.
(n) no court when it has signed its judgement or final order disposing of a case, shall alter
or review the same except to correct a clerical or arithmetical error (Section 362)
Appeal
No appeal shall lie from any judgement or order of Criminal Court except as provided for
by this Code (Section 372). In the case of an acquittal, the State. Government may direct
the Public Prosecutor to present an appeal to the High Court from an original or appellate
order of acquittal passed by any Court other than a High Court.
Every appeal in the case of appealable orders shall be made in the form of a petition in
writing presented by the appellant or his pleader and shall be accompanied by a copy of
the judgement or order appealed against.
An Appellate Court may if it thinks additional evidence to be necessary shall record its
reasons and may either take such evidence itself or direct it to be taken by a Magistrate.
(Section 391)
A Court may refer a case to High Court if it is of the opinion that is involves a question as
to validity of any Act, Ordinance or Regulation and the Court is of opinion that such Act,
Ordinance, or Regulation is in-operative or invalid but has not been declared so by the
High Court or the Supreme Court. The Court has to state setting out its opinion and the
reasons therefor, and refer the same for the decision of the High Court
Bail
U/s 438, provisions have been made for a person who has reason to believe that he may
be arrested on an accusation of having committed a non-bailable offence, he may apply
to the High Court or the Court of Session for a direction and that Court may if it thinks fit
direct that in the event of such arrest, the person shall be released on bail on such
conditions which the Court may include in such directions.
Limitation or Taking Cognizance

Code prescribes limitation period for taking cognizance of certain offences. (Sections 467
to 473)Except as otherwise specifically provided in the Code, no Court shall take
cognizance of an offence after the expiry of the period of limitation mentioned below:
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i. 6 months, if the offence is punishable with fine only.

ii. 1 year, if the offence is punishable with imprisonment for a term not exceeding one
year; and
iii. 3 years, if the offence is punishable with imprisonment for a term exceeding one
year but not exceeding three years.
Commencement of the period of limitation

The period in relation to an offender commences
(a) on the date of the offence;
(b) if the commission of the offence was not known to the person aggrieved or to the
police officer, the first day on which either such offence comes to the knowledge of
such person or to any police officer, whichever is earlier;
(c) Where the identity of the offender is not known, the first day on which such identity
becomes known either to the person aggrieved or the police officer whichever is
earlier.
Section 470 provides provisions for exclusion of time in certain cases.

These are as under:
(a) The period during which another prosecution was diligently prosecuted (the
prosecution should relate to the same facts and is prosecuted in good faith);
(b) the period of the continuance of the stay order or injunction (from the date of grant
to the date of withdrawal) granted against the institution of prosecution;
(c) where notice of prosecution has been given, the period of notice;
(d) where previous sanction or consent for the institution of any prosecution is
necessary, the period required for obtaining such consent or sanction including the
date of application for obtaining the sanction and the date of the receipt of the order;
(e) the period during which the offender is absent from India or from territory outside
India under Central Govt. Administration; and
(f) Period when the offender is absconding or concealing himself.
(g) If limitation expires on a day when the Court is closed, cognizance can be taken on the
day the Court re-opens.
Continuing offence – In the case of a continuing offence, a fresh period of limitation

begins to run at every moment during which the offence continues.
Extension of period of limitation – The Court may take cognizance of an offence after the
expiry of the period of limitation if it is satisfied that -
(a) the delay is properly explained or
(b) it is necessary to do so in the interests of justice.
Summary trial
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Summary trial means the “speedy disposal” of cases. Section 260(1) of the Criminal
Procedure Code sets out the provisions for summary trials. It says:
(a) any Chief Judicial Magistrate;
(b) any Metropolitan Magistrate;
(c) any Magistrate of the First class who is specially empowered in this behalf by the High
Court, may, if he thinks fit, try in a summary way all or any of the following offences:
I. offences not punishable with death, imprisonment for life or imprisonment for a
term exceeding two years;
II. theft under Section 379, Section 380 or Section 381 of the Indian Penal Code,
where the value of the property stolen does not exceed Rs. 2000;
III. receiving or retaining stolen property, under Section 411 of the Indian Penal Code,
where the value of such property, does not exceed Rs. 2000;
IV. assisting in the concealment or disposal of stolen property, under Section 414 of
the Indian Penal Code, where the value of such property does not exceed Rs. 2000;
V. offences under Sections 454 and 456 of the Indian Penal Code;insult with intent
to provoke a breach of the peace, under Section 504 of the Indian Penal Code;
VI. abetment of any of the foregoing offences;
VII. an attempt to commit any of the foregoing offences, when such attempt is an
offence;
VIII. any offence constituted by an act in respect of which a complaint may be made
under Section 20 of the Cattle Trespass Act, 1871.
Record in summary trials

The Magistrate shall enter in the prescribed form the following particulars in every case
tried summarily:
(1) The serial number of the case;
(2) The date of the commission of the offence;
(3) The date of the report or complaint;
(4) The name of the complainant (if any);
(5) The name, parentage and residence of the accused;
(6) The offence complained of and the offence proved, and the value of the property in
respect of which the offence has been committed if the case comes under clause (ii) (iii)
or (iv) of Section 260(1).
(7) the plea of the accused and his examination if any;
(8) the findings;
(9) the sentence or other final order;
(10) the date on which proceedings terminated.
The register containing the particulars mentioned above forms the record in a summary
trial.
Judgement in summary trials
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In every case tried summarily in which the accused does not plead guilty, the Magistrate
shall record the substance of the evidence and a judgement containing a brief statement
of the reason for the finding. The concerned Magistrate must sign such record and
judgement.
The question whether a case may be tried summarily by a Magistrate as provided in this
Section and if the offence is summarily triable, it is a matter of discretion of the
Magistrate, which is to be judicially exercised with due care as well as considering the
circumstances of the case.
Maximum imprisonment under summery trial the person found guilty in a summary trial
can be sentenced to imprisonment maximum for a period of 3 months.
Judgement in summary trials

In every case tried summarily in which the accused does not plead guilty, the Magistrate
shall record the substance of the evidence and a judgement containing a brief statement
of the reason for the finding. The concerned Magistrate must sign such record and
judgement.
7.35
Indian Evidence Act
INDIAN EVIDENCE ACT, 1872
Introduction
The "Law of Evidence" may be defined as a system of rules for ascertaining controverted
questions of fact in judicial inquiries.
This system of ascertaining the facts, which are the essential elements of a right or
liability and is the primary and perhaps the most difficult function of the Court, is
regulated by a set of rules and principles known as “Law of Evidence”.
The Indian Evidence Act, 1872 is an Act to consolidate, define and amend the Law of
Evidence.
It applies to all judicial proceedings in or before any Court, including Court-martial

other than
Ø the Court-martial convened under the Army Act,
Ø the Naval Discipline Act or
Ø the Indian Navy Discipline Act, 1934 or
Ø the Air Force Act
but not to affidavits presented to any Court or officer, or to proceedings before an
arbitrator
Judicial Proceedings
• The Act does not define the term "judicial proceedings"
• It is defined under Section 2(i) of the Criminal Procedure Code as "a proceeding in
the course of which evidence is or may be legally taken on oath".
• The proceedings under the Income Tax are not "judicial proceedings" under this
Act.
• The Act is also not applicable to the proceedings before an arbitrator.
• An affidavit is a declaration sworn or affirmed before a person competent to
administer an oath. Thus, an affidavit per se does not become evidence in the suits
but it can become evidence only by consent of the party or if specifically, authorised
by any provision of the law.
Evidence
• The term evidence is defined under Section 3 of the Evidence Act as follows:
8.1
Indian Evidence Act
“Evidence” means and includes:

1) all statements which the Court permits or requires to be made before it by
witnesses, in relation to matters of fact under inquiry; such statements are called
oral evidence;
2) all documents (including electronic records) produced for the inspection of the
Court; such documents are called documentary evidence.
• The word evidence in the Act signifies only the instruments by means of which
relevant facts are brought before the Court, viz., witnesses and documents, and by
means of which the court is convinced of these facts.
• Evidence may be either oral or personal.
• In general, the rules of evidence are same in civil and criminal proceedings but there
is a strong and marked difference as to the effect of evidence in civil and criminal
proceedings. In the former a mere preponderance of probability due regard being
had to the burden of proof, is sufficient basis of a decision, but in the latter, specially
when the offence charged amounts to felony or treason, a much higher degree of
assurance is required. The persuasion of guilt must amount to a moral certainty such
as to be beyond all reasonable doubt.
Facts
According to Section 3, “fact” means and includes:
a) anything, state of things, or relation of things
capable of being perceived by the senses;
b) any mental condition of which any person is
conscious.
Thus facts are classified into physical and psychological facts.
Illustrations
a) That a man heard or saw something, is a fact.
b) That a man has a certain reputation, is a fact.
(a)is example of physical facts whereas (b)is example of psychological bids
Section 5
This Section provides that evidence may be given in any suit or proceeding of the
existence or non-existence of every fact in issue and of such other facts as are hereinafter
declared to be relevant, and of no others.
The Explanation appended to Section 5, however, makes it clear that this section shall not
enable any person to give evidence of a fact to which he is disentitled to prove by any
provision of the law.
Evidence may be given of facts in issue and relevant facts.
1) Relevant Fact
8.2
Indian Evidence Act
• Relevant facts are those inter-connected facts which prove the existence or non-
existence of facts in issue. It is not an essential ingredient of a right or liability.
• Where in a case direct evidence is not available to prove a fact in issue then it may
be proved by any circumstantial evidence and in such a case every piece of
circumstantial evidence would be an instance of a "relevant fact".
• Relevant facts can be:
i. Logical relevancy and legal relevancy
A fact is said to be logically relevant to another when it bears such casual
relation with the other as to render probably the existence or non-existence of
the latter. All facts logically relevant are not, however, legally relevant.
ii. Legal relevancy and admissibility
Relevancy and admissibility are not co-extensive or interchangeable terms. A
fact may be legally relevant, yet its reception in evidence may be prohibited on
the grounds of public policy, or on some other ground. Similarly every
admissible fact is not necessarily relevant.
2) Facts in issue
"facts in issue" means and includes-any fact from which, either by itself or in
connection with other facts, the existence, non-existence, nature or extent of any right,
liability, or disability, asserted or denied in any suit or proceedings, necessarily
follows. The facts which establish the litigated right or liability is called fact in issue.
It is called ‘factum probandum’.
Illustration
A is accused of the murder of B.
At his trial the following facts may be in issue:
Ø that A caused B’s death;
Ø that A intended to cause B’s death;
Ø that A had received grave and sudden provocation from B;
Ø that A at the time of doing the act which caused B’s death, was, by reason of
unsoundness of mind, incapable of knowing its nature.
Thus, ‘facts in issue’ are those facts, which are alleged by one party and denied by other
party in the pleading in a civil case or alleged by the prosecution and denied by the
accused in a criminal case.
Facts in issue and issues of fact

Under Civil Procedure Code, the Court has to frame issues on all disputed facts which are
necessary in the case. These are called issues of fact but the subject matter of an issue of
fact is always a fact in issue.
Thus when described in the context of Civil Procedure Code, it is an ‘issue of fact’ and
when described in the language of Evidence Act it is a ‘fact in issue’. Thus as discussed
above, distinction between facts in issue and relevant facts is of fundamental
importance.
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Indian Evidence Act
Classification of relevant facts

Relevant facts may be classified in the following form:
i. facts connected with the facts to be proved;
ii. statement about the facts to be proved e.g. admission, confession;
iii. statements by persons who cannot be called as witnesses;
iv. statements made under special circumstances;
v. how much of a statement is to be proved;
vi. judgements of Courts of justice, when relevant;
vii. opinions of third persons, when relevant;
viii. character of parties in Civil cases and of the accused in criminal cases.
Two fundamental rules on which the law of evidence is based are:

a) no facts other than those having rational probative value should be admitted in
evidence and,
b) all facts having rational probative value are admissible in evidence unless
excluded by a positive rule of paramount importance.
§ The Court ‘may presume’ a fact as may be provided by the Act, unless and until it is
disproved or may call for proof of it.
§ Presumption has been defined as an inference, affirmative or affirmative of the
existence of some fact, drawn by a judicial tribunal, by a process of probable
reasoning form some matter of fact, either judicially noticed, admitted or established
by legal evidence to the satisfaction of the tribunal. It is an inference of the existence
of some fact, which is drawn, without evidence, from some other fact already proved
or assumed to exist (wills).
§ Presumption is either of a fact or law.
§ These presumptions which are inference are always rebuttable.
§ Presumption of law is either conclusive or rebuttable.
§ The Act also provides that when one fact is declared by this Act to be conclusive proof
of another, the court shall on the proof of the one fact, regard the other as proved and
shall not allow evidence to be given for the purpose of disproving it.
Relevancy of facts connected with the fact to be proved

The facts coming under this category are as follows:
1) Res gestae or facts which though not in issue, are so connected with a fact in issue
as to form part of the same transaction.
Section 6 embodies the rule of admission of evidence relating to what is commonly

known as res gestae. Acts or declarations accompanying the transaction or the facts
in issue are treated as part of the res gestae and admitted as evidence. The obvious
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Indian Evidence Act
ground for admission of such evidence is the spontaneity and immediacy of the act or
declaration in question.
Illustration
Arman is accused of the murder of Bharat by beating him. Whatever was said or done
by Arman or Bharat or the by-standers at the beating, or so shortly before or after it
as to form part of the transaction, is a relevant fact. The entire conversations, act
between Arman, Bharat and by-standers shall be treated as Res Gestae.
2) Facts constituting the occasion, or effect of, or opportunity or state of things for
the occurrence of the fact to be proved whether it be a fact or another relevant
fact. (Section 7)
Illustration
The question is, whether A robbed B.
The facts that, shortly before the robbery, B went to a fair with money in his
possession, and that he showed it, or mentioned the fact that he had it, to third
persons, are relevant.
3) Motive, preparation and previous or subsequent conduct.
• According to Section 8, any fact is relevant which shows or constitutes a motive

or preparation for any fact in issue or relevant fact.
• What is relevant under Section 8 is the particular act upon the statement and the
statement and the act must be so blended together as to form a part of a thing
observed by the witnesses and sought to be proved.
• Motive means which moves a person to act in a particular way. It is different from
intention. Motive is a psychological fact and the accused’s motive, will have to be
proved by circumstantial evidence.
• The Section makes the conduct of certain persons relevant. Conduct means
behaviour. The conduct of the parties is relevant. The conduct to be relevant must
be closely connected with the suit, proceeding, a fact in issue or a relevant fact,. It
must influence the decision. If these conditions are satisfied it is immaterial
whether the conduct was previous to or subsequent to the happening of the fact
in issue.
Illustrations
A is tried for the murder of B. The fact that A murdered C, that B knew that A had
murdered C, and that B had tried to extort money from A by threatening to make his
knowledge public, are relevant.
4) Facts necessary to explain or introduce relevant facts.
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Indian Evidence Act
According to Section 9, such facts are -

i. which are necessary to explain or introduce a fact in issue or relevant fact, or
ii. which support or rebut an inference suggested by a fact in issue or relevant
fact, or
iii. which establish the identity of a person or thing whose identity is relevant, or
fix the time or place at which any fact in issue or relevant fact happened, or
iv. which show the relation of parties by whom any such fact was transacted, are
relevant in so far as they are necessary for that purpose.
Facts which establish the identity of an accused person are relevant under Section 9.
Illustrations
The question is, whether a given document is the will of A. The state of A’s property and
of his family at the date of the alleged will may be relevant facts.
Statements about facts to be proved

The general rule known as the hearsay rule is that what is stated about the fact in question
is irrelevant. To this general rule there are three exceptions which are:
1. Admissions and Confessions

Sections 17 to 31 lay down the first exception to the general rule known as admissions
and confessions.
Admissions
Ø An admission is defined in Section 17 as a statement, oral or documentary or
contained in electronic form which suggests any inference as to any fact in issue
or relevant fact, and which is made by any of the persons, and under the
circumstances mentioned under Sections 18 to 20.
Ø Admission may be verbal or contained in documents as maps, bills, receipts,
letters, books etc.
Ø An admission may be made by a party, by the agent or predecessor-in-interest of
a party, by a person having joint propriety of pecuniary interest in the subject
matter or by a “reference”.
Ø An admission is the best evidence against the party making the same unless it is
untrue and made under the circumstances which does not make it binding on him.
Ø An admission by the Government is merely relevant and non-conclusive, unless
the party to whom they are made has acted upon and thus altered his detriment.
Ø An admission must be clear, precise, not vague or ambiguous.
Ø Admission means conceding something against the person making the admission.
That is why it is stated as a general rule (the exceptions are in Section 21), that
admissions must be self-harming; and because a person is unlikely to make a
statement which is self-harming unless it is true evidence of such admissions as
received in Court.
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Indian Evidence Act
Ø Admissions by conduct are not covered by these sections.

Ø Oral admissions as to the contents of electronic records are not relevant unless the
genuineness of the record produced is in question. (Section 22A)
Confessions
Ø Sections 24 to 30 deal with confessions. However, the Act does not define a
confession but includes in it admissions of which it is a species. Thus confessions
are special form of admissions.
Ø Whereas every confession must be an admission but every admission may
not amount to a confession.
Ø A confession is relevant as an admission unless it is made:
i. to a person in authority in consequence of some inducement, threat or promise
held out by him in reference to the charge against the accused;
ii. to a Police Officer; or
iii. to any one at a time when the accused is in the custody of a Police Officer and
no Magistrate is present.
Ø Thus, a statement made by an accused person if it is an admission, is admissible in
evidence. The confession is evidence only against its maker and against another
person who is being jointly tried with him for an offence.
Ø Section 30 is an exception to the general rule that confession is only an
evidence against the confessor and not against the others.
The confession made in front of magistrate in a native state recorded is admissible
against its maker is also admissible against co-accused under Section 30.
Ø The Privy Council in Pakala Narayanaswami v. Emperor, observed that:
No statement that contains self-exculpatory matter can amount to confession, if
the exculpatory statement is of some fact which if true would negative the offence
alleged to be confessed. All confessions are admissions but not vice versa. A
confession must, either admit, in terms the offence, or substantially all the facts
which constitute the offence. An admission of a gravely incriminating fact, is not
of itself a confession. For example, an admission that the accused was the owner
of and was in recent possession of the knife or revolver which caused a death with
no explanation of any other man’s possession of the knife or revolver. A confession
cannot be construed as meaning a statement by the accused suggesting the
inference that he committed the crime.
Ø According to Section 24, confession caused by inducement, threat or promise is
irrelevant. To attract the prohibition contained in Section 24 of the Evidence Act
the following six facts must be established:
(i) that the statement in question is a confession;
(ii) that such confession has been made by an accused person;
(iii) that it has been made to a person in authority;
(iv) that the confession has been obtained by reason of any inducement, threat
or promise proceeded from a person in authority;
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Indian Evidence Act
(v) such inducement, threat or promise, must have reference to the charge
against the accused person;
(vi) the inducement, threat or promise must in the opinion of the Court be
sufficient to give the accused person grounds, which would appear to him
reasonable for supposing that by making it he would gain any advantage or
avoid any evil of a temporal nature in reference to the proceedings against
him.
Ø To exclude the confession, it is not always necessary to prove that it was the
result of inducement, threat or promise. It is sufficient if a legitimate doubt is
created in the mind of the Court or it appears to the Court that the confession was
not voluntary. It is however for the accused to create this doubt and not for the
prosecution to prove that it was voluntarily made. A confession if voluntary and
truthfully made is an efficacious proof of guilt.
Difference between Admission and Confession
Admission Confession
It means voluntary acknowledgement of It means a statement made by accused
existence of truth of particular fact admitting his guilt
Admission is a genesis Confession is specie hence all confessions

are admissions but all admissions are not
confessions.
It is defined under Indian Evidence Act, It is not defined
1872
It can be oral or written It should be in writing and signed by the
parties.
It may or may not be voluntary It is always mandatory
2. Statements by persons who cannot be called as witnesses

Certain statements made by persons who are dead, or cannot be found or produced
without unreasonable delay or expense, makes the second exception to the general
rule. However, the following conditions must be fulfilled for the relevancy of the
statements:
a) That the statement must relate to a fact in issue or relevant fact,
b) That the statement must fall under any of following categories:
i. the statement is made by a person as to the cause of this death or as to any of the
circumstances resulting in his death;
ii. statement made in the course of business;
iii. Statement which is against the interest of the maker;
iv. a statement giving the opinion as to the public right or custom or matters of
general interest;
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Indian Evidence Act
v. a statement made before the commencement of the controversy as to the

relationship of persons, alive or dead, if the maker of the statement has special
means of knowledge on the subject;
vi. a statement made before the commencement of the controversy as to the
relationship of persons deceased, made in any will or deed relating to family
affairs to which any such deceased person belong;
vii. a statement in any will, deed or other document relating to any transaction by
which a right or custom was created, claimed, modified, etc.;
viii. a statement made by a number of persons expressing their feelings or impression;
ix. evidence given in a judicial proceeding or before a person authorised by law to
take it, provided that the proceeding was between the same parties or their
representatives in interest and the adverse party in the first proceeding had the
right and opportunity to cross examine and the questions in issue were
substantially the same as in the first proceeding.
Illustrations
The question is, whether A was murdered by B; or A dies of injuries received in a
transaction in the course of which she was ravished. The question is, whether she was
ravished by B; or The question is, whether A was killed by B under such circumstances
that a suit would lie against B by A’s widow.
Statements made by A as to the course of his or her death, referring respectively to the
murder, the rape and the actionable wrong under consideration are relevant facts.
3. Statements made under special circumstances

The following statements become relevant on account of their having been made
under special circumstances:
i. Entries made in books of account, including those maintained in an electronic form
regularly kept in the course of business. Such entries, though relevant, cannot,
alone, be sufficient to charge a person with liability; (Section 34)
ii. Entries made in public or official records or an electronic record made by a public
servant in the discharge of his official duties, or by any other person in
performance of a duty specially enjoined by the law; (Section 35)
iii. Statements made in published maps or charts generally offered for the public sale,
or in maps or plans made under the authority of the Central Government or any
State government; (Section 36)
iv. Statement as to fact of public nature contained in certain Acts or notification;
(Section 37)
v. Statement as to any foreign law contained in books purporting to be printed or
published by the Government of the foreign country, or in reports of decisions of
that country. (Section 38)
vi. When any statement of which evidence is given forms part of a longer statement,
or of a conversation or part of an isolated document, or is contained in a document
which forms part of a book, or is contained in part of electronic record or of a
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Indian Evidence Act
connected series of letters or papers, evidence shall be given of so much and no

more of the statement, conversation, document, electronic record, book or of
letters or papers as the Court considers necessary in that particular case to the full
understanding of the nature and effect of the statement, and of the circumstances
under which it was made. (Section 39)
Opinion of third persons when relevant

The general rule is that opinion of a witness on a question whether of fact or law, is
irrelevant. However, there are some exceptions to this general rule. These are:
a) Opinions of experts. (Section 45)
Ø Illustration - The question is, whether a certain document was written by A.
Another document is produced which is proved or admitted to have been written
by A.
The opinions of experts on the question whether the two documents were written
by the same person or by different persons, are relevant. Similarly the opinions of
experts on typewritten documents as to whether a given doucment is typed on a
particular typewriter is relevant.
Ø As a general rule the opinion of a witness on a question whether of fact, or of law,
is irrelevant. Witness has to state the facts which he has seen, heard or perceived,
and noted the conclusion, form of observations. The functions of drawing
inferences from facts is a judicial function and must be performed by the Court.
Ø Opinions of experts are relevant upon a point of (a) foreign law (b) science (c) art
(d) identity of hand writing (e) finger impression special knowledge of the subject
matter of enquiry become relevant.
b) Facts which support or are inconsistent with the opinions of experts are also
made relevant. (Section 46)
c) Others: In addition to the opinions of experts, opinion of any other person is
also relevant in the following cases:
Ø Opinion as to the handwriting of a person if the person giving the opinion is
acquainted with the handwriting of the person in question; (Section 47)
Ø Opinion as to the digital signature of any person, the opinion of the Certifying
Authority which has issued the Digital Signature Certificate; (Section 47A)
Ø Opinion as to the existence of any general right or custom if the person giving the
opinion is likely to be aware of the existence of such right or custom; (Section 48)
Ø Opinion as to usages etc. words and terms used in particular districts, if the person
has special means of knowledge on the subject; (Section 49)
Ø Opinion expressed by conduct as the existence of any relationship by persons
having special means of knowledge on the subject. (Section 50)
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Indian Evidence Act
Facts of which evidence cannot be given (Privileged

Communications)
There are some facts of which evidence cannot be given though they are relevant, such as
facts coming under Sections 122, 123, 126 and 127, where evidence is prohibited under
those Sections. They are also referred to as ‘privileged communications’
A witness though compellable to give evidence is privileged in respect of particular
matters within the limits of which he is not bound to answer questions while giving
evidence. These are based on public policy and are as follows:
i. Evidence of a Judge or Magistrate in regard to certain matters; (Section 121)
ii. Communications during marriage; (Section 122)
iii. Affairs of State; (Section 123)
iv. Official communications; (Section 124)
v. Source of information of a Magistrate or Police officer or Revenue officer as to
commission of an offence or crime; (Section 125)
vi. In the case of professional communication between a client and his barrister,
attorney or other professional or legal advisor (Sections 126 and 129). But this
privilege is not absolute and the client is entitled to waive it.
Under Section 122 of the Act, communication between the husband and the wife during
marriage is privileged and its disclosure cannot be enforced. This provision is based on
the principle of domestic peace and confidence between the spouses. The Section
contains two parts; the first part deals with the privilege of the witness while the second
part of the Section deals with the privilege of the husband or wife of the witness.
Evidence as to affairs of State

Section 123 applies only to evidence derived from unpublished official record relating
to affairs of State. According to Section 123, no one shall be permitted to give any evidence
derived from unpublished official
records relating to any affairs of State, except with the permission of the officer at the
head of the department concerned, who shall give or withhold such permission as he
thinks fit.
Professional communications
• Section 126 to 129 deal with the professional communications between a legal
adviser and a client, which are protected from disclosure.
• A client cannot be compelled and a legal adviser cannot be allowed without the
express consent of his client to disclose oral or documentary communications passing
between them in professional confidence.
• The rule is founded on the impossibility of conducting legal business without
professional assistance and securing full and unreserved communication between the
two.
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Indian Evidence Act
• Under Sections 126 and 127 neither a legal adviser i.e. a barrister, attorney, pleader
or vakil (Section 126) nor his interpreter, clerk or servant (Section 128) can be
permitted to disclose any communication made to him in the course and for the
purpose of professional employment of such legal adviser or to state the contents or
condition of any document with which any such person has become acquainted in the
course and for the purpose of such employment.
• In general it is not open to a party to test the credit or impeach the “truthfulness of a
witness offered by him. But the Court can in its discretion allow a party to cross
examine his witness” if the witness unexpectedly turns hostile. (Section 154)
Oral, Documentary and Circumstantial Evidence

The Act divides the subject of proof into two parts:
(i) proof of facts other than the contents of documents;
(ii) proof of documents including proof of execution of documents and proof
of existence, condition and contents of documents.
However, all facts except contents of documents or electronic records may be proved by
oral evidence (Section 59) which must in all cases be “direct” (Section 60). The direct
evidence means the evidence of the person who perceived the fact to which he deposes.
Thus, the two broad rules regarding oral evidence are:
i. all facts except the contents of documents may be proved by oral evidence;
ii. oral evidence must in all cases be “direct”.
Oral evidence means statements which the Court permits or requires to be made before
it by witnesses in relation to matters of fact under inquiry. But, if a witness is unable to
speak he may give his evidence in any manner in which he can make it intelligible as by
writing or by signs. (Section 119)
Direct evidence
• In Section 60 of the Evidence Act, expression "oral evidence" has an altogether
different meaning. It is used in the sense of "original evidence" as distinguished from
"hearsay" evidence and it is not used in contradiction to "circumstantial" or
"presumptive evidence".
• According to Section 60 oral evidence must in all cases whatever, be direct; that is to
say:
Ø if it refers to a fact which could be seen, it must be the evidence of a witness who
says he saw it;
Ø if it refers to a fact which could be heard, it must be the evidence of a witness who
says he heard it;
Ø if it refers to a fact which could be perceived by any other sense or in any other
manner, it must be the evidence of a witness who says he perceived it by that sense
or in that manner;
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Indian Evidence Act
Ø if it refers to an opinion or to the grounds on which that opinion is held, it must be

the evidence of the person who holds that opinion on those grounds.
• Thus, if the fact to be proved is one that could be seen, the person who saw the fact
must appear in the Court to depose it, and if the fact to be proved is one that could be
heard, the person who heard it must appear in the Court to depose before it and so
on.
• In defining the direct evidence in Section 60, the Act impliedly enacts what is called
the rule against hearsay. Since the evidence as to a fact which could be seen, by a
person who did not see it, is not direct but hearsay and so is the evidence as to a
statement, by a person who did hear it.
Documentary evidence
A "document" means any matter expressed or described upon any substance by means of
letters, figures or marks, or by more than one of those means, intended to be used, or
which may be used for the purpose of recording that matter. Documents produced for the
inspection of the Court is called Documentary Evidence.
Section 60 provides that the contents of a document must be proved either by primary or
by secondary evidence.
Primary evidence
"Primary evidence" means the document itself produced for the inspection of the Court
(Section 62). The rule that the best evidence must be given of which the nature of the case
permits has often been regarded as expressing the great fundamental principles upon
which the law of evidence depends. The general rule requiring primary evidence of
producing documents is commonly said to be based on the best evidence principle and to
be supported by the so called presumption that if inferior evidence is produced where
better might be given, the latter would tell against the withholder.
Secondary evidence
Secondary evidence is generally in the form of compared copies, certified copies or copies
made by such mechanical processes as in themselves ensure accuracy. Section 63 defines
the kind of secondary evidence permitted by the Act. According to Section 63, "secondary
evidence" means and includes.
1. certified copies given under the provisions hereafter contained;
2. copies made from the original by mechanical processes which in themselves
ensure the accuracy of the copy, and copies compared with such copies;
3. copies made from or compared with the original;
4. counterparts of documents as against the parties who did not execute them;
5. oral accounts of the contents of a document given by some person who has himself
seen it.
Section 65 stipulates the cases in which secondary evidence relating to documents may
be given. As already stated, documents must be proved by primary evidence but in certain
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Indian Evidence Act
cases for example, where the document is lost or destroyed or the original is of such a
nature as not to be easily, movable, or consists of numerous documents, or is a public
document or under some law by a certified copy, the existence, condition or contents of
the document may be proved by secondary evidence.
Special Provisions as to Evidence Relating to Electronic Record

Section 65A provides that the contents of electronic records may be proved in
accordance with the provisions of Section 65B.
Under Section 65B(1) any information contained in an electronic record which is
printed on a paper, stored, recorded or copied in optical or magnetic media produced by
a computer (hereinafter referred to as the computer output) shall be deemed to be also
a document, if the conditions mentioned in this Section are satisfied in relation to the
information and computer in question and shall be admissible in any proceedings,
without further proof or production of the original, as evidence of any contents of the
original or of any fact stated therein of which direct evidence would be admissible.
Circumstantial evidence
• In English law the expression direct evidence is used to signify evidence relating to
the ‘fact in issue’ (factum probandum) whereas the terms circumstantial evidence,
presumptive evidence and indirect evidence are used to signify evidence which
relates only to "relevant fact" (facta probandum).
• However, under Section 60 of the Evidence Act, the expression "direct evidence" has
altogether a different meaning and it is not intended to exclude circumstantial
evidence of things which could be seen, heard or felt. Thus, evidence whether direct
or circumstantial under English law is "direct" evidence under Section 60.
• Before acting on circumstances put forward are satisfactorily proved and whether the
proved circumstances are sufficient to bring the guilt to the accused the Court should
not view in isolation the circumstantial evidence but it must take an overall view of
the matter.
Presumptions
The Act recognises some rules as to presumptions. Rules of presumption are deduced
from enlightened human knowledge and experience and are drawn from the connection,
relation and coincidence of facts and circumstances. A presumption is not in itself an
evidence but only makes a prima facie case for the party in whose favour it exists. A
presumption is a rule of law that courts or juries shall or may draw a particular inference
from a particular fact or from particular evidence unless and until the truth of such
inference is disproved.
There are three categories of presumptions:
i. presumptions of law, which is a rule of law that a particular inference shall be
drawn by a court from particular circumstances.
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Indian Evidence Act
ii. presumptions of fact, it is a rule of law that a fact otherwise doubtful may be
inferred from a fact which is proved.
iii. mixed presumptions, they consider mainly certain inferences between the
presumptions of law and presumptions of fact.
The terms presumption of law and presumption of fact are not defined by the Act. Section
4 only refers to the terms "conclusive proof", "shall presume" and "may presume". The
term "conclusive proof" specifies those presumptions which in English Law are called
irrebuttable presumptions of law; the term "shall presume" indicates rebuttable
presumptions of law; the term "may presume" indicates presumptions of fact. When we
see a man knocked down by a speeding car and a few yards away, there is a car going,
there is a presumption of fact that the car has knocked down the man.
Estoppel
The general rule of estoppel is when one person has by his
declaration, act or omission, intentionally caused or
permitted another person to believe a thing to be true and
to act upon such belief, neither he nor his representative
shall be allowed, in any suit or proceeding between himself
and such person or his representative to deny the truth of
that thing (Section 115). However, there is no estoppel against the Statute. Where the
Statute prescribes a particular way of doing something, it has to be done in that manner
only. Other relevant Sections are Sections 116 and 117.
Principle of Estoppel
Estoppel is based on the maxim ‘allegans contratia non est audiendus’ i.e. a person alleging
contrary facts should not be heard. The principles of estoppel covers one kind of facts. It
says that man cannot approbate and reprobate, or that a man cannot blow hot and cold,
or that a man shall not say one thing at one time and later on say a different thing.
The doctrine of estoppel is based on the principle that it would be most inequitable and
unjust that if one person, by a representation made, or by conduct amounting to a
representation, has induced another to act as he would not otherwise have done, the
person who made the representation should not be allowed to deny or repudiate the
effect of his former statement to the loss and injury of the person who acted on it (Sorat
Chunder v. Gopal Chunder).
Estoppel is a rule of evidence and does not give rise to a cause of action. Estoppel by
record results from the judgement of a competent Court (Section 40, 41). It was laid down
by the Privy Council in Mohori Bibee v. Dharmodas Ghosh, (1930) 30 Cal. 530 PC, that the
rule of estoppel does not apply where the statement is made to a person who knows the
real facts represented and is not accordingly misled by it. The principle is that in such a
case the conduct of the person seeking to invoke rule of estoppel is in no sense the effect
of the representation made to him. The main determining element is not the effect of his
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Indian Evidence Act
representation or conduct as having induced another to act on the faith of such

representation or conduct.
Different kinds of Estoppel:

1. Estoppel by Attestation
2. Estoppel by Contract
3. Constructive Estoppel
4. Estoppel by Election
5. Estoppel by Negligence
6. Estoppel by Silence
7. Equitable Estoppel.
8.16
www.pcbaba.in CS PRAVEEN CHOUDHARY
Specific Relief Act 1963
Specific Relief Act, 1963
Introduction
The Specific Relief Act, 1963 was enacted to define and amend the law relating to
certain kinds of specific relief.
The expression ‘specific relief’ means a relief in specie. It is a remedy which aims at the
exact fulfilment of an obligation.
Scope of the Act

The Specific Relief Act, 1963 is not exhaustive. It does not consolidate the whole law on
the subject. As the Preamble would indicate, it is an Act ”to define and amend the law
relating to certain kinds of specific relief”. It does not purport to lay down the law
relating to specific relief in all its ramifications
Under the Specific Relief Act, 1963, remedies have been divided as specific relief
(Sections 5-35) and preventive relief (Sections 36-42). These are:
Ø Recovering possession of property (Sections 5-8);
Ø Specific performance of contracts (Sections 9-25);
Ø Rectification of Instruments (Section 26);
Ø Rescission of contracts (Sections 27-30);
Ø Cancellation of Instruments (Section 31-33);
Ø Declaratory decrees (Sections 34-35); and
Ø Injunctions (Sections 36-42)
Who May Sue for Specific Performance?

Section 15 lays down that specific performance of a contract may be obtained by
a) any party thereto;
b) the representative in interest or the principal, of any party thereto;
Provided that where the learning, skill, insolvency or any personal quality of such
party is a material ingredient in the contract, or where the contract provides that his
interest shall not be assigned, his representative in interest or his principal shall not
be entitled to specific performance of the contract, unless such party has already
performed his part of the contract, or the performance thereof by his representative
in interest, or his principal, has been accepted by the other party;
c) where the contract is a settlement on marriage, or a compromise of doubtful rights
between members of the same family, any person beneficially entitled
thereunder;
d) where the contract has been entered into by tenant-for-life in due exercise of a
power the remainder man;
e) a reversioner in possession, where the agreement is a covenant entered into with
his predecessor in title and the reversioner is entitled to the benefit of such
covenant;
f) a reversioner in remainder, where the agreement is such a covenant, and the
reversioner is entitled to the benefit thereof and will sustain material injury by
reason of its breach;
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fa) when a LLP has entered into a contract and subsequently becomes amalgamated
with another limited liability partnership, the new LLP which arises out of the
amalgamation.”.
g) when a company has entered into a contract and subsequently becomes

amalgamated with another company the new company which arises out of the
amalgamation;
h) when the promoters of a company have, before its incorporation, entered into a
contract for the purpose of the company and such a contract is warranted by the
terms of the incorporation of the company provided that the company has accepted
the contract and has communicated such acceptance to the other party to the
contract.
Generally, only a party to the contract can get its specific performance. The section
gives the list of persons who can sue for specific performance of a contract. The general
principle is that in a suit for specific performance of a contract, all the parties to the
contract should be parties to the suit and no one else.
Contracts which can be specifically enforced

Section 10 provides the cases in which specific performance of contract is enforceable.
It says that except as otherwise provided in this Chapter, (subject to provision of Sec
11(2), 14 & 16) the specific performance of any contract may, in the discretion of the
Court, be enforced
a) when there exists no standard for ascertaining the actual damage caused by the
non-performance of the act agreed to be done, or
b) when the act agreed to be done is such that compensation in money for its non-
performance would not afford adequate relief.
The explanation provides that unless and until the contrary is proved, the Court
shall presume:
i. that the breach of a contract to transfer immovable property cannot be
adequately relieved by compensation in money, and
ii. that the breach of a contract to transfer movable property can be so relieved
except in the two cases:
Ø where the property is not an ordinary article of commerce or is of special
value or interest to the plaintiff, or consists of goods which are not easily
obtainable in the market, and
Ø where the property is held by the defendant as the agent or trustee of the
plaintiff.
In an agreement for sale of agricultural land, the respondent vendor wilfully
avoided the execution of sale deed after receiving full sale consideration. Rajasthan
High Court held that compensation by way of damages would not be substituted to
execution of sale deed. The Court directed the respondents to enforce the specific
performance of the agreement (Ram Karan and others v. Govind Lal and other).
Cases in which specific performance of contracts connected with trusts

enforceable
Section 11 lays down that except as otherwise provided in this Act, specific
performance of a contract may, in the discretion of the Court, (contract Shall) be
enforced when the act agreed to be done is in the performance wholly or partly of a
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trust. But if a trustee enters into a contract in excess of his powers then such a contract
cannot be specifically enforced.
Illustrations
Ø A contracts with B to paint a picture for B and B agrees to pay Rs. 1000 for the same.
The picture is painted. ‘B’ is entitled to have it delivered to him on payment or
tender of Rs. 1,000.
Ø A is a trustee of land with power of lease it for 7 years. He enters into a contract with
B to grant a lease of the land for 7 years, with a covenant to renew the lease at the
expiry of the term. This contract cannot be specifically enforced.
Specific performance of part of a contract (Section 12)

Section 12(1) lays down the general principle that except as otherwise hereinafter
provided in this section, the Court shall not direct the specific performance of a part
of a contract.
Sections 12(2)-(4) lay down the exceptions to this general rule as follows:
i. Section 12(2) says that where a party to a contract is unable to perform the whole
of his part of it, but the part which must be left unperformed by only a small
proportion to the whole in value and admits of compensation in money, the Court
may, at the suit of the either party, direct the specific performance of so much of the
contract as can be performed and award compensation in money for the deficiency.
ii. Section 12(3) lays down that where a party to a contract is unable to perform the
whole of his part of it, and the part which must be left unperformed either
a) forms a considerable part of the whole, though admitting of compensation in
money; or
b) does not admit of compensation in money; he is not entitled to obtain a decree
for specific performance; but the Court may, at the suit of the other party, direct
the party in default to perform specifically so much of his part of the contract as
he can perform, if the party
Ø in a case falling under clause (a), pays or has paid the agreed consideration
for the whole of the contract reduced by the consideration for the part which
must be left unperformed and in a case falling under clause (b), pays or has
paid the consideration for the whole of the contract without any abatement,
and
Ø in either case, relinquishes all claims to the performance of the remaining
part of the contract and all rights to compensation, either for the deficiency
or for the loss or damage sustained by him through the default of the
defendant.
For example, A contracts to sell B a piece of land consisting of 100 bighas for Rs.
1,00,000. It turns out that only 50 bighas of land belong to A. 50 bighas are
substantial part of the contract. A cannot demand specific performance of the
contract but B can demand specific performance to get 50 bighas of land from A by
paying the full consideration i.e. Rs. 1,00,000.
iii. Section 12(4) lays down that when a part of a contract which taken by itself, can
and ought to be specifically performed, stands on a separate and independent
footing from another part of the same contract which cannot or ought not to be
specifically performed, the Court may direct specific performance of the former part.
For the purposes of this section, a party to the contract shall be deemed to be unable
to perform the whole of his part of it, if a portion of its subject matter existing at the
date of the contract has ceased to exist at the time of its performance.
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Section 13 lays down the rights of a purchaser or lessee against the seller or lessor
with no title or imperfect title. It lays down that where a person contracts to sell or let
certain immovable property having no title or only an imperfect title, the purchaser or
lessee (subject to the other provisions of this Chapter) has the following rights, namely:
• if the vendor or lessor has, subsequent to the contract, acquired any interest in the
property, the purchaser or lessee may compel him to make good the contract out
of such interest;
• where the concurrence of other persons is necessary for validating the title, and they
are bound to convey at the request of the vendor or lessor, the purchaser or lessee
may compel him to procure such concurrence and when conveyance by other
person is necessary to validate the title and they are bound to convey at the request
of the vendor or lessor, the purchaser or lessee may compel him to procure such
conveyance;
• where the vendor professes to sell unencumbered property but the property is,
mortgaged for an amount not exceeding the purchase money and the vendor has in
fact only a right to redeem it, the purchaser may compel him to redeem the
mortgage and to obtain a valid discharge, and, where necessary, also a
conveyance from the mortgagee;
• where the vendor or lessor sues for specific performance of the contract and the suit
is dismissed on the ground of his want of title, or imperfect title, the defendant has a
right to a return of his deposit, interest and costs on the interest, if any, of the
vendor or lessor in the property which is the subject matter of the contract.
Contracts which cannot be specifically enforced (Sec 14)

The following contracts cannot be specifically enforced, namely:—
a) Where a party to the contract has obtained substituted performance of contract u/s
20;
b) A contract, the performance of which involves the performance of a continuous duty
which the court cannot supervise;
c) A contract which is so dependent on the personal qualifications of the parties that
the court cannot enforce specific performance of its material terms; and
d) A contract which is in its nature determinable.
Power of court to engage experts (Sec 14A)

1) Without prejudice to the generality of the provisions contained in the CPC 1908, in
any suit under this Act, where the court considers it necessary to get expert opinion
to assist it on any specific issue involved in the suit, it may engage one or more
experts and direct to report to it on such issue and may secure attendance of the
expert for providing evidence, including production of documents on the issue.
2) The court may require or direct any person to give relevant information to the
expert or to produce, or to provide access to, any relevant documents, goods or
other property for his inspection.
3) The opinion or report given by the expert shall form part of the record of the suit;
and the court, or with the permission of the court any of the parties to the suit, may
examine the expert personally in open court on any of the matters referred to him or
mentioned in his opinion or report, or as to his opinion or report, or as to the
manner in which he has made the inspection.
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4) The expert shall be entitled to such fee, cost or expense as the court may fix, which
shall be payable by the parties in such proportion, and at such time, as the court may
direct.”.
Recovery of Possession of Movable and Immovable Property

Sections 5 to 8 deal with recovery of possession of property. Property may either be (i)
immovable, or (ii) movable. Sections 5 and 6 deal with recovery of possession of
immovable property while Sections 7 and 8 deal with movable property.
Recovery of possession of specific immovable property

According to Section 5, a person, entitled to the possession of specific immovable
property may recover the same in the manner provided by the Code of Civil Procedure,
1908. The action under Section 5 arises when claim is made on the basis of “title”.
Recovery of possession of dispossessed immovable property

• The Act provides another relief under Section 6 for the recovery of possession of
immovable property where the claim is based merely on ‘possession’. Section 6
provides that if any person is dispossessed without his consent, of immovable
property otherwise than in due course of Law, he or any person (through whom he
has been in possession or any person) claiming through him may by suit recover
possession thereof, notwithstanding any other title that may be set up in such a
suit.
• There are two restrictions; no suit under Section 6 shall be brought
i. after the expiry of 6 months from the date of dispossession, or
ii. against the Government.
• Under Sub-section (3) no appeal or review is allowed of any order of decree
passed under this Section.
• Sub-section (4) allows a person to file a suit to establish his title to such property
and recover possession thereof.
• The object of these provisions is to discourage people from taking the law into
their own hands. Section 5 thus provides for a suit for ejectment on the basis of title
and Section 6 gives a remedy without establishing title
• The object of Section 6 is to discourage forcible dispossession and to enable the
person dispossessed to recover possession by merely providing previous possession
and wrongful dispossession without proving title (Lachman v. Shambu Narain,).
• A suit under Section 6 is maintainable between landlords and tenants. Heirs are also
entitled to sue for recovery of possession.
Recovery of specific movable property (Section 7)

A person is entitled to recover the possession of specific movable property in the
manner provided by the Code of Civil Procedure, 1908.
Explanation 1: A trustee may sue for possession of movable property of which he is a
trustee. The term ‘trustee’ includes every person holding property in trust.
Explanation 2: A special or temporary right to the present possession of movable
property is sufficient to support a suit under this section.
Illustrations
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Ø A bequeaths land to B for his life, with remainder to C. A dies, B enters on the land,
but C, without B’s consent, obtains possession of the title deeds, B may recover them
from C.
Ø A deposits books and papers for safe custody with B. B losses them and C finds them,
but refuses to deliver them to B when demanded. B may recover them from C,
subject to C’s right, if any, under Section 168 of the Indian Contract Act, 1872.
Liability of person in possession, not as owner to deliver to persons entitled to

immediate possession (Section 8)
It lays down that any person having the possession or control of a particular article of
movable property of which he is not the owner, may be compelled specifically, to
deliver it to the person entitled to its immediate possession in any of the following four
cases:
a) When the thing claimed is held by the defendant as the agent or trustee of the
plaintiff,
b) when the compensation in money would not afford the plaintiff adequate relief for
the loss of the thing claimed,
c) when it would be extremely difficult to ascertain the actual damage caused by its
loss,
d) when the possession of the thing claimed has been wrongfully transferred from the
plaintiff.
Unless and until the contrary is proved, the Court shall, in respect of any article of
movable property claimed under clause (b) or (c) of this section presume that
i. compensation in money would not afford the plaintiff adequate relief for the loss
of the thing claimed or as the case may be, and
ii. it would be extremely difficult to ascertain the actual damage caused by its loss.
Thus under this part of the Act, if a person, who has been dispossessed, does not bring a
suit under Section 6 of the Specific Relief Act within 6 months, he may still bring a suit
for recovery alleging any title to the property. But in this case, the suit may be defeated
by the defendant by proving a better title.
Illustrations
Ø A, proceeding to Europe, leaves his furniture in charge of B, as his agent during his
absence. B, without A’s authority, pledges the furniture to C, and C knowing that B
had no right to pledge the furniture, advertises it for sale. C may be compelled to
deliver the furniture to ‘A’ for he holds it as A’s trustee.
Ø Z has got possession of an idol belonging to A’s family, and of which A is the proper
custodian. Z may be compelled to deliver the idol to A.
Persons against whom specific performance available

Section 15 lays down the parties who can bring an action for specific
performance.
According to Section 19, specific performance of a contract may be enforced against
a) either party thereto,
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b) any person claiming under him, by a title arising subsequently to the contract except
a transferee for value who has paid his money in good faith and without notice of the
original contract,
c) any person claiming under a title which though prior to the contract, and known to
the plaintiff, might have been displaced by the defendant,
ca) when a LLP has entered into a contract and subsequently becomes amalgamated
with another LLP, the new LLP which arises out of the amalgamation”.
d) when a company has entered into a contract and subsequently becomes
amalgamated with another company — the new company which arises out of the
amalgamation,
e) when the promoters of a company have before its incorporation entered into a
contract, for the purpose of the company and such contract is warranted by the
terms of the incorporation of the company; provided that the company has accepted
the contract and communicated such acceptance to the other party to the contract.
Clauses (a) and (b) embody the principle that Court will enforce specific performance of
a contract not only against either party, thereto, but also against any person claiming
under either of the parties, a title arising subsequently to the contract, except a
transferee for value who has paid money in good faith and without notice of the original
contract.
Persons against whom specific performance cannot be

enforced
Under Section 16, specific performance of a contract cannot be enforced in favour of a
person —
a) who would not be entitled to recover compensation for its breach, (who has
obtained subsequent performance u/s 20) or
b) who has became incapable of performing, or violates any essential term of the
contract that on his part remains to be performed, or acts in fraud of the contract, or
wilfully acts at variance with, or in subversion of, the relation intended to be
established by the contract, or
c) who fails to aver and prove that he has performed or has always been ready and
willing to perform the essential terms of the contract which are to be performed by
him, other than terms the performance of which has been prevented or waived by
the defendant.
The explanation states that for the purpose of clause (c),
Ø where a contract involved the payment of money, it is not essential for the plaintiff
to actually tender to the defendant or to deposit in Court any money except when so
directed by the Court
Ø the plaintiff must aver Prove performance of, or readiness and willingness to
perform, the contract according to its construction.
The obligation imposed by Section 16 of the Act is upon the Court not to grant specific
performance to a plaintiff who has not met the requirements of clause (a), (b) and (c)
thereof.
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Thus in a suit for specific performance the plaintiff should not only plead and prove the
terms of the agreement but should also plead and prove his readiness and willingness to
perform his obligations under the contract in terms of the contract.
To adjudge whether the plaintiff is ready and willing to perform his part of the contract,
the court must take into consideration the conduct of the plaintiff prior and subsequent
to the filing of the suit along with other attending circumstances. Right from the date of
the execution till the date of the decree he must prove that he is ready and has always
been willing to perform his part of the contract. (N.P. Thirgnanam v. Dr. R Jagan Mohan
Rao)
The continuous readiness and willingness on the part of the plaintiff is a condition
precedent to grant the relief of specific performance. The circumstance is material and
relevant and is required to be considered by the Court while granting or refusing to
grant the relief. If the plaintiff fails to either aver or prove the same he must fail.
A Court may not, therefore, grant to a plaintiff who has failed to to prove that he has
performed or has always been ready and willing to perform his part of the agreement,
the specific performance whereof he seeks (Ram Awadh v. Achhaibar Dubey)
Section 17 sets out two more cases where specific performance cannot be enforced
in favour of a vendor or lessor. It states that a contract to sell or let any immovable
property cannot be specifically enforced in favour of vendor or lessor
a) who knowing himself not to have any title to the property, has contracted to sell or
let the property;
b) who, though he entered into the contract believing that he had a good title to the
property, cannot at the time fixed by the parties or by the Court for the completion
of the sale or letting, give the purchaser or lessee a title free from reasonable doubt.
According to this Section, a contract to sell or hire property cannot be specifically

enforced in favour of a seller or lessor if he had no title to the property. A person who
knows that he has no title to the property but still enters into a contract with regard to
that property, he cannot have the remedy of specific performance. It is the duty of the
vendor to make a reasonable, clear and marketable title about which there must not be
any rational doubt.
Non-enforcement except with variation (Section 18)

According to this Section, where a plaintiff seeks specific performance of a contract in
writing, to which the defendant sets up a variation, the plaintiff cannot obtain the
performance sought, except with the variation so set up in the following cases, namely:
a) where by fraud, mistake of fact or misrepresentation, the written contract of which
performance is sought is in its terms or effect different from what the parties agreed
to, or does not contain all the terms agreed to between the parties on the basis of
which the defendant entered into the contract;
b) where the object of the parties was to produce a certain legal result which the
contract as framed is not calculated to produce,
c) where the parties have subsequently to the execution of the contract, varied its
terms.
Illustration
9. 8
A contracts in writing to let a house to B for a certain term, at the rent of Rs. 100/- per
month, putting it first into tenantable repair. The house turns out to be not worth
repairing. So with B’s consent, A pulls it down and erects a new house in its place. B
contracting orally to pay rent at Rs. 120/- per month. B then sues to enforce specific
performance of the contract in writing. He cannot enforce it except with the variations
made by the subsequent oral contract.
Substituted performance of contract (Section 20)

(1) Without prejudice to the generality of the provisions of ICA, 1872, and, except
as otherwise agreed upon by the parties, where the contract is broken due to non-
performance of promise by any party, the party who suffers by such breach shall
have the option of substituted performance through a 3rd party or by his own
agency, and, recover the expenses and other costs actually incurred, spent or
suffered by him, from the party committing such breach.
(2) But he need to give a written notice of 30 days to the party in breach calling
upon him to perform the contract within specified time, and on his refusal or
failure to do so, he may get the same performed by a 3rd party or by his own
agency:
Provided that the party who suffers such breach shall not be entitled to recover
the expenses and costs unless he has got the contract performed through a 3rd
party or by his own agency.
(3) Where the party suffering breach of contract has got the contract performed
through a 3rd party or by his own agency after giving notice, he shall not be
entitled to claim relief of specific performance against the party in breach.
(4) Nothing in this section shall prevent the party who has suffered breach of
contract from claiming compensation from the party in breach.
Special provisions for contract relating to infrastructure

project (Section 20A)
(1) No injunction shall be granted by a court in a suit under this Act involving a
contract relating to an infrastructure project specified in the Schedule, where
granting injunction would cause impediment or delay in the progress or
completion of such infrastructure project.
(2) The CG may, depending upon the requirement for development of

infrastructure projects, and if it considers necessary or expedient to do so, by
notification in the Official Gazette, amend the Schedule relating to any Category of
projects or Infrastructure Sub-Sectors.
(3) Every notification issued under this Act by the CG shall be laid, as soon as may
be after it is issued, before each House of Parliament, while it is in session, for a
total period of 30 days which may be comprised in one session or in 2 or more
successive sessions, and if, before the expiry of the session immediately following
the session or the successive sessions aforesaid, both Houses agree in making any
modification in the notification or both Houses agree that the notification should
not be made, the notification shall thereafter have effect only in such modified
form or be of no effect, as the case may be; so, however, that any such
9. 9
modification or annulment shall be without prejudice to the validity of anything
previously done under that notification.
Special Courts (Section 20B)

The SG, in consultation with the Chief Justice of the High Court, shall designate, by
notification published in the Official Gazette, one or more Civil Courts as Special
Courts, within the local limits of the area to exercise jurisdiction and to try a suit
under this Act in respect of contracts relating to infrastructure projects.
Expeditious disposal of suits (Section 20C)

Notwithstanding anything contained in the CPC, 1908, a suit filed shall be
disposed of by the court within 12 months from the date of service of summons to
the defendant:
Provided that the said period may be extended for a further period not exceeding
6 months in aggregate after recording reasons in writing for such extension by
the court.”.
Court’s power to award damages in certain cases(Section 21)

• Section 21(1) states that in a suit for specific performance of a contract, the plaintiff
may also claim compensation for its breach, either in addition to, or in substitution
of such performance.
• Section 21(2) states that if, in any suit the Court decides that specific performance
ought not to be granted but that there is a contract between the parties which has
been broken by the defendant and that the plaintiff is entitled to compensation for
that breach, it shall award him such compensation accordingly.
• Section 21(3) lays down that if, in any such suit the Court decides that specific
performance ought to be granted, but that it is not sufficient to satisfy the justice of
the case, and that some compensation for breach of the contract should also be made
to the plaintiff, it shall award him such compensation accordingly.
• Section 21(4) states that in determining the amount of any compensation awarded
under this section, the Court shall be guided by the principles specified in Section 73
of the Indian Contract Act, 1872.
• Section 12(5) lays down that no compensation shall be awarded under this Section
unless the plaintiff has claimed such compensation in his plaint provided that where
the plaintiff has not claimed any such compensation in the plaint, the Court shall at
any stage at the proceeding, allow him to amend the plaint on such terms as may be
just for including a claim for such compensation. Even if the contract has become
incapable of specific performance that does not preclude the Court from exercising
the jurisdiction conferred by this section.
The conditions according to which damages may be awarded by the Court in addition
to specific performance are:
i. the Court decides that specific performance ought to be granted but,
ii. the justice of the case requires that not only specific performance but also some
compensation for the breach of the contract should also be given to the plaintiff.
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The circumstances in which a court would award damages in lieu of specific
performance:
a) Specific performance could have been granted but in the circumstances of the case
the Court in its discretion considers that it would be better to award damages
instead of specific performance.
b) Though specific performance is refused, plaintiff is entitled to compensation for
breach of the contract.
c) If the circumstances are such that specific performance would not be granted; for
example, where the plaintiff has disentitled himself to the specific performance,
damages cannot be awarded under Section 21 in lieu of specific performance.
Section 22 gives power to the Court to grant relief for possession, partitions, refund
of earnest money. Under Section 22 any person, suing for the specific performance of a
contract for the transfer of immovable property may, in an appropriate case ask for
a) possession or partition and separate possession, of the property in addition to any
such performance; or
b) any other relief to which he may be entitled in case his claim for specific
performance is refused.
The power of the Court to grant relief under clause (b) shall be without prejudice to its
power to award compensation under Section 21.
Illustrations
A conveys land to B, who bequeaths it to C and dies. Thereupon D gets possession of the
land and produces a forged instrument stating that the conveyance was made to B in
trust for him. C may obtain the cancellation of the forged instrument.
Section 23 lays down that even if the parties have agreed for liquidated damages, in the
contract itself, specific performance of that contract may be decreed by the Court in
proper cases but in that case the payment of the sum named in the contract will not be
decreed.
Section 24 imposes a bar on suit for compensation for breach of a contract after
dismissal of the suit for specific performance.
Rectification of Instruments(Section 26)

• Rectification means correction of an error in an instrument in order to give
effect to the real intention of the parties. Where a contract reduced into writing in
pursuance of a previous agreement, fails to express the real intention of the parties,
the court will rectify the instrument in accordance with their true intention.
• Here, there must be in existence as between the parties, a complete and perfectly
unobjectionable contract; but the writing designed to embody it, either from fraud
or mutual mistake, is incorrect or imperfect and the relief sought is to rectify the
writing so as to bring it into confirmity with the true intention. In such a case, if such
instrument is enforced, one party will suffer and if it is rescinded altogether both the
parties will suffer but if it is rectified and enforced neither party will suffer.
• The principle on which the courts act in correcting instruments is that the parties
are to be placed in the same position as that in which they would have stood if no
error had been committed (Sudha Singh v. Munshi Ram).
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• There must have been a complete agreement prior to the instrument. It should be in
writing and there must be clear evidence of mutual mistake or of fraud.
In order to obtain rectificaion the conditions mentioned in Section 26 must be present.

i. Rectification would be granted where, though there was a consensus between the
parties as to the contract through fraud of one of the parties, the instrument did not
correctly express the real intention.
ii. It will also be granted, at the instance of third party, where both the parties are
equally innocent, but owing to a common mistake, the instrument does not express
their intention.
iii. Sub-section (2) makes it clear that rectification would not be allowed so as to
prejudice rights acquired by third party in good faith and for value.
For example, A intending to sell to B his house and one of three godowns
adjacent to it, executes a conveyance prepared by B in which through B’s fraud,
all three godowns are included. Of the two godowns which were fraudulently
included, B gives one to C and let the other to D for a rent, neither C nor D
having any knowledge of the fraud. The conveyance may, as against B and C, be
rectified so as to exclude from it the godown given to C, but it cannot be
rectified so as to affect D’s lease.
iv. The only limitation placed on the Courts discretion is that the rectification can be
done without prejudice to the rights acquired by third persons in good faith and for
value
Rescission of Contract(Section 27)

• “Rescission” means putting an end to a contract which is still operative and making
it null and void ab initio. It does not apply to void contracts.
• Section 27 states the principle upon which rescission can be ordered. A person suing
for rescission cannot, in the alternative sue for specific performance but a person
suing for specific performance can sue for rescission.
• Sub-section (1) lays down that any person interested in a contract may sue to have it
rescinded, and such rescission may be adjudged by the Court in any of the following
cases, namely –
Ø where the contract is voidable or terminable by the plaintiff;
Ø where the contract is unlawful for causes not apparent on its face and the
defendant is more to blame than the plaintiff.
• Sub-section (2) lays down that notwithstanding anything contained in Sub-section
(1), the Court may refuse to rescind the contract –
a) where the plaintiff has expressly or impliedly ratified the contract; or
b) where, owing to the change of circumstances which has taken place since the
making of the contract (not being due to any act of the defendant himself), the
parties cannot be substantially restored to the position in which they stood when
the contract was made; or
c) where third-parties have, during the subsistence of the contract, acquired rights
in good faith without notice and for value; or
d) where only a part of the contract is sought to be rescinded and such part is not
severable from the rest of the contract.
9. 12
• Any person interested in a contract may sue to have it rescinded. Hence a suit may
be brought by a third party whose interests are affected by the contract.
• In case of a rescission of a contract, the Court may, in its discretion, require the party
to whom such relief is granted to make any compensation to the other party. The
main object of this relief is to put both the parties in their original positions. If a
plaintiff fails to get specific performance of a contract in writing, he may get it
rescinded and delivered up to be cancelled.
Cancellation of Instruments
• Section 31(1) provides that any person against whom a written instrument is void
or voidable, and who has reasonable apprehension that such instrument, if left
outstanding may cause him serious injury, may sue to have it adjudged void or
voidable, and the Court may in its discretion, so adjudge it and order it to be
delivered up and cancelled.
• Section 31(2) lays down that if the instrument has been registered under the Indian
Registration Act, 1908, the Court shall also send a copy of its decree to the officer in
whose office the instrument has been so registered; and such officer shall note on
the copy of the instrument contained in his books the fact of its cancellation.
• The relief of cancellation of instruments is founded upon the administration of
protective justice which is technically known as “Quia time”. It is based upon the
administration of protective justice for fear that the instrument may be vexatiously,
or injuriously used by the defendant against the plaintiff when the evidence to
impeach it may be lost or that it may throw a cloud of suspicion over the title or
interest (Jekadula v. Bai Jini).
• Relief of cancellation under Section 31 would be available when
i. an instrument is void or voidable against the plaintiff;
ii. where the plaintiff may apprehend serious injury if the instrument is left
outstanding and
iii. where it is proper under the circumstances of the case to grant the relief.
Illustrations
A, the owner of a ship, by fraudulently representing her to be seaworthy, induces B, an
underwriter, to insure her. B may obtain the cancellation of the policy.
• Section 32 lays down that where an instrument is evidence of different rights or
different obligations, the Court may, in proper case, cancel it in part and allow it to
stand for the residue. The Court is not bound to cancel the whole of the instrument
but may, in its discretion, when necessary, cancel it in part and allow rest of it to
stand.
For example, A executes a deed of mortgage in favour of B. A gets back the deed
from B by fraud and endorses on it a receipt for Rs. 1,200 purporting to be signed by
B. B’s signature is forged. B is entitled to have the endorsement cancelled, leaving
the deed to stand in other respects (Ram Chandar v. Ganga Saran).
• Section 33(1) provides that on adjudging the cancellation of an instrument, the
Court may require the party to whom such relief is granted, to restore, so far as may
be, any benefit which he may have received from the other party and to make any
compensation to him which justice may require.
9. 13
Declaratory Decrees
A declaratory decree is a decree whereby any right as to any property or the legal
character of a person is judicially ascertained.
The Supreme Court in State of Madhya Pradesh v. Mangilal Sharma, 1997 (7) SCALE 743,
held that a declaratory decree merely declares the right of the decreehoder vis-a-vis the
judgement debtor and does not in terms direct the judgement debtor to do or refrain
from doing any particular act or thing. It cannot be executed as it only declares the
rights of the decree-holder qua the judgement debtor and does not, in terms, direct him
to do or refrain from doing any particular act or thing.
• Section 34 lays down that any person entitled to any legal character, or to any right
as to any property, may institute a suit against any person denying, or interested to
deny, his title to such character or right, and the Court may in its discretion make
therein a declaration that he is so entitled and the plaintiff need not in such suit ask
for any further relief provided that no Court shall make any such declaration where
the plaintiff, being able to seek further relief than a mere declaration of title, omits to
do so.
• The object of declaratory decree is to remove doubt by having legal status of any
rights declared by the Court, and to perpetuate and strengthen testimony
regarding title of the plaintiff and protect it from adverse attacks.
• In case of declaratory decree, neither specific performance nor any compensation is
awarded but only a declaration of the rights of the parties is made without any
consequential relief being granted.
• The declaration does not confer any new rights upon the plaintiff but it merely
declares what he had before. It only clears the mist that has gathered round the
plaintiff’s title or status.
• To maintain a suit under this Section following conditions must be fulfilled:
a) the plaintiff must be a person entitled to any legal character or to any right as to
any property;
b) the defendant must be a person denying or interested to deny the plaintiff’s title
to such legal character or, right;
c) The declaration issued for must be a declaration that the plaintiff is entitled to a
legal character or to a right to property; and
d) where the plaintiff is able to seek further relief than a mere declaration he must
seek such relief.
Effect of Declaration
Section 35 lays down that a declaration is binding only on the parties to the suit,
persons claiming through them respectively, and where any of the parties are trustees,
on the persons for whom, if in existence at the date of the declaration, such parties
would be trustees.
Such a declaration is not judgement in rem and as such it cannot bind strangers.
Illustration
A, a Hindu, in a suit to which B, his alleged wife is the defendant’s seeks a declaration
that his marriage was duly solemnised and prays for an order of restitution of conjugal
rights. The Court makes the declaration and order of restitution of conjugal rights. C, a
9. 14
third-party claiming that B is his wife, sues A for the recovery of B. The declaration
made in the former suit is not binding upon C.
Preventive Reliefs
• Part III of the Specific Relief Act, 1963 grants specific relief called Preventive Relief
i.e., preventing a party from doing that which he is under an obligation not to do.
Preventive relief is granted at the discretion of the court by way of an injunction.
• An injunction is a specific order of the Court forbidding the commission of a
wrong threatened or the continuance of a wrongful course of action already begun,
or in some cases (when it is called a ‘mandatory injunction’) commanding active
restitution of the former state of things.
• The main difference between an injunction and specific performance is that the
remedy in case of an injunction is generally directed to prevent the violation of a
negative act and therefore deals not only with contracts but also with torts and
many other subjects of purely equitable one, whereas specific performance is
directed to compelling performance of an active duty.
• It is known as a “judicial process by which one, who has invaded or is threatening to
invade the rights (legal or equitable) of another is restrained from continuing or
commencing such wrongful act. Injunction is the most ordinary form of preventive
relief. For the effective administration of justice, this power to prevent and to
restrain is absolutely necessary.
Characteristics of an injunction
An injunction has three characteristic features;
1. It is a judicial process.
2. The object of this judicial process is to restrain or to prevent.
3. The act restrained or prevented is a wrongful act. An injunction acts or operates
always in personam.
If the wrongful act has already taken place, the injunction prevents its repetition. If it is
merely threatened, the threat is prevented from being executed.
Temporary and perpetual injunctions

• Section 36 states that preventive relief is granted at the discretion of the Court by
injunction, temporary or perpetual.
• The temporary injunction may be dissolved at any time under Civil Procedure Code
by the defendant showing specific cause to the satisfaction of the Court against the
order granting the injunction, or it automatically terminate with the disposal of the
suit. The general principles governing temporary and permanent injunctions are
mainly the same except that a temporary injunction is granted before the plaintiff
establishes his case at the trial.
• Section 37(1) lays down that temporary injunctions are such as are to continue
until a specified time, or until the further order of the Court and they may be granted
at any stage of a suit, and are regulated by the Code of Civil Procedure, 1908.
• Section 37(2) states that a perpetual injunction can only be granted by the decree
made at the hearing and upon the merits of the suit; the defendant is thereby
perpetually enjoined from the assertion of right, or from the commission of an act,
which would be contrary to the rights of the Plaintiff.
• Section 38 deals with granting of perpetual injunction.
9. 15
Ø Sub-section (1) states that subject to the other provisions contained in or
referred to by this chapter, a perpetual injunction may be granted to the plaintiff
to prevent the breach of an obligation existing in his favour whether express or
by implication.
Ø Sub-section (2) provides that when any such obligation arises from contract, the
Court shall be guided by the rules and provisions contained in Chapter II, i.e., the
chapter on specific performance of contracts.
Ø Sub-section(3) lays down that when the defendant invades or threatens to
invade the plaintiff’s right to, or enjoyment of property, the Court may grant a
perpetual injunction in the following cases, namely:
a) where the defendant is a trustee of the property for the plaintiff;
b) where there exists no standard for ascertaining the actual damage caused, or
likely to be caused by the invasion;
c) where the invasion is such that compensation in money would not afford
adequate relief;
d) where the injunction is necessary to prevent a multiplicity of judicial
proceedings.
Difference between the remedies of specific performance and injunction

• Specific performance is decreed to compel the performance of an active duty, while
injunction is decreed to prevent the violation of a negative duty.
• Normally, the former deals with contracts, while the latter with torts and other
subjects of equitable nature.
• If a contract is positive in its nature, it calls for the relief of specific performance, on
the other hand, if it is negative in its nature, it calls for relief of injunction.
• The principle governing the award of injunction as a mode of enforcement of
contracts is similar to that of specific performance. This is clearly borne out by
Section (38)2 of the Act. Thus, the enforcement of a contract is governed by both
specific relief and injunction.
• “The jurisdiction of equity to grant such injunction is substantially coexistent with
its jurisdiction to compel a specific performance”. But still their fields of operation
are separate from each other.
• While a promise to do is enforced by specific performance, a promise to forbear is
enforced by injunction.
• Section 41(e) further provides that contract which will not be affirmatively
enforced by a decree of specific performance, will not be negatively enforced by
issuing an injunction. The only exception to this rule is found in Section 42.
Mandatory injunction
Section 39 dealing with mandatory injunctions states that when to prevent the breach
of an obligation, it is necessary to compel the performance of certain acts which the
Court is capable of enforcing, the Court may in its discretion grant an injunction to
prevent the breach complained of, and also to compel performance of the requisite acts.
For example, A builds a house with eaves projecting over B’s land, B may sue for an
injunction to pull down so much of the eaves as so projecting over his land. According to
Section 40, the plaintiff in a suit for perpetual injunction under Section 38 or mandatory
9. 16
injunction under Section 39 may claim damages either in addition to, or in substitution
for such injunction and the Court, may, if it thinks fit, award such damages.
Injunction when refused

Section 41 gives a list of cases in which a perpetual injunction cannot be granted. It
says that an injunction cannot be granted —
a) to restrain any person from prosecuting a judicial proceeding pending at the
institution of the suit in which the injunction is sought, unless such restraint is
necessary to prevent a multiplicity of proceedings;
b) to restrain any person from instituting or prosecuting any proceeding in a Court not
subordinate to that from which the injunction is sought;
c) to restrain any person from applying to any legislative body;
d) to restrain any person from instituting or prosecuting any proceeding in a criminal
matter;
e) to prevent the breach of a contract the performance of which would not be
specifically enforced;
f) to prevent on the ground of nuisance, an act of which it is not reasonably clear that it
will be nuisance;
g) to prevent a continuing breach in which the plaintiff has acquiesced;
h) when equally efficacious relief can certainly be obtained by any other usual mode of
proceeding except in case of breach of trust;
ha) if it would impede or delay the progress or completion of any infrastructure
project or interfere with the continued provision of relevant facility related
thereto or services being the subject matter of such project.”
i) when the conduct of the plaintiff or his agents has been such as to disentitle him to
the assistance of the Court;
j) when the plaintiff has no interest in the matter.
It may be noted that this relief also is a discretionary remedy. It may be refused even if
the case is not covered by Section 41.
Injunction to perform negative agreement

Section 42 provides that notwithstanding anything contained in clause (e) of Section
41, where a contract comprises an affirmative agreement to do a certain act, coupled
with negative agreement, express or implied, not to do a certain act, the circumstance
that the Court is unable to compel specific performance of the affirmative agreement
shall not preclude it from granting an injunction to perform the negative agreement,
provided that the plaintiff has not failed to perform the contract so far as it is binding on
him.
This Section is based upon an English case viz., Lumley v. Wagner (21) L.J. CH. 898. In
this case Miss W, a singer agreed to sing at L’s theatre for a certain period and not to
sing anywhere else during that period. Afterwards, she entered into a contract to sing at
another theatre and refused to perform her contract with L. The Court refused to
enforce her positive agreement to sing at L’s theatre (by specific performance) but
granted an injunction restraining her from singing at any other theatre thereby
preventing breach of the negative part of the agreement though the positive part of it,
being a contract for the personal service, could not be specifically enforced.
Conditions necessary for the applicability of this Section are:
9. 17
1. The contract should comprise of two agreements, one affirmative and another
negative.
2. Both the agreements must be divisible.
3. The negative agreement must relate to a specific act.
4. The Court should be unable to compel specific performance of the affirmative
agreement.
5. The plaintiff must not have failed to perform the contract, so far as it is binding
upon him.
A negative stipulation may be express or implied. The Section does not say that every
affirmative contract includes by necessary implication a negative agreement to refrain
from doing certain things. It is therefore a question of interpretation in each case to find
whether a particular contract can be said to have a negative stipulation, express or
implied, contained in it, e.g., the mere use of word “exclusively” does not imply a
negative stipulation to refrain from service of other people.
The provisions of this Section are based on the equitable principle that “he who seeks
equity must do equity”.
9. 18
Limitation Act, 1963
Limitation Act 1963
Introduction
The law relating to limitation is incorporated in the
Limitation Act of 1963, which prescribes different periods
of limitation for suits, petitions or applications. The Act
applies to all civil proceedings and some special criminal
proceedings which can be taken in a Court of law unless its
application is excluded by any enactment.
The Limitation Act derives its roots from 2 maxis:

1. Interest Republicae ut sit fines litum: It is in interest of the state to prescribe limitation
period for filing suit.
2. Vigilantibus nor Dormantibus jura Subvenient: Law Protects those who are vigilant
and not sleepy
Limitation Bars Remedy, But Does Not Extinguish Rights

The Law of limitation bars the remedy in a Court of law only when the period of limitation
has expired, but it does not extinguish the right that it cannot be enforced by judicial
process (Bombay Dying & Mfg. Co. Ltd. v. State of Bombay). Thus if a claim is satisfied
outside the Court of law after the expiry of period of limitation, that is not illegal as the
right to cause of action always remains.
Bar of Limitation
• Section 3 of the Act provides that any suit, appeal or application if made beyond the
prescribed period of limitation, it is the duty of the Court not to proceed with such
suits irrespective of the fact whether the plea of limitation has been set up in defence
or not.
• The Court can suo moto take note of question of limitation. The question whether a
suit is barred by limitation should be decided on the facts as they stood on the date of
presentation of the plaint.
Note: if the period of limitation ends on a day when the court is closed, it will extend up
to the day when court re opens.
Extension of Time in Certain Cases

1. Doctrine of Sufficient causes
ü Section 5 allows the extension of prescribed period in certain cases on sufficient
cause being shown for the delay.
10.1
ü Any appeal or any application, may be admitted after the prescribed period if the
appellant or the applicant satisfies the court that he had sufficient cause for not
preferring the appeal or making the application within such period
ü The Section is not applicable to suits.
ü The Court has no power to admit a time barred suit even if there is a sufficient cause
for the delay. It applies only to appeals or applications as specified therein.
ü The reason for non-applicability of the Section to suits is that, the period of
limitation allowed in most of the suits extends from 3 to 12 years whereas in
appeals and application it does not exceed 6 months.
What is sufficient cause and what is not may be explained by the following Judicial
observations
1. Wrong practice of High Court which misled the appellant or his counsel in not filing
the appeal should be regarded as sufficient cause;
2. In certain cases, mistake of counsel may be taken into consideration in condonation of
delay. But such mistake must be bona fide;
3. Wrong advice given by advocate can give rise to sufficient cause in certain cases;
4. Mistake of law in establishing or exercising the right given by law may be considered
as sufficient cause.
5. However, ignorance of law is not excuse, nor the negligence of the party or the legal
adviser constitutes a sufficient cause;
2. Imprisonment of the party or serious illness of the party may be considered for
condonation of delay;
6. Time taken for obtaining certified copies of the decree of the judgment necessary to
accompany the appeal or application was considered for condoning the delay.
7. Non-availability of the file of the case to the State counsel or Panel lawyer is no ground
for condonation of inordinate delay
8. Ailment of father during which period the defendant was looking after him has been
held to be a sufficient and genuine cause (Mahendra Yadav v. Ratna Devi & others)
Important: The test of “sufficient course” is purely an individualistic test. It is not an

objective test. Therefore, no two cases can be treated alike. The statute of limitation
has left the concept of sufficient cause’ delightfully undefined thereby leaving to the
court a well-intended discretion to decide the individual cases whether circumstances
exist establishing sufficient cause. There are no categories of sufficient cause. The
categories of sufficient cause are never exhausted. Each case spells out a unique
experience to be dealt with by the Court as such. [R B Ramlingam v. R B Bhvansewari]
Note: The quasi-judicial tribunals, labour courts or executive authorities have no power
to extend the period under this Section.
Persons under Legal Disability (Sec 6,7,8)

10.2
Section 6
Ø It applies to person who is entitled to institute suit, file appeal and make application
is a minor, insane or idiot.
Ø This section applies only if disability exists at time when limitation period starts. (Any
subsequent disability will not attract this section).
Ø If a person is disabled at time when limitation period starts, then the limitation period
starts only after the disability ceases.
Ø If the person suffers from more than one disability, then the limitation period will start
only after all disability ceases.
Ø If before one disability ceases, the person contacted with another disability, the period
of limitation will start only after such disability ceases.
Ø If the person dies before the disability ceases, then fresh period of limitation will be
granted to the legal representative.
Example: if Master Lilliput is a minor, the period of limitation will start only after he
attains majority. If just before attaining majority he becomes insane then the period of
limitation will start only after he attains majority and becomes sane.
Section 7
Where one of several persons jointly entitled to institute a suit or make an application
for the execution of a decree is under any such disability, and a discharge can be given
without the concurrence of such person, time will run against them all; but, where no such
discharge can be given, time will not run as against any of them until one of them becomes
capable of giving such discharge without the concurrence of the others or until the
disability has cased
Section 8
Nothing in section 6 or in section 7 applies to suits to enforce rights of pre-emption, or
shall be deemed to extend, for more than 3 years from the cessation of the disability or
the death of the person affected thereby the period of limitation for any suit or application.
Continuous Running of Time
According to Section 9 of the Act where once time has begun to run, no subsequent
disability or inability to institute a suit or make an application can stop it provided that
where letters of administration to the estate of a creditor have been granted to his debtor,
the running of the period of limitation for a suit to recover debt shall be suspended while
the administration continues.
Thus, when any of the statutes of limitation is begun to run, no subsequent disability or
inability will stop this running. The applicability of this Section is limited to suits and
applications only and does not apply to appeals unless the case fell within any of the
exceptions provided in the Act itself.
Computation of Period Of Limitation

10.3
COMPUTATION OF PERIOD OF LIMITATION

Exclusion of certain days or exclusion of time in legal proceedings-While computing
Period of Limitation certain day/days are to be excluded.
In case of suit The day on which period begins to run

In case of appeal The day on which period begins to run.
The day of pronouncement of judgement.
Day of obtaining copy of decree, order sentence or judgement
In case of The day of pronouncement of Judgement.
Application for Day of obtaining copy of decree, order, sentence or judgement.
Revision or Review
In case of The day on which period begins to run.
application to set Day of obtaining copy of award.
aside an Award
In case of any other The day on which period begins to run
Application
Miscellaneous
Death of Party
If a person dies before the right to sue arises then the limitation period will commence
only when the legal representative will come into existence.
Effect of acknowledgement in writing
The section applies if one party against whom certain rights are claimed acknowledge the
liability in writing before the expiry of limitation period, then a fresh period or limitation
will commence from the date of acknowledgement. However the acknowledgement shall
be a valid one.
Essentials of Valid acknowledgement

1. The acknowledgement is made by the party against whom certain rights are claimed.
2. The acknowledgement relates to acceptance of liability.
3. The acknowledgement is made in writing.
4. The acknowledgement is made before expiry of the limitation period.
Effect of Payment on Account of Debt or of Interest on Legacy

As per Section 19 of the Act where payment on account of a debt or of interest on a legacy
is made before the expiration of the prescribed period by the person liable to pay the debt
or legacy or by his agent duly authorised in this behalf, a fresh period of limitation shall
be computed from the time when the payment was made.
10.4
Acquisition of Ownership By Possession
Section 25 applies to acquisition of easements. It provides that the right to access and use
of light or air, way, watercourse, use of water, or any other easement which have been
peaceably enjoyed without interruption and for 20 years (30 years if property belongs to
Government) shall be absolute and indefeasible. Such period of 20 years shall be a period
ending within 2 years next before the institution of the suit.
Classification of Period Of Limitation

Depending upon the duration, period of limitation for different purposes may be classified
as follows:
a. Period of 30 years: The maximum period of limitation prescribed by the Limitation
Act is 30 years and it is provided only for three kinds of suits:
1. Suits by mortgagors for the redemption or recovery of possession of immovable
property mortgaged;
2. Suits by mortgagee for foreclosure;
3. Suits by or on behalf of the Central Government or any State Government
including the State of Jammu and Kashmir.
b. Period of 12 years: A period of 12 years is prescribed as a limitation period for
various kinds of suits relating to immovable property, trusts and endowments.
c. Period of 3 years: A period of three years has been prescribed for suits relating to
accounts, contracts, declaratory suits, suits relating to decrees and instruments and
suits relating to movable property.
d. Period varying between 1 to 3 years: The period from 1 to 3 years has been
prescribed for suits relating to torts and other miscellaneous matters and suits for
which no period of limitation is provided in the schedule to the Act.
e. Period in days varying between 90 to 10 days: The minimum period of limitation
of 10 days is prescribed for application for leave to appear and defend a suit under
summary procedure from the date of service of the summons.
f. For appeals against a sentence of death passed by a court of session or a High Court in
the exercise of its original jurisdiction the limitation period is 30 days.
g. For appeal against any sentence other than a sentence of death or any other not being
an order of acquittal, the period of 60 days for the appeal to High Court and 30 days
for appeal to any other Court is prescribed.
10.5
www.cscartindia.com CS PRAVEEN CHOUDHARY
ARBITRATION AND CONCILIATION ACT 1996
ARBITRATION AND CONCILIATION ACT, 1996
Introduction
With a view to consolidate and amend the law relating to domestic arbitration, international
commercial arbitration, enforcement of foreign arbitral awards and also to provide for a law
relating to conciliation and related matters, a new law called Arbitration and Conciliation
Act, 1996 has been passed which is based on United Nations Commission on International
Trade Law (UNCITRAL), model law on International Commercial Arbitration.
The Arbitration and Conciliation Act, 1996 aims at streamlining the process of
arbitration and facilitating conciliation in business matters. The Act recognizes the
autonomy of parties in the conduct of arbitral proceedings by the arbitral tribunal and
abolishes the scope of judicial review of the award and minimizes the supervisory role of
Courts. The autonomy of the arbitral tribunal has further been strengthened by empowering
them to decide on jurisdiction and to consider objections regarding the existence or validity
of the arbitration agreement.
Arbitration
Arbitration is one of the methods of settling civil disputes between two or more persons
by reference of the dispute to an independent and impartial third person, called
arbitrator, instead of litigating the matter in the usual way through Courts. It saves time
and expenses. It also avoids unnecessary technicalities and at the same time ensures
‘’substantial justice within limits of the law’’.
Arbitration (Sec 2(1)(a)):

Any arbitration whether or not administered by a permanent arbitral institution.
International Commercial Arbitration ([Sec 2(1)(f)])

An arbitration relating to disputes arising out of legal relationships, whether contractual
or not, considered as commercial under the law in for in India and where at least 1 of
the parties is-
i. an individual who is a national of, or habitually resident in, any country other than
India; or
ii. a body corporate which is incorporated in any country other than India; or
iii. an association or a body of individuals whose central management and control is
exercised in any country other than India; or
11.1
iv. the Government of a foreign country.
ARBITRATION AGREEMENT (Sec 2(1)(b))

“Arbitration agreement” means an agreement referred to in Sec 7.
Under Section 7, the Arbitration agreement has been defined to mean an agreement by
the parties to submit to arbitration all or certain disputes which have arisen or which
may arise between them in respect of a defined legal relationship, whether contractual
or not.
• An arbitration agreement may be in the form of an arbitration clause in a contract
or in the form of a separate agreement.
• An arbitration agreement shall be in writing.
• An arbitration agreement is in writing if it is contained in-
ü a document signed by the parties;
ü an exchange of letters, telex, telegrams or other means of telecommunication
including communication through electronic means which provide a record
of the agreement; or
ü an exchange of statements of claim and defence in which the existence of the
agreement is alleged by one party and not denied by the other.
• The reference in a contract to a document containing an arbitration clause

constitutes an arbitration agreement if the contract is in writing and the reference
is such as to make that arbitration clause part of the contract.
Essentials of Arbitration Agreement

An arbitration agreement, to be valid and binding, must have the following essential
elements:
1. It must be in writing and includes an exchange of letters, telex telegrams or other
means of communication, which provides a record of such arbitration agreement.
2. It must have all the essential elements of a valid contract.
3. An arbitration agreement is not required to be in any particular form. What is require
d be ascertained is whether the parties have agreed that if dispute arise between them
in respect of subject matter of the contract, such disputes shall be referred to
arbitration then such an agreement would spell out an arbitration agreement.
[Rukmanibai v. Collector]
4. It must be to refer a dispute, present or future, between the parties to arbitration.
5. It may be in the form of separate agreement.
It may noted that if certain provisions of a contract, containing an arbitration

clause,comes to an end owing to frustration or is avoided on the ground of fraud,
misrepresentation, undue influence or coercion, the arbitration clause continues to be
binding. [Naihati v. Khyaliram].
11.2
POWER OF JUDICIAL AUTHORITY TO REFER PARTIES TO ARBITRATION
[SECTION 8]
A judicial authority, before which an action is brought in a matter which is the subject of
an arbitration agreement, shall refer the parties to arbitration, if a party so applies.
In order that the judicial authority may refer the parties to arbitration, the
following conditions must be fulfilled:
1. There should be a valid and a subsisting arbitration agreement capable of being
enforced.
2. The subject matter in question in the legal proceedings must be within the scope of
arbitration agreement.
3. The application must be made by a party to the arbitration agreement or by some
person claiming under him.
4. The applicant must make the application at the earliest stage of the proceedings, i.e.,
before submitting his first statement on the substance of the dispute.
5. The application must be accompanied by the original arbitration agreement or a duly
certified copy thereof.
The Supreme Court in Hindustan Petroleum Corporation Ltd. V. M/s Pink City Midway
Petroleum, has held that jurisdiction of Civil Court is barred after an application under
Section 8 of the Act is made for arbitration.
Power of the court, seized of petitions u/s 9 or 11 of the Act, to refer the
dispute to Mediation or Conciliation.
According to Section 8A
(1):- If during the pendency of petitions u/s 9 or 11 of the Act, it appears to the court, that
there exists elements of a settlement which may be acceptable to the parties, the court
may, with the consent of parties, refer the parties, for resolution of their disputes, to,-
(a) mediation; or
(b) conciliation.
(2) The procedure for reference of a dispute to mediation is as under–
a) where a dispute has been referred for resolution by recourse to mediation, the
procedure framed under that Act shall apply;
b) in case of a successful resolution of the dispute, the Mediator shall immediately
forward the mediated settlement to the referral court;
c) on receipt of the mediated settlement, the referral court shall independently
apply its judicial mind and record a satisfaction that the mediated settlement is
genuine, lawful, voluntary, entered into without coercion, undue influence, fraud
or misrepresentation and that there is no other legal impediment in accepting
the same;
11.3
d) the court shall record a statement on oath of the parties, or their authorised
representatives, affirming the mediated settlement as well as a clear undertaking
of the parties to abide by the terms of the settlement;
e) if satisfied, the court shall pass an order in terms of the settlement;
f) if the main petition, in which the reference was made is pending, it shall be
disposed of by the referral court in terms thereof;
g) if the main petition, in which the reference was made stands disposed of, the
mediated settlement and the matter shall be listed before the referral court, which
shall pass orders in accordance with clauses (iii), (iv) and (v);
h) such a mediated settlement, shall have the same status and effect as an arbitral
award and may be enforced accordingly.
(3) With respect to reference of a dispute to conciliation, the provisions of Part II of this
Act shall apply as if the conciliation proceedings were initiated by the parties under the
relevant provision of this Act.
Power of the court, seized of matters under sections 34 or 37 of the Act,

to refer the dispute to Mediation or Conciliation.
As per Section 8B
(1) If during the pendency of a petition u/s 34 or an appeal u/s 37, it appears to the court,
that there exists elements of a settlement which may be acceptable to the parties, the
court may, with the consent of parties, refer the parties, for resolution of their disputes,
to:–
a) mediation; or
b) conciliation.
(2) The procedure for reference of a dispute to mediation is as under:-
Same as specified in 8A
(3) Same as specified in 8A.
Interim measures etc. by Court (Sec 9)

1) A party may, before, or during arbitral proceedings or at any time after making of the
arbitral, apply to a court-
i. for the appointment of a guardian for a minor or person of unsound mind for the
purposes of arbitral proceedings; or
ii. for an interim measure of protection in respect of any of the following matters,
namely:-
1. the preservation, interim custody or sale of any goods which are the subject-
matter of the arbitration agreement;
2. securing the amount in dispute in the arbitration;
3. the detention, preservation or inspection of any property or thing which is the
subject-matter of the dispute in arbitration, or as to which any question may arise
11.4
therein and authorising for any of the aforesaid purposes any person to enter
upon any land or building in the possession of any party or authorising any
samples to be taken or any observation to be made, or experiment to be tried,
which may be necessary or expedient for the purpose of obtaining full information
or evidence;
4. interim injunction or the appointment of a receiver;
5. such other interim measure of protection as may appear to the Court to be just
and convenient, and the Court shall have the same power for making orders as it
has for the purpose of, and in relation to, any proceedings before it.
2) where, before the commencement of the arbitral proceedings, a Court passes an order
for any interim measure of protection, the arbitral proceedings shall be commenced
within 90 days from the date of such order or within such further time as the Court may
determine.
3) once the arbitral tribunal has been constituted, the Court shall not entertain an
application, unless the Court finds that circumstances exist which may not render the
remedy provided u/s 17 efficacious.
ARBITRAL TRIBUNAL
The person who is appointed to determine the differences and disputes is called the
Arbitrator or Arbitral Tribunal (which may consist of sole arbitrator or panel of
arbitrators) , the proceedings before whom are called arbitration proceedings , and his
decision is called as award.
Number of Arbitrators [Sec. 10]

The parties are free to determine the number of arbitrators provided that such number
shall not be an even number. If the parties fail to make the determination, the arbitral
tribunal shall consist of a sole arbitrator.
Appointment of Arbitrators [ Sec. 11]

A person of any nationality may be appointed as an arbitrator, unless otherwise agreed
by the parties.
When the parties have agreed that the number of arbitrators to be appointed shall 3, but
do not agree on a procedure for their appointment, then each party shall appoint 1
arbitrator, and the 2 appointed arbitrators shall appoint the 3rd arbitrator, who shall act as
the Presiding Arbitrator.
The Supreme Court and the High Court shall have the power to designate, arbitral
institutions, from time to time, which have been graded by the Council under section 43-
I, for the purposes of the Act.
It may be noted that in respect of those High Court jurisdictions, where no graded arbitral
11.5
institution are available, then, the Chief Justice of the concerned High Court may maintain
a panel of arbitrators for discharging the functions and duties of arbitral institution and
any reference to the arbitrator shall be deemed to be an arbitral institution for the
purposes of this section and the arbitrator appointed by a party shall be entitled to such
fee at the rate as specified in the 4th Schedule.
Where a party fails to appoint an arbitrator within 30 days from the date of the receipt of
a request to do so from the other party or where the 2 appointed arbitrators fail to agree
on the 3rd arbitrator within 30 days from the date of their appointment, then the
appointment shall be made, on an application of the party, by the arbitral institution
designated by S.C. in case of International commercial Arbitration OR by H.C. in case of
arbitration other than international commercial arbitration, as the case may be.
Challenge of appointment of Arbitrator

The appointment of arbitrator may be challenged on any of the following grounds:
1. Circumstances exist that give rise to justifiable doubts as to his independence
or impartiality; or
2. He does not possess the qualification agreed to by the parties.
It may be noted that a party may challenge an arbitrator appointed by him only on those
grounds which came to his knowledge after the appointment has been made.
Note: The designation of any person or institution by the Supreme Court or, as the case may
be, the High Court, for the purposes of this section shall not be regarded as a delegation of
judicial power by the Supreme Court or the High Court.
The arbitral institution, before appointing an arbitrator, shall seek a disclosure in writing
from the prospective arbitrator, and have due regard to -
ü any qualifications required for the arbitrator by the agreement of the parties; and
ü the contents of the disclosure and other considerations as are likely to secure the
appointment of an independent and impartial arbitrator.
In the case of appointment of sole or 3rd arbitrator in an international commercial arbitration,

the arbitral institution designated by the SC may appoint an arbitrator of a nationality other
than the nationalities of the parties where the parties belong to different nationalities.
Where more than 1 request has been made, to different arbitral institutions, the arbitral
institution to which the request has been 1st made shall be competent to appoint.
Where the matter arises in an international commercial arbitration or any other arbitration,
the reference to the arbitral institution, shall be construed as a reference to the designated
arbitral institution.
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An application for appointment of an arbitrator or arbitrators shall be disposed of by the

arbitral institution within 30 days from the date of service of notice on the opposite party.
Procedure [Sec .13]: The parties are free to agreee on a procedure for challenging an
arbitrator. If there is no agreement on this point or the parties have failed to agree, then
the procedure to be followed is that the party wising to present the challenge has to
inform the Arbitral Tribunal of the matter. This would be done within 15 days after
becoming aware of the constitution of the Arbitral Tribunal or after becoming aware of
any circumstances of the challenge, whichever is later. The Tribunal shall decide on the
challenge unless the arbitrator withdraws from office or the other party to the
arbitration agrees to the challenge.
If the challenge is not successful, the Tribunal shall continue with the proceedings and
shall make an award. But at that stage, the party who challenged arbitrator may
challenge the award and also make an application for setting aside the award in
accordance with Section 34 of the Act.
Failure or Impossibility to act [Sec. 14]

Section 14 deals with when a mandate given to an arbitrator shall be terminated.
‘’Mandate’’ means an authorization to act given to an arbitrator.
The mandate of an arbitrator shall terminate if-

a. He becomes de jure (by right) or de facto (in fact) unable to perform his functions or
for other reasons fails to act without undue delay; and
b. He withdraws from his office or the parties agree to the termination of his mandate.
The mandate of an arbitrator shall also be terminated in the following cases:

a. Where he withdraws from office for any reason; or
b. By virtue of an agreement between the parties.
Case law: In Construction India Ltd. v. Secretary, Works Department, Government

of Orissa, it was held that demotion of a government employee from his government
position does not lead to termination of that person as an arbitrator. Section 14
provides the circumstances of termination of arbitrator and demotion from a
government position is not covered under Section 14.
Substitution of Arbitrator [Sec. 15]

Where the mandate of an arbitrator terminates, a substitute arbitrator shall be
appointed according to the rules that were applicable to the government of th
arbitrator being replaced.
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Unless otherwise agreed by the parties:
a. Where an arbitrator is replaced, any hearings previously held may be repeated at the
discretion of the Arbitral Tribunal;
b. An order or ruling of the Arbitral Tribunal made prior to the replacement of an
arbitrator shall not be invalid solely because there has been a change in the composition
of the Arbitral Tribunal.
Jurisdiction of Arbitral Tribunal [Sec. 16]

The arbitral tribunal may rule on its jurisdiction, including ruling on any objections with
respect to the existence or validity of an arbitration agreement. For this purpose:
a. An arbitration clause which forms part of a contract shall be treated as an agreement
independent of the other terms of the contract; and
b. A decision by the arbitral tribunal that the certain provisions of a contract are null
and void shall not automatically invalidate the arbitration clause.
It may be noted that a plea that arbitral tribunal does not have jurisdiction shall be
raised not later than the submission of the statement of defence. However, a party shall
not be precluded from raising such a plea merely because that he has appointed, or
participated in the appointment of an arbitrator.
Interim Measures Ordered by Arbitral Tribunal (Sec 17)

1. A party may, during the arbitral proceedings apply to the arbitral tribunal,
i. For the appointment of a guardian for a minor or person of unsound mind for the
purposes of arbitral proceedings; or
ii. For an interim measure of protection in respect of any of the following matters,
namely:
a. the preservation, interim custody or sale of any goods which are the subject
matter of the arbitration agreement;
b. securing the amount in dispute in the arbitration;
c. the detention, preservation or inspection of any property or thing which is the
subject-matter of the dispute in arbitration, or as to which any question may
arise therein and authorising for any of the aforesaid purposes any person to
enter upon any land or building in the possession of any party, or authorising
any samples to be taken, or any observation to be made, or experiment to be
tried, which may be necessary or expedient for the purpose of obtaining full
information or evidence;
d. interim injunction or the appointment of a receiver;
e. such other interim measure of protection as may appear to the arbitral tribunal
to be just and convenient, and the arbitral tribunal shall have the same power
for making orders, as the court has for the purpose of, and in relation to, any
proceedings before it.
2. Subject to any orders passed in an appeal, any order issued by the arbitral tribunal shall
11.8
be deemed to be an order of the Court for all purposes and shall be enforceable under the
CPC, 1908, in the same manner as if it were an order of the Court.
Statements of Claim and Defence (Sec 23)

1. Within time agreed by the parties or determined by the arbitral tribunal, the claimant
shall state the facts supporting his claim, the points at issue and the relief or remedy
sought, and the respondent shall state his defence in respect of these particulars, unless
the parties have otherwise agreed as to the required elements of those statements.
2. The parties may submit with their statements all documents they consider to be
relevant or may add a reference to the documents or other evidence they will submit.
2A. The respondent, in support of his case, may also submit a counter claim or plead a set
-off, which shall be adjudicated upon by the arbitral tribunal, if such counterclaim or set-
off falls within the scope of the arbitration agreement.
3. Unless otherwise agreed by the parties, either party may amend or supplement his
claim or defence during the course of the arbitral proceedings, unless the arbitral tribunal
considers it inappropriate to allow the amendment or supplement having regard to the
delay in making it.
5. The statement of claim and defence under this section shall be completed within 6
months from the date the arbitrator or all the arbitrators, as the case may be, received
notice, in writing, of their appointment.
Procedure for Arbitral/Arbitration Proceedings

Sections 23 to 27 of the Arbitration and Conciliation Act, 1996 lays down the procedure
to be followed in the arbitral/arbitration proceedings. The procedure involves the
following steps:
i. Statements of claim and defence: The claimant has to submit his claim, consisting
of facts supporting the claim, points at issue and the relief of remedy sought – within the
period agreed by the parties, or determined by the arbitral tribunal. Likewise, the
respondent has to state the defence in respect of the claims of the claimant.
ii. Hearing and written proceedings: It is open to parties to agree for holding oral
hearings for presentation of evidence and for oral arguments, or, alternatively, for
conducting proceedings on the basis of documents such as affidavits. In such absence of
any such agreement, a decision in this regard may be taken by the arbitral tribunal.
iii. Default of a party: It is open to the parties to agree to what constitutes a default in
the proceedings. In the absence of any such agreement, certain situations as stipulated
under the Act are regarded as defaults, leading to certain consequences.
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iv. Expert appointment by arbitral tribunal: The arbitral tribunal may appoint one or
more experts to report to it, on specific issues to be determined by the arbitral tribunal.
v. Court assistance in taking evidence: The arbitral tribunal as well as any party, with
the approval of the arbitral tribunal, can apply to the court for assistance in taking
evidence.
vi. Decision: The decision of the Tribunal is generally by a majority of all its members.
Time Limit for Arbitral Award (Sec 29A)

1. The award in matters other than international commercial arbitration shall be made
by the arbitral tribunal within 12 months from the date of completion of pleadings.
Award in the matter of international commercial arbitration may be made as

expeditiously as possible and endeavour may be made to dispose-off the matter within
12 months from the date of completion of pleadings.
2. If the award is made within 6 months from the date the arbitral tribunal enters upon
the reference, the arbitral tribunal shall be entitled to receive such amount of additional
fees as the parties may agree.
3. The parties may, by consent, extend the period for making award for a further period
not exceeding 6 months.
4. If the award is not made within the specified period or the extended period, the
mandate of the arbitrator(s) shall terminate unless the Court has, either prior to or after
the expiry of the period so specified, extended the period:
Provided that while extending the period, if the Court finds that the proceedings have
been delayed for the reasons attributable to the arbitral tribunal, then, it may order
reduction of fees of arbitrator(s) by not exceeding 5% for each month of such delay.
Provided further that where an application is pending, the mandate of the arbitrator shall
continue till the disposal of the said application.
Provided also that the arbitrator shall be given an opportunity of being heard before the
fees is reduced.
5. The extension of period may be on the application of any of the parties and may be
granted only for sufficient cause and on such terms and conditions as may be imposed by
the Court.
6. While extending the period, it shall be open to the Court to substitute one or all of the
arbitrators and if one or all of the arbitrators are substituted, the arbitral proceedings
shall continue from the stage already reached and on the basis of the evidence and
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material already on record, and the new arbitrator(s) appointed shall be deemed to have
received the said evidence and material.
7. In the event of arbitrator(s) being appointed, the arbitral tribunal thus reconstituted
shall be deemed to be in continuation of the previously appointed arbitral tribunal.
8. It shall be open to the Court to impose actual or exemplary costs upon any of the parties.
9. An application filed shall be disposed of by the Court as expeditiously as possible and

endeavour shall be made to dispose of the matter within 60 days from the date of service
of notice on the opposite party.
Settlement [Sec.30]
This section declares that, in spite of an arbitration agreement, the arbitral tribunal may
encourage the settlement of disputes by using mediation, conciliation or other
proceedings, with the agreement of the parties.
If the parties reach to a settlement, the arbitral award will be given by the arbitral
tribunal. The arbitral award, on agreed terms, will have the same status and effect as
any other arbitral award on the merits of the dispute.
AWARD
Meaning of Award
Award means an arbitral award. It is a final judgement of the arbitral tribunal on all
matters referred to it. It is in fact a final adjudication by a tribunal of the parties own
choice. It is binding in the same manner as the decision of a Court.
It may be noted that an arbitral award includes an interim award.
Essentials of a valid award:

i. It must be in writing. It may be in such language as agreed upon.
ii. It must follow the agreement and not purport to decide matters not within the
agreement.
iii. It must be final and give a decision on all matters referred.
iv. It must be certain i.e., it should be clear and possible to perform.
v. It must be dated and signed by the arbitrators and in the presence of parties.
vi. It must be legal and must be in conformity with the powers contained in the reference
Form and contents of Arbitral Award

Section 31 provides that the following are the important provisions pertaining to form
and contents of arbitral award:
i. Arbitral award must be in writing.
ii. It must state the reasons unless otherwise agreed by the parties or the award is on
agreed terms u/s 30.
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iii. It must be dated and signed by the arbitrators.
iv. It must state the place of arbitration.
v. A signed copy of arbitral award must be delivered to each of the parties to the
reference.
Correction and Interpretation of Award [Sec. 33(1)]

Within 30days from the receipt of arbitral award:
a. a party, with notice to the other party, may request the arbitral tribunal to correct
any computation errors, any clerical or typographical errors or any other errors of
a similar nature occurring in the award.;
b. if so agreed by the parties, a party, with notice to the other party, may request the
arbitral tribunal to give an interpretation of a specific point or part of the award.
It may be noted that the arbitral tribunal may correct any error of the type referred to in
clause a) above, on its own initiative, within 30 days from the date of arbitral award.
Additional Award [Sec. 33(4)]

Unless otherwise agreed by the parties, a party with notice to the other party may
request, within 30days from the receipt of arbitral award, the arbitral tribunal to make
an additional arbitral award as to claims presented in the arbitral proceedings but
omitted from the arbitral award. If the arbitral tribunal considers the request made to
be justified, it shall make the additional arbitral award within 60days from the receipt of
such request.
Setting aside of an Arbitral Award [Sec.34]

1. Recourse to a Court against an arbitral award may be made only by an application for
setting aside such award.
2. An arbitral award may be set aside by the Court only if -
(a) the party making the application establishes on the basis of the record of the arbitral
tribunal that-,
i. a party was under some incapacity, or
ii. the arbitration agreement is not valid under the law to which the parties have
subjected it or,
iii. failing any indication thereon, under the law for the time being in force; or
iv. the party making the application was not given proper notice of the appointment of
an arbitrator or of the arbitral proceedings or was otherwise unable to present his
case; or
v. the arbitral award deals with a dispute not contemplated by or not falling within the
terms of the submission to arbitration, or it contains decisions on matters beyond
the scope of the submission to arbitration:
Provided that, if the decisions on matters submitted to arbitration can be separated
from those not so submitted, only that part of the arbitral award which contains
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decisions on matters not submitted to arbitration may be set aside; or
vi. the composition of the arbitral tribunal or the arbitral procedure was not in
accordance with the agreement of the parties, unless such agreement was in conflict
with a provision of this Part from which the parties cannot derogate, or, failing such
agreement, was not in accordance with this Part; or
(b) the Court finds that,

i. the subject-matter of the dispute is not capable of settlement by arbitration, or
ii. the arbitral award is in conflict with the public policy of India.
Explanation 1
For the avoidance of any doubt, it is clarified that an award is in conflict with the public
policy of India, only if -
i. the making of the award was induced or affected by fraud or corruption; or
ii. it is in contravention with the fundamental policy of Indian law; or
iii. it is in conflict with the most basic notions of morality or justice.
Explanation 2
For the avoidance of doubt, the test as to whether there is a contravention with the
fundamental policy of Indian law shall not entail a review on the merits of the dispute.
Sec 34(2A): An arbitral award arising out of arbitrations, other than international
commercial arbitrations, may also be set aside by the Court, if the Court finds that the
award is vitiated by patent illegality appearing on the face of the award.
Provided that an award shall not be set aside merely on the ground of an erroneous
application of the law or by re appreciation of evidence.
Sec 34 (3): provides that an application for setting aside may not be made after 3 months
have elapsed from the date on which the party making that application had received the
arbitral award or, if a request had been made, from the date on which that request had
been disposed of by the arbitral tribunal:
Provided that if the Court is satisfied that the applicant was prevented by sufficient cause
from making the application within the said period of 3 months it may entertain the
application within a further period of 30 days, but not thereafter.
Sec 34(4): On receipt of an application, the Court may, where it is appropriate and it is so
requested by a party, adjourn the proceedings for a period of time determined by it in
order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or
to take such other action as in the opinion of arbitral tribunal will eliminate the grounds
for setting aside the arbitral award.
Sec 34(5): An application under this section shall be filed by a party only after issuing a
11.13
prior notice to the other party and such application shall be accompanied by an affidavit
by the applicant endorsing compliance with the said requirement.
Sec 34(6): an application under this section shall be disposed of expeditiously, and in any
event, within 1 year from the date on which the notice is served upon the other party.
Appealable Orders (Sec 37)

1. Notwithstanding anything contained in any other law for the time being in force, an
appeal shall lie from the following orders (and from no others) to the Court authorised by
law to hear appeals from original decrees of the Court passing the order, namely, refusing
to refer the parties to arbitration;
a. Granting or refusing to grant any measure;
b. Setting aside or refusing to set aside an arbitral award.
2. Appeal shall also lie to a court from an order of the arbitral tribunal-
a) accepting the plea; or
b) granting or refusing to grant an interim measure.
3. No second appeal shall lie from an order passed in appeal, but nothing in this section
shall affect or take away any right to appeal to the Supreme Court.
Arbitration agreement not to be discharged by death of party thereto

Section 40 (1) provides that an arbitration agreement shall not be discharged by the
death of any party thereto either as respects the deceased or, as respects any other party,
but shall in such event be enforceable by or against the legal representative of the
deceased.
Section 40 (2) states that the mandate of an arbitrator shall not be terminated by the
death of any party by whom he was appointed.
Time limit for Arbitral Award:

Sec 29A Sec 29B
The award shall be made within 12 The parties to an arbitration agreement
months from the date of arbitral tribunal may, at any stage, either before or at the
enters upon reference. time of appointment of the arbitral
tribunal, agree in writing to have dispute
resolved within 6 months by fast track
process
Fast track procedure (Section 29B)
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(1) Notwithstanding anything contained in this Act, the parties to an arbitration
agreement, may, at any stage either before or at the time of appointment of the arbitral
tribunal, agree in writing to have their dispute resolved by fast track procedure.
2) The parties to the arbitration agreement, while agreeing for resolution of dispute by
fast track procedure, may agree that the arbitral tribunal shall consist of a sole arbitrator
who shall be chosen by the parties.
3) The arbitral tribunal shall follow the following procedure while conducting arbitration
proceedings:
a) The arbitral tribunal shall decide the dispute on the basis of written pleadings,
documents and submissions filed by the parties without any oral hearing;
b) The arbitral tribunal shall have power to call for any further information or
clarification from the parties in addition to the pleadings and documents filed by
them;
c) An oral hearing may be held only, if, all the parties make a request or if the arbitral
tribunal considers it necessary to have oral hearing for clarifying certain issues;
d) The arbitral tribunal may dispense with any technical formalities, if an oral hearing is
held, and adopt such procedure as deemed appropriate for expeditious disposal of the
case.
ARBITRATION COUNCIL OF INDIA (ACI)

Section 43A of Act contains definitions of terms used in Part IA such as Chairperson,
Council and Member.
Establishment and incorporation of Arbitration Council of India (Sec 43B)

It empowers the CG to establish the Arbitration Council of India to perform the duties and
discharge the functions under the Arbitration Conciliation Act, 1996.
The Council shall be a body corporate by the name aforesaid, having perpetual succession
and a common seal, with power, subject to the provisions of this Act, to acquire, hold and
dispose of property, both movable and immovable, and to enter into contract, and shall,
by the said name, sue or be sued. The head office of the Council shall be at Delhi. The
Council may, with the prior approval of the CG, establish offices at other places in India.
Composition of Council (Sec 43 C)

The Council shall consist of the following Members, namely:
(a) a person, who has been,
ü a Judge of the Supreme Court or,
ü Chief Justice of a High Court or,
ü a Judge of a High Court or an eminent person,
having special knowledge and experience in the conduct or administration of arbitration,
11.15
to be appointed by the CG in consultation with the CJI – Chairperson;
(b) An eminent arbitration practitioner having substantial knowledge and experience in
institutional arbitration, both domestic and international, to be nominated by the CG –
Member;
(c) an eminent academician having experience in research and teaching in the field of
arbitration and alternative dispute resolution laws, to be appointed by the CG in
consultation with the Chairperson – Member;
(d) Secretary to the Government of India in the Department of Legal Affairs, Ministry of
Law and Justice or his representative not below the rank of Joint Secretary – Member, ex
office.
(e) Secretary to the Government of India in the Department of Expenditure, Ministry of
Finance or his representative not below the rank of Joint Secretary – Member, ex officio;
(f) one representative of a recognised body of commerce and industry, chosen on
rotational basis by the CG – Part-time Member; and
(g) Chief Executive Officer – Member - Secretary, ex officio.
The Chairperson and Members of the Council, other than ex officio Members, shall hold
office as such, for 3 years from the date on which they enter upon their office.
Chairperson or Member, other than ex officio Member, shall not hold office after he has
attained the age of 70 years in the case of Chairperson and 67 years in the case of
Member.
The salaries, allowances and other terms and conditions of the Chairperson and Members
as may be prescribed by the CG. The Part-time Member shall be entitled to such travelling
and other allowances as may be prescribed by the CG.
For the purposes of performing the duties and discharging the functions
under this Act, the Council may—
a. Frame policies governing the grading of arbitral institutions;
b. Recognise professional institutes providing accreditation of arbitrators;
c. Review the grading of arbitral institutions and arbitrators;
d. Hold training, workshops and courses in the area of arbitration in collaboration of
law firms, law universities and arbitral institutes;
e. Frame, review and update norms to ensure satisfactory level of arbitration and
conciliation;
f. Act as a forum for exchange of views and techniques to be adopted for creating a
platform to make India a robust centre for domestic and international arbitration and
conciliation;
g. Make recommendations to the CG on various measures to be adopted to make
provision for easy resolution of commercial disputes;
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h. Promote institutional arbitration by strengthening arbitral institutions;
i. Conduct examination and training on various subjects relating to arbitration
and conciliation and award certificates thereof;
j. Establish and maintain depository of arbitral awards made in India;
k. Make recommendations regarding personnel, training and infrastructure of arbitral
institutions; and
l. Such other functions as may be decided by the Central Government.
Vacancies, etc., not to invalidate proceedings of Council (Sec 43 E)

No act or proceeding of the Council shall be invalid merely by reason of—
a. any vacancy or any defect, in the constitution of the Council;
b. any defect in the appointment of a person acting as a Member of the Council; or
c. any irregularity in the procedure of the Council not affecting the merits of the case.
Resignation of Members (Sec 43F)

The Chairperson or the Full-time or Part-time Member may, by notice in writing, under
his hand addressed to the CG, resign his office.
Provided that the Chairperson or the Full-time Member shall, unless he is permitted by
the CG to relinquish his office sooner, continue to hold office until the expiry of 3 months
from the date of receipt of such notice or until a person duly appointed as his successor
enters upon his office or until the expiry of his term of office, whichever is earlier.
Removal of Member Sec 43G

(1) The CG may, remove a Member from his office if he –
a. is an undischarged insolvent; or
b. has engaged at any time (except Part-time Member), during his term of office, in
any paid employment; or
c. has been convicted of an offence which, in the opinion of the CG, involves moral
turpitude; or
d. has acquired such financial or other interest as is likely to affect prejudicially his
functions as a Member; or
e. has so abused his position as to render his continuance in office prejudicial to the
public interest; or
f. has become physically or mentally incapable of acting as a Member.
(2) Notwithstanding anything above, no Member shall be removed from his office on the
grounds specified in clauses (d) and (e) unless the Supreme Court, on a reference being
made to it in this behalf by the CG, has, on an inquiry, held by it in accordance with such
procedure as may be prescribed in this behalf by the Supreme Court, reported that the
11.17
Member, ought on such ground or grounds to be removed.
Appointment of experts and constitution of Committees thereof (Sec 43 H)

The Council may, appoint such experts and constitute such Committees of experts as it
may consider necessary to discharge its functions on such terms and conditions as may
be specified by the regulations.
Norms for accreditation (Sec 43 J)

According to the ‘8th Schedule of the Act, a person shall not be qualified to be an
arbitrator unless he—
i. is an advocate having 10 years of practice experience as an advocate; or
ii. is a CA having 10 years of practice experience as a CA; or
iii. is a cost accountant having 10 years of practice experience as a cost accountant; or
iv. is a CS having 10 years of practice experience as a CS; or
v. Has been an officer of the Indian Legal Service; or
vi. has been an officer with law degree having 10 years of experience in the legal matters
in the Government, Autonomous Body, PSU or at a senior level managerial position
in private sector; or
vii. has been an officer with engineering degree having 10 years of experience as an
engineer in the Government, Autonomous Body, PSU or at a senior level managerial
position in private sector or self-employed; or
viii. has been an officer having senior level experience of administration in the CG or SG
or having experience of senior level management of a PSU or a Government company
or a private company of repute;
ix. is a person, in any other case, having educational qualification at degree level with 10
years of experience in scientific or technical stream in the fields of telecom,
information technology, Intellectual Property Rights or other specialised areas in the
Government, Autonomous Body, PSU or a senior level managerial position in a
private sector, as the case may be.
General norms applicable to Arbitrator

ü A person of general reputation of fairness, integrity and capable to apply objectivity
in arriving at settlement of disputes;
ü Must be impartial and neutral and avoid entering into any financial business or other
relationship that is likely to affect impartiality or might reasonably create an
appearance of partiality or bias amongst the parties;
ü Should not involve in any legal proceeding and avoid any potential conflict connected
with any dispute to be arbitrated by him;
ü Should not have been convicted of an offence involving moral turpitude or economic
offence;
ü Shall be conversant with the Constitution of India, principles of natural justice, equity,
common and customary laws, commercial laws, labour laws, law of torts, making and
11.18
enforcing the arbitral awards;
ü Should possess robust understanding of the domestic and international legal system on
arbitration and international best practices in regard thereto;
ü Should be able to understand key elements of contractual obligations in civil and
commercial disputes and be able to apply legal principles to a situation under dispute
and also to apply judicial decisions on a given matter relating to arbitration; and
ü Should be capable of suggesting, recommending or writing a reasoned and enforceable
arbitral award in any dispute which comes before him for adjudication.
Depository of awards (Sec 43K)

The Council shall maintain an electronic depository of arbitral awards made in India and
such other records related thereto in such manner as may be specified by the regulations.
Power to make regulations by Council (Sec 43L)

The Council may, in consultation with the CG, make regulations, consistent with the
provisions of this Act and the rules made thereunder, for the discharge of its functions
and perform its duties under the Act.
CEO (Sec 43M)

There shall be a CEO of the Council, who shall be responsible for day-to-day
administration of the Council. The qualifications, appointment and other terms and
conditions of the service of the CEO shall be prescribed by the CG.
There shall be a Secretariat to the Council consisting of such number of officers and
employees as may be prescribed by the CG.
The qualifications, appointment and other terms and conditions of the service of the
employees and other officers of the Council shall be such as may be prescribed by the CG.
11.19
Conciliation
Meaning of Conciliation
Conciliation means the setting of disputes without litigation. Conciliation is an informal
process in which the conciliator (the 3rd party) tries to bring disputants to an
agreement. He does this by lowering tensions, improving communication, interpreting
issues, providing technical assistance, exploring potential solutions and bringing about
a negotiated settlement. The Arbitration and Conciliation Act, 1996 gives a formal
recognition to conciliation in India.
Appointment of Conciliator (Sec 64)

ü If there is 1 conciliator in conciliation proceedings, there should be an agreement
on his name.
ü If there are 2 conciliators, each party should appoint one conciliator each.
ü If there are 3 conciliators in conciliation proceedings, each party should appoint 1
conciliator each and the 3rd conciliator will be an agreed person, who shall act as
Presiding Conciliator.
Role of Conciliator
The conciliator’s role is to provide assistance in an independent and impartial manner
to the parties to reach an amicable settlement of their disputes and to conduct the
conciliation proceedings in such a manner as he considers appropriate. He is guided by
the principles of objectivity, fairness and justice. The conciliator may conduct the
conciliation proceedings in an appropriate manner taking into consideration all
circumstances and wishes of the parties.
The conciliator’s role is not confined merely in providing assistance, but also extends top to
making proposals for settlements of disputes. The conciliator may make proposals for
settlement of disputes at any stage of the proceedings.
Difference between Arbitration and conciliation

Arbitration Conciliation
Arbitration is a process in which the The conciliator or mediator tries to
conflicting parties agree to refer their remove the difference between the parties.
dispute to a neutral 3rd party known as
‘Arbitrator’.
Arbitration differs from conciliation in the He/she persuades the parties to think over
sense that in arbitration the arbitrator the matter with a problem solving
11.20
gives his judgment on a dispute while in approach, i.e., with a give and take
conciliation, the conciliator disputing approach.
parties to reach at a decision.
The arbitrator does not enjoy any judicial He/she only persuades the disputants to
powers. The arbitrator listens to the view reach a solution and never imposes
points of the conflicting parties and then his/her own viewpoint.
gives his decision which is binding on all The conciliator may change his approach
the parties. from case to case as he/she finds fit
depending on other factors.
Termination of conciliation proceedings (sec 76)

The conciliation proceedings shall be terminated-
a) by the signing of the settlement agreement by the parties, on the date of the
agreement; or
b) by a written declaration of the conciliator, after consultation with the parties, to the
effect that further efforts at conciliation are no longer justified, on the date of the
declaration; or
c) by a written declaration of the parties addressed to the conciliator to the effect that
the conciliation proceedings are terminated, on the date of the declaration; or
d) by a written declaration of a party to the other party and the conciliator, if appointed,
to the effect that the conciliation proceedings am terminated, on the date of the
declaration.
Costs
Upon termination of the conciliation proceedings, the conciliator shall fix the costs of the
conciliation and give written notice thereof to the parties. "costs" means reasonable costs
relating to-
ü the fee and expenses of the conciliator and witnesses requested by the conciliator,
with the consent of the parties;
ü any expert advice requested by the conciliator with the consent of the parties;
ü any assistance provided
ü any other expenses incurred in connection with the conciliation proceedings and the
settlement agreement.
The costs shall be borne equally by the parties unless the settlement agreement provides
for a different apportionment. All other expenses incurred by a party shall be borne by
that party.
Enforcement of foreign arbitration award

Chapters I and II of Part II of the Arbitration and Conciliation Act, 1996 deal with the
enforcement of certain foreign awards made under the New York Convention and the
Geneva Convention, respectively.
11.21
Sections 44 and 53 of the Act define the foreign awards as to mean an arbitral award on
differences between persons arising out of legal relationship, whether contractual or not,
considered commercial under the law in force in India made on or after the 11th day of
October 1960 in the case of New York Convention awards and after the 28th day of July
1924 in the case of Geneva Convention awards.
Awards made under New York convention or Geneva Convention

Any foreign award, whether made under New York Convention or Geneva Convention,
which would be enforceable under the respective provisions of the Act applicable to the
award, have been treated as binding for all purposes on the persons as between whom it
was made, and may accordingly be relied on by any of those persons by way of defence,
set off or otherwise in any legal proceedings in India.
Power of judicial authority to refer parties to arbitration (Sec 45)

Notwithstanding anything contained in Part I or in the CPC, 1908, a judicial authority,
when seized of an action in a matter in respect of which the parties have made an
agreement, shall, at the request of one of the parties or any person claiming through or
under him, refer the parties to arbitration, unless it finds that the said agreement is null
and void, inoperative or incapable of being performed.
When foreign award binding (Sec 46)

Any foreign award which would be enforceable under this Chapter shall be treated as
binding for all purposes on the persons as between whom it was made, and may
accordingly be relied on by any of those persons by way of defence, set off or otherwise in
any legal proceedings in India and any references in this Chapter to enforcing a foreign
award shall be construed as including references to relying on an award.
Evidence (Sec 47)

1) The party applying for the enforcement of a foreign award shall, at the time of the
application, produces before the court-
a. The original award or a copy thereof, duly authenticated in the manner required by
the law of the country in which it was made;
b. The original agreement for arbitration or a duly certified thereof; and
c. Such evidence as may be necessary to prove that the award is a foreign award.
2) If the award or agreement to be produced is in a foreign language, the party seeking to

enforce the award shall produce a translation into English certified as correct by a
diplomatic or consular agent of the country to which that party belongs or certified as
correct in such other manner as may be sufficient according to the law in force in India.
Conditions for enforcement of foreign awards (Sec 48)
11.22
The party, against whom the award is invoked, may use one or more of the following
grounds for the purpose of opposing enforcement of a foreign award, namely:
a. the parties to the agreement were, under the law applicable to them, under some
incapacity, or the said agreement is not valid under the law to which the parties have
subjected it or, failing any indication thereon, under the law of the country where the
award was made; OR
b. the party against whom the award is invoked was not given proper notice of the
appointment of the arbitrator or of the arbitral proceedings or was otherwise unable
to present his case; OR
c. the award deals with a difference not contemplated by or not failing within the terms
of the submission to arbitration, or it contains decisions on matters beyond the scope
of the submission to arbitration: Provided that, if the decisions on matter submitted
to arbitration can be separated from those not so submitted, that part of the award
which contains decisions on matters submitted to arbitration may be enforced; OR
d. the composition of the arbitral authority or the arbitral procedure was not in
accordance with the agreement of the parties, or, failing such agreement, was not in
accordance with the law of the country where the arbitration took place; OR
e. the award has not yet become binding on the parties, or has been set aside or
suspended by a competent authority of the country in which. or under the law of
which, that award was made; OR
f. the subject-matter of the difference is not capable of settlement by arbitration under
the law of India; OR
g. the enforcement of the award would be contrary to the public policy of India.
Explanation -It is clarified that an award is in conflict with the public policy of India,
only if-
a. the making of the award was induced or affected by fraud or corruption; or
b. it is in contravention with the fundamental policy of Indian law; or
c. it is in conflict with the most basic notions of morality or justice.
Enforcement of foreign awards (Sec 49)

Where the Court is satisfied that the foreign award is enforceable, the award is executable
as a decree of the Court.
ALTERNATIVE DISPUTE RESOLUTION (ADR)

There is a growing awareness that courts will not be in a position to bear the entire burden
of justice system. A very large number of disputes lend themselves to resolution by
alternative modes such as arbitration, mediation, conciliation, negotiation, etc. The
ADR processes provide procedural flexibility save valuable time and money and avoid the
stress of a conventional trial.
There is, therefore, an urgent need to establish and promote ADR services for resolution
11.23
of both domestic and international disputes in India.
These services need to be nourished on sound conceptions, expertise in their

implementation and comprehensive and modern facilities. The International Centre for
Alternative Dispute Resolution (ICADR) is a unique centre in this part of the world that
makes provision for promoting teaching and research in the field of ADR as also for
offering ADR services to parties not only in India but also to parties all over the world. The
ICADR is a Society registered under Societies Registration Act, 1860, it is an independent
NGO. It maintains panels of independent experts in the implementation of ADR
processes.
Areas in which ADR works

Almost all disputes including commercial, civil, labour and family disputes, in respect
of which the parties are entitled to conclude a settlement, can be settled by an ADR
procedure. ADR techniques have been proven to work in the business environment,
especially in respect of disputes involving joint ventures, construction projects,
partnership differences, intellectual property, personal injury, product liability,
professional liability, real estate, securities, contract interpretation and performance and
insurance coverage.
11.24
Indian Stamp Act 1899
INDIAN STAMP ACT, 1899
INTRODUCTION:
(a) Union List, Entry 91 gives power to the

Union Legislature to levy stamp duty with
regard to certain instruments (mostly of a
commercial character).
They are bill of exchange, cheques,

promissory notes, bill of lading, letters of
credit, policies of insurance, transfer of
shares, debentures, proxies and receipt. The
power to reduce or remit duties on these
instruments is vested in the Union
Government as per Section 9 of the Act.
(b) State List, Entry 63 confers on the States power to prescribe the rates of stamp duties on
other instruments
(c) Concurrent List, Entry 44. Some States, for their convenience, have passed separate
legislation to cover the matters coming under State‘s domain. As a result, the rates of stamp
duties in different States on other instruments category differ from State to State for the
same instrument
Instrument:
Section 2(14) defines an ―instrument to include every document by which any right or liability
is, or purports to be, created, transferred, limited, extended, extinguished or recorded.
Following instances may be noted:
(i) An unsigned draft document is not an ―instrument (because it does not create or
purport to create any right, etc.)
(ii) An entry in register containing terms of Hiring of machinery is an instrument,
where it is authenticated by the thumb impression of the hirer. (Reason is, that it
purports to create, a liability etc.)
(iii) A letter which acknowledges receipt of a certain sum as having been borrowed at
a particular rate of interest and for a particular period and that it will be
repaid with interest on the due date is an instrument.
(iv) Photocopy of an agreement is not an instrument as defined under Section 2(14)
of the Act.
Instrument Chargeable with duty (Section 3):

This is charging section and provides that subject to the provisions of the act and the
exemptions contained in schedule, I, the following instruments shall be chargeable with duty:
1. Instrument mentioned in schedule I, which are executed in India.
12.1
2. BOE & Promissory Note drawn or made out of India and accepted or paid, or presented,
for acceptance or payment or endorsed, transferred or otherwise negotiated in India.
3. Every Instrument executed out of India and relates to any property situated in Indian
and is received in India.
Exception
1. Instrument by or in favour of Government: Any instrument executed by or on behalf of

or in favour of the Government
2. Sale of Ship: No stamp duty shall require in respect of any instrument for the sale, transfer
of, other disposition, either absolutely or by way of mortgage etc. of the any registered ship.
3. Instrument for the purpose of SEZ: Any instrument executed by, or, on behalf of, or in
favour of, the Developer or Unit or in connection with the carrying out of purposes of the
special Economic Zone.
made liable to duty is an instrument. If a contract of

purchase and sale or a conveyance by way of purchase
without an instrument, then the Legislature

has not reached that transaction and stamp duty shall not be chargeable
Substance and description

Courts have invariably upheld the principle of substance of the transaction, over the
form, in the matter of deciding the nature of the instrument. It is the substance of the
transaction as contained in the instrument and not the form of the instrument that
determines the stamp duty, though the duty is leviable on the instrument and not
on the transaction. In determining whether a document comes within the description of
a document upon which a stamp is required by the Act, one has to look at the entire
document to find out whether it falls within the description.
Section 4: When single transaction effected by several instruments:
Only principle instrument shall be chargeable with duty, prescribed in schedule &
subsidiary instrument by one rupee duty.
Example: Mr. A wants to sll his property but to affect such sale he needs consent of his mother.
Then sale deed being the primary instrument is chargeable with stamp as per schedule and the
consent being a subsidiary instrument is chargeable to Rs. 1.
Mr. A wants to sell his share in partnership firm ABC & Co. to an outsider but to affect such sale
he needs consent of his co-partners Mr. B & Mr. C. The sale deed being the primary instrument is
chargeable with stamp as per schedule and consent being a subsidiary instrument is chargeable
to Rs. 1.
12.2
Section 5: Instrument relating several distinct matter i.e. multifarious
instruments:
When several distinct matters or transaction are embodied in a single instrument it

shall be chargeable with the aggregate amount of the duties with which separate
instruments in respect of each distinct matter would have been charged.
Examples:
1. A document containing both an agreement for the dissolution of a partnership and
a bond, is chargeable with the aggregate of the duties with which two such separate
instruments would be distinct matters
2. A grant of annuity by several persons requires only one stamp (because there is
only one transaction).
3. A lease to joint tenants requires only one stamp.
4. A power of attorney executed by several persons authorising the agent to do
similar acts for them in relation to different subject matter is chargeable under
Section 5, where they have no common interest.
5. Where a person having a representative capacity (as a trustee) and a personal
capacity delegates his powers in both the capacities, section 5 applies. In law, a
person acting as a trustee is a different entity from the same person acting in his
personal capacity.
Section 6: Instrument falling within several descriptions
When an instrument falls within provisions of 2 or more Article in schedule I and the
instrument doesn't contain "distinct matters", it is to charge with the highest of the
duties chargeable are different.
Example: An instrument which can be treated both as a dissolution of partnership and

as an instrument of partition has to be charged to the duty prescribed for partition deed,
which is the higher of the 2.
Methods of Stamping (Section 10-16):
Section 10: Payment of Duty

All duties with which any instrument is chargeable shall be paid, and such payment
shall be indicated on such instrument, by means of stamp i.e. adhesive stamp or
impressed stamp as per provisions of the act or rules.
12.3
Section 11: Use of Adhesive Stamps:
The following instrument may be stamped

with adhesive stamps:
1. Instruments chargeable with a duty not

exceeding 10 naya paisa, except parts of
Bills of Exchange payable otherwise than
on demand and drawn in sets.
2. BOE & PN drawn or made out of India.
3. Entry as an advocate, vakil on the roll of a
High Court.
4. Notarial acts;
5. Transfers by endorsement of shares in a
company or body corporate;
Section 12: Cancellation of adhesive stamps :
In order to prevent the re-use of adhesive stamps, section 12(1A) provides that any
person affixing any adhesive stamp to any instrument chargeable with duty, which has
been executed, by any person shall, when affixing such stamp, cancel the same.
Manner of Cancellation
1. A stamp can be cancelled effectually merely by drawing a solitary or single line

across the stamps. However, in Hafiz allah Baksh v. Dost Mohammed, it was held
that if it is possible to use the stamp even after drawing a line, it will not be
considered as an effectual cancellation.
2. In Melaram v. Brij Lal, it was held that a very effective method of cancellation of
stamps is drawing of diagonal lines across the stamp with the ends of the lines
extending on to the paper of the document.
3. If an illiterate person marks a cross on the stamp it would amount to effectual
cancellation.
4. By writing name or initials across the stamp.
Section 12(1B): If there is plain paper bearing adhesive stamp duty, it must be
cancelled first so it can’t be re-used. .
Section 12(2): Consequences of non-cancellation: Instrument bearing an adhesive

stamp, which has not been cancelled, is deemed to be unstamped
12.4
Section 13: Impressed Stamps
Impressed stamps means and includes labels affixed and

impressed and stamps embossed or engraved.
Every instrument executed on stamp paper shall be in such

manner that the stamp may appear on the face of the
instrument and can't be used for or applied to any other
instrument.
If an instrument is stamped in contravention of the

aforesaid manner, it shall be deemed as unstamped.
The expression face of the instrument means the embossed portion of stamp, "Daulat
Ram Harji vs. VithoRadhoji"
Rule 7 of Stamp Rules, 1925 Provides:
When one stamp paper is insufficient in space, plain paper may be added but the
substantial part of the instrument must appear on the stamp paper.
Section 14 only one Instrument on One Stamp:
"No second instrument chargeable with duty shall be written upon a piece of stamped
paper upon which an instrument chargeable with duty has already been written".
However, endorsement of the same instrument should not be treated as second

instruments. If an instrument is written in contravention of section 13/14. It shall be
deemed to be unstamped and inadmissible in evidence.
Time of Stamping of Instruments (Section 17):
When document is executed in India: Before or at the time of execution of the

instruments.
Please note that the "at the time of execution" means not simultaneously with signing and
therefore can be a reasonable time after signing. (Kurivla vs. Varkeg.)
Document executed out of India (Section 18-19):
Section 18: Any instrument executed out of India except (BOE & PN) must be stamped
within 3 months of its receipt in India. If an adhesive stamp is permissible, the party
receiving the instrument must affix and cancel it himself. But when it can't be stamped
by a private person, with reference to the description of stamp prescribed, such person
shall present the same to the collector within 3 months of its receipt.
12.5
Bills or notes drown out of India (Section 19):
By first holder in India before he deals with the instrument, i.e. presents the same for
acceptance or payment or endorses transfer or otherwise negotiates the same in India.
Provision relating to valuation of instruments:
Section 20 Where consideration is stated in a foreign currency, rate of exchange

on the date of instrument will be considered to convert the amount
into Indian currency.
Exchange rate as notified by CG shall be used for the conversion.
Eg: If a machine purchased for $40,000 and the rate of exchange
notified by CG is $1=Rs. 70. Then value on which stamp duty payable
will be 40,000*70 = 28,00,000.
Section 21 Value of stock or security will be calculated on the basis of average
price on the value on the date of instrument.
In case of share transfer stamp duty is paid on the market value as on
the date of instrument.
Section 22 Any rate of exchange or market value stated in the instrument is
presumed to be correct, until the contrary is proved. (Section 22)
Section 23 Where interest is expressly made payable by the terms of an

instrument, such instrument is not chargeable with duty higher than
that with which it would have been chargeable had no mention of
interest.
Eg: a promissory note for Rs. 10,000 is drawn with the recital of
interest @18% p.a., payable by the promisor; stamp duty is leviable on
the basis that the instrument is for Rs. 10,000 only.
Section 24 Where any property is transferred to any person in consideration
(wholly or in part) of any debt due to him, such debt shall be treated
as consideration for calculating the stamp duty.
Eg: If a has given a loan of Rs. 5,00,000 to B. Instead of Repayment of
loan to A, B transfer his property to A, then the stamp duty will be
paid on the debt amount i.e. Rs. 500000.
On the same grounds, it the property is transferred subject to

payment or transfer of any money or stock, such money or stock will
be considered for valuation purpose.
Eg: If A has transferred shares worth Rs. 50,000 to B. Instead of paying
money to A, B transfers his property to A, then the stamp duty will be
paid on the value of shares i.e. Rs. 50,000
If sale of property is subject to a mortgage, any unpaid mortgage
12.6
together with interest due, if any, will be treated as consideration.
Eg: A sells a property to B for Rs. 500 which is subject to a mortgage to
C for Rs. 1000/- and unpaid interest Rs. 200/-, stamp duty is payable
on Rs. 1700/-
Where property transferred is subject to mortgage, duty already paid

in respect of mortgage will be deducted.
Eg: A mortgages a house of the value of Rs. 10,000/- to B for Rs.
5000/-. B afterwards buy the house from A. Stamp duty is payable on
Rs. 10,000 minus amount of stamp duty already paid for the mortgage.
Section 25 When the payments are made in instalments and not in lump sum
amount. The valuation will be done as follows:
Particulars Valuation
When period of annuity is Total amount of annuity to be
definite paid during such period shall be
considered for valuation
When period of annuity is not
definite
i. And is not subject to life * Total amount payable within
or death of a person 20 yrs of the date of 1st payment.
ii. Is subject to life or death * Annuity payable for 12 years
of a person from the date of 1st payment.
If the value of When on the date of execution of instrument, value of the subject
the subject matter cannot be determined then the stamp duty can be paid on the
matter is estimated basis of valuation. But the benefit derived form the
indeterminate instrument cannot exceed the value of the stamp duty paid.
Valuation in If lease is paid on the basis of Royalty or share of produce, it is not
case of lease possible to determine the exact amount of lease annually. In such
of Mine cases the valuation will be done as follows:
Lease has been granted on The amount estimated by
behalf of Govt. collector of district is considered
for valuation
Lease has been granted by any The amount of Rs. 20,000 per
other person year will be considered for
valuation
Consideration to be set Out (Section 27):
Consideration and all other facts and circumstances affecting the chargeability of any
instrument with duty or the amount of the duty with which it is' chargeable, shall be
fully and truly set forth there in.
12.7
The sections compel the parties to give true & full disclosure.
Penalty (Section 64): Fine up to Rs. 5,000/-
Person Liable to pay Duty: Section 29 deals with the persons responsible for payment
of duty. Under this section, in the absence of an agreement to the contrary, the expense
of providing the proper stamp shall be borne:
(a) in the case of any instrument described in any of the following articles of
Schedule-Iàby the person drawing, making or executing such instrument;
(b) in the case of a policy of insurance other than fire insuranceà by the person
effecting the insurance;
(c) in the case of a policy of fire-insurance à by the person issuing the policy;
(d) in the case of a conveyance including a re-conveyance of mortgaged property à
by the grantee;
(e) in the case of a lease or agreement to lease à by the lessee or intended lessee;
(f) in the case of a counterpart of a lease à by the lessor;
(g) in the case of an instrument of exchange à by the parties in equal shares;
(h) in the case of a certificate of sale à by the purchaser of the property to which
such certificate relates; and
(i) in the case of an instrument of partition à by the parties thereto in proportion
to their respective shares in the whole property partitioned, or, when the
partition is made in execution of an order passed by a Revenue Authority or Civil
Court or arbitrator, in such proportion as such authority, Court or arbitrator
directs.
Impounding of Instrument (Section 33)

1. If an instrument which is not duly stamped is produced as evidence before any
public authority except an officer of police, shall impound (seize and confiscate) the
same.
2. The word produced means produced in response to a summon or produced
voluntarily for some judicial purpose, such as for supporting an evidence. It does not
refer to a document which accidentally or incidentally falls into a judge’s hand.
3. The section also provides that the instrument must be impounded, before it can be
admitted in evidence. Once it is admitted in evidence, the instrument cannot be
impounded at a later stage.
4. The original instrument after impounding has to be sent to the collector along with
report by the impounding authority.
UNSTAMPED RECEIPTS
Section 34 provides that where the instrument is an unstamped receipt produced in the
course of an audit of any public account, the officer before whom the receipt is produced
has discretion either to impound or to require the receipt to be stamped.
12.8
INSTRUMENTS NOT DULY STAMPED INADMISSIBLE IN EVIDENCE
Section 35 stipulates that no instrument chargeable with duty shall be–
i. Admitted in evidence for any purpose whatsoever by any person authorised by
law (such as judges or commissioners) or by the consent of the parties (such as
arbitrators) to record evidence; or
ii. Shall be acted upon; or
iii. Registered; or
iv. Authenticated by any such person as aforesaid or by any public officer unless
such instrument is duly stamped.
An insufficiently stamped instrument is not an invalid document and it can be admitted

in evidence on payment of penalty. [See K. Narasimha Rao v. Sai Vishnu]
ADMISSION OF INSTRUMENTS (WHERE NOT TO BE QUESTIONED)

Section 36 provides that where an instrument has been admitted in evidence, such an
admission shall not be called in question at any stage of the same suit or proceeding on
the ground that the instrument has not been duly stamped.
If notwithstanding any objection, the trial Court admits the document, the matter ends
there and the Court cannot subsequently order the deficiency to be made and levy
penalty (Bhupathi Nath v. Basanta Kumar).
REFUND OF DUTY OR PENALTY IN CERTAIN CASES BY REVENUE AUTHORITY

Section 45 deals with power of the Revenue Authority to refund the penalty in excess
of duty payable on instrument in certain cases.
Section 39 of the Act empowers the Collector to refund a part and in some cases, the
whole of the penalty. Section 45 further empowers the Chief Controlling Revenue
Authority to order refunds.
The object of granting such further power to the Chief Controlling Revenue Authority is
evidently to set right mistakes or other omissions by the Collector to order refund in
deserving cases. The Section provides that where any penalty is paid under Section 35
or Section 40, the Chief Controlling Revenue Authority may, upon application in writing
made within one year from the date of payment, order, refund such penalty wholly or in
part.
It is necessary to appreciate the differences between the powers of the Collector under
Section 39 and the powers of the Controlling Revenue Authority under Section 45 at this
stage.
They are:
(i) Section 39 provides for refund of penalty, whereas Section 45 confers powers to
refund even duties where they have been paid in excess.
12.9
(ii) The Collector’s power to refund penalty is restricted only to 2 cases mentioned
in Section 39(3) but the powers under Section 45 are not subject to any such
limitation.
(iii) Section 39 does not lay down any time limit for the Collector to exercise his
powers to refund, but in the case of Section 45 there is a time limit.
(iv) The power under Section 45 is to be exercised only when an application is made
by a party, whereas under Section 39 it is routine function of the Collector.
Recoveries of Duties and Penalties

Under Section 48, all duties penalties and other sums required to be paid under this
Chapter may be recovered by the Collector by distress and sale of the movable property
of the person or by any other process used for the recovery of the arrears of land
revenue. This section provides for the mode of realisation of duty or penalty or other
sums not voluntarily paid.
Unused Forms
Section 51 of the Act enables the Chief Controlling Revenue Authority or the Collector if
authorised by the Chief Controlling Revenue Authority, for such purpose to allow
refunds in cases where refunds of stamps on printed forms used by bankers,
incorporated companies/bodies corporate if required.
Allowance may be made without limit of time, for stamped papers used for printed
forms of instruments any bankers or by any incorporated company or other body
corporate, if for any sufficient reasons such forms have ceased to be required by the
said banker, company or body corporate: provided that the Chief Controlling Revenue
Authority or the Collector, as the case may be, is satisfied that the duty in respect of such
stamped papers has been duly paid.
CRIMINAL OFFENCES (penalties)

As per Section 62(1),
Any person
a) drawing, making, issuing, endorsing or transferring, or signing otherwise than as a
witness, presenting for acceptance or payment, or accepting, paying or receiving
payment of or in any manner negotiating, any bill of exchange (payable otherwise
than on demand) or promissory note without the same being duly stamped; or
b) executing or signing otherwise than as a witness any other instrument chargeable
with duty without the same being duly stamped; or
c) voting or attempting to vote under any proxy not duly stamped shall,
For every such offence, be punishable with fine which may extend to Rs. 5000.
(2) Section 63 Any person required by Section 12 to cancel an adhesive stamp, and
failing to cancel such stamp in the manner prescribed by that section, shall be
12.10
punishable with fine which may extend to Rs. 100. The criminal intention is necessary
for an offence under this Section.
(3) Section 64, any person who, with intent to defraud the Government-
a) executes any instrument in which all the facts and circumstances required by
Section 27 to be set forth in such instrument are not fully and truly set forth; or
b) being employed or concerned in or about the preparation of any instrument,
neglects or omits fully and truly to set forth therein all such facts and
circumstances; or
c) does any other Act calculated to deprive the Government of any duty or penalty
under this Act;
shall be punishable with fine which may extend to Rs. 5000.
Here also, an intention to evade payment of proper stamp duty or intention to defraud
the Government of its stamp revenue is necessary.
E-Stamping
E-Stamping is a computer based application and a secured way of paying Non-Judicial
stamp duty to the Government. The benefits of e-Stamping are e-Stamp Certificate can
be generated within minutes; e-Stamp Certificate generated is tamper proof; Easy
accessibility and faster processing; Security; Cost savings and User friendly.
Executed / Execution (Sec (12))

The words “executed” and “execution”, mean “signed” and “signature” (including thumb
impression or other mark) respectively.
An instrument which is chargeable with stamp duty only on being “executed” is not
liable to stamp duty until it is signed.
The Collector can receive the stamp duty without penalty and certify an instrument as
duly stamped, as from the date of execution.
12.11
Registration Act, 1908
REGISTRATION ACT, 1908

INTRODUCTION
Registration Act, 1908 provides for registration of certain documents. Following
are the purposes or objectives of registration of documents:
1. To give notice to the world that such a document has been registered and to serve as a
source of information.
2. To prevent fraud and forgery with the purpose of providing good evidence of the
genuineness of the written document and
3. To secure the interest of person dealing with any immovable property where such
dealings requires registration.
DOCUMENTS FOR WHICH REGISTRATION IS COMPULSORY AND OPTIONAL

[SECTION 17 & 18]
Documents for which Registration is Compulsory [Sec. 17]
Section 17 provides that the following documents require compulsory registration:
1. Instruments of gift of immovable property.
2. Other non-testamentary instruments which create, declare, assign, limit or
extinguish, any right, title or interest of the value of Rs.100/- and above in
immovable property. A document which is plainly intended to be operative
immediately and to be final and irrevocable is non-testamentary instrument.
3. Non-testamentary instruments which acknowledge the receipt or payment of any
consideration on account of creation, declaration, assignment, limitation or
extinction, of any right, title or interest of the value of Rs.100/- and above in
immovable property.
This clause requires an acknowledgement in the form of a receipt to be registered, but
not an acknowledgement of the fact that a transaction has taken place.
4. Nontestamentary instruments transferring or assigning any decree of a court or an
y award of an arbitrator when such decree or award declares, assigns, limits or
extinguishes, of any right, title or interest of the value of
Rs.100/- and above in immovable property.
5. Lease Deeds of following leases of immovable property:
a) Lease from year to year basis;

b) Lease for the term exceeding 1 year; and
c) Lease which reserves a yearly rent.
6. A document, other than a will, through which one person authorizes another person
to adopt his son.
It may be noted that a document covered under the aforesaid provisions, but also
13.1
covered under Section 17(2) is optionally registerable.
Documents not required for registration section 17(2)

(i) any composition deed, i.e., every deed the essence of which is composition; or
(ii) any instrument relating to shares in Joint Stock Company; or
(iii) any debentures issued by any such Company; or
(iv) any endorsement upon or transfer of any debenture; or
(v) any document other than the documents specified under clause (e) above
creating merely a right to obtain another document which will, when executed
create, declare, assign, limit or extinguish any such right, title or interest; or
(vi) any decree or order of a court;
Documents for which Registration is Optional[ Section 18]

Section 18 provides that in respect of the following documents, registration is optional:
1. instruments (other than instruments of gift and wills) which purport or operate
to create, declare, assign, limit or extinguish, whether in present or in future, any
right, title or interest whether vested or contingent, of value less than one
hundred rupees, to or in immovable property;
2. instruments acknowledging the receipt or payment of any consideration on
account of the creation, declaration, assignment; limitation or extinction of any
such right, title or interest;
3. leases of immovable property for any term not exceeding one year and leases
exempted under Section 17
4. instruments transferring or assigning any decree or order of a court or any award
when such decree or order or award purports or operates to create, declare, assign, limit
or extinguish, whether in present or in future, any right, title or interest, whether vested
or contingent of a value less than one hundred rupees, to or in immovable property.
5. Instruments (other than wills) which purport or operate to create, declare, assign,
limit or extinguish any right, title or interest to or in movable property;
6. Wills; and
7. Other documents not required by Section 17 to be registered. (Section 18)
TIME LIMIT FOR PRESENTATION OF DOCUMENT FOR REGISTRATION

Documents executed in India [Section 23, 24 & 25]
Section 23 of Registration Act, 1908 provides that the document must be presented
before the Registrar for registration within four months of its execution.
In cases of urgent necessity etc., the period is 48 hrs but higher fees has to be paid.
Section 24 provides that where there are several persons executing a document at
different times, such document may be presented for registration may be presented for
registration and re-registration within 4 months from the date of each execution.
13.2
Section 25 further provides that the Registrar has got the power to condone the delay
in presenting the document for registration up to a period of four months; provided that
the applicant satisfies the Registrar that he has been prevented by sufficient cause or
reasons beyond his control in presenting the documents for registration within the
prescribed period of four months.
Documents executed outside India[Section 26]

As per section 26 of the Registration Act, where the Registrar is satisfied that the
document was executed outside India and it has been presented for registration within
four months after its arrival in India, he may accept such documents for registration
on payment of proper registration fees.
A document executed outside India and which requires compulsory registration, is not
valid unless it is registered in India.[ Nain Sukhdas v. Gowardhandas]
If document is not sufficiently stamped its presentation is still good presentation though penalty
under Stamp Act can be levied. (Mahaliram v. Upendra Nath)
Time limit for presentation of Will [Section 27]

A will may be presented at any time for the purpose of registration.
Place for Registration of Document

Documents pertaining to Immovable Property[Section 28]
Section 28 of the Registration Act provides that the document relating to immovable
property shall be presented for registration in the office of Sub-Registrar within whose
sub-district the whole or some portion of the relevant property is situated.
Documents pertaining to Other Property[Section 29]
Section 29 of the Registration Act provides that documents pertaining to any property,
other than immovable property, may be presented for registration in the office of Sub-
Registrar in whose sub-district the document was executed or in the office of any other
Sub-Registrar under State Govt. at which all persons executing and claiming under the
document desired the same to be registered.
Registration in certain cities

Section 30 – In any city comprising a Presidency town or in Delhi, a document relating to
property situated anywhere in India may be registered.
Section 31 – Registration is permitted in cases of necessity under extra-ordinary
circumstances, at residence of the executant.
WHO CAN PRESENT THE DOCUMENT FOR REGISTRATION [SECTION 32]

Every document to be registered under the Registration Act, whether such
13.3
registration is compulsory or optional, shall be presented before the Registrar by any of

the following persons:
1. Some persons executing or claiming under the document;
2. The representative or assign of such person;
3. The agent of the aforesaid persons, duly authorised by special power of
Attorney
It is immaterial whether the registration is compulsory or optional; but if it is presented

for registration by a person other than a party not mentioned in Section 32, such
presentation is wholly inoperative and the registration of such a document is void.
[Kishore Chandra Singh v. Ganesh Prasad Singh]
RE-REGISTRATION OF CERTAIN DOCUMENTS [SECTION 23A]

Sometimes, a document requiring registration may be accepted for registration by
Registrar from a person not duly empowered to present the same and may be
registered. In such a case, any person claiming under such document may present such
document, in accordance with the provisions of the Registration Act, for registration in
the office of the Registrar of the district in which the document was originally
registered. He can, however, do so within four months from his first becoming aware
that registration of such document is invalid.
When such a document is presented for re-registration, the Registrar shall register the
same as if it has not been previously registered. The document, if duly re-registered in
accordance with the provisions of Section 23A, shall be deemed it have been duly
registered for all purposes from the date of its original registration.
EFFECT OF REGISTRATION/NON REGISTRATION OF DOCUMENTS
Effect of Registration of Documents [Section 47 & 48]
A registered document operates from the time from which it was intended to operate
and not from the date of registration.[Section 47]
As between two registered documents, the date of execution determines the priority. Of
the two registered documents, executed by same persons in respect of the same
property to two different persons at two different times, the one which is executed first
gets priority over the other, although the former deed is registered subsequently to the
later one. [K.J. Nathan v. S. V. Maruti Rai].
A non-testamentary registered document, relating to property, takes effect against any

oral agreement relating to such property. However, when the oral agreement is
accompanied by delivery of possession, then the oral agreement will prevail over the
registered document. [Section 48]
Effect of Non-Registration of Documents[Section 49]

13.4
A document which is compulsorily registrable but is not registered, fails to take effect
and is void as regards immovable property. It cannot effect any immovable property
comprised therein. Further it cannot confer ant power to adopt.
An unregistered document cannot be received as evidence of any transaction effecting
such property or conferring such power. However such a document may be received as
evidence of:
1. A contract in a suit for specific performance; or
2. Part performance of a contract as per section 53A of Transfer of Property Act.
REFUSAL BY REGISTRAR TO REGISTER DOCUMENTS[SECTION 71-75]
Reasons for refusal to register the document to be recorded[Section 71]
Every Sub-Registrar refusing to register the document, except on the ground that the
property to which the document relates is not situated within its sub-district, shall
make an order of refusal and shall record the reasons for such order.
It may be noted that the under- valuation of stamp duty is not a valid ground for
refusing the registration of a document. In such a case, the sub-registrar can guide the
person to affix proper stamps before he can register the docments presented. If the sub-
registrar is doubtful as to the proper value of stamps affixed, he can refer the case to the
Collector of Stamps to be adjudicated.
Appeal to Registrar from the orders of Sub-Registrar refusing registration on

ground other than denial of execution of document[Section 72]
An appeal shall lie, against order of Sub-Registrar refusing to register a document, to the
Registrar to whom such Sub-Registrar is subordinate. However, the appeal shall not lie
where the refusal is made on the ground of denial of execution of a document. The
appeal can be presented to the Registrar within 30 days from the date of order of Sub-
Registrar .
If the Registrar directs the documents to be registered and the document is duly
presented for registration within 30 days after the making of such order, the Sub-
Registrar shall register the same.
Such registration shall take effect as if the document has been registered when it was
first duly presented for registration.
Appeal to Registrar when Sub-Registrar refused to register the Documents on the

ground of Denial of Execution[Section 73, 74 & 75]
Where the Sub-Registrar refused to register the Documents on the ground of denial of
execution, then any person claiming under such document may, within 30days after the
making of the order of refusal, apply to the Registrar to whom such Sub-Registrar is
subordinate in order to establish his right to have the document registered.
13.5
Where such an appeal is made to the Registrar, then he shall enquire to find out
whether the document has been really executed or not. If the Registrar finds that the
document is duly presented for registration within 30days after the making of such
order, the Sub-Registrar shall register the same.
Such registration shall take effect as if the document has been registered when it was
first duly presented for registration.
LAW RELATING TO REGISTRATION OF GIFT DEED
If the donor dies before registration of the gift deed, the gift deed may be presented for
registration after his death and if registered, it will have the same effect as registration
in his lifetime.
In Kalyana Sundaram v. Karuppa, it was held that the registration of gift deed of any
immovable property shall operate from the date of execution of gift deed.When the
instrument of gift has been handed once by the donor, the former has done everything
in his power to complete the donation and to make it effective. If it has been presented
before the Registrar for registration within prescribed time period,the Registrar must
register it. Neither death nor express revocation by the donor is ground for refusing
registration provided other conditions are complied with.
Delay in registration of a gift does not postpone its operation. Section 123 of the Tranfer
of Property Act, 1882 merely requires the donor should have signed the deed of gift.
Hence a gift deed can be registered even if the donor does not agree to its registration.
[Venkata Rama Reddy v. Pillai Rama Reddy ]
LAW RELATING TO REGISTRATION OF WILL
• Registration of a Will is Optional.
• The Will may be presented for registration by
Ø Testator/Donor or
Ø His executor or
Ø Donee or
Ø Legatee
• The will can be presented for registration either before or after death of donor.
• If the will is presented by donor, it may be registered in same manner as any other
document
• If will presented by any other person entitled to do so, it shall be registered if registering
officer is satisfied that –
i. The document was actually executed by donor and
ii. Donor is dead
iii. Person presenting will is authorised to do so.
13.6
13.7
RTI Act,2005
RIGHT TO INFORMATION ACT, 2005
Introduction
The Right to Information Act, 2005 is an Act to provide for setting out the practical
regime of right to information for citizens to secure access to information under the
control of public authorities, in order to promote transparency and accountability in
the working of every public authority, the constitution of a Central Information
Commission and State Information Commissions and for matters connected therewith or
incidental thereto.
Right to know
• Before reading the RTI Act, 2005, mention should be made that in R.P. Limited v Indian
Express Newspapers, the Supreme Court read into Article 21 the right to know. The
Supreme Court held that right to know is a necessary ingredient of participatory
democracy.
• Article 21 confers on all persons a right to know which include a right to receive
information.
• Thus, a citizen has a right to receive information and that right is derived from the
concept of freedom of speech and expression comprised in Article 19(1) (a).
• The State is not only under an obligation to respect the Fundamental Rights of the
citizens, but it is equally under an obligation to ensure conditions under which these
rights can meaningfully and effectively be enjoyed by one and all.
Features of RTI Act

• It shall apply to Public authorities.
• All citizens have right to information, subject to provisions of the Act.
• The Public Information Officers / Assistant Public Information Officers will be
responsible to deal with the requests for information and also to assist persons
seeking information.
• Certain categories of information have been exempted from disclosure under Section
8 and 9 of the Act.
Important Definitions
14.1
RTI Act,2005
1. Section 2(h) - “Public authority” means any authority or body or institution of self-
government established or constituted
Ø By or under the Constitution;
Ø By any other law made by Parliament;
Ø By and other law made by State Legislature;
Ø By notification issued or order made by the appropriate Govt.
2. Section 2(I) - “Record" includes—

a) any document, manuscript and file;
b) any microfilm, microfiche and facsimile copy of a document;
c) any reproduction of image or images embodied in such microfilm (whether
enlarged or not); and
d) any other material produced by a computer or any other device;
3. Section 2(f) - "Information" means any material in any form, including records,
documents, memos, e-mails, opinions, advices, press releases, circulars, orders,
logbooks, contracts, reports, papers, samples, models, data, material held in any
electronic form.
4. Section 2(j) - "Right to information" means the right to information accessible

under this Act which is held by or under the control of any public authority and
includes the right to—
i. taking notes, extracts, or certified copies of documents or records;
ii. inspection of work, documents, records;
iii. taking certified samples of material;
iv. obtaining information in the form of diskettes, floppies, tapes, video cassettes or
in any other electronic mode or through printouts where such information is
stored in a computer or in any other device;
5. Section 2(n) - “Third party" means a person other than the citizen making a request
for information and includes a public authority.
Obligations of Public Authority

Section 4(1)(a)
Every public authority under the Act has been entrusted with a duty to maintain records
and publish manuals, rules, regulations, instructions, etc. in its possession as prescribed
under the Act.
Section 4(1)(b)
Every public authority has to publish within 120 days of the enactment of this Act:
Ø the particulars of its organization, functions and duties;
Ø the powers and duties of its officers and employees;
14.2
RTI Act,2005
Ø the procedure followed in its decision making process, including channels of

supervision and accountability;
Ø the norms set by it for the discharge of its functions;
Ø the rules, regulations, instructions, manuals and records used by its employees for
discharging its functions;
Ø a statement of the categories of the documents held by it or under its control;
Ø the particulars of any arrangement that exists for consultation with, or
representation by the members of the public, in relation to the formulation of policy
or implementation thereof;
Ø a statement of the boards, councils, committees and other bodies consisting of two
or more persons constituted by it. Additionally, information as to whether the
meetings of these are open to the public, or the minutes of such meetings are
accessible to the public;
Ø a directory of its officers and employees;
Ø the monthly remuneration received by each of its officers and employees, including
the system of compensation as provided in its regulations;
Ø the budget allocated to each of its agency, indicating the particulars of all plans,
proposed expenditures and reports on disbursements made;
Ø the manner of execution of subsidy programmes, including the amounts allocated
and the details and beneficiaries of such programmes;
Ø particulars of recipients of concessions, permits or authorizations granted by it;
Ø details of the information available to, or held by it, reduced in an electronic form;
Ø the particulars of facilities available to citizens for obtaining information, including
the working hours of a library or reading room, if maintained for public use;
Ø the names, designations and other particulars of the Public Information Officers.
Ø Such other information as may be prescribed; and thereafter update the publications
every year.
Designation of Public Information Officers (PIO)

Section 5
Every public authority has to—
Ø Designate in all administrative units or offices Central or State Public Information
Officers to provide information to persons who have made a request for the
information.
Ø Designate at each sub-divisional level or sub-district level Central Assistant or
State Assistant Public Information Officers to receive the applications for
information or appeals for forwarding the same to the Central or State Public
Information Officers.
Ø No reason to be given by the person making request for information except those that
may be necessary for contacting him.
Request for obtaining information

14.3
RTI Act,2005
Application is to be submitted in writing or electronically, with prescribed fee, to

Public Information Officer (PIO).
Particular Days within which information is to be provided

from date of receipt of application
Request made to PIO 30 days
Request made to Assistant PIO 35 days
Interest of third party involved 40 days (Includes maximum period + time given to
party to make representation)
Life or liberty is involved 48 hours
Note:
• Time taken for calculation and intimation of fees excluded from the time frame.
• No action on application for 30 days is a deemed refusal.
• No fee for delayed response.
Duties of PIO
1. Assist in writing application –
PIO shall deal with requests from persons seeking information and where the request
cannot be made in writing, to render reasonable assistance to the person to reduce
the same in writing.
2. Transfer the request –
If the information requested for is held by or its subject matter is closely connected
with the function of another public authority, the PIO shall transfer, within 5 days, the
request to that other public authority and inform the applicant immediately.
3. Seek Assistance –
PIO may seek the assistance of any other officer for the proper discharge of his/her
duties.
4. Provide Information –
• PIO, on receipt of a request, shall as expeditiously as possible, and in any case
within 30 days of the receipt of the request, provide the information on payment
of such fee as may be prescribed. or reject the request for any of the reasons
specified in Section 8 or Section 9.
• Where the information requested for concerns the life or liberty of a person, the
same shall be provided within 48 hours of the receipt of the request. If the PIO fails
to give decision on the request within the period specified, he shall be deemed to
have refused the request.
5. Rejection of Application –
Where a request has been rejected, the PIO shall communicate to the requester –
(i) the reasons for such rejection,
(ii) the period within which an appeal against such rejection may be preferred, and
(iii) the particulars of the Appellate Authority.
14.4
RTI Act,2005
6. Form of Information –
PIO shall provide information in the form in which it is sought unless it would
disproportionately divert the resources of the Public Authority or would be
detrimental to the safety or preservation of the record in question.
7. Duties in case of Partial Access –
If allowing partial access, the PIO shall give a notice to the applicant, informing:
Ø that only part of the record requested, after severance of the record containing
information which is exempt from disclosure, is being provided;
Ø the reasons for the decision, including any findings on any material question of fact,
referring to the material on which those findings were based;
Ø the name and designation of the person giving the decision;
Ø the details of the fees calculated by him or her and the amount of fee which the
applicant is required to deposit; and
Ø his or her rights with respect to review of the decision regarding non-disclosure of
part of the information, the amount of fee charged or the form of access provided.
8. Duty in case of third party –

If information sought has been supplied by third party or is treated as confidential by
that third party, the PIO shall give a written notice to the third party within 5 days
from the receipt of the request. Third party must be given a chance to make a
representation before the PIO within 10 days from the date of receipt of such notice.
Exemption from Disclosure

Section 8
Certain categories of information have been exempted from disclosure under the Act.
These are:
a) Where disclosure prejudicially affects the sovereignty and integrity of India, the
security, strategic, scientific or economic interests of the State, relation with foreign
State or lead to incitement of an offence;
b) Information which has been expressly forbidden by any court or tribunal or the
disclosure of which may constitute contempt of court;
c) Where disclosure would cause a breach of privilege of Parliament or the State
Legislature;
d) Information including commercial confidence, trade secrets or intellectual property,
where disclosure would harm competitive position of a third party, or available to
a person in his fiduciary relationship, unless larger public interest so warrants;
e) Information received in confidence from a foreign government;
f) Information the disclosure of which endangers life or physical safety of any person
or identifies confidential source of information or assistance;
g) Information that would impede the process of investigation or apprehension or
prosecution of offenders;
14.5
RTI Act,2005
h) Cabinet papers including records of deliberations of the Council of Ministers,

Secretaries and other officers:
Provided that the decisions of Council of Ministers, the reasons thereof, and the
material on the basis of which the decisions were taken shall be made public after the
decision has been taken, and the matter is complete, or over:
Provided further that those matters which come under the exemptions specified in
this section shall not be disclosed;
i) Personal information which would cause invasion of the privacy unless larger
public interest justifies it.
Rejection of Request
Section 9
The Public Information Officer has been empowered to reject a request for information
where an infringement of a copyright subsisting in a person would be involved.
Partial Disclosure Allowed

• Under Section 10 of the Act, only that part of the record which does not contain any
information which is exempt from disclosure and which can reasonably be severed
from any part that contains exempt information, may be provided.
• As per Section 10 of the Act if the request for access to information is rejected on the
ground that it is in relation to the information which is exempt from disclosure, in that
event access may be provided to that part of the record which does not contain any
information which is exempt from disclosure under this Act and which can be
reasonably severed from any part that contains exempt information.
Exclusions
Section 24
The Act excludes: -
a) Central Intelligence and Security agencies specified in the Second Schedule
like IB, R&AW, Directorate of Revenue Intelligence, Central Economic Intelligence
Bureau, Directorate of Enforcement, Narcotics Control Bureau etc.
b) Agencies specified by the State Governments through a Notification will also be
excluded.
The exclusion, however, is not absolute and these organizations have an obligation to
provide information pertaining to allegations of corruption and human rights violations.
Information Commissions
1. Central Information Commission (CIC):
14.6
RTI Act,2005
Section 12
Ø The CIC is to be constituted by the Central Government through a Gazette
Notification.
Ø The CIC consists of the Chief Information Commissioner and Central
Information Commissioners not exceeding 10.
§ These shall be appointed by the President of India on the recommendations
of a committee consisting of PM who is the Chairman of the Committee; the
leader of Opposition in the Lok Sabha; and a Union Cabinet Minister to be
nominated by the Prime Minister.
§ They shall be persons of eminence in public life with wide knowledge
and experience in law, science and technology, social service, management,
journalism, mass media or administration and governance.
§ CIC/IC shall not be a Member of Parliament or Member of the Legislature
of any State or Union Territory.
§ He shall not hold any other office of profit or connected with any political
party or carrying on any business or pursuing any profession.
Ø The general superintendence, direction and management of the affairs of the
Commission vests in the Chief Information Commissioner who shall be assisted by
the Information Commissioners. Commission shall have its Headquarters in
Delhi.
Section 13
Ø CIC shall be appointed for a term of 5 years (as may be prescribed by CG) from
date on which he enters upon his office or till he attains the age of 65 years,
whichever is earlier.
Ø CIC is not eligible for reappointment.
Ø Salary will be the same as that of the Chief Election Commissioner(as may be
prescribed by CG) This will not be varied to the disadvantage of the CIC during
service.
Ø Every Information Commissioner shall hold office for such term as may be prescribed by
the CG or till he attains the age of 65 years, whichever is earlier, and shall not be eligible
for reappointment as such Information Commissioner. However, every Information
Commissioner shall, on vacating his office be eligible for appointment as the CIC. But in
such case, his term of office shall not be more than 5 years in aggregate as the Information
Commissioner and the CIC.
2. State Information Commission (SIC):

Section 15 & 16
Ø The State Information Commission will be constituted by the State Government
through a Gazette notification.
Ø SCIC shall hold office for a period as may be prescribed by or till the attainment of
age of 65 yrs and shall not be eligible for Re appointment.
14.7
RTI Act,2005
Ø However, every Information Commissioner shall, on vacating his office be eligible for
appointment as the SCIC. But in such case, his term of office shall not be more than 5 years
in aggregate as the SIC and the SCIC.
Ø The State Information Commission consists of one SCIC and not more than 10 SIC.
§ These shall be appointed by the Governor on the recommendations of a
committee consisting of the Chief Minister who is the Chairman of the
committee. Other members include the Leader of the Opposition in the
Legislative Assembly and one Cabinet Minister nominated by the Chief
Minister.
§ The qualifications for appointment as SCIC/SIC shall be the same as that for
Central Commissioners.
§ The salary of the State Chief Information Commissioner will be the same as
that of an Election Commissioner.
§ The salary of the State Information Commissioner will be the same as that
of the Chief Secretary of the State Government.
Ø Salary will be the same as that of the Chief Election Commissioner(as may be
prescribed by CG). This will not be varied to the disadvantage of the SCIC & SIC
during service.
Ø The Commission will exercise its powers without being subjected to any other
authority.
Ø The headquarters of the State Information Commission shall be at such place as
the State Government may specify. Other offices may be established in other parts
of the State with the approval of the State Government
Power of Information Commissions

Section 18
The Central Information Commission/State Information Commission has a duty to

receive complaints from any person—
Ø who has not been able to submit an information request because a PIO has not
been appointed;
Ø who has been refused information that was requested;
Ø who has received no response to his/her information request within the specified
time limits;
Ø who thinks the fees charged are unreasonable;
Ø who thinks information given is incomplete or false or misleading; and
Ø any other matter relating to obtaining information under this law.
If the Commission feels satisfied, an enquiry may be initiated and while initiating an
enquiry the Commission has same powers as vested in a Civil Court.
The Central Information Commission or the State Information Commission during the
inquiry of any complaint under this Act may examine any record which is under the
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RTI Act,2005
control of the public authority, and no such record may be withheld from it on any
grounds.
Appellate Authorities
Section 19
Any person who does not receive a decision within the specified time or is aggrieved by
a decision of the PIO may file an appeal under the Act.
1. First Appeal
First appeal to the officer senior in rank to the PIO in the concerned Public Authority
within 30 days from the expiry of the prescribed time limit or from the receipt of the
decision (delay may be condoned by the Appellate Authority if sufficient cause is
shown).
2. Second Appeal
Second appeal to the Central Information Commission or the State Information
Commission as the case may be, within 90 days of the date on which the decision was
given or should have been made by the First Appellate Authority (delay may be
condoned by the Commission if sufficient cause is shown).
3. Third Party appeal against PIO's decision
It must be filed within 30 days before first Appellate Authority; and, within 90
days of the decision on the first appeal, before the appropriate Information
Commission which is the second appellate authority.
Burden of proving that denial of information was justified lies with the PIO.
First Appeal shall be disposed of within 30 days from the date of its receipt or within
such extended period not exceeding a total of 45 days from the date of filing thereof,
for reasons to be recorded in writing. Time period could be extended by 15 days if
necessary.
Penalties
• Section 20 of the Act imposes stringent penalty on a Public Information Officer (PIO)
for failing to provide information.
• Every PIO will be liable for fine of Rs. 250 per day, up to a maximum of Rs. 25,000/
for -
i. not accepting an application;
ii. delaying information release without reasonable cause;
iii. malafidely denying information;
iv. knowingly giving incomplete, incorrect, misleading information;
v. destroying information that has been requested; and
vi. obstructing furnishing of information in any manner.
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RTI Act,2005
• The Information Commission (IC) at the Centre and at the State levels will have the
power to impose this penalty. They can also recommend disciplinary action for
violation of the law against the PIO for persistently failing to provide information
without any reasonable cause within the specified period.
Jurisdiction of Courts
As per Section 23, lower Courts are barred from entertaining suits or applications
against any order made under this Act.
Role of Central/State Governments

Section 26 contemplates the Role of Central/State Governments. It authorizes the
Central/State Governments to:
a) Develop and organize educational programmes for the public especially
disadvantaged communities on RTI
b) Encourage public authorities to participate in the development and
organisation of such programmes.
c) Promote timely and effective dissemination of accurate information by the
public authorities.
d) Train officers and develop training materials
e) Compile and disseminate a User Guide for the public in the respective official
language.
f) Publish names, designation, postal addresses and contact details of PIOs and
other information.
14.10
IT Act,2000
INFORMATION TECHNOLOGY ACT, 2000
Introduction
Information Technology Act, 2000 is the primary law in India
dealing with electronic commerce and Cyber Crime.
It is based on the United Nations Model Law on Electronic Commerce (UNCITRAL Model)
recommended by the General Assembly of United Nations by a resolution dated 30th
January 1997.
The Information Technology Act, 2000, was enacted to make, in the main, three kinds of
provisions, as under:
a) It provides legal recognition for transactions carried out by means of electronic
data interchange and other means of electronic communication, usually referred to,
as “electronic Commerce”.
b) It facilitates the electronic filing of documents with the Government agencies, (and
also with the publication of rules etc, in the electronic form).
c) It amends the, Indian Penal Code, the Indian Evidence Act, 1872, the Bankers’ Book
Evidence Act, 1891, and the Reserve Bank of India Act, 1934, so as to bring in
electronic documentation within the purview of the respective enactments.
Documents or Transactions to which Act shall not apply

1. A negotiable instrument (other than a cheque) as defined in section 13 of the
Negotiable Instruments Act, 1881.
2. A power-of-attorney as defined in section 1A of the Powers-of-Attorney Act, 1882.
3. A trust as defined in section 3 of the Indian Trust Act, 1882.
4. A will as defined in clause (h) of section 2 of the Indian Succession Act, 1925, including
any other testamentary disposition by whatever name called.
5. Any contract for the sale or conveyance of immovable property or any interest in
such property
Important Definitions
1. “Addressee” means a person who is intended by the originator to receive the
electronic record, but does not include any intermediary. [Section 2(1)(b)]
2. “Affixing electronic signature” with its grammatical variations and cognate

expressions means adoption of any methodology or procedure by a person for the
purpose of authenticating an electronic record by means of digital signature. [Section
2(1)(d)]
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3. “Asymmetric crypto system” means a system of a secure key pair consisting of a

private key for creating a digital signature and a public key to verify the digital
signature [Section 2(1)(f)]
4. “Digital signature” means authentication of any electronic record by a subscriber by

means of an electronic method or procedure in accordance with the provisions of
Section 3. [Section 2(1)(p)]
5. “Electronic signature” means authentication of any electronic record by a subscriber

by means of the electronic technique specified in the Second Schedule and includes
digital signature. [Section 2(1)(ta)]
6. “Electronic Signature Certificate” means an Electronic Signature Certificate issued

under section 35 and includes Digital Signature Certificate. [Section 2(1)(tb)]
7. “Intermediary” with respect to any particular electronic records, means any person
who on behalf of another person receives, stores or transmits that record or provides
any service with respect to that record and includes telecom service providers,
network service providers, internet service providers, webhosting service providers,
search engines, online payment sites, online-auction sites, online-market places and
cyber cafes; [Section 2(1)(w)]
8. “Key pair” in an asymmetric crypto system, means a private key and its
mathematically related public key, which are so related that the public key can verify
a digital signature created by the private key. [Section 2(1)(x)]
9. “Originator” means a person who sends, generates, stores or transmits any electronic
message or causes any electronic message to be sent, generated, stored or transmitted
to any other person, but does not include an intermediary. [Section 2(1)(za)]
10. PrivateKey” means the key of a key pair, used to create a digital signature. [Section
2(1)(zc)]
11. “Public key” means the key of a key pair, used to verify a digital signature and listed
in the Digital Signature Certificate. [Section 2(1)(zd)]
12. “Secure system” means computer hardware, software, and procedure that–
a) are reasonably secure from unauthorised access and misuse;
b) provide a reasonable level of reliability and correct operation;
c) are reasonably suited to performing the intended functions; and
d) adhere to generally accepted security procedures;
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Digital Signature and Electronic Signature

Sections 3(1), 3(2)
Digital signature (i.e. authentication of an electronic record by a
subscriber, by electronic means) is recognised as a valid method of
authentication. The authentication is to be effected by the use of
“asymmetric crypto system and hash function”, which envelop and
transform electronic record into another electronic record.
Section 3(3)
Verification of the electronic record is done by the use of a public key of the subscriber.
The private key and the public key are unique to the subscriber and constitute a
functioning “key pair”.
Section 3A
It deals with electronic signature.
Section 3A(1) provides that notwithstanding anything contained in section 3(1), but
subject to the provisions of sub-section (2), a subscriber may authenticate any
electronic record by such electronic signature or electronic authentication technique
which—
(a) is considered reliable; and
(b) may be specified in the Second Schedule.
For the purposes of above any electronic signature or electronic authentication technique
shall be considered reliable if—
a) the signature creation data or the authentication data are, within the context in
which they are used, linked to the signatory or, as the case may be, the authenticator
and to no other person;
b) the signature creation data or the authentication data were, at the time of signing,
under the control of the signatory or, as the case may be, the authenticator and of no
other person;
c) any alteration to the electronic signature made after affixing such signature is
detectable;
d) any alteration to the information made after its authentication by electronic
signature is detectable; and
e) it fulfils such other conditions which may be prescribed.
Electronic Governance (Legal Recognition of Electronic

Records)
Section 4
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The Act grants legal recognition to electronic records by laying down that where (by any
law) “information” or any other matter is to be in writing or typewritten form or printed
form, then, such requirement is satisfied, if such information or matter is:
i. rendered or made available in an electronic form; and
ii. accessible, so as to be usable for a subsequent reference.
Section 5
It deals with legal recognition of electronic signatures. It states that where any law
provides that information or any other matter shall be authenticated by affixing the
signature or any document shall be signed or bear the signature of any person, then,
notwithstanding anything contained in such law, such requirement shall be deemed to
have been satisfied, if such information or matter is authenticated by means of
electronic signature affixed in such manner as may be prescribed by the Central
Government.
Section 6
This provision grants recognition to electronic records and electronic record signatures,
in cases where any law provides for
a) the filing of any form, application or any other document with a Governmental
office or agency or
b) the grant of any licence, permit etc. or
c) the receipt or payment of money in a particular manner.
Section 6A
The appropriate Government may, for the purposes of this Chapter and for efficient
delivery of services to the public through electronic means authorise, by order, any
service provider to set up, maintain and upgrade the computerised facilities and
perform such other services as it may specify, by notification in the Official Gazette.
Retention of Information
Section 7
The Act also seeks to permit the retention of information in electronic form, where any
law provides that certain documents, records or information shall be retained for any
specific period.
Audit of documents maintained in electronic form

Section 7A
Where in any law for the time being in force, there is a provision for audit of documents,
records or information, that provision shall also be applicable for audit of documents,
records or information processed and maintained in the electronic form.
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IT Act,2000
Validity of contracts formed through electronic means

As per section 10A of the Act, where in a contract formation, the communication of
proposals, the acceptance of proposals, the revocation of proposals and acceptances, as
the case may be, are expressed in electronic form or by means of an electronic records,
such contract shall not be deemed to be unenforceable solely on the ground that such
electronic form or means was used for that purpose
Attribution and Dispatch of Electronic records

Section 11- Attribution
An electronic record is attributed to the “originator”.
The “originator” is the person at whose instance it was sent in the following cases -
a) if it was sent by the originator himself; or
b) if it was sent by a person authorised to act on behalf of the originator in respect of that
electronic record; or
c) if it was sent by an information system programmed by or on behalf of the originator
to operate automatically.
Section 12(1) - Acknowledgement of receipt of electronic records

Where there is no agreement that the acknowledgment be given in a particular form etc.
then the acknowledgement may be given by:
a) any communication by the addressee (automated or otherwise) or
b) any conduct of the addressee which is sufficient to indicate to the originator that
the electronic record has been received.
Time and Place of Dispatch.

Section 13(1)
Subject to agreement between the parties, the dispatch of an electronic record occurs,
when it enters a “computer resource” outside the control of the originator.
Section 13(2)(a)
Subject to agreement, if the addressee has designated a computer resource for receipt,
then receipt occurs when the electronic record enters the designated resource.
However, if the record is sent to a computer resource of the addressee which is not the
designated resource, then receipt occurs at the time when the electronic record is
retrieved by the addressee.
Sections 13(1), 13(2)

If the addressee has not designated a computer resource (with or without specified
timings), then receipt is deemed to occur, when the electronic record enters the
computer resource of the addressee.
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Above provisions apply, even where the place of location of the computer is different
from the deemed place of receipt.
Secure Electronic Record

Section 14
When the procedure has been applied to an electronic record at a specific point of time,
then such record is deemed to be a secure electronic record, from such point of time to
the time of verification.
Section 15
An electronic signature shall be deemed to be a secure electronic signature if—
i. the signature creation data, at the time of affixing signature, was under the
exclusive control of signatory and no other person; and
ii. the signature creation data was stored and affixed in such exclusive manner as
may be prescribed.
Section16
The Central Government is required, by the Act, to prescribe the security procedure for
electronic records, having regard to the commercial circumstances prevailing at the time
when the procedure is used.
Certifying Authority
A Certifying Authority is expected to reliably identify persons applying for “signature key
certificates”, reliably verify their legal capacity and confirm the attribution of a public
signature key to an identified physical person by means of a signature key certificate. To
regulate the Certifying Authorities, there is a Controller of Certifying Authorities.
Electronic Signature Certificates

Sections 35-39 of the Act deal with Electronic Signature Certificates.
As per Section 35 of the Act, Certifying authority to issue electronic signature
Certificate.
Followings are the procedure of obtaining electronic signature Certificate:
1. Any person may make an application in prescribed form to the Certifying
Authority for the issue of electronic signature Certificate in such form as may be
prescribed by the Central Government.
2. Every such application shall be accompanied by prescribed fees
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3. Every such application shall be accompanied by a certification practice

statement or where there is no such statement, a statement containing such
particulars, as may be specified by regulations.
4. On receipt of an application, the Certifying Authority may, after consideration of
the certification practice statement or the other statement and after making such
enquiries as it may deem fit, grant the electronic signature Certificate or for
reasons to be recorded in writing, reject the application.
It may be noted that no application shall be rejected unless the applicant has been given
a reasonable opportunity of showing cause against the proposed rejection.
Penalties and Adjudications

Section 43 provides that if any person without permission of the owner or any other
person who is in charge of a computer, computer system or computer network, –
a) accesses or secures access to such computer, computer system or computer
network or computer resource;
b) downloads, copies or extracts any data, computer data base or information from
such computer, computer system or computer network including information or data
held or stored in any removable storage medium;
c) introduces or causes to be introduced any computer contaminant or computer
virus into any computer, computer system or computer network;
d) damages or causes to be damaged any computer, computer system or computer
network, data, computer data base or any other programmes residing in such
computer, computer system or computer network;
e) disrupts or causes disruption of any computer, computer system or computer
network;
f) denies or causes the denial of access to any person authorised to access any
computer, computer system or computer network by any means;
g) destroys, deletes or alters any information residing in a computer resource or
diminishes its value or utility or affects it injuriously by any means;
h) steal, conceal, destroys or alters or causes any person to steal, conceal, destroy or
alter any computer source code used for a computer resource with an intention to
cause damage;
he shall be liable to pay damages by way of compensation to the person so affected.
Compensation for failure to protect data

Section 43A
Where a body corporate, possessing, dealing or handling any sensitive personal data or
information in a computer resource which it owns, controls or operates, is negligent in
implementing and maintaining reasonable security practices and procedures and
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thereby causes wrongful loss or wrongful gain to any person, such body corporate shall
be liable to pay damages by way of compensation to the person so affected.
Appellate Tribunal
Chapter X of the Act provides for the establishment of Appellate Tribunal.
The Central Government shall specify, by notification the matters and places in relation
to which the Appellate Tribunal may exercise jurisdiction.
Section 57
Any person aggrieved by an order of the Controller of Certifying Authorities or of
the adjudicator can appeal to the Appellate Tribunal, within 45 days.
Any person aggrieved by “any decision or order” of the Appellate Tribunal may
appeal to the High Court, within 60 days.
Jurisdiction of Civil Courts is barred, in respect of any matter which an adjudicating officer
or the Appellate Tribunal has power to determine.
Offences
Tampering with computer source documents (Section 65)
Whoever knowingly or intentionally conceals, destroys or alters or intentionally or
knowingly causes another to conceal, destroy, or alter any computer source code used for
a computer, computer programme, computer system or computer network, when the
computer source code is required to be kept or maintained by law for the time being in
force, shall be punishable with imprisonment up to three years, or with fine which
may extend up to two lakh rupees, or with both.
Computer related offences (Section 66)

If any person, dishonestly or fraudulently, does any act referred to in section 43, he
shall be punishable with imprisonment for a term which may extend to three years
or with fine which may extend to five lakh rupees or with both.
Section 69
Where the Central Government or a State Government or any of its officers, as the case
may be, is satisfied that it is necessary or expedient so to do,
in the interest of the sovereignty or integrity of India, or for preventing incitement to the
commission of any cognizable offence relating to above or for investigation of any offence,
it may, for reasons to be recorded in writing, by order, direct any agency of the
appropriate Government to intercept, monitor or decrypt or cause to be intercepted or
monitored or decrypted any information generated, transmitted, received or stored in
any computer resource.
Extraterritorial operation (Section 75)

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IT Act,2000
Extra-territorial operation of the Act is provided for, by enacting that the provisions of
the Act apply to any offence or contravention committed outside India by any person,
irrespective of his nationality, if the act or conduct in question involves a computer,
computer system or computer network located in India.
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INDIAN CONTRACT ACT, 1872
Topic 1: AGREEMENT
Agreement: “Every promise and every set of promises, forming consideration for each other, is
an agreement.” [Sec. 2(e)]. In simple words, an agreement means a promise. It is created when a
person makes an offer to another person and that person accepts it.
It is clear from the above definition that an agreement is created by exchange or promises by the
parties.
But, what is a promise? “A proposal, when accepted, becomes a promise.” [Sec.2 (b)] Thus it is
clear that agreement is created when one person proposes to another and the other accepts it,
irrespective of the fact that it is enforceable by law or not.
AGREEMENT = OFFER + ACCEPTANCE OF THE OFFER.
PROPOSAL AND ACCEPTANCE
Will you buy my house..?

Will you buy my car..?
OFFEROR /
OFFER / PROPOSAL OFFEREE
PROPOSER
Will you sell me your computer..?
Will you work for me..?
PROPOSAL OR OFFER
The term ‘proposal’ has been defined in the Indian Contract Act as
§ When one person signifies
§ to another
§ his willingness to do or
§ to abstain from doing anything,
§ with a view to obtaining the assent of that other to such act or abstinence,
§ he is said to make a proposal. [Sec.2(a)]
Ø The person making the proposal is known as the ‘Proposer’, or ‘offeror’ and
Ø The person to whom it is made is known as the ‘Offeree’.
On acceptance of the proposal-

Ø The person making the proposal is called the ‘Promisor’ and
Ø The person accepting the proposal is called the ‘Promisee’ or the ‘Acceptor’.[Sec.2(c)]
Basic Characteristics of a Proposal

A valid proposal is said to be constituted when it possesses the following basic characteristics:
1. At least two parties. In order to make a proposal – there must at least two parties, i.e. the
proposer and the offeree or acceptor.
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2. A proposal may be positive or negative. It is positive when the proposer expresses his
willingness to do something. When the proposer expresses his willingness to abstain from
doing anything, it is negative proposal.
3. A proposal must be made to obtain assent. A proposal must be made with a view to
obtaining the assent of the offeree.
4. Proposal must be made with an intention to create relations. Whether a proposal is made
with or without any intention of parties is determined by the terms of the agreement as well
as by the surrounding circumstances of the proposal.
5. It must be signified or communicated. Every proposal is complete only when the proposer
signifies or communicates it to the party to whom he wants to communicate it. If the
intended party does not come to know about the offer, the offer is incomplete.
TYPES OF OFFERS
The offers may be classified on the following basis:
Types of Offer
On the Basis of On the Basis of

On the Basis of
Nature of Offer
Mode of Offer Offeree:
Cross Offer
Express Offer Specific Offer
Counter Offer
Implied Offer General Offer
Standing Offer
1. On the Basis of Mode of Offer: The mode of offer may either-

(i) Express Offer. An offer made in words, written or spoken.
(ii) Implied Offer. An offer made otherwise than in words. Such an offer is inferred from the
conduct of parties and circumstances of the case.
2. On the Basis of Offeree: There are two types of offers on the basis of Offeree-
(i) Specific Offer. An offer made to specific or a particular or an ascertained person. Such
an offer can be accepted by the particular or specific person to whom it has been made
and none else.[Boulton v.Jones (1857)2 H & N 564]
(ii) General Offer. An offer made to the public at large or to the whole world. Any person
from among the public who has knowledge of it may accept such an offer.
Distinction between Specific and General Offer
Basis of
Specific offer General offer
distinction
A specific offer is an offer made A general offer is an offer made to public
1. Meaning
to a particular or specific person. at large.
The person, to whom it has been It is accepted by any one from among the
2. Acceptance
made, accepts it. public who had the knowledge of it.
3. Mode of It is accepted in the same mode It is accepted only by performance of
acceptance as defined in the offer itself. conditions or by doing the desired act.
It continues up to reasonable It continues till it is accepted by any
4. Continuation time or till is accepted or person by performance of conditions of it
revoked. or it is withdrawn.
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3. On the Basis of Nature of Offer: On the basis of their nature, offer may also be classified as-
(i) Cross offer. When two persons make identical offer (i.e. similar in terms, conditions etc.)
to each other, without having knowledge of each other’s offer, are known as cross offers.
They are independent and identical offers of the respective parties. Such offers do no
constitute a contract even though both the parties intend to do or not to do the same
thing. Only when one of the parties accepts the offer of the other party, contract
comes into existence.
(ii) Counter offer. When an offer is accepted on the terms and conditions, other than set out
by the offerer, it is not an acceptance but a counter offer. A counter offer is, in fact, not
only a rejection of the original offer but is also a new offer by the original offeree.
(iii) Standing offer. A standing offer is an offer, which is open for acceptance over a period of
time. This is also known as continuing or open offer.
WHAT IS NOT PROPOSAL?

There are certain communications or documents, which resemble as proposals but, in fact, they
are not proposals. They are either:
× Intention to put a proposal: The objective of proposal is to get the assent of the other party
whereas the intention to put a proposal is merely an expression or declaration by a person
that he intends to offer something in future.
× Invitation to proposal: The objective of proposal is to get the assent of the other party but
the invitation to proposal is made with an intention to receive a proposal from other. The
acceptance of offer creates an agreement whereas the acceptance of invitation to proposal
gives birth to a proposal. For example:
× Catalogue or price list.
× A banker’s catalogue.
× Menu card.
× Quotation of price.
× Prospectus inviting
× Time table of a carrier. (Railways, roadways or airlines)
ACCEPTANCE
According to Sec. 2(b)

“When the person to whom the proposal is made signifies his assent thereto, the proposal is said
to be accepted”.
A proposal when accepted becomes a promise.
Who May Accept? Acceptance may be given by the following:

1. In case of specific offer. Only the person to whom the offer is made may give the acceptance.
The underlying principle is that no person can give himself a contractual right by interposing
in an offer which was not intended for him.
2. In case of a general offer. Any person from among the public who has knowledge of the offer
may accept such an offer.
Essentials/Legal Rules of Valid Acceptance

For a valid acceptance of a proposal, certain legal rules must be observed. Some of the rules are
given in the Act itself while a few others have been laid down by the Courts while deciding the
cases. A few important rules of acceptance are summarized as under:
ü Acceptance must be absolute and unqualified.[Sec.7(1)]
ü Acceptance must be in prescribed manner.
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ü Acceptance may be given by performance of conditions or act required by the
offeror.(Sec.8)
ü It may be given by acceptance of consideration forwarded or act required by the
offeror.(Sec.8)
ü It may express or implied.
ü It must be given within specified or reasonable time.
ü It must be given while the offer is in force.
ü It must not precede an offer.
ü It must be given by the person to whom offer is made.
ü Acceptance must be communicated.
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Topic 2: CONTRACT
According to Section 2(h) of the Act, ‘An agreement enforceable by law is a contract.’
Enforceability of the agreement: Every agreement is not a contract. Only an agreement

enforceable by law is a contract. An agreement is enforceable by law only when it creates legal
rights and obligations of the parties. Enforceability of the agreement depends on the intention of
the parties to the agreement as well as the fulfillment of requirements of a valid contract.
CONTRACT = AGREEMENT + ENFORCEABILITY OF THE AGREEMENT.
ESSENTIALS OF A VALID CONTRACT
Section 10 states.
§ All agreements are contracts
§ if they are made by the free consent of
§ parties competent to contract,
§ for lawful consideration and with a lawful object,
§ And are not hereby expressly declared to be void.
1. Plurality of parties. There must be at least two persons or parties. One of them is known as
‘proposer’ or ‘promisor’ and other one is known an ‘offeree’ or ‘promisee’.
2. Proposal and acceptance (i.e. agreement)
3. Intention to create legal relations. For an agreement to be a contract, it must be able to create
legal relations. Whether or not any agreement creates legal relations between the parties,
would depend upon the intentions of the parties to the contract.
In all social, domestic, moral, religious or political agreements, the usual presumption is that
the parties do not intend to create obligation. However, in business agreements, usual
presumption is that the parties intend to create legal obligations. But, when the parties in a
business transaction intend to rely on good faith and do want to go to the court of law, such
transaction is not legally binding.
4. Contractual Capacity. Only legally competent persons can make valid agreement. The law
presumes that every person is competent to enter into contract if he fulfills the following
conditions:
(i) He is a major.
(ii) He is of sound mind; and
(iii) He is not disqualified from contracting by any law of the land to which he is a subject.
5. Consent or Consensus ad idem. Consent is the essence of a contract. The parties are said to
consent when they agree upon the same thing in the same sense.(Sec.13) It means that both
the parties must have ‘unision or meeting of mind or mutually of assent’ (i.e. two minds with
one intention) with regard to the subject-matter of the contract. This is technically known as
consensus ad idem.
6. Free consent. Consent is said to be free when it is not caused by (i) coercion, or (ii) undue
influence, or (iii) fraud, or (iv) mis-representation, or (v) mistake. (Sec.14).
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7. Consideration. Generally, every agreement to be enforceable by law must be supported by
consideration’. Consideration means something, which the promisor receives from his
promise. In fact, it is the price for promise paid by the promisee to the promisor. It may be in
cash or kind.
Consideration must be lawful and real and not illusory. It must have some value in terms of
money. However, it may not be adequate. Nominal consideration may even be enough for a
valid contract if the parties are satisfied. But agreements without consideration are always
void subject to certain exception.
8. Lawful objects or consideration. Another essential of a contract is the lawful object or

consideration. Any agreement for an unlawful object or consideration is void ab-initio. An
agreement will be unlawful in any of the following circumstances:
(i) If it (agreement) is forbidden by law; or
(ii) If it is of such a nature that if permitted, would defeat the provisions of any law; or
(iii) If it is fraudulent; or
(iv) If it involves or implies injury to the person or property of another; or
(v) If the Court regards it as immoral; or
(vi) If the Court regards it against public policy.(Sec.23)
9. Certainty of meaning. Agreements with certainty of meaning are only enforceable by law.
Agreements, the meaning of which is not certain, or which is not capable of being made
certain are void (Sec.29). The parties must agree upon the terms which are definite without
further agreement of the parties. If, however, the meaning of agreement can be made certain
from the facts and circumstances of the case, it will be a valid contract.
10. Possibility of performance. An agreement to be a valid contract must also be possible to be

performed. The terms of the agreement must be capable of performance physically as well
as legally. An agreement to do an impossible act is void. (Sec.56).
11. Agreements not declared void. An agreement, which possesses all the essential of a valid
agreement, is generally a valid contract. However, if any such agreement is expressly
declared void by the law of the land, it is void. Agreements having unlawful object or
consideration, agreements without consideration, agreement in restraint of trade or
marriage, etc. are some of the expressly declared void agreements.
12. Compliance of Legal formalities. Generally no legal formalities are required to be complied
with for a valid contract. A contract may be written, oral or gestural (by signals).
However, Section 10, states that a contract should be made in writing or in the presence of
witnesses or be registered, if required by any law of the land. Various law of our country
requires that some formalities should be complied with for an agreement to be enforceable.
For instance, agreements for transfer of property must also be written, witnessed and
registered. These are some examples where certain legal formalities are required to be
complied with the enforcement of agreement by the law.
AGREEMENT VS. CONTRACT
All Contracts are Agreements but

All Agreements are not Contracts
On comparing the meaning of the two terms i.e. contract and agreement, it is revealed that
agreement is a wider terms than the term contract. That is why it is repeated by experts “All
contracts are agreements but all agreements are not contracts.”
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All Agreements are not Contracts

The term agreement is a wider term than the term contract. It includes variety of agreements
such as personal, social, domestic, lawful, unlawful, void, voidable, etc. Some of them are
enforceable by law and others are not. Those agreements, which are not enforceable by law, are
definitely not contracts as per section 2(h). Hence, it is generally said that all agreements are not
contracts. A few examples of such agreements are given to show that all agreements are not
contracts.
1. Certain domestic and family agreements.
2. Political agreements/promises.
3. Commercial transactions without legal binding.
4. Agreement not possessing all essentials of a contract.
5. Agreements expressly declared to be void.
6. Agreement to make a contract.
CLASSIFICATION OF CONTRACTS / AGREEMENTS

CLASSIFICATION ACCORDING TO ENFORCEABILITY/LEGALITY
1. Valid agreement i.e. contract: A valid agreement is a contract. It gives rise to legal
obligations of all parties to it. Such an agreement possesses all essentials of a contract laid
down by Section 10.
2. Void agreement: “An agreement not enforceable by law is said to be void.”[Sec.2(g)] Such an
agreement lacks essentials of a valid agreement and consequently does not create legal
obligations of the parties. It is also not maintainable in law and is, therefore, a nullity.
Effects
(i) Void from beginning. The agreement is void from beginning. It does not create any
legal obligation of either party.
(ii) No restitution. No restitution can be granted. Any consideration passed on by parties
to each other, cannot be generally restored.
3. Void Contract: According to Sec 2(j) “A contract which ceases to be enforceable by law
becomes void when it ceases to be enforceable.” When a contract is valid at the time of its
making but later on due to change in circumstances or in law, it becomes unenforceable, it is
a void contract.
Effects
(i) Contract becomes void. Contract is void, when it is discovered to be void or it
becomes void due to change in circumstances.
(ii) Restitution is allowed. Any person who has received any advantage under void
contract, is bound to restore it to the person from whom he got it.(Sec.65)
(iii) Payment or compensation for performance. Any party who has received any
advantage by way of part performance of a void contract (i.e. which later on
becomes void) is also bound to pay or make compensation to the person from whom
he received it. (Sec.65).
Distinction between Void Agreement and Void Contract.

Basis Void Agreement Void Contract
A contract which ceases to be
An agreement not enforceable by
1. Definition enforceable by law becomes void
law is said to be void.
when it ceases to be enforceable
It becomes void subsequently due to
2. Time when
It is void from very beginning. change in law or change in
becomes void
circumstances.
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Generally no restitution is granted.
however, the court may on Restitution may be granted when the
3. Restitution equitable grounds grant restitution contract is discovered to be void or
in case of fraud or becomes void.
misrepresentation by minors.
4. Description Such agreements have been There is no mention of void
in the Act mentioned as void in the Act. contracts in the Act.
4. Voidable contract: According to Sec.2 (i), “An agreement which is enforceable by law at the
option of one or more of the parties thereto, but not at the option of the others, is a voidable
contract.”
Therefore, a voidable contract is an agreement, which is voidable at the option of the
aggrieved party. Voidable contracts may be of two types:
(i) Voidable from beginning. There are certain contracts, which are voidable from the
very beginning. It is so when the consent of the party is caused either by
(a) coercion,
(b) undue influence,
(c) fraud or
(d) mis-representation.
(ii) Voidable subsequently. There are certain cases where one part may treat a contract
as voidable. In other words, when one of the parties to the contract elects to treat
the contract as void, then such a contract becomes voidable subsequently. A
contract becomes voidable subsequently in the following three circumstances.
(a) On refusal of performance: When a party to a contract has refused to perform
his promise in entirety, the other party may put an end to the contract, unless he
has signified by words or conduct, his consent to its continuance.(Sec.39)
(b) When a party prevents another from performing. When one party to the
contract prevents the other from performing a reciprocal promise, the contract
becomes voidable at the option of the party so prevented. [Sec.53].
(c) When a party fails to perform within a specific time. When a party to a
contract promises to do a certain thing at or before a specific time and fails to
perform it at or before such time, the contract becomes voidable at the option of
the promisee, if the parties intended that the time should be of essence of the
contract.
Effects
(i) Voidable at the option of aggrieved party.
(ii) Valid till rescinded. A voidable contract continues to be valid till the aggrieved party
rescinds it.
(iii) Other party relieved from performing. When aggrieved party rescinds the contract,
the other party need not perform any promise therein contained. (Sec.64)
(iv) Restitution / Compensation is allowed if aggrieved party rescinds the contract..
Distinction between Void Agreement and Voidable Contract

Basis Void Agreement Voidable Contract
A contract, which is enforceable by law
An agreement not enforceable
1. Definition at the option of the aggrieved party, is
by law is said to be void.
a voidable contract.
2. Period of It is void from the beginning i.e. It is valid till the aggrieved party to the
validity void ab initio. contract avoids it.
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3. Legal It is nullity, hence does not exist It has its existence in the eye of law till
existence in the eye of law. it is repudiated.
Status of void agreement does Status of such contract change when
4. Change in
not change with the change in the aggrieved party elects to avoid it
status
circumstances. within a reasonable time.
A contract is voidable when the
Any agreement is void when it
consent of the party is caused by
is made with incompetent
coercion or undue influence or fraud
parties or for unlawful objects
5.Causes or misrepresentation. Moreover,
and consideration or it is
parties can treat the contract voidable
expressly declared to be void
under the provisions of Secs.39, 53 and
under the law.
55.
The party obtaining goods under
voidable agreement can transfer a
The party obtaining goods
good title to the third party if the third
6. Transfer of under void agreement cannot
party obtains it in good faith and for
title transfer a good title to the third
consideration and the aggrieved party
party.
has not avoided the contract before
such transfer.
Parties do not have right to
restore the benefits passed on
If the party rescinding the contract has
to the other unless the parties
received may benefit under the
were unaware of the
7. Restitution contract from other party, he must
impossibility of performance at
restore such benefit, so far as may be,
the time of agreement or the
to the other party.
party to the agreement was
minor.
If a party rightfully rescind (i.e. puts an
No party has a right to get
end) the contract, he can claim
compensation for damages
8. Damages compensation or damages sustained
because such agreement has no
by him due to non-fulfillment of the
legal effects.
promise.
Distinction between Void and Voidable contract

Basis of
Void contract Voidable Contract
distinction
A contract, which ceases to be
A contract, which is enforceable by law
enforceable by law become
1. Definition at the option of the aggrieved party, is
void, when it ceases to be
voidable contract.
enforceable.
2. Period of It remains valid till it does not It remains valid till the party, at whose
validity cease to be enforceable. option it is voidable, avoids the same.
Its validity is not affected by the
3. Will of the Its validity is affected by the will of the
will of any party. The court
party aggrieved party.
decides it.
Contract is voidable when the consent
Contracts become void due to
of the party is caused by coercion,
4. Causes change in circumstances or in
undue influence, fraud or
the law of the land.
misrepresentation.
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5. Illegal Agreement. Generally speaking, an agreement, which is expressly or impliedly
prohibited by law, is an illegal agreement. Such an agreement may either be against the law
of the land or opposed to public policy or be criminal or immoral in nature.
The term ‘illegal agreement’ has not been defined in the Indian Contract Act. However, Section
23 of the Act states that the object or consideration of an agreement is unlawful if-
(i) it is forbidden by law; or
(ii) it is of such a nature that, if permitted, it would defeat the provisions of any law; or
(iii) it is fraudulent; or
(iv) it involves or implies, injury to the person or property of another; or
(v) The Court regards it as immoral; or
(vi) The court regards it apposed to public policy.
Thus, the term unlawful agreement is wider in its scope that the term illegal agreement. All the
agreements covered under the above stated six heads are not illegal agreements. Only the
agreements forbidden by law, agreements opposed to public policy, agreement of criminal or
immoral nature are included in illegal agreements. Therefore, it is true that every illegal
agreement is unlawful but every unlawful agreement is not necessarily illegal.
Effects:
(i) Void agreement. The agreement is void ab initio.
(ii) Collateral agreement void. Every collateral agreement to an illegal agreement is also
void. It should be noted that if the main agreement were void but not illegal, its collateral
agreement would not be affected.
(iii) Legal part enforceable. If any part of a single agreement is illegal, the whole agreement
will be illegal and void. However, where the agreement consists of two parts, one legal and
the other illegal, and they are severable or separable from each other, the legal part is
enforceable and the illegal part will be void.
(iv) Punishment. The parties to an illegal agreement are punishable as per the law of the land.
Similarities and Distinctions

Void and illegal agreements are similar in certain respects. The similarities are as under:
(i) Both are un-enforceable agreements, hence void.
(ii) Restitution (Restoration of benefits) is not possible in either kind of agreements.
Distinction between Void and Illegal Agreement

Void Agreement Illegal Agreement
An agreement, which is expressly
An agreement not enforceable by law.
or impliedly prohibited by law.
The agreement collateral to the void The agreement collateral to an
agreement is not necessarily void. illegal agreement is always void.
All void agreements need not be
All illegal agreements are void.
illegal agreements.
The Court may grant restitution of
money advanced if the party to an Restitution of money is not
agreement is minor or if the parties granted in case of an illegal
were unaware of the impossibility of agreement.
performance of the agreement.
6. Unenforceable contract. A contract, which is good in substance but cannot be forced in a

law court due to some technical defects, is said to be unenforceable contract. Technical
defects in a contract may be due to non-compliance of some of the legal formalities. For
instance, a particular law may require that the contract must be in writing, witnessed,
stamped and registered. In such a case, the contract cannot be enforced if all the legal
formalities are not complied with properly. Even the absence of signature of witness or
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stamps of lesser amount than required on the deed may render the contract unenforceable.
As soon as the technical defect is removed, the contract becomes enforceable.
II. Classification According to Mode of Formation

Contracts may be classified on the basis of their mode of formation in three heads:
1. Express Contract. A contract is express when the parties state its terms and conditions and
show their assent by words, either oral or written.
2. Implied contract. Where a contract is made otherwise than in words, is said to be

implied.(Sec.9). An implied contract arises from the acts and conduct of the parties or by their
surrounding circumstances.
3. Tacit Contract: tacit contracts are those which are inferred from the conduct of the parties.
For example cash withdrawn by a customer from the bank ATM.
4. Quasi-contract. A quasi-contract is not a result of agreement, express or implied. It is a

contract imposed by the law on the parties and gives rise to obligations similar to that arising
under a contract. The parties do not intentionally make such a contract.
III. Classification According to Extent of Execution

Contract may be classified according to extent of execution or performance under 2 heads:
1. Executed contract. A contract in which all the parties to the contract have performed their
respective obligations, is known as executed contract. Nothing remains to be done by the
parties under such a contract.
2. Executory contract. A contract in which the parties to the contract have still to perform
their side of the contract, it is known as executory contract.
Where in a contract, one party has performed the contract but the other is yet to perform his
part of the contract, the contract will be known as partly executed and partly executory
contract.
On the basis of extent of execution or performance, the contracts can also be classified as
follows:
1. Bilateral contract. A bilateral contract is one in which both the parties exchange a promise
to each other. One party promises to perform some act in the future in exchange for the
other party’s promise to perform some act. In such a contract, obligations on part of both the
parties are outstanding at the time of formation of the contract. Thus, it is similar to an
executory contract. It is also known as contract with executory consideration
2. Unilateral contract. It is a one-sided contract in which one party has already performed his
obligation at or before the point of time when the contract comes into existence and the
other party remains liable to perform his obligation after the contract comes into existence.
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Topic 3: CONSIDERATION
The definition of 'agreement' itself states that the mutual promises should form consideration of
each other. Thus, 'consideration' is essential for an agreement.
Definition of consideration:
§ When, at the desire of the promisor,
§ The Promisee or any other person
§ Has done or Abstained from doing,
§ Or does or abstains from doing,
§ Or promises to do or to abstain from doing, something,
§ Such act or abstinence or promise is called a consideration for the promise. [Section
2(d)].
Consideration' means quid pro quo i.e. 'something in return'. It is an advantage moving from one
to another. The consideration can be a positive act or abstinence from act (i.e. negative act). It
can be in form of cash, goods or services. It can be past, present or future.
§ Consideration should be at the desire of promisor - A cannot demand payment for his
services when he saved life of B when he was drowning, as it was voluntary act and not
at the desire of B.
§ Consideration can be given to/by third person – It may move from promise or any other
person.
§ Consideration must be lawful
§ Past consideration valid, if given at desire of promisor
§ Consideration should not be impossible
§ Consideration should be certain - Promising to pay a 'reasonable sum' or 'as may be
mutually agreed upon' is not a consideration as it is uncertain. Agreement containing
such clause is not a valid contract.
§ Act which promisor is anyway bound to do is not a 'consideration' - If the promisor is
any way legally bound to do something, and he agrees to do it, it is not 'consideration' as
any way he was bound to do it - e.g. agreeing to pay an amount to witness to attend
Court as per summons received by him is not a 'consideration' as he was anyway bound
to attend as per Court orders. - - A promise to pay Advocate additional sum if he wins
the case is not a valid consideration as the advocate was even otherwise bound to
render best of his services.
Agreements void, if consideration or objects unlawful in part (Section 24)
§ If any part of a single consideration for one or more objects, or any one or any part of any
one of several consideration of a single object, is unlawful, the agreement is void.
Rule: Contract without consideration is void
EXCEPTIONS to the above rule Section 25: Means Contract without consideration will be valid.
Exception 1If agreement is made on account of natural love and affection between parties
standing in a near relation to each other if it is made it in writing and must be registered.
Exception 2: promise to compensate for past voluntary service.
Exception 3: A Promise to pay time barred debt (law of limitation) is valid if it is made in writing
+ signed by debtor.
Exception 4: Completed Gifts i.e. gift is completed when it is accepted by done. However,
agreement to make gift is not enforceable.
Exception 5: Creation of Agency or Partnership
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PRIVITY OF CONTRACT
As a general rule, stranger to contract cannot sue or be sued.
Rule: Stranger to contract cannot sue parties to contract
EXCEPTIONS to the above rule: Means EVEN stranger to contract can sue parties to contract
Exception 1: Beneficiary can sue -Beneficiary of contract can sue if contract was for his benefit.
Beneficiary trust can enforce the contract. e.g. - A agrees to transfer certain property to B to be
held in to benefit of C. Here, C, being beneficiary, can enforce the agreement even if he was not
pa agreement - If airline books rooms for its crew in a hotel, the crew member who is injured can
sue hotel for injury suffered by him, as he was beneficiary of the contract
Exception 2: Assignee of contract – When benefits under a contract is assigned, the assignee can
enforce the contract.
Exception 3: Devolution by operation of law - Sometimes, contract may devolve on third person
by operation of law (e.g, purchase or lease of interest in land, death, bankruptcy, insolvency). In
such case, the successor (in case of death), official receiver (in case of insolvency) etc. can sue
though they were not parties to contract.
Exception 4: Insurance company can sue - Insurance Company can sue as it enters into shoe of
person to whom compensation was paid by it as per insurance contract.
Exception 5: Principal can enforce contract entered into by Agent - Principal can enforce
contract entered into by Agent on behalf of Principal, if Agent is acting within his authority.
THERE CAN BE STRANGER TO CONSIDERATION

(STRANGER CAN PERFORM CONTRACT)
BUT
THERE CANNOT BE STRANGER TO CONTRACT
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Topic 4: COMMUNICATION
1. COMMUNICATION OF PROPOSAL/OFFER
An offer is complete when it is properly communicated to the offeree. The communication of
offer is complete when it comes to the knowledge of the person to whom it is made.[Sec.4, para
1]
14 Feb
OFFEROR
Offer
16 Feb
OFFEREE
Communication of offer is complete as against the offeree???
2. COMMUNICATION OF ACCEPTANCE
Communication of acceptance of an offer completes at different times as against the offeror and
offeree. The time of completion of communication of acceptance against each of them is as
under:-
(a) As against the proposer/offeror: The communication of an acceptance is complete as
against the offeror when it is put into a course of transmission to him so as to be out of
the power of the acceptor. After such communication, the offeror is bound by the
acceptance.
(b) As against the acceptor: The communication of acceptance as against the acceptor is
complete when it comes to the knowledge of the offeror.(Sec.4 para 2.)
14 Feb
OFFEROR
Offer
16 Feb
OFFEREE
20 Feb
Acceptance put in to course of transmission
Communication of ACCEPTANCE is complete as against the OFFEROR ???
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14 Feb
OFFEROR
Offer
22 Feb 16 Feb
OFFEREE
20 Feb
Acceptance put in to course of transmission
Communication of ACCEPTANCE is complete as against the OFFEREE ???
3. COMMUNICATION OF REVOCATION
Revocation means ‘withdrawing’ or ‘taking back’. Offer as well as acceptance may be revoked.
The communication of revocation completes at two different counts:
(i) As against the person who makes. The communication of a revocation is complete as
against the person who makes it, when it is put into a course of transmission.
(ii) As against the person to whom it is made. The communication of a revocation is
complete as against the person to whom it is made, when it comes to his
knowledge.(sec.4)
GENERAL RULES AS TO COMMUNICATION OF ACCEPTANCE
1. In case of acceptance by post : Where the acceptance is given by post, the communication
of acceptance is complete as against the proposer when the letter of 'acceptance .is posted.
Thus, mere posting of letter of acceptance is sufficient to conclude a contract. However, the
letter must be properly addressed and stamped.
2. Delayed or no delivery of letter: Where the letter of acceptance is posted by the acceptor
but it never reaches the offeror, or it is delayed in transit, it will not affect the validity of
acceptance. The offeror is bound by the acceptance.
3. Acceptance by telephones, telex or fax: If the communication of an acceptance is made by

telephone, teleprinter, telex, fax machines, etc., it completes when the acceptance is received
by the offeror. The contract is concluded as soon as the offeror receives or hears the
acceptance.
4. The place of Contract : In case of acceptance by the post, the place where the letter is
posted is the place of contract. Where the acceptance is given by instantaneous means of
communication (telephone, fax, teleprinter, telex, etc.), the contract is made at the place
where the acceptance is received.
.
REVOCATION OF OFFER
Time for Revocation of Offer

A proposal may be revoked at any time before the communication of acceptance is complete as
against the proposer, but not afterwards.(sec.5 para 1) It is possible only when no acceptance
has been given by the time the communication of revocation of acceptance is complete.
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Modes of Revocation and Rejection of Offer
According to section 6, the following are the modes of revocation of an offer:
1. By notice.
2. By lapse of time.
3. By death of insanity of offeror. An offer stands revoked if the offeror dies or becomes
insane before acceptance and the fact of his death comes to the knowledge of acceptor,
before acceptance. [Sec.6(4)]
4. By Counter offer. A counter offer rejects the original offer.
5. by non- acceptance of the offer according to the prescribed or usual
mode.[Sec.7(2)]
6. By death of insanity of the offeree.
7. By destruction of subject matter.
8. By change in the law.
9. By rejection of offer.
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Topic 5: CAPACITY TO CONTRACT

Who are Competent to Contract?
Section 11 reads,
§ Every person is competent to contract who is of the
§ Age of majority according to the law to which he is subject and
§ Who is of sound mind and
§ Not disqualified from contracting by any law to which he is subject
Conversely, following persons are not competent to contract:

× Minors
× Persons of unsound mind; and
× Persons disqualified from contracting by any other law of the land.
I. MINORS:
§ According to Indian Majority Act, “A minor is a person who has not completed 18 years of
age”
§ When guardian is appointed by court, person becomes major when he attains the age of 21
years.
Rules/Effects as to or Nature of Minor’s Agreement

1. Void-ab-Initio. Minor’s agreement in absolutely void from very beginning, i.e. void ab initio.
It is nullity in the eye of law. An agreement with minor, therefore, can never be enforced by
law.[Mohri bibi v.Dharmodas ghose]
2. Minor can be promisee or beneficiary. The Courts regard minor capable of accepting
benefits under an agreement. However, he must have performed his promise under the
agreement. It means that if a amajor borrows money from a minor and later on refuses to pay
it, minor can sue him and recover the money.
3. No ratification. One of the basic rules of ratification is that only valid acts may be ratified. A
minor’s agreement is void ab initio. Hence it cannot be ratified even after attaining majority.
(i) It maybe noted that where a minor after attaining majority pays the debt incurred during
minority, he cannot afterwards recover it.
(ii) Again it is worth noting that where a minor had not completed a transaction during his
minority and continues to complete the same on majority, he will be liable for the whole
transaction. Therefore, the services rendered at the desire of the minor during his
minority(to the minor) and are continued to be rendered at his request after his majority
and he makes a promise to pay for the whole, the promise is enforceable.
4. NO Restitution / Compensation. Generally, a minor is not liable to compensate for or

restore any benefit which he has received.
Restitution order is granted subject to following conditions (Specific Relief Act, 1963):
§ Power of court to order restitution is discretionary
§ It is generally allowed when minor had misrepresented to other party about his age
§ If money paid to a minor is in the same form, minor may be ordered to pay it back
§ If money is used to purchase property, property purchased by the minor shall be used in
paying off the money.
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5. No estoppel and can plead minority. The rule of estoppel says that when a person by
written or spoken words or by his conduct falsely represents another to believe that certain
state of things exists; he will not be allowed to deny the existence of that state of things.
However, the minor is not bound by the rule of estoppel. A minor can always plead his
minority. Even if he has falsely represented himself to be a major and induced the other party
to contract, he can later deny the stand. He cannot be sued either in contract or in tort for
fraud. If the aggrieved party is allowed to sue, it would amount to allowing enforcement of
void agreement which is not possible.
6. No specific performance. Specific performance of a contract means performance of contract

as per the terms of the contract. Minor’s agreement being void, the court cannot direct for
specific performance of it.
7. Contract by parent / guardian / manager. A minor’s parent / guardian / manager can enter
into contract on behalf of the minor provided:
i) the parent / guardian / manager is authorized ; and
ii) the contract is for the benefit of the minor.
A certified guardian / manager by the Court may with the sanction of the Court, sell the
minor’s immovable property for his benefit.
8. No liability of parents. The Parents (guardian) of a minor are not liable for agreements made
by their minor ward. However, they can be held liable if the minor makes agreement as their
authorized agent.
9. Minor agent. A minor cannot appoint an agent because only person competent to contract
can appoint agents. (Sec.183) However, a minor can be appointed as an agent by any person
competent to contract. The minor agent can bind his principal by his acts but the principal
would be unable to hold him personally liable for any damage arising out of his negligence or
wrongful acts. (Sec.184)
10. Minor partner. Partnership arises out of a contract and a minor is not competent to make a
contract. Hence he cannot be a partner in a partnership firm. However, a minor can be
admitted to the benefits of an existing firm with the consent of all the partners. Thus, he can
be a partner in the profits of a firm but not partner of the firm. [sec.4 and 30 of the Indian
Partnership Act, 1932]
11. Guarantee for a minor or by a minor. A contract of guarantee in favour of a minor is valid.
However, a minor cannot be a surety in a contract of guarantee. This is because, the surety is
ultimately liable under a contract of guarantee whereas minor can never be personally liable.
12. Liability for necessaries of life. A minor is incompetent to contract; therefore, he is not
personally liable for the payment of price of necessaries of life supplied to him or to his legal
dependents. However, the person who has furnished such supplies is entitled to be
reimbursed from the property of the minor. (Sec.68)
Thus, it is clear that the liability of the minor is not personal but is only to the extent of the
minor’s property. The supplier’s right of reimbursement is based on the principle of equity.
The law presumes a quasi-contract between the minor and the supplier.
II. PERSONS OF UNSOUND MIND

“A person is said to be of sound mind for the purpose of making a contract if, at the time when he
makes it, he is capable of understanding it and of forming a rational judgment as to its effect
upon his interests.” (Sec.12)
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When soundness of Mind is required?

The soundness of mind is required only at the time of making a contract.
1. Contract by a person usually of unsound mind. A person who is usually of unsound mind,
but occasionally of sound mind, may make contract when he is of sound mind.(Sec.12 para 2)
2. Contract by a person usually of sound mind. A person who is usually of sound mind, but
occasionally of unsound mind, may not make a contract when he of unsound mind.(Sec.12
para 3)
Types of Persons of Unsound Mind and their Contracts

1) Idiot. An idiot is a person who is congenital (by birth) of unsound mind. Such a person
can never understand contract and make a rational judgment as to its effects upon his
interests. Consequently, the agreement of an idiot is absolutely void ab initio. He is not
personally liable even for the payment of necessaries of life supplied to him.
2) Lunatic. A lunatic is a person whose mental powers are damaged due to some disease of
brain or mental strain. A lunatic, therefore, may have lucid intervals of sanity and
insanity. He can make contracts during those intervals when he is sane. He is not liable
for agreements made during the intervals of insanity.
3) Delirious persons. A person delirious from fever is also not capable of understanding
the nature and implications of an agreement. Therefore, he cannot enter into a contract
so long as delirium lasts.
4) Drunken or intoxicated persons. A drunken or intoxicated person is temporarily
incompetent to contract. The mental faculties of such a person are clouded for the time
being when he is under the effect of drink or intoxicant. He cannot enter into contract
during the period when he is under the effect of such things.
5) Hypnotized persons. Hypnotism produces temporary incapacity till a person is under
the effect of artificial induced sleep.
6) Mental decay. There may be mental decay or senile mind due to old age or poor health.
When such person is not capable of understanding the contract and its effect upon his
interests, he cannot enter into contract.
III. PERSONS DISQUALIFIED BY LAW

There are certain persons who are disqualified from contracting by the law of our country. They
are as under:
1) Alien enemy. Alien means foreign citizen living in India. When an alien is declared as
alien enemy (due to the declaration of war between his country and the Republic of India
or for any other reasons) he cannot enter into a contract with any Indian national so long
as the declaration is in force. The contract made before the declaration stands suspended
till such declaration remains in force.
2) Foreign Sovereigns, diplomatic staff etc. Foreign sovereigns, their representatives and
diplomatic staff (e.g. ambassadors, envoys etc.) have full capacity to contract in India but
they can claim their privilege of not sued. They cannot be sued unless they voluntarily
submit to the jurisdiction of our law Courts; or the Central Government permits to sue
them. (they can enter into valid contract)
3) Corporation and companies. Corporations and companies are the artificial persons
created by law. It is competent to make contract within the scope of the Memorandum.
Any contract made beyond the Memorandum is ultra vires and void.
4) Insolvents. An adjudged insolvent (under the Insolvency Act to which he is a subject)
cannot enter into contract for the sale of his property. It is because his property vests in
the official Receiver or the Official Assignee. However, he can make contracts of service
or for purchase of property or to take loans.
5) Convicts. A convict during the period of his imprisonment becomes incompetent for two
things:
a. To enter into contract, and
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b. To sue on contracts made before conviction.
He may however, get a license from the government and perform the above acts while
undergoing imprisonment.
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Topic 6: FREE CONSENT

In order to constitute a valid contract, ‘consent’ of all the parties is necessary and that
too must be ‘free’. Consent is an absolute and unconditional assent to an offer, given by
the offeree. According to
Section 13, “Two or more persons are said to consent when they agree upon the same
thing in the same sense”.
Free Consent: Free consent is the consent given by the sweet will of the parties
and not caused by any form of physical or mental force or pressure or mistake.
According to Sec.14, consent is said to be free when it is not caused by
i) Coercion – Sec 15 , or
ii) Undue influence – Sec 16, or
iii) Fraud – Sec 17, or
iv) Mis-representation – Sec 18, or
v) Mistake Sec 20.21.22.
COERCION:
According to Section 15,
§ Coercion is 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 into an agreement.
The Act also provides an explanation with this Section, which states,
“It is immaterial whether the Indian Penal Code is or is not in force in the
place where the coercion is employed.”
Effects
Ø Voidable contract.
Ø Restitution is allowed if aggrieved party rescinds the contract
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UNDUE INFLUENCE:
According to section 16(1)
§ A contract is said to be induced by ‘undue influence’
§ Where the relations subsisting between the parties are such
§ That one of the parties is in a position to dominate the will of the other
§ And uses that position to obtain an unfair advantage over the other
§ Kind of moral coercion.
Effect
Ø Voidable contract.
Ø Restitution is allowed if aggrieved party rescinds the contract
Presumption of UE:
(when is a person deemed to be in a position to dominate will of others?)
ü Where he holds a real or apparent authority over the other (For ex- master &
servant, ITO & Assessee)
ü Where he stands in a fiduciary relationship to the other.
ü Unconscionable transaction - Where a party makes a contract with a person
whose mental capacity is temporarily or permanently affected by reason of age,
illness, or mental or bodily distress.
ü Ex: Parent and child, guardian and ward, trustee and beneficiary, doctor and
patient, solicitor and client, Religious adviser and disciple.
NO Presumption
× Landlord and tenant, Creditor and debtor, Husband and wife, Principal & Agent.
FRAUD
According to Sec.17
§ Fraud means and includes any of following acts
a) The suggestion, as a fact, of that which is not true, by one who does
not believe it to true.
b) The active concealment of a fact, by one having knowledge or belief of
the fact;
c) A promise made without any intention of performing it;
d) Any other act fitted to deceive; and
e) Any such act or omission as the law specially declares to be
fraudulent
§ Committed by a party to a contract,
§ Or with his connivance,
§ Or by his agent
§ With an intent to deceive another party there to or his agent,
§ Or to induce him to enter into the contract
Rule: Silence ≠ Fraud

Explanation to Section 17 mentions the circumstances in which silence may be regarded
as fraud. The explanation reads “Mere silence as to facts likely to effect the
willingness of a person to enter into a contract is not fraud, unless the
circumstances of the case are such that, regard being had to them, it is the
duty of the person keeping silence to speak, or unless his silence is, in itself,
equivalent to speech.”
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Duty to speak i.e. SILENCE WILL AMOUNT TO FRAUD
1. Contracts of uberrimae fidei, or utmost good faith. In contacts of uberrimae fidei,
there is a legal duty on the parties to disclose true and full material facts. Suppression
of truth in such contract amounts to fraud. The following types of contract fall under
this category:
(i) Contract of insurance. Insurance contracts are founded upon the principle of
utmost good faith. The proposer, therefore, is under a duty to disclose all the
facts known or ought to be known to him, which are likely to affect the
acceptance of the proposal.
(ii) Contracts for sale of immovable property. In such contracts, buyer as well
as seller is under a duty to disclose all material facts. (Sec.55, Transfer of
property Act)
(iii) Allotment of shares. Every prospectus issued by a company to the public is
an invitation to the public to subscribe shares in the company. It must also
disclose all the facts accurately otherwise the allotment will be voidable at the
option of the allottee.
(iv) Contract of marriage. Every party in a marriage contract is under a duty to
disclose all the material facts.
(v) Contract of family settlement. Each member of family is under a duty to
disclose all material facts.(i.e. as to property etc.) at the time of family
settlement.
2. Contract of partnership. A contract of partnership is not strictly a contract of

uberrimae fidei. It is because every partner is not under a duty to disclose all the
material facts, which existed before the partnership. They are required to observe
good faith to each other. Therefore, they are under a duty to give true account and
information to the firm on all matters affecting it.
3. Contract of guarantee. In contract of guarantee the parties are under a duty to
disclose all the material facts. A guarantee obtained by means of keeping silence as to
material fact, is invalid.(Sec.143)
4. Contract by parties having fiduciary relations. Where the parties stand in

fiduciary relationship, they are also under a duty to disclose all the material facts
likely to affect the willingness of another party. Fiduciary relation is supposed to
exist between parent and child, solicitor and client, guardian and ward, trustee and
beneficiary, doctor and patient etc.
5. Change in facts before conclusion of the contract. If a statement is true when

made, but subsequently becomes false before the conclusion of the contract. In such a
case, the party is under a duty to speak and notify the change to the other party.
6. Required by law. Where disclosure of facts is required by a law of the land, it

creates a duty to speak.
7. Customs and usages. Where the custom and usage of trade requires a party to
disclose certain known facts, it becomes a duty of the party to do so.
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8. In case of latent defect. Where a product has latent defect (i.e. not visible by
ordinary inspection) and the seller has knowledge of it, he will be under a duty to
disclose the defect.
Silence Equivalent to Speech Sometimes keeping silence may also give an impression of
the existence of a certain fact. In such a case silence is, in itself equivalent to speech.
Effects
Ø Contract voidable.
Ø Insisting for specific performance.
Ø Restitution.
Ø Claim for damages..
Exceptions
In the following cases, the contract is not voidable or contract cannot be rescinded:
× If the Aggrieved party had the means of discovering the truth with ordinary
diligence.(Exception of sec.19)
× A fraud which did not cause the consent of the party.(Explanation to sec.19)
× Where the party after becoming aware of the fraud affirms or ratifies the
contract.
× The right of rescission can be claimed within a reasonable time after
discovery of fraud.
× If a third party acquires rights or interest in the subject matter of the
contract for value and in good faith.
MISREPRESENTATION
According to Sec 18, Misrepresentation is any innocent or unintentional false statement
or assertion of fact made by one party to the other during the course of negotiation of a
contract is called a misrepresentation. The party making the statement honestly believes
in it to be true and is made in honest ignorance of its falsehood.
Effects
Ø Contract voidable
Ø Insisting for performance.
Ø Restitution. (no damages)
Exceptions
In the following cases, the contract is not voidable or contract cannot be rescinded:
ü If the Aggrieved party had the means of discovering the truth with ordinary
diligence.(Exception of sec.19)
ü A misrepresentation which did not cause the consent of the
party.(Explanation to sec.19)
ü Where the party after becoming aware of the fraud affirms or ratifies the
contract.
ü The right of rescission can be claimed within a reasonable time after
discovery of fraud.
ü If a third party acquires rights or interest in the subject matter of the
contract for value and in good faith.
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MISTAKE:
Mistake is a
§ Misconception or
§ Misimpression or
§ Misunderstanding or
§ Erroneous belief about something.
Usually, mistake does not affect the validity of a contract. However, under some
circumstances, mistake may render a contract void for a want of genuine consent.
Classification of Mistake
Mistake of LAW Mistake of FACT
Mistake of Mistake of
UNILATERAL Mistake BILATERAL Mistake
LAW of LAND FOREIGN LAW
VALID VOID VALID

VOID
No Excuse Like Mistake of FACT S.t. certain exceptions
Mistake of Law
ü Mistake of law of the land. No party can seek the relief on the ground of ignorance of law of
the land. Sec.21 states that a contract is not voidable because it was caused by mistake as to
any law in force in India. The contract will have the same effect as if parties had full knowledge of
the law of the country.
ü Mistake of foreign law. Ignorance of foreign law is excusable. Therefore, the mistake of
foreign law adversely affects the validity of a contract. It is void. Section 21 states that “ a
mistake as to a law not in force in India has the same effect as a mistake of fact”. The contracts
caused by mistake of fact are void. (Sec.20)
Mistake of fact
ü Bilateral or mutual mistake. Where both the parties to an agreement are under a mistake
as to a matter of fact essential to the agreement, there is said to be a bilateral mistake. An
agreement caused by such a mistake is void.(Sec.20).Bilateral mistakes may be of two types:
§ Mistake as to subject matter. Where both the parties are under a mistake as to
subject matter of the agreement, the agreement is void. Mistake as to subject matter
may be of the following types:
Mistake as to identity of subject matter, existence of subject matter, quality of subject
matter, quantity, price, title, existence of state of affairs.
§ Mistake as to possibility of performance. When both the parties believe that the
contract is capable of being performed but, in fact, it is impossible to be performed at the
time of contract. In such a case, the contract is void on the ground of bilateral mistake as
to the possibility of performance. If the impossibility arises subsequent to the formation of
the contract, the contract is not void because of mistake. (Sec.56)
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ü Unilateral Mistake: Where one of the parties to a contract is under a mistake as

to a matter of fact, it is unilateral mistake. Section 22 states that a contract is not
voidable merely because it was caused by one of the parties to it being
under a mistake as to a matter of fact.
However, in certain cases a unilateral mistake may also render a contract void
whether or not caused by fraud, misrepresentation etc. On the basis of judicial
decisions, they may be of following types:
§ Mistake as to the identity of the party contracted with. Where a party
enters into an agreement with some person believing him to be some other
person, there is a mistake as to identity of the person contracted with. In such
a situation the contract would be void provided the identity of the party is of
material significance in the contract.
§ Mistake as to identity of attributes of contracting party. Sometimes the
parties are face to face but one of the parties fails to identify the attributes of the
contracting party or person. If such identity of attributes of the person is a
material fact, the contract is void.
§ Mistake as to the nature of the contract. When one of the parties makes a
mistake as to the nature of contract, it is void. Such a mistake may be caused
due to some physical or mental weakness or illiteracy of the party or due to
some fraudulent act of other party.
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Topic 7: VOID AGREEMENTS

“An agreement not enforceable by law is said to be void”. [(Sec.2 (g)]
Section Explanation
11 Agreements by incompetent persons
20 Agreement made under bilateral mistake as to material fact
23 Agreement of which the consideration or the object is unlawful
Agreement on which the consideration or the object is unlawful in part and cannot
24 be separated from the lawful part.
25 Agreements made without consideration with certain exceptions
26 Agreement in restraint of marriage, void
27 Agreement in restraint of trade, void
28 Agreements in restrain of legal proceedings, void
29 Agreements void for uncertainty
30 Agreements by way of wager, void
36 Agreements contingent on impossible event
56 Agreements to do impossible act
AGREEMENTS OPPOSED TO PUBLIC POLICY

1. Trading with the enemy.
2. Stifling (suppressing) prosecution:
3. Champerty and maintenance - When a person helps another in litigation
Ø Does not share in the proceeds of the action, it is called MAINTENANCE.
Ø Exchange of a promise to hand over a portion of the fruits of the litigation, if any,
it is called CHAMPERTY.
Ø VOID if litigation is of a gambling character
4. Marriage brokerage.
5. Sale of public offices, titles and appointments.
6. To create monopolies.
7. Restraining personal liberty.
8. Restraint of parental rights
9. Restraint of marriage / trade / legal proceedings
AGREEMENT IN RESTRAINT OF MARRIAGE, VOID

Every agreement in restraint of the marriage of any person, other than a minor, is void.
AGREEMENTS IN RESTRAINT OF TRADE

Section 27 of the Act states that every agreement by which anyone is restrained from exercising
a lawful profession, trade or business of any kind, is to that extent void.
Exceptions: The exceptions to the rule that agreement in restraint to trade is void can be
classified into:
1) Statutory Exceptions. Following are the statutory exceptions to the rule that an agreement in
restraint of trade is void.
(a) When goodwill is sold, seller is restrained from carrying on SIMILAR business within
specified local limits
(b) Where the partners of the firm make an agreement that a partner shall not carry on any
business other than that of the firm while he is a partner, the agreement is
valid.[Sec.11(2)Indian Partnership Act]
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(c) Partners may agree that on ceasing to be partner, they will not carry on any business
similar to that of the firm within a specified period or within specified local limits. Such an
agreement is valid if the restrictions imposed are reasonable.[Sec.36(2) Partnership Act]
(d) Where the partners, upon or in anticipation of dissolution of the firm, make an agreement
that some of all of them will not carry on a business similar to that of the firm, it is valid
agreement. [Sec.54, Indian Partnership Act]
(e) A service agreement may restraint employees from working elsewhere DURING period of
employment.
2) Exception under Judicial Interpretations

(a) Restraint by trade combinations. Now a days it is common to form trade, business or
professional association i.e. combination. These associations usually frame rules,
regulations and conditions of trade, sometimes, fix up the price to be charged, or fix up the
mode of selling the products or services etc. All these bind the members, although these
restrain the freedom of action of the members.
(b) Restraint by sole selling agreement. Sometimes a seller or producer agrees to sell his
entire goods to a sole selling agent or exclusive dealer in a particular area and who in turn
also agrees not to deal in the goods of any other producer. Such an agreement is valid and
not a restraint in trade.
AGREEMENT IN RESTRAINT OF LEGAL PROCEEDINGS (SECTION 28)
All agreements, which interfere with the course of justice, are unlawful and void as these are
against public policy. Section 28 the Act has following provisions:
(i) Agreements restricting enforcement of rights. Every agreement by which any party to it is
restricted absolutely from enforcing his rights under or in respect of any contract by the
usual legal proceedings in ordinary tribunal is void to that extent. However, the partial
restriction on the right to legal proceedings would be valid and enforceable.
(ii) Agreements reducing the period of enforcement. Every agreement, which limits the time
within which any party may enforce his rights, is to that extent void.
(iii) Agreement extinguishing rights on the expiry of certain period. Every agreement that
extinguishes the rights of any party to it, (from any liability) under or in respect of any
contract on the expiry of a specific period so as to restrict any party from enforcing his
rights is void to that extent.
Exceptions:
i. any dispute between them in respect of any subject shall be referred to arbitration
(present disputes)
ii. To refer to arbitration any question between them which has already arisen or which
may arise in future, is valid; but such a contract must be in writing. (agreement to refer
past & future disputes to arbitration)
iii. Referring disputes to court in particular jurisdiction
WAGERING AGREEMENTS OR WAGER (Section 30)
According to Sir William Anson, “A wager is a promise to give money or money’s worth upon the
determination or ascertainment of an uncertain event.” Justice Hawkins defines, “a wagering
agreement is one by which two persons, professing to hold opposite views touching the issue of
a future uncertain event, mutually agree that, dependent upon the determination of that event,
one shall win from the other and that other shall pay or hand over to him a sum of money or
other stake…” [Carlill v.Carbolic Smoke Ball Company’s case]
Such an agreement has been declared as void under the act. (Sec.30). For example betting on
cricket matches.
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Effects of wagering Agreements
1. Void. The agreements by way of wager are void from beginning.(Sec.30)
2. Collateral agreements valid. The agreements collateral to void agreements need not
necessarily be void. [Gherulal Parekh v.Mahadel dass]. However, in the State of
Maharashtra and Gujarat, wagering agreements have been declared as illegal. Therefore,
in these States the collateral agreements to wagering agreements are also void.
3. No recovery of money paid to stake holder. Money paid to the stakeholder cannot be
recovered.
4. A winner in the wagering agreement cannot sue for the recovery of money won.
5. No suit can lie on promissory note made for a debt due on a wagering agreement.
Such a note is deemed to have been made without consideration because a void
agreement (wagering agreement) cannot be treated as consideration for a promissory
note.
6. Agents cannot recover money from his principal. An agent is not entitled to recover
any money from the principal which he has paid on a wagering agreement, entered into
on behalf of the principal.[Sec.222]
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Topic 8: CONTINGENT CONTRACTS

A contract may be either absolute or contingent. In an absolute contract, promisor undertakes to
perform contract absolutely, i.e. unconditionally. But a contingent contract depends upon the
happening or non-happening of event collateral to such contract.
According to Sec.31, a contingent contract is a contract to do or not to do something, if some
event, collateral to such contract, does or does not happen. The contracts of indemnity, insurance
and guarantee are definitely contingent contracts. Similarly the contracts of life insurance are
also contingent contracts to a certain extent.
Characteristics/Essential of contingent Contracts

Following are the main characteristics of contingent contracts:
1) The performance of a contingent contract depends upon the happening or non-
happening of some future event.
2) A contingent contract is dependent upon an uncertain event.
3) The event upon which performance of a contingent contract depends must be collateral
or incidental to the contract. Collateral event is the event for which neither of the parties
makes any promise but the contract is dependent upon the happening or non-happening
of the event. It means that a contract already exists between the parties but its
performance depends upon the happening or non-happening of the event.
4) The contingent event or act must not be the mere will of the promisor.
5) A contingent contract has all essentials of a valid contract. If any of the elements is
missing, the contingent contract is not enforceable.
Rules as To Enforcement of Contingent Contracts

The rules as to enforcement of contingent contracts are given in Sections 32 to 36 of the Act.
They are as under:
1. Contingent contracts dependent on the happening of some specific uncertain future event
can be enforced only when the event has happened. (Sec.32) If the event becomes
impossible, such contracts become void.
2. Where a contingent contract is dependent upon the happening of a specified uncertain event
within a fixed time, the contract can be enforced only when the specified event happens
within the time fixed. (Sec.35 para 1)
3. Where a contingent contract is to be performed on non-happening of a specified future

uncertain event, the contract can be enforced when the happening of that event becomes
impossible, and not before. (Sec.33).
4. Where a contingent contract is dependent upon the non-happening of some specified

uncertain future event within the time fixed, the contract may be enforced when the (i)
time fixed has expired and such event has not happened, or (ii) before the expiry of
time, if it becomes certain that the event will not happen.(Sec.35 para 2)
5. Sometimes, a contingent contract is dependent upon the way in which a person will act at an
unspecified time. In such a case, the event shall be considered to have become impossible
when such person does anything which renders it impossible that he should so act within
any definite time, or otherwise than under further contingencies. (Sec.34)
6. Where a contingent agreement is dependent upon the happening of an impossible event, the
agreement is void. It makes no difference whether the impossibility of the event was known
or not known to the parties at the time when the agreement was made. (Sec.36)
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PERFORMANCE OF CONTRACT
Obligations of parties to contract (Section 37)

The parties to a contract must either perform, or offer to perform, their respective promises,
unless such performance in dispensed with or excused under the provision of this Act, or of any
other law. Promises bind the representative of the promissor in case of the death of such
promissor before performance, unless a contrary intention appears from the contract.
TENDER OF PERFORMANCE(Sec 38)

Tender is not actual performance but is only an offer to perform the obligation under the
contract. Where the promisor offers to perform the obligation, or makes a tender and the other
party refuses to accept the performance, such tender shall be regarded as equivalent to
performance. It is, therefore, also called “attempted performance”.
Sec. 38 sums up the position as under: “Where a promisor has made an offer of performance to
the promisee, and the offer has not been accepted, the promisor is not responsible for non-
performance, nor does he thereby lose his rights under the contract.
Requisites of a valid tender-
a) It must be unconditional.
b) It must be of the whole quantity contracted for or of the whole obligation.
c) It must be by a person who is in a position, and is willing, to perform the promise.
d) It must be made at the proper time and place.
e) It must be in proper form.
f) It must give a reasonable opportunity to the promisee for inspection of goods.
g) It must be made to proper person, i.e. the promisee or his duty authorized agent.
h) It may be made to one of the several joint owners, and in such a case it has the same effect
as a tender to all of them.
Kinds of tender: Tender or attempted performance may be-

1) Tender of goods. Where in a contract for the sale of goods, the seller satisfies all the
requirements of the contract as to delivery (i.e., the goods are in a deliverable state
and nothing remains to be done by the seller to ascertain the price) and the buyer
refuses to accept the goods, the seller is discharged by such a tender of performance
and may either maintain or successfully defend an action for breach of the contract.
2) Tender of money. Where a debtor makes a valid tender of money, but the creditor
refuses to accept it, the debtor is not discharged from making the payment. Tender,
in this case, does not constitute discharge of the debt. When the creditor files a suit
against the debtor, the debtor can set up the defence of tender. If he deposits the
money in the Court and proves his pleas, the creditor gets the amount originally
tendered to him without any interest, whereas the debtor gets judgment for his cost
of defence.
Effect of refusal of party to perform promise wholly (Section 39)

When a party to a contract has refused to perform, or disabled himself from performing, his
promise in its entirely, the promisee may put an end to the contract, unless he has signified, by
words or conduct, his acquiescence in its continuance.
Person by whom promises is to be performed (Section 40)

If it appears from the nature of the case that it was the intention of the parties to any contract
that any promise contain in it should be performed by the promisor himself, such promise must
be performed by the promisor. In other cases, the promisor or his representative may employ a
competent person to perform it.
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Time and Place of performance of contracts
Usually the parties lay down in the contract entered into by them the terms about time and place
of performance of that contract. Sec. 46 to 50 lay down rules regarding time and place of
performance of a contract. These Sections are reproduced below:
1. Where, by the contract, a promisor is to perform his promise without application by the
promisee, and no time for performance is specified, the engagement must be performed
within a reasonable time.(Sec.46).
2. When a promise is to be performed on a certain day, and the promisor has undertaken to
perform it without application by the promisee, the promisor may perform it at any time
during the usual hours of business on such day and at the proper place at which the
promise ought to be performed (Sec.47).
3. When a promise is to be performed on a certain day, and the promisor has not undertaken
to perform it without application by the promisee, it is the duty of the promisee to apply
for performance.
i. at a proper place; and
ii. within the usual hours of business(Sec.48).
4. When a promise is to be performed without application by the promisee, and no place is
fixed for its performance, it is the duty of the promisor to apply to the promisee to appoint
a reasonable place for the performance of the promise, and to perform it at such place
(Sec.49).
5. The performance of any promise may be made in any manner, or at any time, which the
promisee prescribes (Sec.50).
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Topic 9: PERFORMANCE & DISCHARGE

Discharge of Contract
By
By By Mutual By Lapse of By operation of By Breach of
impossibility of
Performance Consent Time Law Contract
performance
Novation Impossibility at Law of By merger

Actual or Actual or
Alteration the time making Limitation unauthorized
Attempted Anticipat
Rescission the contract, Ex: Time alteration of terms,
Performance ory
Remission with or without barred debt insolvency, death,
Waiver knowledge of the rights & liabilities
Merger parties or arising becoming vested
subsequent to in the same person
the formation of
the contract
A contract is said to be discharged, when the obligations created by it come to an end. A contract
may be discharged or terminated by any one of the following modes:
1. Discharge by performance. The most obvious mode of discharge of a contract is by

performance of the obligation by each party. When each party performs his obligation, the
contract comes to an end.
Performance may be actual, or attempted. Where a person does what he undertook to do, he is
said to have actually performed his promise. But sometimes it may happen that a person who is
bound to perform a promise is willing to perform it at the proper time and place but cannot do
so because the other party does not accept the performance. This is knows as “attempted
performance” or “tender”.
2. Discharge by agreement or consent. A contract rests on the agreement of the parties. As it is

their agreement, which binds them, so by their agreement, they may be discharged.
Now we may take up the various cases that fall under this head one by one:
i. Novation: Novation occurs when a new contract is substituted for an existing one,
either between the same parties; or between the new parties. The consideration for the
new contract is the discharge of the old contract.
ii. Alteration. Alteration of a contract may take place when one or more terms of the
contract are altered by the mutual consent of all the parties to the contract.
iii. Rescission. Rescission of a contract takes place when all or some of the terms of the
contract are cancelled. It may occur under any of the following circumstances:
(a) By mutual consent
(b) Where one party fails in the performance of his obligation under the contract,
the other party may rescind the contract without prejudice to his right to
claim compensation for breach by the other party.
(c) In a voidable contract, the aggrieved party may cancel the contract.
Rescission can be effected by agreement between the parties at any time
before the contract is discharged by performance or in some other ways.
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iv. Remission. Remission means acceptance of lesser fulfillment of the promise made, e.g.
acceptance of a lesser sum than what was contracted for in discharge of the whole of
the debt.
v. Waiver. Waiver means the intentional relinquishment or giving up of a right by a party
entitled thereto under a contract so that the other party to the contract is released
from his obligation.
vi. Merger. Merger takes place when an inferior right accruing to party in a contract
vanishes or merges into the superior right accruing to the same party under the same
contract. If, for example, a higher security is accepted in place of a lower security, the
security, which in the eyes of law is inferior in operative power, merges and is
extinguished in the higher security.
MATTER NOVATION ALTERATION

Meaning New contract in place of old Change in one or more terms of
contract contract with consent of parties
New contract Yes Does not require
Different parties May involve Parties are same
Change in terms & conditions May or may not involve Always require
MATTER RESCISSION ALTERATION

Meaning Cancellation of contract Change in one or more terms of
contract
Mutual consent With mutual consent or by Can’t take place without mutual
aggrieved party consent
Effect Contract ends Parties are bound to each other
under altered contract
3. By impossibility of performance (Sec.56). Impossibility of performance may fall into any of the
following three categories:
a. Impossibility at the time making the contract, with the knowledge of the parties. In this
case the contract is void ab initio and the parties are discharged from the performance of
the contract.
b. Impossibility at the time of making the contract unknown to the parties. In this case, the
contract becomes void as soon as the impossibility is discovered.
c. Impossibility, which arises subsequent to the formation of the contract. Such
impossibility, as a general rule, is no excuse for the non-performance of the contract. But
where this impossibility is caused by the circumstances beyond the control of the parties,
they are discharged from the further performance of the obligation arising under the
contract.
4. By lapse of time. The Limitation Act lays down that a contract should be performed within a
specified period otherwise the contract shall be terminated. For example, a loan should be paid
back within 3 years and if it is not paid back and the creditor does not file a suit within this
period for the recovery of the amount, the debt becomes time-barred and hence irrecoverable.
Again if a contract is to be performed at a stipulated time, it is discharged if it is not performed at
such stipulated time. The party not in fault, in such a case, need not perform his obligation.
5. Discharge by operation of law. This includes discharge-

a. By merger. Refer to point 2 (vi) discussed above.
b. By the unauthorized alteration of terms of a written agreement. Where a party to a
contract makes any material alteration in the contract, without the consent of the other
party, the other party can avoid the contract.
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c. By insolvency. When a person is adjudged insolvent, he is discharged from all liabilities
or debts incurred prior to his adjudication.
d. By death. In contracts involving personal skill or ability, the contract is terminated on
death. In other contracts, the rights and liabilities of a deceased person pass on to the
legal representatives of the deceased person.
e. By rights and liabilities becoming vested in the same person. Where the rights and
liabilities under a contract vest in the same person, the other parties are discharged, e.g.,
when a bill gets into the hands of the acceptor, the other parties are discharged of their
liability.
6. Discharge by breach of contract. If one of the two parties to a contract breaks the obligation or
shows by his conduct or words his unwillingness to perform the obligation, which the contract
imposes, a new obligation arises- a right of action conferred upon the party injured by the
breach. This right of action by the injured party consists in-
i. treating the contract as discharged and suing the other party for breach of contract, or
ii. treating the contract as still binding, if the time for the performance has not yet arrived
and compelling the other party to perform his part when the time for it comes.
Subsequent or supervening impossibility

Impossibility, which arises subsequent to the formation of the contract, is called
subsequent or supervening impossibility. Sec.56, expressly provides that ‘A contract
to do an act which after the contract is made becomes impossible, or by
reason or some event which the promisor could not prevent, becomes void
when the act becomes impossible or unlawful.’ This is called the doctrine of
supervening impossibility.
A contract is discharged by supervening impossibility in the following cases:
ü Destruction of subject matter of contract
ü Nonexistence or non-occurrence of particular state of things.
ü Death or incapacity of a person, where the contract depends on the
personal skill or qualification.
ü Government or legislative intervention
ü Outbreak of war
Impossibility of performance-not an excuse

Impossibility of performance is, as a rule, not an excuse for non-performance of a
contract. In the following cases a contract is not discharged on the ground of doctrine of
supervening impossibility.
ü Difficulty of performance: A contract is not discharged by the mere fact
that it has become more difficult to perform due to some non contemplated
events or delay.
ü Commercial hardship
ü Impossibility due to failure of a third person on whose work the promisor
relied
ü Strikes, lock-outs and civil disturbances
ü Failure of one of the objects
Effects
When the performance of a contract becomes impossible or unlawful subsequent to its
formation, the contract becomes void (Sec.56)
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APPROPRIATION OF PAYMENTS
The question of appropriation of payment becomes important when a debtor owns several
distinct debts to the same creditor and makes part payment to the creditor. At that time a
question may arise: against which debt is this payment to be appropriated? The creditor would
naturally like to appropriate a payment towards a debt, which he is not likely to recover. But
appropriation is a right generally given to the debtor and for his benefit.
The rules relating to appropriation of payments made by a debtor to his creditor as contained in
Secs.59 to 61 are as follows:
i. Where the debtor intimates (Sec.59). In the first instance, the right to adopt the manner
of appropriation rests with the debtor. If he expressly intimates that the payment
should be applied towards the discharge of a particular debt, the creditor must do so. If
there is no express intimation by the debtor, the law will look to the circumstances
attending the payment for appropriation.
ii. Where the debtor does not intimate (Sec.60). Where the debtor does not expressly
intimate or where the circumstances attending on the transaction do not indicate any
intention, the creditor is at liberty to apply it to any lawful debt actually due and payable
to him. But the creditor cannot apply the payment to a disputed or unlawful debt. The
creditor may even apply the payment to a time-barred debt.
iii. Where the debtor does not intimate and the creditor fails to appropriate (Sec.61).
Where the debtor does not expressly intimate and where the creditor fails to make any
appropriation, it is open to the debtor to insist that the appropriation shall be done in
chronological order i.e. in order of time.
ASSIGNMENT OF CONTRACT
By the assignment of a contract we mean transfer of contractual rights and liabilities to a third
party with or without the concurrence of the other party to the contract.
Assignment may take place-
Ø By the act of the parties. This will include assignment of- i. contractual liabilities, and ii.
contractual rights.
Ø By operation of law. This will take place by death, or insolvency of a party to the
contract.
1. Assignment by act of the parties of the contractual liabilities.

A promisor cannot assign his liabilities or obligations under a contract. In other words, a
promisee cannot be compelled by the promisor or a third party to accept any other person as
liable to him on the promise.
Limitations to the rule:
i. Vicarious performance. It is open to a party to have the contract performed vicariously
by another person in a satisfactory manner provided the contract does not expressly or
impliedly contemplate performance only by the promisor. However, the original party
remains liable for the proper performance of the obligation under the contract.
ii. Novation (Secs.41 and 62). Novation is the substitution of a new contract for an existing
one either between the same parties or between new parties, the discharge of the old
contract being the consideration for the new one. Novation can take place only by an
agreement between the parties. However, contracts involving personal skill or ability or
other personal qualifications cannot be assigned (Sec.40).
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(b) Assignment by act of the parties of contractual rights.
i. The right and benefits under a contract may be assigned, if the obligation under
the contract is not a personal nature, and the assignee can demand performance
from the other party to the contract, i.e. the promisor.
ii. An actionable claim can always be assigned but the assignment to be complete and
effectual must be effected by an instrument in writing. Notice of such assignment
must also be given to the debtor.
2. Assignment by operation of Law

This takes place in cases of death and insolvency.
i. Death. Upon the death of a party to a contract his rights and liabilities under the
contract (except in the case of contracts involving personal qualifications) devolve
upon his heirs and legal representatives.
ii. Insolvency. In case of insolvency of a person, his rights and liabilities incurred
previous to adjudication pass on to the Official Receiver or Assignee, as the case
may be
RIGHTS AND LIABILITIES OF JOINT PROMISORS
Where two or more persons enter into a joint agreement with one or more persons, the question
arises; who is liable to perform and who can demand performance? Secs.42 to 45 deal with this
subject and are discussed below:
1. Devolution of joint liabilities (Sec.42). When two or more persons have made a joint
promise, then, unless a contrary intention appears from the contract, all such persons must
jointly fulfill the promise. Upon the death of one of the joint promisor, his liability devolves
upon his legal representatives, and his legal representatives are jointly to perform the
contract with the surviving parties. If all the parties die, the liability devolves upon their
legal representatives jointly.
2. Any one of joint promisors may be compelled to perform (Sec.43). When two or more
persons make a joint promise, the promisee may, in the absence of express agreement to the
contrary, compel any one or more of such joint promisors to perform the whole of the
promise.
Each of two or more joint promisors may compel every other joint promisor to contribute
equally with himself to the performance of the promise, unless a contrary intention appears
from the contract. If any one of two or more joint promisors makes default in such
contribution the remaining joint promisors must bear the loss arising from such default in
equal shares.
3. Effect of release of one joint promisor.(Sec.44) Where two or more persons have made a
joint promise, a release of one of such joint promisors by the promisee, does not discharge
the other joint promisor or joint promisors, neither does it free the joint promisors so
released from responsibility to the other joint promisor or joint promisors.
4. Devolution of joint rights (Sec.45). When a person has made a promise to several persons,
then, unless a contrary intention appears from the contract, the right to claim performance
rests as between him and them i.e., all promisees jointly during the lifetime. When one of
the promisees dies, the right to claim performance rests with his legal representatives
jointly with the surviving promisees. When all the promisees die, the right to claim
performance rests with their legal representatives jointly.
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Topic 10: BREACH OF CONTRACT

Breach of Contract
Actual Anticipatory
Breach Breach
On the due date of performance

OR BEFORE due date of
During performance performance
Aggrieved Party can TREAT CONTRACT AS DISCHARGED

And
CAN TAKE LEGAL ACTION IMMEDIATELY
MEASURE OF DAMAGES
KEPT ALIVE TILL

CONTRACT ENDED AT ONCE PERFORMANCE DATE
PRICE ON DATE OF BREACH PRICE ON DATE OF

(-) PERFORMANCE
CONTRACT PRICE (-)
CONTRACT PRICE
REMEDIES FOR BREACH OF CONTRACT
Rescission
Damages
Quantum meruit
Specific performance
Injunction
Restitution
Parties to a contract are expected to perform their respective promises. If one of the parties
breaks his obligation that the contract imposes, there takes place “breach of contract.” In such a
case, a new obligation will arise- a right of action conferred upon party injured by the breach.
Besides this, there are circumstances in which the breach not only gives rise to a cause of action
but will also discharge the injured party from such performance as may still be due from him.
If the contract is unilateral, the only remedy available to the party who suffers by breach shall be
to claim relief for the breach. If the contract is bilateral, the party who suffers by breach by the
other party has two remedies:
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1. He can claim relief for breach, and
2. In certain circumstances, he can be absolved from the further performance of the
contract.
Breach of contract may be-

1. Actual Breach of contract:
(a) At the time when performance is due. Actual breach of contract occurs when at the
time when performance is due, one party fails or refuses to perform his obligation under
the contract.
(b) During the performance of the contract. Actual breach of contract occurs when during
the performance of the contract, one party fails or refuses to perform his obligation
under the contract.
2. Anticipatory breach of contract. Anticipatory breach of contract occurs when a party

repudiates his promise or obligation under the contract before the time for performance arrives.
This may happen in one of the following ways:
Rights of promisee in case of anticipatory breach:

1. He can treat the contract as discharged so that he is absolved from the performance of
his part of the promise.
2. He can immediately take a legal action for breach of contract, i.e. file a suit for damages,
specific performance, or injunction.
The breach of contract by one party, before the time for performance has come, does not, of
itself, put an end to the contract. However, the breach discharges the aggrieved party, if he so
chooses, and entitles him to sue for the breach at once.
If however, he (the promisee or party not in fault) refuses to accept the discharge or repudiation
by the other party, the contract remains in existence, but at the risk of the promisee. The
promisor may subsequently perform it or if an event happens which discharges the contract
legally (e.g. supervening impossibility), the promisor may take advantage of such discharge. In
other words, the promisee looses his right to sue for the damages.
Measure of damages in anticipatory breach of contract:

1. If the contract is ended at once. If the promisee elects to end the contract at once, he can
sue the promisor for the damages. The amount of damages, which he can recover, will be
measured by the difference between,
i. The price prevailing on the date of the breach; and
ii. The contract price.
2. If the contract is kept alive till the date of performance of the contract, then the
measure of damages will be the difference between
i. The price prevailing on the date of the performance; and
ii. The contract price.
REMEDIES FOR BREACH OF CONTRACT

In case of breach of contract, the injured party has one or more of the following remedies:
1. Rescission. When there is breach of a contract by one party, the other party is absolved
from all his obligations under the contract.
2. Damages. When one party breaches a contract, the other party can claim damages under
the contract. Damages are monetary compensation payable to the aggrieved party. The
object of awarding damages for breach of a contract is to put the injured party in the
position in which he would have been had there been performance and not breach.
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3. Quantum meruit. This means ‘as much is merited’. Where the further performance of a
contract is not possible because of some hurdle created by the promisee, the promisor
can claim compensation for the work already done by him.
4. Specific performance: It means the actual carrying out of the promise by the parties to
the contract
When is specific performance allowed?
a. When actual damages are not measurable
b. Where monetary compensation is not adequate remedy.
When is specific performance NOT allowed?

i. Where monetary compensation is an adequate remedy.
ii. Where the contract is not certain.
iii. Where the contract is in its nature revocable.
iv. Where the contract is of a personal nature, e.g., a contract to marry.
v. Where the contract is made by a company in excess of its powers as laid down in its
charter (ultra vires)
vi. Where the performance of a contract involves the performance of a continuous
duty, which the Court cannot supervise.
5. Injunction. Injunction is a mode of securing the specific performance of the negative
terms of the contract.
6. Restitution : When an aggrieved party rescinds a voidable contract, it shall, if it has
received any benefit under the contract from the other party to such contract, restore
such benefit, so far as may be, to the other party from whom he received it (Sec.64).
Likewise, when an agreement is discovered to be void or when a contract becomes void,
the party which has received any benefit under the agreement or contract, shall have to
restore it to the person from whom he received it (Sec.65).
PRINCIPLES TO ASCERTAIN DAMAGES

The foundation of modern law of damages, is to be found in the judgement in the case of Hadley
vs. Baxendale, (1854) 9 Exch.341. Alderson B. observed in this case as follows:
Sec.73 is clearly based on the judgment in the case of Hadley vs. Baxendale. The rules laid down
in this Section are as follows:
i. Ordinary / Natural Damages: these are the damages which are payable fro the loss
arising naturally & directly as a result of breach of contract.
ii. Remote Damages: Damages not arising in the usual course of things but arising in
circumstances peculiar to the special case are not recoverable.
iii. Special Damages: these are the damages which are payable for loss arising due to some
special circumstance. It can be recovered only if it is in contemplation of both the parties
i.e parties have notice of such damage.
iv. Nominal Damages: where party suffers no loss, court may allow nominal damages simply
to establish that party has proved his case & won. It is very small in amount.
v. Exemplary / vindictive / punitive damages: these damages are allowed not to
compensate party but as mean of punishment to defaulting party. Court may award in
following two cases:
§ Breach of contract to marry – loss based on mental injury
§ Wrongful dishonor of cheque – smaller amount, larger the damage.
vi. Liquidated damages & penalty: party may specify the amount of damage at the time of
entering into contract in event of breach of contract.
§ If specified sum represents, fair & genuine pre-estimate damages likely to
result due to breach, it is called liquidated damages
§ But if specified sum is disproportionate to the damages, it is called penalty.
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Types of Damages
Natural Remote Special Liquidated Vindictive /

Penalty
Damages Damages Damages Damages Exemplary
damages
Always Recoverable
Never Recoverable
Recovera Genuine + only in 2 cases:
Recoverable only if in Not genuine
ble Pre- Wrongful
contemplatio + Pre-
estimated dishonor of
n of both the estimated
Recoverable cheque &
parties Not
to the extent breach of
recoverable
estimated marriage
contract
QUANTUM MERUIT
The phrase ‘quantum meruit’ literally means ‘as much as earned’ or ‘as much as is merited’.
When a person has begun work on a contract, and before he has completed it, if the other party
repudiates the contract or some event happens which makes the further performance of the
contract impossible, he can claim remuneration for the work he has already done. The right to
claim quantum meruit does not arise out of a contract as the right to damages does; it is a claim
on the quasi-contractual obligation, which the law implies in the circumstances.
The claim on ‘quantum meruit’ arises;
1. Claim of Quantum Meruit for party NOT in fault:
(a) When one party prevents other from completion of contract
(b) Where contract has become void before completion of contract
(c) Where agreement is discovered to be void.
2. Claim of Quantum Meruit for party at fault:

(a) If divisible contract is partly performed
Ex: A agreed to supply B 500 units of TV set before a particular date. A supplied
only 4oo sets before the date & declared his intention not to deliver remaining
units. B retained 400 units. A, therefore, is entitled to recover the price of 400
sets on quantum meruit.
(b) Indivisible contract is performed completely but badly

Ex: A agreed to paint & decorate B’s house for a lump sum of Rs. 1 Lakh. The
work was done but in a defective manner. The cost of remaking was Rs. 15,000.
Held A could recover from B, Rs. 85,000.
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Topic 11: QUASI CONTRACTS

In some cases the law implies from the circumstances of the case and from the conduct and relationship of
the parties that there is a promise imposing an obligation on one party and conferring a right in favour of
the other even though there is no offer and acceptance, consensus ad idem, and agreement. These cases,
strictly speaking, are not contracts but the law recognizes them as ‘relations resembling those created by
contracts.’ Such relationships are called quasi-contracts, or constructive contracts in English Law and
‘Certain relations resembling those created by contracts’ under Indian Law. Such contracts rest on the
ground of equity that a person shall not be allowed to enrich himself unjustly at the expense of another.
Sec. 68 o 72 deal with the following quasi-contracts:
a. Claim for necessaries supplied to a person incapable of contracting, or on his account (Sec.68). If
a person, incapable of entering into a contact (e.g.. a minor), or anyone whom he is legally bound
to support, is supplied by another with necessaries suited to his condition in life, the person who
has furnished such supplies is entitled to be reimbursed from the property of such incapable
person.
b. Re-imbursement of person paying money due by another in payment of which he is interested
(Sec.69). A person who is interested in the payment of money, which another is bound by law to
pay, and who therefore, pays it, is entitled to be reimbursed by the other.
c. Obligation of person enjoying benefit of a non-gratuitous act (Sec.70). Where a person lawfully
does anything for another person, or delivers anything to him, not intending to do so
gratuitously, and such other person enjoys the benefit thereof, the latter is bound to make
compensation to the former in respect of, or to restore, the thing so done or delivered.
d. Responsibility of finder of goods (Sec.71). A person, who finds goods belonging to another and
takes them into his custody, is subject to the same responsibility as a bailee. In all cases of
bailment the bailee is bound to take as much care of the goods bailed to him, as a man of
ordinary prudence would, under similar circumstances, take of his own goods of the same bulk,
quality and value as the goods bailed.
e. Liability of person to whom money is paid or thing delivered by mistake or under coercion
(Sec.72). A person to whom money has been paid, or anything delivered, by mistake or under
coercion, must repay or return it.
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The Sale Of Goods Act, 1930
SALE OF GOODS ACT, 1930

Topic 1: SALE & AGREEMENT TO SELL
Introduction:
§ The Sale of Goods Act, 1930, governs transfer of property in goods
§ It does not include transfer of immovable property which is governed by
the Transfer of Property Act, 1882.
§ Contract of Sale of Goods is a special contract.
§ Originally, it was part of Indian Contract Act itself in chapter VII (sections
76 to 123). Later these sections in Contract Act were deleted, and separate
Sale of Goods Act was passed in 1930.
§ It came into force on the 1st of July 1930 as, „The Indian Sale of Goods Act,
1930‟. Later in 1963, the word “Indian” was omitted and it became “The Sale of
Goods Act, 1930”.
§ The Sale of Goods Act extends to the whole of India.
§ As per section 3 of the Sale of Goods Act, the principles of the Contract Act
relating to formation of contract, performance of contract, law of damages etc
are also applicable to contract of the sale of goods in so far as they are not
inconsistent with the express provisions of the Sale of Goods Act
Sale of Goods
Transfer of Price Performance of Breach of

Property (Money Consideration) Contract Contract
Immediate Ownership
transfer of in goods not
ownership yet Subject matter Unpaid
Effects of Contract
(Sale) transferred Goods Seller
(Agreement
to sell)
Specific or Right of Lien
Future or Conditions & Right of stoppage in
Ascertained or
Contingent Warranties transit
Unascertained
Right to re-sale
17.1
Contract of Sale:
A contract of sale of goods is a contract

§ Whereby the seller
§ Transfers or Agrees
§ To Transfer the property / ownership
§ In Goods
§ To the Buyer
§ For a price
Essentials of Contract of Sale

ü Two parties. A contract of sale is made between two parties. They are known as ‘seller’ and
‘buyer’. Seller and buyer must be two different persons, because a person cannot buy his own
goods. However, in case of sale by auction, the seller may reserve his right to bid in the auction
and purchase his own goods.[Sec.64(3)]. A husband and wife can also be the two parties in a
contract of sale.
ü Goods. In order to make a contract of sale, there must be some goods. Goods mean every kind of
movable property other than actionable claims and money, i.e. legal tender. It includes shares,
patent rights, copyrights, trademarks, growing crops, grass, fruits, minerals, water, electricity etc.
But immovable property cannot be the subject matter of contract of sale.
ü Price. One of the most essential elements of a contract of sale is ‘price’. ‘Price’ means the money
consideration for a sale of goods.[Sec.2(10) It is a consideration paid or agreed to be paid by a
buyer to the seller. If the property in the goods is voluntarily transferred without any
consideration, it is a gift.
If goods are exchanged for goods, it is barter, and not sale. Similarly, where goods are given in
consideration for the work or labour done or for rent for any valuable consideration other than
money, it is not a sale.
ü Transfer of property. In a contract of sale, the seller must transfer or agree to transfer the general
property (i.e. absolute ownership) in the goods to the buyer.
ü Free consent. A contract of sale must be by the free consent of the parties
ü Sale or agreement to sell. Contract of sale includes both a sale and agreement to sell.
ü Essential elements of a contract. In addition to the above stated essential elements, all the
essentials elements of a valid contract must be simultaneously present in a contract of sale.
SALE Vs. AGREEMENT TO SELL
A ‘contract of sale’ is a generic term and includes the following:

(1) Sale: Where under a contract of sale the property in the goods is transferred from the seller to the
buyer, the contract is called a sale.[Sec.4(3)]. According to Blackstone ‘sale is a transmutation of
property from one man to another in consideration of some price.’
Example: A sells is motorcycle to B for ` 10,000. It is sale since the ownership of motorcycle is transferred
to B.
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(2) Agreement to Sell: Where the transfer of the property in the goods is to take place at a future time or
subject to some conditions thereafter to be fulfilled, the contract is called an agreement to
sell.[Sec.4(3)]
Thus, in case of agreement to sell, the transfer of property in the goods does not takes place immediately
but at a future time. Thus, it is an executory contract.
An agreement to sell becomes a sale when the time elapses or the conditions are fulfilled subject to which
the property in the goods is to be transferred.[Sec.4(4)]
Example: A agreed to buy from B a certain quantity of nitrate of soda. The ship, carrying the nitrate of
soda, was yet to arrive. This is an agreement to sell. In this case, the ownership is to be transferred to A on
the arrival of ship containing the specified goods.
Distinction between Sale and Agreement to Sell

Basis of
Sale Agreement to sell
distinction
1. Nature It is an executed contract. It is an executory contract.
2. Transfer to In sale, the ownership of the goods Transfer of ownership takes place at
ownership is transferred immediately. a future time or on fulfillment of
conditions of agreement to sell.
3. Conveyance A sale implies a contract plus In agreement to sell, there is no
of property conveyance of property. Therefore, conveyance of property. It gives
a buyer gets a right in rem. He can buyer the rights against the seller
enjoy the goods against the whole only.
world.
4. Type of Only the existing and specific goods In case of agreement to sale, the
goods can be the subject matter of sale. goods are usually the future or
contingent. Sometimes, it is
unascertained existing goods.
5. Risk of loss In sale, risk passes with the In this case, the seller is to bear the
ownership. Hence, if goods are risk of loss even though the goods
destroyed, the buyer is to bear the are in possession of the buyer.
loss even though the goods are with
the seller.
6. Rights of In sale, if seller is an unpaid seller, In case of agreement to sell if the
seller he can sue the buyer for price. If buyer makes the breach of contract
goods are in his possession he can the seller can sue the buyer for
also exercise his rights against the damages even though the goods are
goods, i.e.(i) lien, (ii) stoppage of in his possession.
goods on transit, and (iii) resell the
goods.
7. Rights of In a sale, if the seller makes a In an agreement to sell, the buyer
buyer breach of contract, the buyer can can sue the seller for damages on
sue for damages. If the seller resells breach of contract.
the goods, the buyer can even sue
the third party for recovery of the
goods.
8. Insolvency of In case a sale, if the buyer becomes In agreement to sell, the seller is not
the buyer. insolvent, the official bound to deliver the goods unless
17.3
assignee/receiver can claim the the full price of the goods is paid to
goods because the buyer is the him because the ownership of the
owner of goods. The seller is goods is still with the seller.
entitled to ratable dividend for the
price only.
9. Insolvency of If the seller becomes insolvent after If the seller becomes insolvent after
the seller sale, the buyer can claim the goods agreement to sale, the buyer can
from official Assignee/ Receiver. It claim ratable dividend for the price
is because ownership of the goods of the goods if he has already paid.
is with the buyer.
17.4
Topic 2: SALE & OTHER TRANSACTIONS

SALE AND HIRE – PURCHASE AGREEMENT
In a sale, the seller the seller transfers the property in the goods to the buyer for a price. A hire-purchase
agreement is not a sale or actual sale. It is an agreement under which an owner of goods or article gives it
on hire on a promise by the hirer to pay a certain number of installments of specified amount of money as
hire charges and the owner gives the hirer an option either to return the article or to become owner of it
by paying all the installments of hire.
Distinction between a Sale and a Hire-Purchase Agreement

Basis Sale Hire-purchase agreement
1. Transfer of In sale, ownership of goods is In hire-purchase agreement, the
ownership immediately transferred. ownership of goods passes to the hirer
when he pays all the installment of hire.
2. Number of There is only one contract of There are two contracts within this
contracts sale. agreement (i) the contract of bailment
for hire, and (ii) agreement to sell
subject to the payment of installments.
3. Possession of In sale, the possession of goods The possession of goods must pass on to
goods may remain with the seller the hirer.
4. Position of parties. The buyer is in the position of The hirer is in a position of a bailee.
an owner of goods.
5. Termination of A seller or buyer cannot A hirer has an option to terminate the
contract terminate the contract. If contract of hire at any time. But in such
anyone does so, he is liable to a case, the owner can retain the
pay damages. installments paid and claim the arrears
of installments due.
6. Treatment of In sale, the payment made in Payment of installments is treated as
installments installments is treated as hire charges for the use of goods until all
payment towards the price of the installments are paid and option to
goods. buy is exercised by the hirer.
7. Right to regain In sale, once possession of The owner can regain the possession of
possession goods is transferred to the goods until all the installments are paid
buyer, the seller cannot regain or hirer does something against the
it. terms of the agreement.
8. Transfer of title to In sale, the buyer can transfer a The hirer cannot transfer a good title to
third party. good title to the goods to a third the goods held on hire to any third party
party. without the consent of the seller.
9. Written contract The sale may be by words of The hire-purchase contract must be in
mouth or by a written contract. writing and signed by all the parties.
10. Regulating Act This is regulated by the Sale of The Hire Purchase Act, 1972, regulates
Goods Act, 1930. this.
SALE DISTINGUISHED FROM OTHER CONTRACTS
17.5
1. Sale and contract for work and labour. A contract of sale of goods is one whereby the seller transfers
or agrees to transfer the property in the goods to the buyer for a price. But a contract of work and labour
is one whereby one party agrees to render service or exercise skill on the material supplied by another
party. Thus, the essence of the contract of work and labour is the exercise of skill or rendering of
services by a party on material supplied by another. For instance, when cards and envelopes are
supplied to a printer for printing invitation cards of a marriage ceremony, it is a contract of work and
labour and not a contract of sale. But, if the substance of the contract is the production of something to
be sold, then it is a contract of sale. For instance, making of false teeth is a contract of sale.[Lee v.Griffin
AIR (1939) Nag.19] similarly, the sale of photograph taken by a photographer is a contract of
sale.[Newman v.Lipman, (1951) 1 KB 333] However, asking a painter to paint a picture is not a contract
of sale because it involves the exercise of skill.[Robinson v.Graves, (1935) 1 KB 579]
2. Sale and bailment. A sale and bailment is different on the following grounds.
(i) Ownership. In sale, the goods are transferred to the buyer whereas no change in ownership takes
place in case of bailment. There is only a transfer of possession of goods from a bailor to a bailee.
(ii) Use of goods. A buyer may use the goods as he likes but a bailee can use goods only if the terms of
bailment allow and in accordance with the terms of bailment.
(iii) Return in goods. In sale, the buyer does not return goods to the seller. But in case of bailment, bailee
is bound to return the goods to the bailor or dispose of according to his directions when purpose of
bailment is accomplished.
(iv) Price. A price is paid in money as consideration for a sale but a bailment may be without any
consideration, i.e. gratuitous bailment.
3. Sale and barter or exchange. Sale means transfer of property from one person to another for a price
paid or to be paid in money. Barter or exchange is a contract where the consideration for the transfer of
the property from one person to another consists of goods.
4. Sale and gift. Sale mean transfer of property in goods from one person to another for a price paid or to
be paid in money. On the other hand, where one person transfers property in the goods to another
without any price or consideration, the transaction is called a gift.
5. Sale and mortgage or pledge. Sale means the transfer of general property in the goods from one
person to another for price paid or to be paid in money. Mortgage of goods means the transfer of an
interest in the goods from the mortgagor to the mortgagee in order to secure a debt. Mortgagee or
pledgee gets only special property in the goods.
17.6
Topic 3: SUBJECT MATTER OF SALE & PRICE
Definition
According to section 2(7) of this act, Goods means very kind of
§ Movable property
§ Other than actionable claim and money; and
§ Includes stock and shares,
§ Growing crops, grass and things
§ Attached to or forming part of the land
§ Which are agreed to be severed
§ Before sale or under the contract of sale
Thus, every kind of movable property such as (i) shares, (ii) growing crops, (iii) grass, (iv)
things attached to or forming part of the land which are agreed to be severed before sale
have expressly been included in the term goods.
Moreover, various courts have held that following are also covered under the definition of goods:
(i) Metal and stone are goods even in unqualified state
(ii) Interest of a partner in a partnership firm is goods.
(iii) Embellishments such as vegetables, fruits etc. are included in the term goods.
(iv) Fixtures and buildings when sold as materials and seller agrees to sever them before sale.
(v) Shares before allotment are also goods
(vi) Debentures after allotment are goods.
(vii) Old coins or old notes that have ceased to be legal tender and have become objects of curiosity are
included in the goods.
(viii) Foreign currency is also goods.
(ix) Goodwill, copyright, patents are goods.
(x) Water, gas and electricity are goods.
(xi) A court decree is good.
Things Not Included in the Goods

(i) Actionable claims, i.e. a claim or right that can be enforced through the court. For instance, a lottery
ticket is a goods but a right to claim prize, if successful is an actionable claim.
(ii) Money, i.e. current money or currency notes and emblems of money constituting ‘legal tender’.
Besides the above two, the courts have held that debentures before allotment, services, immovable
property are not covered in the goods. Goods served or sold in a hotel or restaurant or supplied by Airline
Company to its residents or customers or passengers, is in the nature of service and it is, therefore, not a
sale of goods.
17.7
CLASSIFICATION OF GOODS.
Sale of Goods
Existing Goods Future goods Contingent Goods
Specific Ascertained Unascertained

Goods Goods Goods
1. Existing goods. Goods owned or possessed by the seller at time of contract or sale are
known as existing goods.[Sec.6(1)] Sale or actual sale may be affected only of existing goods.
The existing goods may be further classified into three types:
(i) Specific goods. Specific goods means the goods identified and agreed upon at the time a
contract of sale made.[Sec.2(14)]. In other words, the goods whose individuality has been
found out at the time of making the contract are called as specific goods.
Example: out of four cars in different colors displayed in a show room, A selects white car and
agrees to buy it. The white car is specific existing goods.
(ii) Unascertained or generic goods. The goods, which are not identified and agreed upon at
the time of making of contract of sale, are known as unascertained goods. Such goods are
indicated or defined by description at the time of contract of sale.
Example: A had ten horses. He agreed to sell one horse to B. in this case, the contract is for
sale of unascertained goods as the horse has not been identified at the time of contract of sale.
(iii) Ascertained goods. Generally, the term specific goods and ascertained goods are used for the
same kind of goods. But, more specifically, the term ascertained goods is used to denote the
goods, which is ascertained after formation of contract of sale.
Example: A had 100 bales of cotton lying in his godown. He agreed to sell 50 bales of cotton to
B, who agreed to purchase the same. After making of the contract, the cotton bales to be
delivered to B was identified & kept separate by A, and B agreed to take delivery of the same. In
this case, the contract is for sale of ascertained goods, as the cotton bales to be sold are
identified & agreed after the formation of contract. It may be noted that before ascertainment of
the goods, the contract was or sale of unascertained goods.
2. Future goods. Future goods means the goods to be manufactured or produced or

acquired by the seller after making of the contract of sale.[Sec.2 (6)] where a contract of sale
of futuregoods.
Contingent goodsContingent
is made, goods agreement
it is anare to acquisition
the goods, the sell’ & notof awhich
‘sale’depends
[Sec.6 (3)]
upon Itthe
is happening
because the
property in the goods can be transferred only at a future
or non-happening of a contingency i.e. contingent event.[Sec.6(2)] date when the goods shall be manufactured
or acquired.
Example: P contract to sell 50 pieces of particular article provided the ship which is bringing them
Example:
reaches A, a safely.
the port manufacturer
This is anofagreement
table fans,forcontracted
the sale ofto sell 100 goods.
contingent fans to B at a certain rate. B
agreed to purchase the fan. However, the fans were yet to be manufactured by A. This is an
agreement to sell & not sale.
17.8
Effect of Destruction of Specific Good
The effect of destruction of specific good on a contract of sale is discussed as under in two different
conditions:
1. Goods perishing before making contract. A contract of sale of goods is void if-
(i) The contract is for the sale of some specific goods,
(ii) The goods have perished, and
(iii) The seller was having no knowledge of the destruction of the goods at the time of contract of sale.
(Sec.7)
Where the specific goods become so damaged as they are no longer to answer to their description in the
contract, the contract of sale also becomes void.(Sec.7) Similarly, when the specific goods are lost due to
theft or goods have lost their commercial value, before contract is made, the contract becomes void.
Example: A agreed to sell to B 100 bags of cement lying in his godown. In fact, that cement has
already been destroyed by leakage of water and has been converted into stone. But this fact was
not known to the seller. In this case, the contract is void.
2.Goods perishing before sale but after agreement to sell. An agreement to sell goods becomes void if
(i) The agreement to sell is for specific goods,
(ii) The goods perish subsequent to the agreement to sell the goods is made but before the risk passes to
the buyer, and
(iii) Goods perish without any fault on the part of the seller or buyer.(Sec.8)
It should also be noted that where the specific goods become so damaged as they are no longer to answer
their description in the contract, the agreement to sell also becomes void.(Sec.8.
Example: A delivered a horse to B for trial for 8 days. It was agreed that the sale would be
completed if the horse was found suitable for B’s purpose. The horse died on the third day
without any fault of either party. It was held that the contract was void and A could not recover
the price from B.
Exceptions: Section 7 and 8 do no apply in the following two cases;

(i) Where the seller has knowledge of the destruction of the goods.
(ii) Where the contract of sale is not for specific goods but for generic or unascertained goods.
Example: A agreed to sell to B 10 bales of Egyptian Cotton out of 100 bales lying in his godown. The goods
were already destroyed by fire before the contract of sale. But both A and B did not know about the fire. In
this case, the contract is not void as it was not for the sale of specific goods, but for sale of unascertained
goods. And thus, A is liable to supply 10 bales to B, or pay him damages for the breach of contract.
Document of Title to Goods
According to Section 2 (4) documents of title to goods includes a bill of lading, dock-warrant, warehouse
keeper’s certificate, document used in the ordinary course of business as proof of the possession or
control of goods, or authorizing or purporting to authorize, either by endorsement or by delivery, the
possessor of the document to transfer or receive goods there by represented.
Essentials. The essential features of document of title to goods are as under:

(i) A document of title to goods symbolizes the goods; therefore, it can become subject matter of
contract of sale.
17.9
(ii) It authorizes its possessor to receive or to transfer the goods represented by it.
(iii) The possessor of the documents of title to the goods can effect actual sale as well as make an
agreement to sell.
(iv) A transfer of such document of title operates a symbolic delivery of goods.
(v) A transfer of such document operates as transfer of the property in the goods to the transferee.
Following are the usual types of documents of title to goods.

1. Bill of lading. It is a document if title to the goods, which entitles the possessor to receive the goods,
referred in it from the captain of the ship.
2. Dock-warrant. It entitles the possessor of it to receive the goods represented by it from the dock-
owner.
3. Warehouse keeper’s or wharfinger’s certificate. It entitles the possessor of it to recover the goods
described in it from the warehouse keeper or wharfinger.
4. Railways receipt. A R/R is a document, the possessor of which is entitled to receive goods described
in it from the railway company issuing it.
5. Delivery warrants or order. It is a document which contains an order by the owner of the goods to a
person having possession of goods on his behalf, to deliver the goods specified in it to a person named
therein or to the bearer of it in case of warrant.
PRICE OF THE GOODS

Price means the money consideration for a sale of goods (Sec.2(10). Money means legal tender money in
circulation. Old and rare coins are not included in the definition of money.
How is the price of the goods ascertained? Section 9 provides 4 modes of ascertainment of price. The
price in a contract of sale may be -
a. Fixed by the contract
b. May be left to be fixed in an agreed manner (such as market price or fixation of price by a third
party).
c. May be determined by the course of dealings between parties. (Such as manufacturing cost,
market price ).
d. A reasonable price (if price cannot be fixed in accordance with the above provisions)
Sec 9(2): What is a reasonable price is a question of fact dependent on the circumstances of each
particular case.
Consequence of Non-Fixation of Price by Third Party (section 10)

§ The parties may agree to sell and buy goods on the terms that the price is to be fixed by the
valuation of a third party. If such third party fails to make the valuation the contract becomes void.
§ However, if the buyer has received and appropriated the goods or any part thereof, he becomes
bound to pay reasonable price.
§ If the third party is prevented from making the valuation by the fault of the seller or the buyer, the
innocent party may maintain suit for damages against the party in fault.
Example: A agreed to sell his 100 bags of rice to B at a price to be fixed by C. but C failed to fix the
price. In this case, the agreement becomes void on C’s failure to fix the price.
Example: A agreed to sell his 100 bags of rice to B at a price to be fixed by C. C is willing to value &
fix the price. But A by his wrongful act, prevent C from making the valuation. In this case, B can
claim damages from A.
17.10
Topic 4: CONDITIONS & WARRANTIES
Stipulation
Conditions Warranties
As to time Essential to the main Collateral to the main
purpose of the contract purpose of the contract
Any other matter Implied Conditions as to: Implied Warranties as to:

Payment of price - title - quiet possession of
(time of delivery)
Are not deemed to be - description goods
Depends upon
essence of contract - sample - freedom from charge or
terms of contract
- sample as well as description encumbrance
- quality or fitness - quality or fitness
- merchantable quality - disclose dangerous
- wholesomeness nature
STIPULATIONS AS TO TIME
In a contract of sale of goods, the stipulations as to time may be related to the following:
1) Stipulations as to time of payment. Stipulations as to time are not deemed to be the essence of a
contract of sale unless a different intention appears from the terms of contract.(Sec.11)
2) Stipulations as to time of any other matter. Except the stipulations as to time of payment,
whether any other stipulation as to time is of the essence of the contract or not depends on the
terms of the contract.(Sec.11)
Therefore, the parties may make the stipulation as to time of delivery of goods. In such case, if the seller
fails to deliver the goods at the time fixed, there is a breach of condition of contract of sale. Consequently,
the buyer may refuse to take delivery and treat the contract as repudiated.
Conditions & Warranties
1. Condition: A condition is a stipulation essential to the main purpose of the contract, the breach of
which gives rise to a right to treat the contract as repudiated.[Sec.12(2)]
Thus, stipulation, which forms the foundation of contract of sale, is said to be the condition of the
contract. It is so vital to the contract the non-fulfillment of it defeats the very purpose for which the
contract was made. When a party fails to perform such stipulation, the other party gets a right to
repudiate the contract and reject the goods.
Example: A consulted B. a car dealer & told him that he wanted to purchase a car suitable for
touring purpose. B, suggested that a “Bugatti” car would be fit for the purpose. Relying upon this
statement, A bought a Bugatti car. Later on, the car turned out to be unfit for touring purpose. A
wanted to reject the car & demanded the refund. It was held A was entitled to reject the car & have
the refund of price. In this case, the suitability of the car, for touring purpose, was a condition of
the contract. It was so important that the non-fulfillment defected the very purpose for which A
bought the car. [Baldrey V. Marshall]
17.11
2. Warranty: A warranty is a stipulation collateral to the main purpose of the contract, the breach of
which gives rise to a claim for damages but not to a right to reject the goods and treat the contract as
repudiated.(Sec.12(3)]
Thus, a warranty is that stipulation which is not essential to the main purpose of the contract.
Consequently, the aggrieved party can claim only damages arising from breach of such stipulation. He
cannot reject the goods.
Example: A goes to B, a car dealer, and says, “I want a good car” The car dealer shows him a car and
says,” it can give you a mileage of 20 kms/litre” .A buys the car. Later on, A finds that the car is
giving a mileage of 10 kms/litre only. There is a breach of warranty, because the stipulation made
by the seller was only collateral one.
When a condition can be treated as a warranty:

1. Voluntary waiver of a condition: sec 13(1) where a contract of sale is subject to a condition to be
fulfilled by the seller, the buyer may -
§ Waive the condition, for example a buyer may accept defective goods or accept goods beyond
stipulated time.
§ Elect to treat a breach of condition as a breach of warranty, i.e. instead of repudiating the
contract he may accept performance and sue for damages, if he has suffered any. - Sec. 13(1).
§ Once a buyer decides to waive, he cannot afterwards insist on its fulfilment.
2. Compulsory waiver of a condition: sec 13(2) Where a contract of sale is not severable (i.e. indivisible)
and the buyer has accepted the goods or a part thereof, he cannot repudiate the contract but can only sue
for damages. In such a case, the breach of condition can only be treated as a breach of warranty, unless
there is a contract to the contrary. -Sec.13 (2).
Exception. If the fulfillment of any condition of the contract of sale is excused by law by reason of
impossibility or otherwise, the condition cannot be treated as warranty.[Sec.13(3)].
Distinction between condition and Warranty

Basis of Condition Warranty
distinction
Nature A condition is stipulation that is A warranty is a stipulation that is
essential to the main purpose of the collateral to the main purpose of
contract. the contract.
Significance It is essential to the very purpose of the It is so essential that a failure to
contract that its non-performance may perform it cannot be considered as
be considered as failure to perform the failure to perform the contract.
contract.
Consequence The aggrieved party may treat the The aggrieved party cannot
of breach contract as repudiated. repudiate the contract but can
claim damages.
Treatment A breach of condition may be treated as A breach of warranty cannot be
breach of warranty. treated as breach of condition.
Types of Conditions And Warranties

In a contract of sale, conditions and warranties may be of two types:
1) Express conditions and warranties. Express conditions and warranties are those, which are
expressly agreed upon by the parties and provided in the contract of sale.
2) Implied conditions and warranties. The implied conditions and warranties have been provided
in this Act in Sections 14 to 17. These implied conditions and warranties apply to every contract of
17.12
sale unless they are inconsistent with any express condition and warranty agreed to by the
parties.[Sec.16(4)]
IMPLIED CONDITIONS
Following are the implied conditions, incorporated in the Sale of Goods Act:
1. Condition as to title. In a contract of sale, there is an implied condition on the part of the seller that-
(i) In case of sale, he has a right to sell the goods, and
(ii) In case of agreement to sell, he will have a right to sell the goods at the time when the property is
to pass.{Sec.14(a)]
Example: A bought a second hand car from B, a car dealer. After a few months, the car was taken
by the police as it was stolen one and A was forced to return the car to the true owner. It was held
that A could recover the full price from B. In this case, there was breach of condition as to title as B
had no right to sell the car. [Rowland V. Divall]
2. Condition as to description. Where there is a contract for sale of goods by description of goods,
implied conditions exists that goods shall correspond to description. The description may include
physical characteristics, class or grade, trademarks, brand name label, model, mode of packing etc. of
the goods.
Example: A purchased from B a car, which he had never seen. B described the car as ‘brand new’.
However, on delivery, A found that the car was used & repainted and returned the car to B. it was
held that the sale was by description and the car did not correspond to the description & A was
entitled to reject the car. [Varley V. Whipp]
3. Condition as to sample. A contract of sale is a contract for sale by sample where there is a term in the
contract, express or implied, to that effect.[Sec.17((1)]
Following are the three implied conditions in the case of a contract for sale by sample:
(a) The bulk shall correspond with the sample in quality.
(b) The buyer shall have a reasonable opportunity of comparing the bulk with the sample.
(c) The goods shall be free from any defect, which would not be apparent on reasonable examination
of the sample. If the defect is visible and can be discovered on inspection, the seller cannot be held
liable for the same.
4. Condition as to sample as well as description. Where the goods are sold by sample as well as by
description, the implied condition is that the goods must correspond with both.(Sec.150) If not, the
buyer can reject the goods.
Example: A agreed to sell B some cotton which was described as ‘Long Staple Cotton’. The sample
was also shown to B. A delivered the cotton which was of the quality of sample. But subsequently,
B found that the cotton was not ‘Long Staple Cotton’ but only ‘Western Madras Cotton’. It was held
that the buyer could reject the goods (i.e., cotton) as they do not correspond with the description
given by the seller, though they correspond with the sample. [Azemar v. Carella (1867) 2 CP 431]
5. Condition as to quality or fitness. General rule is that there is no implied condition as to quality or
fitness for any particular purpose of goods supplied. Therefore, the buyer himself must ensure that
the goods suit his purpose before he buys.
17.13
But there is an implied condition in a contract of sale that the goods shall be reasonably fit for the
buyer’s purpose provided following conditions are satisfied:
(a) The buyer expressly or by implication makes known to the seller the particular purpose for which
the goods are required.
(b) The buyer relies on the seller’s skill or judgment.
(c) The seller deals in the goods in his usual course of business. [Sec.16(1)]
Example: A bought a set of false teeth from B, a dentist. But the set was not fit for A’s mouth. A
rejected the set of teeth and claimed the refund of price. It was held that A was entitled to do so as
the only purpose for which he wanted the set of teeth was not fulfilled.
But the condition of fitness or quality does not apply in the following specific cases, even if the buyer
has made known to the seller the purpose for which he is buying:
(i) Where the goods sold is a specified article under its patent or other trade mark.(Proviso to
Sec.16(1)] This exception is applicable only when the buyer does not rely on the seller’s skill and
judgment.
Example: an hotelier orders “Sujeet” juicer and mixer (patent product) for his business. The juicer
and mixer supplied was found to be unsuitable for commercial use. The buyer has no cause of
action against the seller, since he purchased the juicer by its patent name.
(ii) Where the product is used only for a particular purpose but buyer fails to disclose his abnormal
circumstances.
(iii) Where the goods can be used for more than one purpose and buyer fails to make known to the
seller the purpose of his buying, the seller is not be liable.
6. Condition as to merchantable quality. Where goods are bought by description from a seller who
deals in goods of that description (whether he is the manufacturer or producer or not), there is an
implied condition that the goods shall be of merchantable quality.[Sec.16(2)]The expression
‘Merchantable quality of goods’ means the goods fit in terms of their quality and condition for the
purpose for which they are bought by prudent persons, or the goods which are marketable at their full
value.
Example : A & Co., a firm of merchants, contracted to buy from B, a London Merchant, a number of
bales of ‘Manila Hemp’. This was to arrive from Singapore. The hemp arrived wetted by sea water,
and it was so much damaged that it was not possible to sell it in the market as ‘Manila Hemp’. It
was held that the goods (i.e., hemp) were not of merchantable quality. In this case, the hemp was
not sealable under the description of ‘Manila Hemp’.
Example : A, a shopkeeper, sold a radio set to B, who purchased it in good faith. The set had some
manufacturing defect and it did not work after a few days in spite of repairs. In this case, the radio
was not merchantable as it was not fit for ordinary purpose. Thus, the buyer had the right to reject
the radio and to have the refund of the price.
7. Condition as to wholesomeness: This condition is part of the condition as to merchantability. It is

applicable in cases of eatables, i.e., foodstuffs and other goods which are used for human consumption.
As per this condition, goods sold must be fit for human consumption.
Example : A purchased some milk from B, a milk dealer. The milk contained some typhoid germs.
After consuming the milk, A’s wife got infection and died. It was held that A was entitled to
recover damages from the milk dealer. In this case, the milk was not wholesome as it was not pure
and fit for human consumption.
IMPLIED WARRANTIES
17.14
Following are the implied warranties in every contract of sale of goods:
1. Warranty as to quiet possession of goods. In every contract of sale, unless there are intentions to
the contrary, there is an implied warranty that the buyer shall have and enjoy quiet possession of the
goods.[Se.14(b)]
Example: A purchased a second hand typewriter from B. A used it for sometime and also spent
some money on its repairs. The typewriter turned out to be stolen one and as such A had to return
it to the true owner. It was held that A could recover damages from B amounting to the price paid
and the cost of repair.
2. Warranty as to freedom from charge or encumbrance. In a contract of sale, there is also an implied
warranty that the goods shall be free from any charge or encumbrance in favour of any third party.
[Sec.14(c)]
Example: A obtained a loan of Rs. 200 from B and hypothecated his cycle with B as security for the
repayment of the loan. Subsequently, A sold the same cycle to C, an innocent buyer, who had no
knowledge about B’s charge on the cycle. In this case, if C’s possession is disturbed by B who is
having charge on the cycle, then he (C) can claim damages from A for any loss which he may suffer
due to such charge.
3. Warranty as to quality or fitness by usage of trade. In every contract of sale, an implied warranty
as to quality or fitness for a particular purpose may be annexed by the usage of trade.[Sec.16(3)]
4. Warranty to disclose dangerous nature of goods. Many Courts have held that there is a warranty
from the seller to disclose dangerous nature of the goods.
DOCTRINE OF CAVEAT EMPTOR
Doctrine of Caveat Emptor:

§ It is buyer’s duty to examine goods thoroughly.
§ The buyer should ensure at the time of purchase that the goods conform to his
requirements.
§ If the goods turn out to be defective, buyer cannot hold the seller responsible.
§ Caveat emptor means ‘buyers beware’ or buyer take care.
Exceptions
The age-old doctrine of caveat emptor is subject to express and implied conditions and warranties. As per
the provisions of Indian law, following are the exception to the doctrine of caveat emptor.
1. Fitness as to quality or use. Sec. 16(1)
§ Where the buyer, expressly or by implication, makes known to the seller the particular purpose for
which the goods are required,
§ so as to show that the buyer relies on the seller’s skill, or judgement, and
§ the goods are of a description which it is in the course of the seller’s business to supply (whether
he is the manufacturer or not, there is an implied condition that the goods shall be reasonably fit for
such purpose )
2. Sale of goods by description. Sec. 16(2)

Where there is a sale of goods by description, there is an implied condition that the goods are
merchantable that is, fit for particular purpose.
3. Trade usage. Sec 16 (3) : An implied condition of fitness may be annexed to a contract of sale by
usage of trade.
17.15
Example: A sold certain drugs by auction, to B. In case of sale by auction, it was a trade usage to
declare any ‘sea damage’ in the goods. In this case, the goods were sold without such declaration.
Subsequently, the goods were found to be sea damaged. It was held that the sale without such
declaration meant that the goods were free from any sea damage. And thus, B could reject for
drugs and claim the refund of the price.
4. Where the seller is guilty of fraud: where the seller makes a false representation and buyer relies on
that representation, the doctrine of caveat emptor will not apply. In such a case the buyer will be
entitled to the goods according to that representation.
5. Where seller actively conceals a defect: Where the seller actively conceals a defect in the goods so
that the same could not be discovered on a reasonable examination, the doctrine of caveat emptor will
not apply. Such a contract will be voidable.
6. Sale by sample: When goods are purchased by sample, the bulk must correspond with the sample and
the buyer must have reasonable opportunity of inspecting the goods.
17.16
Topic 5: TRANSFER OF PROPERTY
TRANSFER OF PROPERTY =
PASSING OF PROPERTY =
TRANSFER OF OWNERSHIP
Passing of property in the goods implies passing of absolute legal ownership of the goods under a contract
of sale from the seller to the buyer for a price. On passing of the property, the goods sold ceases to be the
property of the seller and vests in the buyer.
It should be noted that passing of property in the goods is not similar to passing of possession of goods. A
person may be in possession of goods but may not be the owner of the goods. For instance, an agent or
servant, or a hire purchaser may be in possession of the goods but cannot be the owner of the goods.
Similarly, a person may be the owner of the goods but he may not be in possession of the goods. Thus, the
ownership of property in the goods may pass with or without transfer of possession.
Significance of Transfer Of Property In The Goods

In a contract of sale of goods, the time of transfer of property is very significant for the following reasons.
1. Risk follows ownership. It is the general rule of law that ‘risk follows ownership’. Therefore, the risk
in the goods remains with the seller until the property in the goods is transferred to the buyer subject
to a contract to the contrary. When the property in the goods is transferred to the buyer, the goods are
at the buyer’s risk whether delivery has been made or not. But if the delivery has been delayed
through the fault of either of the buyer or seller, the goods are at the risk of the party in fault.
2. Action against third parties. A general rule of law is that the owner alone can exercise proprietary
right. When the goods are damaged by the fault of any other person, it is only the owner of the goods
who is entitled to take action against such person.
3. Suit for price. A seller is entitled to sue for the price of goods sold against the buyer only when the
property in the goods has passed to the buyer.
4. Insolvency of the buyer or seller. Time of transfer of property also decides the right of official
Assignee/ Receiver to claim the possession of the goods. If the property in the goods sold has passed
to the buyer before the date of order of his insolvency, the official Receiver/Assignee will be entitled to
claim the possession of goods from the seller. If the seller has become insolvent after passing of
property in the goods sold to the buyer, the Official Receiver/Assignee cannot detain the goods.
Rules Relating To Transfer Of Property

Rules relating to transfer of property may be discussed under the following heads:
I. Transfer of property in Specific Goods / Ascertained goods. ‘Specific goods’ means good identified and
agreed upon at the time of contract of sale is made.[Sec.2 (14)] Ascertained goods’ means goods
ascertained by identifying out of the lot of specific goods.
The general rule is that the property in the specific or ascertained goods is transferred to the buyer at
such time as the parties intend it to be transferred.[Sec.19(1)]For the purpose of ascertaining the
intention of the parties regard shall be had to
(i) the terms of the contract,
(ii) the conduct of the parties, and
(iii) the circumstances of the case.[Sec.19(2)]
17.17
Rules for ascertaining intention. Unless different intention appears, the following are the rules for
ascertaining the intention of the parties as to the time at which the property in the goods is to pass to the
buyer.
1. Where specific goods are in delivered state. Where there is an unconditional contract for the sale of
specific goods in a delivered state, the property in the goods passes to the buyer when the contract is
made.[Sec.20].
2. Where specific goods to be put into deliverable state. Where there is a contract for the sale of
specific goods but the goods are not in delivered state at the time of contract of sale, the property in
such goods passes when the goods are bought to a deliverable state and buyer has a notice of
it.(Sec.21)
3. When something is to be done for ascertaining the price. Where there is a contract for the sale of
specific goods in a delivered state, but the seller is bound to weigh, measure, test or do some other
act or thing with reference to the goods for the purpose of ascertaining the price. In such a case, the
property does not pass until such act or thing is done and the buyer has notice thereof.(Sec.22)
Example: A sold to B some quantity of oil lying in cistern. As per the terms of contract, A was
required to fill the oil in drums and the drums were to be taken away by B. A filled some of the
drums in B’s presence. Before the remainder could be filled, a fire broke out and the whole
quantity if oil was destroyed. It was held that the buyer must bear the loss of oil which was filled
in drums, and the seller must bear the loss of remaining unfilled drums. [Rugg v. Minett (1809) 11
East 210]
Example: A sold some quantity of wheat to B at the rate of Rs. 10 per kg. However, A had to weigh
the wheat in order to know the price of the entire quantity of wheat sold to B. In this case, the
ownership of the wheat shall transfer to B as soon as A weighs the wheat and B comes to know
about the same.
II. Transfer of Property in Unascertained or Future Goods: Unascertained goods means goods which
has not been identified and agreed upon at the time the contract of sale is made. Future goods means the
goods to be manufactured or produced or acquired by the seller after making the contract of
sale.[Sec.2(6)]
Property in the unascertained or future goods sold by description passes to the buyer when following
steps are taken or conditions are fulfilled:
1. The goods must be appropriated to the contract either by the buyer or by the seller with the consent
of the other party.
2. The goods appropriated must be of the same description as given in the contract.
3. The appropriated goods must be in a deliverable state.
4. The appropriation must be unconditional.[Sec.23(1)]
Appropriation of goods may be done

a) by separating the goods sold from other goods, or
b) by putting the quantity of goods sold in suitable receptacles.
Ascertainment of Goods: It is a process by which the goods to be delivered under the contract are
identified and set apart. It is unilateral act of the seller alone to identify and set apart the goods.
Appropriation of Goods: It is a process by which the goods to be delivered under the contract are
identified and set apart with the mutual consent of the seller & buyer. It is a bilateral act of the seller and
17.18
the buyer to identify and set apart the goods. The appropriation may be done either by the seller with
the consent of the buyer or by the buyer with the consent of the seller.
Deemed appropriation of goods:. Where the seller delivers the goods to any of the following for the
purpose of transmission to the buyer without reserving the right of disposal he is deemed to have
unconditionally appropriated the goods to the contract:
1. to the buyer,
2. To a carrier or
3. to a Bailee.
Example: A agreed to sell to B the oil to be produced by him. The oil was filled by A into the bottles
supplied by B. It is an effective appropriation and the ownership passes to the buyer when the oil
is filled into the bottles. In this case, the buyer gave his consent to the appropriation by supplying
the bottles.
Example: A sold to B, 20 bags of sugar out of larger quantity. Four bags of sugar were filled and
taken away by B. Later on, A filled 16 more bags and informed B. B promised to take the delivery
of those 16 filled bags also. Before B could take the delivery, the goods were lost. It was held, that
at the time of loss, the ownership has passed to the buyer. Therefore, he should suffer the loss. In
this case, the appropriation is unconditional and mutual.
The seller appropriated by putting the sugar into bags, and the buyer gave his consent by promise
to take the deliver
III. Transfer of Property in the Goods Sent on Approval: When the goods are sent ‘ on approval’ or ‘on
term’ or on other similar terms, the property in the goods passes to buyer if any of the following
situations emerges:
1. When the buyer signifies his approval or acceptance to the seller, the property in the goods passes to
the buyer at the time of approval.[Sec.24 (a)]
2. When a buyer having goods on approval, adopts the goods by his acts, the property in the goods
passes to the buyer when he adopts.[Sec.24(a)]
3. When buyer retains the goods without signifying approval. In such a case, if a time has been fixed
for the return of the goods, the property in the goods passes to the buyer on expiration of such time.
If no time has been fixed, on the expiration of the reasonable time.[Sc.24(b)]
4. When the buyer makes the return of the goods impossible by his act or default, the property in the
goods passes when he does the act or makes the default.
IV. Transfer of Property when Right of disposal is reserved: Sometimes a seller appropriates the goods to
a contract but at the same time reserve the right of disposal of the goods until the buyer fulfills certain
conditions. The seller can do so if the terms of the contract or appropriation of goods allows him.
If the seller reserves a right of disposal of the goods appropriated, the property in the goods does not
pass to the buyer until the conditions imposed by the seller are fulfilled, even if the goods have been
delivered to the buyer, or to a carrier or to other bailee for the purpose of transmission to the
buyer.[Sec.25(1)]
Deemed right of disposal:

In following two cases right of disposal is deemed to be reserved:
1. When seller make document of title in his or his agent’s name
2. When seller sends BOE along with document of title.
17.19
Example: A agreed to sell certain goods to B. one of the conditions of contract of sale was that the
buyer must pay the price before the delivery of the goods. In this case, by making delivery of the
goods conditional upon payment of price, the seller has reserved the right of disposal. The
ownership of the goods will not be transferred to B unless this condition is fulfilled.
SPECIAL CONTRACTS
CIF Contracts
The term ‘C.I.F.’ means ‘cost’ insurance and freight’. And a ‘C.I.F.’ contract is a contract for the sale of goods
at a price which includes the cost of goods, insurance and freight charges. Thus, in such contracts, the
charges of insurance during transit and the freight charges are paid by the in such contracts, the charges of
insurance during transit and the freight charges are paid by the buyer.
In case of C.I. F. contracts, the ownership of the goods is transferred to the buyer when the shipping
documents are delivered to the buyer and he receives them by paying price of the goods. Thus, on buyer’s
refusal to take the shipping documents, the seller can claim the damages for the breach of contract, and
not the price of the goods
F.O.B Contracts
The term FOB means “free on board”. AFOB contract is a contract for sale of goods where, for the purpose
of transmission to the buyer, the seller has to put the goods on board a ship at his own expense. It may be
noted that the seller has to bear only the expenses of loading the goods. On the goods are loaded on the
board the ship, they are at the buyer’s risk, and he is responsible for freight, insurance and subsequent
expenses.
The ownership of the goods is transferred to the buyer as soon as the goods are boarded on the ship.
Ex – Ship Contracts
An ‘ex-ship’ contract is a contract for the sale of goods in which the seller has to deliver the goods to the
buyer at the port of destination. The freight charges are to be borne by the seller. It may be noted that
during the voyage (sea route), the goods are at the risk of the seller. Thus, to protect his own interest, the
seller may insure the goods, if he so wishes, at his own expenses
In case of ex-ship contracts, the ownership of the goods is transferred to the buyer only when the goods
are actually delivered at the port of destination to enable the buyer to take their delivery.
17.20
Transfer of property or ownership
Specific or Right of
Unascertained Sale on
Ascertained disposal is
or future goods Approval
goods reserved
Sec.19(1): General Rule Sec 23(1) Sec 25(1)

At such time as the parties Property passes Property passes to
intend it to be transferred. when goods are the buyer when the
Depending upon conduct of ascertained & conditions imposed
the parties, circumstances of appropriated to by the seller are
the case, terms of the contract contract fulfilled
Sec 24
following rules shall
intention appears
Unless different
Property passes when:

- Buyer accepts the goods
apply
- Buyer adopts the transaction

- Buyers fails to return goods within
fixed or reasonable time
Right of disposal is presumed to be

Sec 22 reserved if:
Sec 21 - Sec 25(2): Document of title is in Seller’s
Sec 20 Specific goods in
Specific goods name or his agent’s name
Specific goods deliverable state are
to be put in - Sec 25(3): If seller sends BOE along with
in deliverable to be weighed or
deliverable to documents of tile to the buyer
state measured to
state
ascertain price
Property Property passes

passes when when the goods Property passes
the contract is are bought to a when act or thing
made deliverable state is done and the
+ buyer has a buyer has notice
notice of it
17.21
Topic 6: TRANSFER OF TITLE BY NON-OWNERS
The Latin maxim ‘nemo dat quad non habet’ conveys the general rule of law as to transfer of title. It means
that ‘nobody can give what he himself has not got’. When this maxim is applied to the sale of goods, it
means that no seller can transfer a better title than he himself has. Therefore, a thief cannot make any
person the owner of articles stolen by him even though the buyer pays full price. The general rule is that
only an owner or his authorized agent can transfer a good title to the buyer.
Exceptions:
1. Sale by a person under the implied authority of the owner or transfer by estoppel. Sometimes the
owner of the goods by his act or conduct or omission causes the buyer to believe that the seller of the
goods has the authority to sell them. In such a situation, if the buyer buys the goods, the owner is
precluded from denying from seller’s authority to sell.(Sec.27, para-1) The buyer gets a good title to the
goods bought from such a seller.
SELLER: under BUYER gets good

OWNER Sale
implied authority title
2. Sale by mercantile agent. When a mercantile agent sells goods, the buyer gets a good title to the goods
although the agent himself is not an owner. This exception is subject to the following conditions:
(i) The seller must be a mercantile agent having possession of goods or documents of title to the goods
with the consent of the owner.
(ii) The sale must have been made by him when acting in the ordinary course of business.
(iii) The buyer must act in good faith not having notice that the agent has no authority to sell.(Proviso to
Sec.27)
SELLER: BUYER gets good

OWNER Sale
Mercantile Agent title
3. Sale by one of the joint owners. Any one of the several joint owners can make a valid sale of the goods
if the following conditions are satisfied:
(i) The goods must in the joint ownership.
(ii) Any one joint owner is in the sole possession of the goods with the permission of other joint owners.
(iii) The buyer must act in good faith without having notice of the fact that such a joint owner has no
authority to sell.(Sec.28)
17.22
One of the JOINT SELLER: One of BUYER gets good

Sale
OWNER the Joint Owners title
4. Sale by person in possession of goods under voidable contract. Where a person obtains the goods
under a voidable contract (by coercion, under influence, fraud or misrepresentation), the sale by such
person is valid provided following conditions are satisfied:
(i) Seller has possession of goods under voidable contract.
(ii) The contract must not have been rescinded at the time of the sale.
(iii) The buyer should have acted in goods faith without notice of the seller’s defect of title.(Sec.29)
y Original Buyer
le b
Sa u d
Fra cion ce Sa
er n le
Co influe ation
u e n t
d
Un epres
e New BUYER gets
Original OWNER r
mi s good title
5. Sale by seller in possession of goods. A seller (or a mercantile agent) who is in possession of goods or
documents of title to the goods after sale can make a valid sale if the following conditions are satisfied:
(i) The seller must be in possession of the goods or documents of title to the goods before sale.
(ii) He must be in possession with the consent of the buyer (in capacity of agent & not bailee)
(iii) The buyer must not have notice of the previous sale [Sec.30(1)]
Seller = Owner Original BUYER

Original Sale
“A” “B”
“B” - OWNER as
“A” - SELLER in
property in goods is
possession of goods
transferred
after sale
New Sale
NEW BUYER
“C”
6. Sale by buyer in possession of goods. A buyer or his mercantile agent who is in possession of goods
before sale can make a valid sale if the following conditions are satisfied:
17.23
(i) The buyer must in possession of the goods or documents of title to the goods before sale, i.e. before
transfer of property to him.
(ii) He must be in possession with the consent of the seller.
(iii) The buyer must act in good faith without notice of any defect in the right of the seller.[Sec.30(2)]
“B” - Buyer in
possession of
pproval goods without
Seller = Owner Sale on a
“A” ownership
Sale
New Buyer - “C”
7. Resale by unpaid seller. An unpaid seller of goods can resale the goods already sold by him provided
the following conditions are satisfied:
(i) The seller must an unpaid seller.
(ii) The seller must be in possession of the goods already sold.
(iii) He must have exercised his right lien or stoppage in transit.
8. Sale by finder of goods. A finder of goods stands in a position of a bailee. He is not the owner of the
goods found but can transfer a better title to be buyer then he himself has, under certain specified
conditions as follows:
§ If the owner cannot be found with reasonable diligence or
§ If found, he refuses to pay lawful charges of the finder or
§ If the goods are in danger of perishing or
§ If the lawful charges of the finder, in finding the real owner and in preserving the goods found,
amount to at least two third of the value of the goods found.
9. Sale by Pawnee. Generally, pawnee of the goods is liable to return the goods to the pawnor when the
debt is repaid. But, if the pawnor makes a default in repayment of the debt and interest thereon, the
pawnee may sale the goods pledged. The person buying the goods from such pawnee good title to the
goods.
10. Sale by official Receiver/Assignee/Liquidator. Official Receiver/Liquidator does not get ownership
of the goods of the insolvent, but can sell his goods. The person buying the goods gets a good title to such
goods.
PERFORMANCE OF CONTRACT
Performance of contract of sales means as regards the seller, delivery of goods to the buyer of the quality,
in the quantity, at a place and in the manner agreed upon, and as regards the buyer, acceptance of the
delivery of the goods validity tendered and paying the price at a time and place agreed upon.
Duties of Seller and Buyer
§ It is the duty of the seller to deliver the goods and of the buyer to accept and pay for them, in
accordance with terms of the contract of sale.(Sec.31)]
17.24
§ In the absence of a contract to the contrary, seller shall be ready and willing to give possession
of the goods to the buyer in exchange for the price and buyer shall be ready and willing to pay
the price in exchange for possession of goods.(Sec.32)
17.25
Topic 7: DELIVERY OF GOODS
DELIVERY OF THE GOODS
“Delivery” means voluntary transfer of possession of goods from one person to another.[Sec.2(2)]
Delivery of goods sold may be made by doing anything which the parties agree shall be treated as delivery
or which has the effect of putting the goods in the possession of the buyer or of any person authorized to
hold them on his behalf.(Sec.33)
Thus, the delivery of goods may take place in any one of the following three modes:
1. Actual delivery. Actual delivery is a manual transfer of the goods sold to the buyer. In other words,
where the goods are handed over by the seller to the buyer, or to his authorized agent, it is said to be
actual delivery of the goods. For example, A sells a TV to B. A gives physical delivery of the TV to B. it is
an actual delivery.
2. Symbolic delivery. Symbolic delivery is the mode of delivery of goods under which goods are not
physically handed over to the buyer but the seller does something, which has the effect of putting the
goods in possession of the buyer. For example delivering keys of a warehouse containing goods sold, or
R/R or bill of lading or other document of title to the goods sold.
Example: A sold to B all the table fans lying in his godown. And A delivered the keys of his godown to B in
order that he may get the fans from the godown. In this case, there is a symbolic delivery of table fans from
A to B.
3. Constructive or fictitious delivery or delivery by attornment. Constructive delivery takes place when
the seller does some act which expresses his intention to transfer property in the goods sold to the
buyer. For instance, if a bailee is holding goods on behalf of the seller and the seller orders to the bailee
in the presence of the buyer to hold the goods sold for the use of the buyer, it is constructive delivery of
goods.
Example: A sold to B 50 bags of rice which were in possession of C, a warehousemen. And A
ordered C to transfer the rice to B. Accordingly, C transferred the rice, in his books, in B’s name. in
this case, there is constructive delivery.
4. Forward delivery: where the delivery is to be made in future, and not at the time contract is entered
into.
Rules Relating to Delivery of Goods.

Following are the rules relating to delivery of goods from seller to the buyer.
1. Modes of delivery: A seller can deliver the goods by any mode which puts the goods or has effect of
putting the goods in the possession of the buyer or his agent.(Sec.33). Thus, the delivery may be either
(I) actual (ii) symbolic, or (iii) constructive
2. Concurrent conditions: Payment and delivery are concurrent conditions. In the absence of the
contract to the contrary, the seller shall be ready and willing to give possession of the goods to the
buyer in exchange for the price, and buyer shall be ready and willing to pay the price in exchange for
possession of the goods.(Sec.32)
3. Buyer to apply for delievery: In the absence of a contact to the contrary, the seller is not bound to
deliver the goods until the buyer applies for delivery.(Sec.35)
17.26
4. Place for delivery of goods: Buyer and seller are entitled to decide the place of delivery of goods by
an agreement between them. Such agreement may be express or implied. Where there is no
agreement as to place of delivery between the parties, the following rules will apply:
Nature of goods Place of delivery
Delivery of goods sold At the place at which they are at the time of the
sale.
Delivery of goods agreed to be sold At the place at which they are at the time of the
agreement to sell.
Delivery of goods not in existence at the At the place at which they are manufactured or
time of agreement produced
5. Time for delivery of goods:

§ Where under the contract of sale the seller is bound to send the goods to the buyer, but no time
for sending them is fixed, the seller is bound to send them within a reasonable time.[Sec.36(2)]
§ Where terms like ‘directly, without loss of time, forthwith’ and the like are found in the
contract, no delay shall be made and seller is expected to make quick and immediate delivery.
6. Goods in possession of 3rd party: Where the goods at the time of sale are in the possession of third
person, there is no delivery by seller to buyer unless and until such third person acknowledges to the
buyer that he holds the goods on his behalf.[Sec.36(3)]
7. Expenses or the delivery of the goods: Unless otherwise agreed, the expenses of and incidental to
putting the goods into a deliverable state shall be borne by the seller.[Sec.36(5)]
8. Part delivery of goods: A delivery of part of goods is a delivery of the whole. But a delivery of part of
the goods, with an intention of severing it from the whole, does not operate as a delivery of the
remainder.(Sec.34)
§ Part delivery = Delivery : Delivery of a part of goods sold may amount to delivery of the whole if it
is so intended & agreed
§ Part delivery = No Delivery: Where the part is intended to be severed from whole, part delivery
doesn’t amount to delivery of whole.
9. Delivery of wrong quantity: It is the duty of the seller to deliver the quantity of goods in accordance
with the terms of the contract. If the seller tenders larger or smaller quantity of goods than was agreed
upon, the buyer is not bound to accept it.
In case of delivery of wrong quantity of goods, following three situations may emerge:
Short delivery Excess delivery Mixed delivery
(less than contracted) (more than contracted) (with goods of different
description)
a) Reject the goods or a) Reject in full or a) Accept the contracted goods
b) Accepts & pay as per the b) Accept the contract quantity & reject the rest or
contracted rate & reject the excess or b) Reject the entire lot
c) Accept the whole
10. Delivery of goods in installments: Unless otherwise agreed, the buyer of the goods is not bound to
accept delivery of goods in installments.[Sec.38(1)] Thus, the seller must deliver the goods to the
buyer in one lot unless otherwise agreed by the parties.
17.27
11. Delivery to carrier or wharfinger: Where, in pursuance of a contract of sale, the seller is authorized
or required to send the goods to the buyer,
§ delivery of the goods to a carrier, for the purpose of transmission to the buyer, or
§ delivery of the goods to a wharfinger for safe custody,
Is prima facie deemed to be a delivery of the goods to the buyer.[Sec.39(1)]
12. Deterioration of goods during transit: Where the seller of goods, agrees to deliver them at his own
risk at a place other than where they are when sold, the buyer shall bear risk of deterioration in the
goods necessarily incidental to the course of transit. The parties, may however, make a contract to the
contrary.(Sec.40)
13. Liability of buyer for neglecting or refusing delivery of goods.- When the seller is ready and
willing to deliver the goods and requests the buyer to take delivery (proper tender of performance),
and the buyer does not within a reasonable time after such request take delivery of the goods , Buyer
is liable to the seller for any loss occasioned by his neglect or refusal to take delivery and also for a
reasonable charge for the care and custody of the goods.
17.28
The Sale Of Goods Act, 1930 CS Praveen Choudhary
Topic 8: UNPAID SELLER & REMEDIES FOR

BREACH OF CONTRACT
UNPAID SELLER
1) Unpaid seller:
a) Non Payment: When the whole of the price has not been paid or tendered.
b) Dishonor of negotiable instrument: When a bill of exchange or other negotiable
instrument has been received as conditional payment, and the condition on which it
was received, has not been fulfilled by reason of the dishonour of the instrument or
otherwise.[Sec.45(1)]
2) Seller to include agent: The term “Seller” includes any person who is in the position of a
seller, as, for instance an agent of the seller to whom the bill of lading has been endorsed, or
a consignor or agent who has himself paid, or is directly responsible for the price.[Sec.45(2)]
It should be noted that a seller who has obtained money decree for the price of the goods is
still an unpaid seller, if the decree has not been paid satisfied.[Sec.49(2)]
RIGHTS OF AN UNPAID SELLER

A. Rights against the Goods B. Rights against the Buyer
a) When property in the goods has passed a) Suit for price
I. Right of lien, b) Suit for damages for non-acceptance
II. Right of stoppage of goods in transit, c) Suit for interest
and
III. Right of resale.
b) When property in the goods has NOT

passed
I. In addition to the above 3 remedies,
the right of withholding delivery.
I. Right of Lien
§ A lien is a right to retain the possession of goods until some claim due against it is
satisfied.
§ An unpaid seller of goods who has possession of the goods is entitled to retain
possession of them until payment or tender of price.[Sec.47(1)
§ Lien can be exercised only for price and not for any other expenses ex: godown charges,
interest etc.
The right of lien of an unpaid seller is subject to the following rules:

a. The seller must be in possession of the goods sold.[Sec.47(1)]
b. The seller may have possession of the goods as an agent or bailee for the buyer. In other
words, the seller may exercise his right of lien even if he is possession of goods as agent or
bailee for the buyer.[Sec.47(2)
c. The lien can be exercised only when the goods are not sold on credit.(Sec.47)
d. Where the goods have been sold on credit, the term of credit must have expired.(Sec.47)
e. Where the part delivery of goods does not imply that the seller has waived the lien, the
seller can exercise lien on remaining goods.(Sec.48)
f. The right of lien can be exercised only when the seller has not waived his right expressly or
impliedly.[Sec.49(1)]
pg. 145
g. The unpaid seller of goods, having a lien thereon, does not lose his lien by reason only that
he has obtained a decree for the price of the goods.[Sec.49(2)]
When Lien can be exercised?

a. Where the goods have been sold without any stipulation as to credit.
b. Where the goods have been sold on credit, but the term of credit has expired.
c. Where the buyer becomes insolvent.[Sec.47(1)]
Termination or Loss of Lien: The unpaid seller of goods loses his lien in the following cases:
a. When the seller delivers the goods to a carrier or the bailee for the purpose of
transmission to the buyer without reserving the right of disposal of the goods, he loses his
right of lien on the goods sold.[Sec.49(1)(a)]
b. The seller’s lien is also lost when the buyer or his agent lawfully obtains possession of the
goods. [Sec.49(1)(b)]
c. The seller also loses his right of lien once he waives this right, expressly or impliedly.
[Sec.49(1)(a)]
Right of lien can be waived either expressly or impliedly. Express waiver mean the waiver
provided in the express terms of the contract. Implied waiver means the waiver implied by the
conduct of the seller or by the prevailing circumstances of the case. Right of lien can be waived
when he grants a fresh term of credit, or accepting a negotiable instrument for payment of price.
II. RIGHT OF STOPPAGE OF GOODS IN TRANSIT

The right of stoppage of goods in transit means the right of an unpaid seller to stop further
transit of the goods with a view to regain actual or constructive possession of the goods till the
price is paid.
Right of stoppage of goods in transit can be exercised if the following conditions are satisfied:
(i) If the seller is an unpaid seller.
(ii) If he has parted with the possession of goods to carrier.
(iii) If the goods are in the transit.
(iv) If the buyer of the goods has become insolvent.
Termination or Loss of Stoppage in transit:

a. Buyer taking delivery before their arrival at destination, transit comes to an end.
b. Acknowledgement by carrier: if, after the arrival of the goods at their destination,
carrier or bailee acknowledges to the buyer or his agent that he holds goods on his
behalf, and continues the possession of the goods, the transit is at end even if the
buyer indicates further destination for the goods to the carrier.
c. Delivery to ship: When ship is chartered by the buyer, the transit ends as soon as the
goods are loaded on the ship.
d. Wrong denial to deliver goods by the carrier, the transit will be deemed to be at an
end.
e. Sub-sale by the buyer with seller’s consent leads to loss of right of stoppage in
transit
f. If the goods are rejected by the buyer and the carrier or bailee continues in
possession of them, the transit is NOT deemed to be at an end, even if the seller has
refused to receive them back.
Distinct Between Right of Lien and Right of Stoppage in Transit

Basis Right of lien Right of Stoppage in Transit
1. Possession In order to exercise lien, seller In order to exercise the right of
must be in possession of the stoppage in transit, the carrier or the
goods. other bailee must be in possession of
goods on behalf of the seller.
pg. 146
2. Nature and Right of lien is a right to Right of stoppage in transit is a right to

purpose of retain the goods until price regain possession.
right due thereon is paid.
3.Availability of Seller gets right of lien when
Seller gets the right of stoppage in
the right the buyer fails to pay.transit only when the buyer becomes
insolvent.
4. End and Lien comes to an end when Right of stoppage in transit commences
commencement the seller delivers the goods when the seller delivers goods to a
of right to a carrier or bailee. carrier or bailee.
5. Exercise of The seller himself can The seller through the carrier or bailee
right exercise lien. of the goods can exercise this right.
RIGHT OF RE-SALE
An unpaid seller can re-sell only when he is in possession of the goods either by
a) Exercising lien or
b) Has regained possession by stoppage in transit upon buyer’s insolvency
Rules of re-sale:
a. Situation:
I. Where the goods are of a perishable nature,
II. Where the seller has given a notice to the buyer of his intention to resale the goods,
may resale them if the buyer does not within a reasonable time pay the price.
b. Buyer response: Buyer does not pay or tender the price within reasonable time
c. Unpaid seller’s right: resell the goods within reasonable time or can recover from original
buyer damages for any loss occasioned by his breach of contract.
d. Buyer’s right: The buyer shall not be entitled to any profit on such re-sale by the unpaid
seller. Where the buyer had paid some money by way of advance or deposit, then such
amount can be claimed by him, but subject to the seller’s claim for damages.
e. Perishable goods: Where the goods are of a perishable nature, the unpaid seller can resale
the goods without any notice to the buyer. Perishable means = Physical deterioration or
commercially perishable.
f. Notice not given: then, unpaid seller cannot claim damages and the buyer is entiled to
profit, if any, on re-sale.
g. Good title to subsequent buyer: Despite the fact that no notice of re-sale has been given by
the seller to the original buyer.
RIGHTS AGAINST THE BUYER
The unpaid seller also has the rights against the buyer personally in addition to his rights
against the goods. These are as under:
1. Suit for price. This right can be discussed under two specific conditions:
(i) Where under a contract of sale, the property in the goods has passed to the buyer and
the buyer wrongfully neglects or refuses to pay for the goods according to the terms of the
contract, the seller may sue him for the price of the goods.[Sec.55(1)]
(ii) Where price is payable on a day certain. Sometimes, the contract of sale stipulates that the
price is payable on a certain day irrespective of delivery but the buyer wrongfully neglects
pg. 147
or refuses to pay such price. In such a case, the seller may sue the buyer for the price
although the property in the goods has not passed and the goods have not been
appropriated to the contract.[Sec.55(2)]
2. Suit for damages for non-acceptance. Where the buyer wrongfully neglects or refuses to
accept and pay for the goods, the seller may sue him for damages for non-acceptance.(Sec.56)
3. Suit for repudiation of contract before due date. In case the buyer repudiates the contract
of sale before the date of delivery, the seller has two options:
(i) The seller may immediately treat the contract as rescinded and sue for damages for the
breach.
(ii) The seller may treat contract as subsisting (Alive) and wait till the date of
delivery.(Sec.60) this section is based on the principle of anticipatory breach of contract.
4. Suit for interest. The sale of goods Act gives the seller a right to recover interest if by law
interest is recoverable.[Sec.61(2)]
Buyer’s Remedies / Right against Seller

In case of breach of contract by seller’s fault, the buyer has following remedies/rights against
the seller:
1. Suit for damages for non-delivery.: Where the seller wrongfully neglects or refuses to
deliver the goods to the buyer, the buyer may sue the seller for damages for non-delivery.
2. Suit for specific performance of the contract: In any suit for breach of contract to deliver
specific or ascertained goods, the Court may by its decree direct that the contract shall be
performed specifically, without giving the seller an option of retaining the goods on
payment of damages. The decree may be unconditional, or upon such terms and conditions
as to damages, payment of the price or otherwise, as the Court may deem just.
3. Suit for breach of warranty.
4. Suit for damages for repudiation of contract before due date.
5. Suit for refund of price.
6. Interest by way of damages and special damages:
a) Buyer has a right to recover money paid to the seller where consideration for
payment of it has failed, e.g. where the buyer is deprived of Goods by their true
owner, he may recover the price for breach of condition as to title.
b) When under a contract of sale, Buyer has paid the price, but Seller neglects to deliver
Goods, Buyer has a right to claim interest on the amount of price.
c) The buyer can claim interest only when he can recover the price.
d) Interest may be calculated from the date on which the payment was made.
e) The rate of interest to be awarded is at the discretion of the Court.
pg. 148
Topic 9: AUCTION SALE

AUCTION SALE
Auction sale is a public sale, where goods are offered to be taken by the highest bidder from
among the public.
According to the usual practice, proposed auction is advertised. The advertisement generally
contains the brief description of the subject-matter of sale; date time and place of auction; and
the names of persons from whim further information may be obtained. The auctioneer
prepares catalogue of the goods, statements of terms and conditions and makes them available
to the public. Sometimes, the terms and conditions of auction are displayed at the place of
auction.
On the appointed day, the time and place, the auctioneer puts up the lots of goods to be sold.
Then he invites bids for every lot from the people assembled at the place of auction. He
announces every bid made by the people and induces them to make bids of a higher price. When
auctioneer finds any bid reasonable and in accordance with the directions of the seller or equal
or more than the ‘reserve price’ if any, he may accept it. He accepts or knocks-down, the highest
bid by striking with his hammer, or by any other approved method, e.g. by pronouncing the
words. ‘One..,two.., three.., or going—going--gone. With the ‘Knock down’ the contract of sale
is completed. Before the known down, any bidder may retract his bid. Similarly, the auctioneer
may reserve a right even to reject the highest bid.
Rules of Auction Sale.

1. In the case of sale by auction, where goods are put for sale in lots, each lot is prima facie
deemed to be the subject-matter of a separate contract of sale.[Sec.64(1)]
2. In auction sale, the sale is complete when the auctioneer announces its completion by the
fall of the hammer or in other customary manner.
3. Sometimes, the conditions of sale by auction require the deposit of security amount by the
bidders. In such a case, every bidder is bound to deposit the security before he makes a bid
in the auction.
4. Auction sale could be conditional or unconditional. If the auction sale is conditional, the sale
is not complete until the condition is satisfied. For instance, where auction sale is subject to
the approval of some authority, the sale is complete only after approval by such authority.
The bidder can withdraw his bid before such approval in spite of the fact that bid as
provisionally accepted.
5. In an unconditional sale by auction of specific goods in a deliverable state, the property in
the goods passes to the buyer by the fall of hammer.(consolidated Coffer Ltd. V.Coffer
Board,AIR(1980) SC 1468]
6. In sale by auction, a right to bid may be reserved expressly by or on behalf of the seller.
Where such right is expressly so reserved, the seller or any one person on his behalf may,
bid at the auction. [Sc.64(3)].The one person who is notified to make a bid on sellers behalf
is a ‘puffer’. He is also known as ‘white bonnet’, by bidder, or decoy duck,. Only the notified
one puffer can make bid on behalf of the seller.
7. The sale by auction may be notified to be subject to a reserve price or upset price.
[Sec.64(5)] the auctioneer is not authorized to sell below the notified reserve price. In case,
the auctioneer by mistake knock-down a lot for less than the reserve price, the buyer has no
remedy against the auctioneer.
8. Pretended bidding. Where the seller makes use of pretended bidding to raise the price, the
sale is voidable at the option of the buyer. [Sec.64(6)]
9. ‘Knock-out’ or agreement not to bid each other. A ‘knock-out’ is a combination of persons to
prevent competition among them at an auction. The persons joining the combination agree
that only one of them shall bid. Anything obtained by him shall be afterwards disposed of
privately among themselves. Such combinations or knock-out is not illegal.
pg. 149
10. Damping is unlawful. ‘Damping’ is any act by which an intending bidder is dissuaded or
discouraged from bidding. Some of the damping acts are under.
(i) Pointing out effects in the goods put up for auction sale.
(ii) To take intending bidder away from the place of auction.
(iii) To create confusion in the minds of intending bidders as to real value of the goods
put for sale.
----***---
pg. 150
Negotiable Instrument Act 1881
Negotiable Instruments Act, 1881
Definition of a Negotiable Instrument

• The term “negotiable instrument” means a document transferable from one person to
another. However the Act has not defined the term. It merely says that “A negotiable
instrument” means a promissory note, bill of exchange or cheque payable either to
order or to bearer. [Section 13(1)]
• A negotiable instrument may be defined as “an instrument, the property in which is
acquired by anyone who takes it bona fide, and for value, notwithstanding any defect
of title in the person from whom he took it, from which it follows that an instrument
cannot be negotiable unless it is such and in such a state that the true owner could
transfer the contract or engagement contained therein by simple delivery of
instrument” (Willis—The Law of Negotiable Securities).
According to this definition the following are the conditions of negotiability:

i. The instrument should be freely transferable. An instrument cannot be negotiable
unless it is such and in such state that the true owner could transfer by simple
delivery or endorsement and delivery.
ii. The person who takes it for value and in good faith is not affected by the defect in
the title of the transferor.
iii. Such a person can sue upon the instrument in his own name.
But the Act recognises only three types of instruments viz.,
ü a Promissory Note,
ü a Bill of Exchange and
ü a Cheque
as negotiable instruments.
However, it does not mean that other instruments are not negotiable
instruments provided that they satisfy the following conditions of negotiability:
1. The instrument should be freely transferable by the custom of trade.
Transferability may be by (i) delivery or (ii) endorsement and delivery.
2. The person who obtains it in good faith and for consideration gets it free from all
defects and can sue upon it in his own name.
3. The holder has the right to transfer. The negotiability continues till the maturity.
Effect of Negotiability
The general principle of law relating to transfer of property is that no one can pass a
better title than he himself has (nemodat quad non-habet). The exceptions to this general
rule arise by virtue of statute or by a custom. A negotiable instrument is one such
exception which is originally a creation of mercantile custom.
Thus a bona fide transferee of negotiable instrument for consideration without notice of
any defect of title, acquires the instrument free of any defect, i.e., he acquires a better title
than that of the transferor.
Important Characteristics of Negotiable Instruments

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Ø The instrument holder is presumed to be owner of the property contained in it.
Ø They are freely transferable.
Ø A holder in due course gets the instrument free from all defects of the title of any
previous holder.
Ø The holder in due course is entitled to sue on the instrument in his own name.
Ø The instrument is transferable till maturity and in case of cheques till it becomes stale
(on the expiry of 6 months from the date of issue)
Ø Certain equal presumptions are applicable to all negotiable instruments unless the
contrary is proved.
Classification of Negotiable Instruments

a) Bearer Instruments
A promissory note, bill of exchange or cheque is payable to bearer when
(i) it is expressed to be so payable, or
(ii) the only or last endorsement on the instrument is an endorsement in blank. A
person who is a holder of a bearer instrument can obtain the payment of the
instrument.
b) Order Instruments
A promissory note, bill of exchange or cheque is payable to order
(i) which is expressed to be so payable; or
(ii) which is expressed to be payable to a particular person, and does not contain any
words prohibiting transfer or indicating an intention that it shall not be
transferable.
c) Inland Instruments (Section 11)
A promissory note, bill of exchange or cheque drawn or made in India, and made
payable, or drawn upon any person, resident in India shall be deemed to be an inland
instrument. Since a promissory note is not drawn on any person, an inland
promissory note is one which is made payable in India.
Subject to this exception, an inland instrument is one which is either:
i. drawn and made payable in India, OR
ii. drawn in India upon some persons resident therein, even though it is made
payable in a foreign country.
d) Foreign Instruments
An instrument which is not an inland instrument, is deemed to be a foreign
instrument.
The essentials of a foreign instrument include that:
i. it must be drawn outside India and made payable outside or inside India; or
ii. it must be drawn in India and made payable outside India and drawn on a person
resident outside India.
e) Demand Instruments (Section 19)
A promissory note or a bill of exchange in which no time for payment is specified is
an instrument payable on demand.
f) Time Instruments
Time instruments are those which are payable at sometime in the future. Therefore,
a promissory note or a bill of exchange payable after a fixed period, or after sight, or
on specified day, or on the happening of an event which is certain to happen, is known
as a time instrument. The expression “after sight” in a promissory note means that the
18.2
payment cannot be demanded on it unless it has been shown to the maker. In the case
of bill of exchange, the expression “after sight” means after acceptance, or after noting
for non-acceptance or after protest for non-acceptance.
Ambiguous Instruments (Section 17)

• An instrument, which in form is such that it may either be treated by the holder as a
bill or as a note, is an ambiguous instrument.
• Where in a bill, the drawer and the drawee are the same person or where the drawee
is a fictitious person or a person incompetent to contract, the holder may treat the
instrument, at his option, either as a bill of exchange or as a promissory note.
• Bill drawn to or to the order of the drawee or by an agent on his principal, or by one
branch of a bank on another or by the direction of a company or their cashier are also
ambiguous instruments.
• A promissory note addressed to a 3rd person may be treated as a bill by such person
by accepting it, while a bill not addressed to any one may be treated as a note.
• But where the drawer and payee are the same, E.g., where A draws a bill payable to
A’s order, it is not an ambiguous instrument and cannot be treated as a promissory
note. Once an instrument has been treated either as a bill or as a note, it cannot
be treated differently afterwards.
Inchoate or Incomplete Instrument (Section 20)

• When one person signs and delivers to another a paper stamped in accordance with
the law relating to negotiable instruments, and either wholly blank or having
written thereon an incomplete negotiable instrument, he thereby gives prima
facie authority to the holder thereof to make or complete, as the case may be, upon it
a negotiable instrument, for any amount specified therein, and not exceeding the
amount, covered by the stamp. Such an instrument is called an inchoate instrument.
• The authority to fill up a blank or incomplete instrument may be exercised by any
“holder” and not only the first holder to whom the instrument was delivered.
• The person signing and delivering the paper is liable both to a “holder” and a “holder-
in-due- course”. But there is a difference in their respective rights. A “holder” can
recover only what the person signing and delivering the paper agreed to pay under
the instrument, while a “holder-in- due-course” can recover the whole amount made
payable by the instrument provided that it is covered by the stamp, even though the
amount authorised was smaller.
Kinds of Negotiable Instruments

The Act recognises only three kinds of negotiable instruments under Section 13 but
it does not exclude any other negotiable instrument provided the instrument entitles a
person to a sum of money and is transferable by delivery. Instruments written in oriental
languages i.e. hundis are also negotiable instruments.
These instruments are discussed below:

1. Promissory Notes
A “promissory note” is an instrument in writing (not being a bank note or a currency
note) containing an unconditional undertaking, signed by the maker to pay a certain
18.3
sum of money to, or to the order of, a certain person, or only to bearer of the
instrument. (Section 4)
Parties to a Promissory Note:

A promissory note has the following parties:
a) The maker: the person who makes or executes the note promising to pay the
amount stated therein.
b) The payee: one to whom the note is payable.
c) The holder: is either the payee or some other person to whom he may have
endorsed the note.
d) The endorser.
e) The endorsee.
Essentials of a Promissory Note:

i. It must be in writing. An oral promise to pay will not do.
ii. It must contain an express promise or clear undertaking to pay. A promise to pay
cannot be inferred. A mere acknowledgement of debt is not sufficient. If A writes
to B “I owe you Rs. 500", there is no promise to pay and the instrument is not a
promissory note.
iii. The promise or undertaking to pay must be unconditional. A promise to pay
“when able”, or “as soon as possible”, is conditional. But a promise to pay after a
specific time or on the happening of an event which must happen, is not
conditional, e.g. “I promise to pay Rs. 1,000 ten days after the death of B”, is
unconditional.
iv. The maker must sign the promissory note in token of an undertaking to pay to the
payee or his order.
v. The maker must be a certain person.
vi. The payee must be certain.
vii. The sum payable must be certain and the amount must not be capable of
contingent additions or subtractions. If A promises to pay Rs. 100 and all other
sums which shall become due to him, the instrument is not a promissory note.
viii. Payment must be in legal money of the country.
ix. It must be properly stamped in accordance with the provisions of the Indian
Stamp Act. Each stamp must be duly cancelled by maker’s signature or initials.
x. It must contain the name of place, number and the date on which it is made.
However, their omission will not render the instrument invalid, e.g. if it is undated,
it is deemed to be dated on the date of delivery.
Note: A promissory note cannot be made payable or issued to bearer, no matter
whether it is payable on demand or after a certain time (Section 31 of the RBI Act).
2. Bills of Exchange
A “bill of exchange” is an instrument in writing containing an unconditional order,
signed by the maker, directing a certain person to pay a certain sum of money only to
or to the order of, a certain person or to the bearer of the instrument. (Section 5)
18.4
Parties to bills of exchange

The following are parties to a bill of exchange:
a) The Drawer: the person who draws the bill.
b) The Drawee: the person on whom the bill is drawn.
c) The Acceptor: one who accepts the bill. Generally, the drawee is the acceptor but
a stranger may accept it on behalf of the drawee.
d) The payee: one to whom the sum stated in the bill is payable, either the drawer or
any other person may be the payee.
e) The holder: is either the original payee or any other person to whom, the payee
has endorsed the bill. In case of a bearer bill, the bearer is the holder.
f) The endorser: when the holder endorses the bill to any one else he becomes the
endorser.
g) The endorsee: is the person to whom the bill is endorsed.
h) Drawee in case of need: Besides the above parties, another person called the
“drawee in case of need”, may be introduced at the option of the drawer. The name
of such a person may be inserted either by the drawer or by any endorser in order
that resort may be had to him in case of need, i.e., when the bill is dishonoured by
either non-acceptance or non-payment.
i) Acceptor for honour: Further, any person may voluntarily become a party to a bill
as acceptor. A person, who on the refusal by the original drawee to accept the bill
or to furnish better security, when demanded by the notary, accept the bill supra
protest in order to safeguard the honour of the drawer or any endorser, is called
the acceptor for honour.
Essentials of a Bill of Exchange:

i. It must be in writing.
ii. It must contain an unconditional order to pay money only and not merely a
request.
iii. It must be signed by the drawer.
iv. The parties must be certain.
v. The sum payable must also be certain.
vi. It must comply with other formalities e.g. stamps, date, etc.
Forms of Bills of Exchange

i. Inland Bills (Sections 11 and 12)
A bill of exchange is an inland instrument if it is (i) drawn or made and payable in
India, or (ii) drawn in India upon any person who is a resident in India, even though
it is made payable in a foreign country. But a promissory note to be an inland should
be drawn and payable in India, as it has no drawee.
Two essential conditions to make an inland instrument are:

Ø the instrument must have been drawn or made in India; and
Ø the instrument must be payable in India or the drawee must be in India.
Examples: A bill drawn in India, payable in USA, upon a person in India is an inland
instrument. A bill drawn in India and payable in India but drawn on a person in USA
is also an inland instrument.
18.5
ii. Foreign Bills

All bills which are not inland are deemed to be foreign bills. Normally foreign bills
are drawn in sets of three copies.
iii. Trade Bill

A bill drawn and accepted for a genuine trade transaction is termed as a trade bill.
When a trader sells goods on credit, he may make use of a bill of exchange.
iv. Accommodation Bill

All bills are not genuine trade bills, as they are often drawn for accommodating a
party. An accommodation bill is a bill in which a person lends or gives his name to
oblige a friend or some person whom he knows or otherwise. In other words, a bill
which is drawn, accepted or endorsed without consideration is called an
accommodation bill.
The party lending his name to oblige the other party is known as the accommodating
or accommodation party, and the party so obliged is called the party accommodated.
An accommodation party is not liable on the instrument to the party accommodated
because as between them there was no consideration and the instrument was merely
to help. But the accommodation party is liable to a holder for value, who takes the
accommodation bill for value, though such holder may not be a holder in due course.
v. Bills in Sets (Section 132 and 133)

Foreign bills are usually drawn in sets to avoid the danger of loss. They are drawn
in sets of three, each of which is called “Via” and as soon as any one of them is paid,
the others become inoperative. All these parts form one bill and the drawer must sign
and deliver all of them to the payee. The stamp is affixed only on one part and one part
is required to be accepted. But if the drawer mistakenly accepts all the parts of the
same bill, he will be liable on each part accepted as if it were a separate bill.
Right to Duplicate Bill

Where a bill of exchange has been lost before it was overdue, the person who was the
holder to it may apply to the drawer, to give him another bill of the same tenor. It is only
the holder who can ask for a duplicate bill, promissory note or cheque.
Bank Draft
A bill of exchange is also sometimes spoken of as a draft. It is called as a bank draft when
a bill of exchange drawn by one bank on another bank, or by itself on its own branch, and
is a negotiable instrument. It is very much like the cheque with three points of distinction
between the two. A bank draft can be drawn only by a bank on another bank, usually its
own branch. It cannot so easily be cancelled. It cannot be made payable to bearer.
3. Cheques
• Section 6 of the Act provides that a ‘cheque’ is a bill of exchange drawn on a
specified banker and not expressed to be payable otherwise than on demand and it
18.6
includes the electronic image of a truncated cheque and a cheque in the electronic
form.
• Simply stated, a cheque is a bill of exchange drawn on a bank payable always on
demand. Thus, a cheque is a bill of exchange with 2 additional qualifications,
namely:
a. it is always drawn on a banker, and
b. it is always payable on demand.
• A cheque being a species of a bill of exchange, must satisfy all the requirements of a
bill; it does not, however, require acceptance.
Note: By virtue of Section 31 of the RBI Act, no bill of exchange or hundi can be made
payable to bearer on demand and no promissory note or a bank draft can be made
payable to bearer at all, whether on demand or after a specified time. Only a cheque can
be payable to bearer on demand.
Parties to a cheque
The following are the parties to a cheque:
a) The drawer: The person who draws the cheque.
b) The drawee: The banker of the drawer on whom the cheque is drawn.
c) (c), (d), (e) and (f) The payee, holder, endorser and endorsee: same as in the case
of a bill.
Essentials of a Cheque
i. It is always drawn on a banker.
ii. It is always payable on demand.
iii. It does not require acceptance.
iv. A cheque can be drawn on bank where the drawer has an account.
v. Cheques may be payable to the drawer himself. It may be made payable to bearer
on demand unlike a bill or a note.
vi. The banker is liable only to the drawer. A holder has no remedy against the banker
if a cheque is dishonoured.
vii. A cheque is usually valid for fix months. However, it is not invalid if it is post dated
or ante-dated.
viii. No Stamp is required to be affixed on cheques.
Banker
• A banker is one who does banking business.
• Section 5(b) of the Banking Regulation Act, 1949 defines banking as, “accepting for
the purpose of lending or investment, of deposits of money from the public, repayable
on demand or otherwise and withdrawable by cheque, draft or otherwise.”
Customer
The term “customer” is neither defined in Indian nor in English statutes. The general
opinion is that a customer is one who has an account with the bank or who utilises the
services of the bank. The special features of the legal relationship between the banker
and the customer may be termed as the obligations and rights of the banker. These
are:
Ø Obligation to honour cheques of the customers.
18.7
Ø Obligation to collect cheques and drafts on behalf of the customers.
Ø Obligation to keep proper record of transactions with the customer.
Ø Obligation to comply with the express standing instructions of the customer.
Ø Obligation not to disclose the state of customer’s account to anyone else.
Ø Obligation to give reasonable notice to the customer, if the banker wishes to close
the account.
Ø Right of lien over any goods and securities bailed to him for a general balance of
account.
Ø Right of set off and right of appropriation.
Ø Right to claim incidental charges and interest as per rules and regulations of the
bank, as communicated to the customer at the time of opening the account.
Liability of a Banker
• By opening a current account of a customer, the banker becomes liable to his debtor
to the extent of the amount so received in the said account and undertakes to honour
the cheques drawn by the customer so long as he holds sufficient funds to the
customer’s credit. If a banker, without justification, fails to honour his customer’s
cheques, he is liable to compensate the drawer for any loss or damage suffered by him.
But the payee or holder of the cheque has no cause of action against the banker as the
obligation to honour a cheque is only towards the drawer.
• The banker must also maintain proper and accurate accounts of credits and debits.
He must honour a cheque presented in due course.
When Banker must Refuse Payment

In the following cases the authority of the banker to honour customer’s cheque comes to
an end, he must refuse to honour cheques issued by the customer:
a) When a customer countermands payment i.e., where or when a customer, after
issuing a cheque issues instructions not to honour it, the banker must not pay it.
b) When the banker receives notice of customer’s death.
c) When customer has been adjudged an insolvent.
d) When the banker receives notice of customer’s insanity.
e) When an order (e.g., Garnishee Order) of the Court, prohibits payment.
f) When the customer has given notice of assignment of the credit balance of his account.
g) When the holder’s title is defective and the banker comes to know of it.
h) When the customer has given notice for closing his account.
When Banker may Refuse Payment

In the following cases the banker may refuse to pay a customer’s cheque:
a) When the cheque is post-dated.
b) When the banker has no sufficient funds of the drawer with him and there is no
communication between the bank and the customer to honour the cheque.
c) When the cheque is of doubtful legality.
d) When the cheque is not duly presented, e.g., it is presented after banking hours.
e) When the cheque on the face of it is irregular, ambiguous or otherwise materially
altered.
f) When the cheque is presented at a branch where the customer has no account.
g) When some persons have joint account and the cheque is not signed jointly by all or
by the survivors of them.
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h) When the cheque has been allowed to become stale, i.e., it has not been presented
within six months of the date mentioned on it.
Protection of Paying Banker (Sections 10, 85 and 128)

• Section 85 lays down that where a cheque payable to order purports to be endorsed
by or on behalf of the payee the banker is discharged by payment in due course.
• He can debit the account of the customer with the amount even though the
endorsement turns out subsequently to have been forged, or the agent of the payee
without authority endorsed it on behalf of the payee. It would be seen that the payee
includes endorsee. This protection is granted because a banker cannot be expected to
know the signatures of all the persons in the world. He is only bound to know the
signatures of his own customers.
• Therefore, the forgery of drawer’s signature will not ordinarily protect the banker but
even in this case, the banker may debit the account of the customer, if it can show that
the forgery was intimately connected with the negligence of the customer and was the
proximate cause of loss.
• In the case of bearer cheques, the rule is that once a bearer cheque, always a
bearer cheque. Where, therefore, a cheque originally expressed by the drawer
himself to be payable to bearer, the banker may ignore any endorsement on the
cheque. He will be discharged by payment in due course. But a cheque which becomes
bearer by a subsequent endorsement in blank is not covered by this Section. A banker
is discharged from liability on a crossed cheque if he makes payment in due course.
Payment in due Course (Section 10)

Any person liable to make payment under a negotiable instrument, must make the
payment of the amount due thereunder in due course in order to obtain a valid discharge
against the holder.
A payment will be a payment in due course if:
a) it is in accordance with the apparent tenor of the instrument, i.e., according to what
appears on the face of the instrument to be the intention of the parties;
b) it is made in good faith and without negligence, and under circumstances which do
not afford a ground for believing that the person to whom it is made is not entitled to
receive the amount;
c) it is made to the person in possession of the instrument who is entitled as holder to
receive payment;
d) payment is made under circumstances which do not afford a reasonable ground
believing that he is not entitled to receive payment of the amount mentioned in the
instrument; and
e) payment is made in money and money only.
Under Sections 10 and 128, a paying banker making payment in due course is protected.
Collecting Banker
• Collecting Banker is one who collects the proceeds of a cheque for a customer.
• Although a banker collects the proceeds of a cheque for a customer purely as a matter
of service, yet the Negotiable Instruments Act, 1881 indirectly imposes statutory
obligation, statutory in nature. This is evident from Section 126 of the Act which
provides that a cheque bearing a “general crossing” shall not be paid to anyone other
than banker and a cheque which is “specially crossed” shall not be paid to a
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person other than the banker to whom it is crossed. Thus, a paying banker must
pay a generally crossed cheque only to a banker thereby meaning that it should be
collected by another banker.
• While so collecting the cheques for a customer, it is quite possible that the banker
collects for a customer, proceeds of a cheque to which the customer had no title in
fact. In such cases, the true owner may sue the collecting banker for “conversion”. At
the same time, it cannot be expected of a banker to know or to ensure that all the
signatures appearing in endorsements on the reverse of the cheque are genuine. The
banker is expected to be conversant only with the signatures of his customer.
• A customer to whom a cheque has been endorsed, would request his banker to collect
a cheque. In the event of the endorser’s signature being proved to be forged at later
date, the banker who collected the proceeds should not be held liable for the simple
reason that he has merely collected the proceeds of a cheque.
Section 131 of the Negotiable Instruments Act affords statutory protection in such a
case where the customer’s title to the cheque which the banker has collected has been
questioned. It reads as follows: “A banker who has in good faith and without negligence
received payment for a customer of a cheque crossed generally or specially to himself
shall not, in case the title to the cheque proves defective, incur any liability to the true
owner of the cheque by reason of only having received such payment.
The requisites of claiming protection under Section 131 are as follows:

i. The collecting banker should have acted in good faith and without negligence. The
burden of proving this is upon the banker claiming protection.
ii. The banker should have collected a crossed cheque, i.e., the cheque should have
been crossed before it came to him for collection.
iii. The proceeds should have been collected for a customer, i.e., a person who has an
account with him.
iv. That the collecting banker has only acted as an agent of the customer. If he had
become the holder for value, the protection available under Section 131 is forfeited—
Where for instance, the banker allows the customer to withdraw the amount of the
cheque before the cheque is collected or where the cheque has been accepted in
specific reduction of an overdraft, the banker is deemed to have become the holder for
value and the protection is lost. But the explanation to Section 131 says that the mere
crediting of the amount to the account does not imply that the banker has become a
holder for value because due to accounting conveniences the banker may credit the
account of the cheque to the customer’s account even before proceeds thereof are
realised.
Overdue, Stale or Out-of-date Cheques

Ø A cheque is overdue or becomes statute-barred after three years from its due date
of issue.
Ø A holder cannot sue on the cheque after that time.
Ø Apart from this provision, the holder of a cheque is required to present it for payment
within a reasonable time, as a cheque is not meant for indefinite circulation.
Ø In India, a cheque, which has been in circulation for more than six months, is
regarded by bankers as stale. If, as a result of any delay in presenting a cheque, the
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drawer suffers any loss, as by the failure of the bank, the drawer is discharged from
liability to the holder to the extent of the damage.
Liability of Endorser
In order to charge an endorser, it is necessary to present the cheque for payment within
a reasonable time of its delivery by such endorser. ‘A’ endorses and delivers a cheque to
B, and B keeps it for an unreasonable length of time, and then endorses and delivers it to
C. C presents it for payment within a reasonable time after its receipt by him, and it is
dishonoured. C can enforce payment against B but not against A, as qua A, the cheque has
become stale.
Rights of Holder against Banker
A banker is liable to his customer for wrongful dishonour of his cheque but it is not liable
to the payee or holder of the cheque. The holder has no right to enforce payment from
the banker except in two cases, namely,
i. where the holder does not present the cheque within a reasonable time after
issue, and as a result the drawer suffers damage by the failure of the banker in
liquidation proceedings; and
ii. where a banker pays a crossed cheque by mistake over the counter, he is liable
to the owner for any loss occasioned by it.
Crossing of Cheques
• A cheque is either “open” or “crossed”.
• An open cheque can be presented by the payee to the paying banker and is paid over
the counter.
• A crossed cheque cannot be paid across the counter but must be collected through a
banker.
• A crossing is a direction to the paying banker to pay the money generally to a banker
or to a particular banker, and not to pay otherwise.
• The object of crossing is to secure payment to a banker so that it could be traced to
the person receiving the amount of the cheque. To restrain negotiability, addition of
words “Not Negotiable” or “Account Payee Only” is necessary.
• A crossed bearer cheque can be negotiated by delivery and crossed order cheque by
endorsement and delivery.
• Crossing affords security and protection to the holder of the cheque.
Mode of crossing (Sections 123-131A)

There are two types of crossing which may be used on cheque, namely:
Ø General, and
Ø Special.
Ø To these may be added another type, i.e. Restrictive crossing.
It is general crossing where a cheque bears across its face an addition of two parallel
transverse lines and/or the addition of the words “and Co.” between them, or addition of
“not negotiable”. As stated earlier, where a cheque is crossed generally, the paying banker
will pay to any banker. Two transverse parallel lines are essential for a general crossing
(Sections 123-126).
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In case of general crossing, the holder or payee cannot get the payment over the
counter of the bank but through a bank only. The addition of the words “and Co.” do not
have any significance but the addition of the words “not negotiable” restrict the
negotiability of the cheque and in case of transfer, the transferee will not give a better
title than that of a transferor.
Where a cheque bears across its face an addition of the name of a banker, either with or
without the words “not negotiable” that addition constitutes a crossing and the cheque is
crossed specially and to that banker.
Parallel transverse lines are not essential but the name of the banker is the insignia of a
special crossing.
In case of special crossing, the paying banker is to honour the cheque only when it is
prescribed through the bank mentioned in the crossing or it’s agent bank.
Account Payee’s Crossing: Such crossing does, in practice, restrict negotiability of a

cheque. It warns the collecting banker that the proceeds are to be credited only to the
account of the payee, or the party named, or his agent. If the collecting banker allows the
proceeds of a cheque bearing such crossing to be credited to any other account, he will
be guilty of negligence and will not be entitled to the protection given to collecting banker
under Section 131. Such crossing does not affect the paying banker, who is under no duty
to ascertain that the cheque is in fact collected for the account of the person named as
payee.
Not Negotiable Crossing

• A cheque may be crossed not negotiable by writing across the face of the cheque the
words “Not Negotiable” within two transverse parallel lines in the case of a
general crossing or along with the name of a banker in the case of a special crossing.
• A person taking a cheque crossed generally or specially bearing in either case with
the words ”not negotiable" shall not have and shall not be capable of giving, a better
title to the cheque than that which the person from whom he took it had.
• The crossing of cheque “not negotiable” does not mean that it is non-transferable.
It only deprives the instrument of the incident of negotiability.
• Normally speaking, the essential feature of a negotiable instrument as opposed to
chattels is that a person who takes the instrument in good faith, without negligence,
for value, before maturity and without knowledge of the defect in the title of the
transferor, gets a good title to the instrument. It is exactly this important feature
which is taken away by crossing the cheque “not negotiable”.
• In other words, a cheque crossed “not negotiable” is like any other chattel and
therefore the transferee gets same title to the cheque which his transferor had. That
is to say that the transferee cannot claim the rights of a holder-in-due-course. So long
as the title of the transferors is good, the title of the transferees is also good but if
there is a taint in the title to the cheque of one of the endorsers, then all the subsequent
transferees’ title also become tainted with the same defect they cannot claim to be
holders-in-due-course.
• The object of this Section is to afford protection to the drawer or holder of a
cheque who is desirous of transmitting it to another person, as much protection as
can reasonably be afforded to him against dishonestly or actual miscarriage in the
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course of transit. “Not negotiable” restricts the negotiability of the cheque and in case
of transfer, the transferee will not get a better title than that of a transferor.
Maturity
• The date on which payment of an instrument falls due is called its maturity.
• According to Section 22 of the Act, “the maturity of a promissory note or a bill of
exchange is the date at which it falls due”.
• According to Section 21 a promissory note or bill of exchange payable “at sight” or
“on presentment” is payable on demand. It is due for payment as soon as it is issued.
• The question of maturity, therefore, arises only in the case of a promissory note
or a bill of exchange payable “after date” or “after sight” or at a certain period after
the happening of an event which is certain to happen.
• Every instrument payable at a specified period after date or after sight is entitled to
three days of grace. Such a bill or note matures or falls due on the last day of the
grace period, and must be presented for payment on that day and if dishonoured, suit
can be instituted on the next day after maturity.
• If an instrument is payable by instalments, each instalment is entitled to three days of
grace. No days of grace are allowed for cheques, as they are payable on demand.
Illustration - A negotiable instrument dated 31st January, 2001, is made payable at
one months after date. The instrument is at maturity on the third day after the 28th
February, 2001, i.e. on 3rd March, 2001.
• If the day of maturity falls on a public holiday, the instrument is payable on the
preceeding business day. Thus, if a bill is at maturity on a Sunday. It will be deemed
due on Saturday and not on Monday.
• The ascertainment of the date of maturity becomes important because all these
instruments must be presented for payment on the last day of grace and their
payment cannot be demanded before that date.
Holder (Sec 8)
A person is a holder of a negotiable instrument who is entitled in his own name
i. to the possession of the instrument, and
ii. to recover or receive its amount from the parties thereto.
• It is not every person in possession of the instrument who is called a holder.
• To be a holder, the person must be named in the instrument as the payee, or the
endorsee, or he must be the bearer thereof.
• A person who has obtained possession of an instrument by theft, or under a forged
endorsement, is not a holder, as he is not entitled to recover the instrument. The
holder implies de jure (holder in law) holder and not de facto (holder in fact) holder.
• An agent holding an instrument for his principal is not a holder although he may
receive its payment.
Holder in Due Course (Sec 9)

A holder in due course is
i. a person who for consideration, obtains possession of a negotiable instrument if
payable to bearer, or
ii. the payee or endorsee thereof, if payable to order, before its maturity and without
having sufficient cause to believe that any defect existed in the title of the person
from whom he derived his title.
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In order to be a holder in due course, a person must satisfy the following

conditions:
Ø He must be the holder of the instrument.
Ø He should have obtained the instrument for value or consideration.
Ø He must have obtained the negotiable instrument before maturity.
Ø The instrument should be complete and regular on the face of it.
Ø The holder should take the instrument in good faith.
A holder in due course is in a privileged position. He is not only himself protected

against all defects of the persons from whom he received the instrument as current coin,
but also serves as a channel to protect all subsequent holders.
A holder in due course can recover the amount of the instrument from all previous
parties, although, as a matter of fact, no consideration was paid by some of the previous
parties to the instrument or there was a defect of title in the party from whom he took it.
Once an instrument passes through the hands of a holder in due course, it is purged of all
defects. It is like current coin. Whoever takes it can recover the amount from all parties
previous to such holder.
Capacity of Parties
• Capacity to incur liability as a party to a negotiable instrument is co-extensive with
capacity to contract.
• According to Section 26, every person capable of contracting according to law to
which he is subject, may bind himself and be bound by making, drawing, acceptance,
endorsement, delivery and negotiation of a promissory note, bill of exchange or
cheque.
• Negatively, minors, lunatics, idiots, drunken person and persons otherwise
disqualified by their personal law, do not incur any liability as parties to negotiable
instruments. But incapacity of one or more of the parties to a negotiable instrument
in no way, diminishes the abilities and the liabilities of the competent parties.
• Where a minor is the endorser or payee of an instrument which has been endorsed
all the parties accepting the minor are liable in the event of its dishonour.
Liability of Parties
The provisions regarding the liability of parties to negotiable instruments are laid down
in Sections 30 to 32 and 35 to 42 of the Negotiable Instruments Act. These provisions are
as follows:
1. Liability of Drawer (Section 30)
Ø The drawer of a bill of exchange or cheque is bound, in case of dishonour by the
drawee or acceptor thereof, to compensate the holder, provided due notice of
dishonour has been given to or received by the drawer.
Ø The nature of drawer’s liability is that by drawing a bill, he undertakes that
i. on due presentation, it shall be accepted and paid according to its tenor, and
ii. in case of dishonour, he will compensate the holder or any endorser, provided
notice of dishonour has been duly given. However, in case of accommodation
bill no notice of dishonour to the drawer is required.
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Ø The liability of a drawer of a bill of exchange is secondary and arises only on default
of the drawee, who is primarily liable to make payment of the negotiable instrument.
2. Liability of the Drawee of Cheque (Section 31)

Ø The drawee of a cheque having sufficient funds of the drawer in his hands properly
applicable to the payment of such cheque must pay the cheque when duly required to
do so and, or in default of such payment, he shall compensate the drawer for any loss
or damage caused by such default.
Ø As a cheque is a bill of exchange, drawn on a specified banker, the drawee of a cheque
must always be a banker.
Ø The banker, therefore, is bound to pay the cheque of the drawer, i.e., customer, if the
following conditions are satisfied:
i. The banker has sufficient funds to the credit of customer’s account.
ii. The funds are properly applicable to the payment of such cheque, e.g., the funds
are not under any kind of lien etc.
iii. The cheque is duly required to be paid, during banking hours and on or after the
date on which it is made payable.
Ø If the banker is unjustified in refusing to honour the cheque of its customer, it shall be
liable for damages.
3. Liability of “Maker” of Note and “Acceptor” of Bill (Section 32)

Ø In the absence of a contract to the contrary, the maker of a promissory note and the
acceptor before maturity of a bill of exchange are bound to pay the amount thereof
at maturity, according to the apparent tenor of the note or acceptance respectively.
Ø It follows that the liability of the acceptor of a bill corresponds to that of the maker of
a note and is absolute and unconditional but the liability under this Section is subject
to a contract to the contrary (e.g., as in the case of accommodation bills) and may be
excluded or modified by a collateral agreement.
Ø Further, the payment must be made to the party named in the instrument and not to
any-one else, and it must be made at maturity and not before.
4. Liability of endorser (Section 35)

Every endorser incurs liability to the parties that are subsequent to him. Whoever
endorses and delivers a negotiable instrument before maturity is bound thereby to
every subsequent holder in case of dishonour of the instrument by the drawee,
acceptor or maker, to compensate such holder of any loss or damage caused to him
by such dishonour provided (i) there is no contract to the contrary; (ii) he (endorser)
has not expressly excluded, limited or made conditional his own liability; and (iii) due
notice of dishonour has been given to, or received by, such endorser. Every endorser
after dishonour, is liable upon the instrument as if it is payable on demand. He is
bound by his endorsement notwithstanding any previous alteration of the
instrument. (Section 88)
5. Liability of Prior Parties (Section 36)

Every prior party to a negotiable instrument is liable thereon to a holder in due
course until the instrument is duly satisfied. Prior parties may include the maker
or drawer, the acceptor and all the intervening endorsers to a negotiable instrument.
The liability of the prior parties to a holder in due course is joint and several. The
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holder in due course may hold any or all prior parties liable for the amount of the
dishonoured instrument.
6. Liability inter se
Various parties to a negotiable instrument who are liable thereon stand on a different
footing with respect to the nature of liability of each one of them.
7. Liability of Acceptor of Forged Endorsement (Section 41)

An acceptor of a bill of exchange already endorsed is not relieved from liability by
reason that such endorsement is forged, if he knew or had reason to believe the
endorsement to be forged when he accepted the bill.
8. Acceptor’s Liability on a Bill drawn in a Fictitious Name
An acceptor of a bill of exchange drawn in a fictitious name and payable to the
drawer’s order is not, by reason that such name is fictitious, relieved from liability to
any holder in due course claiming under an endorsement by the same hand as the
drawer’s signature, and purporting to be made by the drawer.
Negotiation (Section 14)

A negotiable instrument may be transferred by negotiation or assignment. Negotiation is
the transfer of an instrument for one person to another in such a manner as to convey
title and to constitute the transferee the holder thereof. When a negotiable
instrument is transferred by negotiation, the rights of the transferee may rise higher
than those of the transferor, depending upon the circumstances attending the
negotiation. When the transfer is made by assignment, the assignee has only those rights
which the assignor possessed. In case of assignment, there is a transfer of ownership by
means of a written and registered document.
Negotiability and Assignability Distinguished

A transfer by negotiation differs from transfer by assignment in the following respects:
a) Negotiation requires mere delivery of a bearer instrument and endorsement and
delivery of an order instrument to effectuate a transfer. Assignment requires a
written document signed by the transferor.
b) Notice of transfer of debt (actionable claim) must be given by the assignee to the
debtor in order to complete his title; no such notice is necessary in a transfer by
negotiation.
c) On assignment, the transferee of an actionable claim takes it subject to all the defects
in the title of, and subject to all the equities and defences available against the
assignor, even though he took the assignment for value and in good faith. In case of
negotiation the transferee, as holder-in-due course, takes the instrument free from
any defects in the title of the transferor.
Importance of Delivery
Negotiation is effected by mere delivery of a bearer instrument and by endorsement and
delivery of an order instrument. This shows that “delivery” is essential in negotiable
instruments. Section 46 expressly provides that making acceptance or endorsement
of negotiable instrument is not complete until delivery, actual or constructive, of the
instrument. Delivery made voluntarily with the intention of passing property in the
instrument to the person to whom it is given is essential.
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Negotiation by Mere Delivery

• A bill or cheque payable to bearer is negotiated by mere delivery of the instrument.
An instrument is payable to bearer:
i. Where it is made so payable, or
ii. Where it is originally made payable to order but the only or the last endorsement
is in blank.
iii. Where the payee is a fictitious or a non-existing person.
• These instruments do not require signature of the transferor. The person who takes
them is a holder, and can sue in his own name on them.
• Where a bearer negotiates an instrument by mere delivery, and does not put his
signature thereon, he is not liable to any party to the instrument in case the
instrument is dishonoured, as he has not lent his credit to it. His obligations are only
towards his immediate transferee and to no other holders.
• A cheque, originally drawn payable to bearer remains bearer, even though it is
subsequently endorsed in full. The rule is once a bearer cheque always a bearer
cheque.
Negotiation by Endorsement and Delivery

An instrument payable to a specified person or to the order of a specified person or to a
specified person or order is an instrument payable to order. Such an instrument can be
negotiated only by endorsement and delivery. Unless the holder signs his endorsement
on the instrument, the transferee does not become a holder. Where an instrument
payable to order is delivered without endorsement, it is merely assigned and not
negotiated and the holder thereof is not entitled to the rights of a holder in due course,
and he cannot negotiate it to a third person.
Endorsement (Sections 15 and 16)

Where the maker or holder of a negotiable instrument signs the same otherwise than as
such maker for the purpose of negotiation, on the back or face thereof or on a slip of paper
annexed thereto (called Allonge), or so, signs for the same purpose, a stamped paper
intended to be completed as a negotiable instrument, he is said to endorse the same
(Section 15), the person to whom the instrument is endorsed is called the endorsee.
In other words, ‘endorsement’ means and involves the writing of something on the
back of an instrument for the purpose of transferring the right, title and interest therein
to some other person.
Classes of endorsement
An endorsement may be
a) Blank or General: An endorsement is to be blank or general where the endorser
merely writes his signature on the back of the instrument, and the instrument so
endorsed becomes payable to bearer, even though originally it was payable to order.
Thus, where bill is payable to “Mohan or order”, and he writes on its back “Mohan”, it
is an endorsement in blank by Mohan and the property in the bill can pass by mere
delivery, as long as the endorsement continues to be a blank. But a holder of an
instrument endorsed in blank may convert the endorsement in blank into an
endorsement in full, by writing above the endorser’s signature, a direction to pay the
instrument to another person or his order.
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b) Special or Full: If the endorser signs his name and adds a direction to pay the
amount mentioned in the instrument to, or to the order of a specified person, the
endorsement is said to be special or in full. A bill made payable to Mohan or Mohan or
order, and endorsed “pay to the order of Sohan” would be specially endorsed and
Sohan endorses it further. A blank endorsement can be turned into a special one by
the addition of an order making the bill payable to the transferee.
c) Restrictive: An endorsement is restrictive which prohibits or restricts the further
negotiation of an instrument. Examples of restrictive endorsement: “Pay A only” or
“Pay A for my use” or “Pay A on account of B” or “Pay A or order for collection”.
d) Partial: An endorsement partial is one which purports to transfer to the endorsee a
part only of the amount payable on the instrument. A partial endorsement does not
operate as negotiation of the instrument. A holds a bill for Rs. 1,000 and endorses it
as “Pay B or order Rs. 500". The endorsement is partial and invalid.
e) Conditional or qualified: An endorsement is conditional or qualified which limits or
negatives the liability of the endorser. An endorser may limit his liability in any of the
following ways:
Ø By sans recourse endorsement, i.e. by making it clear that he does not incur the
liability of an endorser to the endorsee or subsequent holders and they should not
look to him in case of dishonour of instrument. The endorser excludes his liability
by adding the words “sans recourse” or “without recourse”.
Ø By making his liability depending upon happening of a specified event which may
never happen, e.g., the holder of a bill may endorse it thus: “Pay A or order on his
marrying B”. In such a case, the endorser will not be liable until A marries B.
It is pertinent to refer to Section 52 which reads “The endorser of a negotiable
instrument may, by express words in the endorsement exclude his own liability thereon,
or make such liability or the right of the endorsee to receive the amount due thereon
depend upon the happening of a specified event, although such event may never happen”.
Negotiation Back
Where an endorser negotiates an instrument and again becomes its holder, the
instrument is said to be negotiated back to that endorser and none of the intermediary
endorsees are then liable to him. The rule prevents a circuity of action.
For example, A, the holder of a bill endorses it to B, B endorses to C, and C to D, and

endorses it again to A. A, being a holder in due course of the bill by second endorsement
by D, can recover the amount thereof from B, C, or D and himself being a prior party is
liable to all of them. Therefore, A having been relegated by the second endorsement to his
original position, cannot sue B, C and D.
Negotiation of Lost Instrument or that Obtained by Unlawful Means

When a negotiable instrument has been lost or has been obtained from any maker,
acceptor or holder thereof by means of an offence or fraud, or for an unlawful
consideration, no possessor or endorsee, who claims through the person who found or
obtained the instrument is entitled to receive the amount due thereon from such maker,
acceptor, or holder from any party prior to such holder unless such possessor or endorsee
is, or some person through whom he claims was, a holder in due course.
Forged Endorsement
18.18
• If an instrument is endorsed in full, it cannot be negotiated except by an endorsement
signed by the person to whom or to whose order the instrument is payable, for the
endorsee obtains title only through his endorsement.
• Thus, if an instrument be negotiated by means of a forged endorsement, the endorsee
acquires no title even though he be a purchaser for value and in good faith, for the
endorsement is a nullity. Forgery conveys no title.
• But where the instrument is a bearer instrument or has been endorsed in blank, it can
be negotiated by mere delivery, and the holder derives his title independent of the forged
endorsement and can claim the amount from any of the parties to the instrument.
For example, a bill is endorsed, “Pay A or order”. A endorses it in blank, and it comes into
the hands of B, who simply delivers it to C, C forges B’s endorsement and transfer it to D.
Here, D, as the holder does not derive his title through the forged endorsement of B, but
through the genuine endorsement of A and can claim payment from any of the parties to
the instrument in spite of the intervening forged endorsement.
Acceptance of a Bill of Exchange

• The drawee of a bill of exchange, as such, has no liability on any bill addressed to him
for acceptance or payment. A refusal to accept or to pay such bill gives the holder no
rights against him. The drawee becomes liable only after he accepts the bill. The
acceptor has to write the word ‘accepted’ on the bill and sign his name below it. Thus,
it is the acceptor who is primarily liable on a bill.
• An acceptance may be either general or qualified. A general acceptance is absolute
and as a rule, an acceptance has to be general.
• Where an acceptance is made subject to some condition or qualification, thereby
varying the effect of the bill, it is a qualified acceptance. The holder of the bill may
either refuse to take a qualified acceptance or non-acquiescence in it. Where he
refuses to take it, he can treat the bill as dishonoured by non-acceptance, and sue the
drawer accordingly.
Presentment for Acceptance

It is only bills of exchange that require presentment for acceptance and even these of
certain kinds only. Bills payable on demand or on a fixed date need not be presented.
Thus, a bill payable 60 days after due date on the happening of a certain event may or
may not be presented for acceptance. But the following bills must be presented for
acceptance otherwise; the parties to the bill will not be liable on it:
a) A bill payable after sight. Presentment is necessary in order to fix maturity of the bills;
and
b) A bill in which there is an express stipulation that it shall be presented for acceptance
before it is presented for payment.
Section 15 provides that the presentment for acceptance must be made to the drawee
or his duly authorised agent. If the drawee is dead, the bill should be presented to his legal
representative, or if he has been declared an insolvent, to the official receiver or assigner.
The following are the persons to whom a bill of exchange should be presented:
i. The drawee or his duly authorised agent.
ii. If there are many drawees, bill must be presented to all of them.
iii. The legal representatives of the drawee if drawee is dead.
iv. The official receiver or assignee of insolvent drawee.
18.19
v. To a drawee in case of need, if there is any. This is necessary when the original
drawee refuses to accept the bill.
vi. The acceptor for honour. In case the bill is not accepted and is noted or protested for
non acceptance, the bill may be accepted by the acceptor for honour. He is a person
who comes forward to accept the bill when it is dishonoured by non-acceptance.
The presentment must be made before maturity, within a reasonable time after it is
drawn, or within the stipulated period, if any, on a business day within business hours
and at the place of business or residence of the drawee.
The presentment must be made by exhibiting the bill to the drawee; mere notice of its
existence in the possession of holder will not be sufficient.
When presentment is compulsory and the holder fails to present for acceptance, the
drawer and all the endorsers are discharged from liability to him.
Presentment for Acceptance when Excused

Compulsory presentment for acceptance is excused and the bill may be treated as
dishonoured in the following cases:
a) Where the drawee cannot be found after reasonable search.
b) Where drawee is a fictitious person or one incapable of contracting.
c) Where although the presentment is irregular, acceptance has been refused on some
other ground.
Presentment for Payment

• Section 64 lays down the general rule as to presentment of negotiable instruments
for payment. It says all notes, bills and cheques must be presented for payment
thereof respectively by or on behalf of the holder during the usual hours of business
and of the maker or acceptor, and if at banker’s within banking hours.
• Section 64(2) stipulates, where an electronic image of a truncated cheque is
presented for payment, the drawee bank is entitled to demand any further
information regarding the truncated cheque from the bank holding the truncated
cheque in case of any reasonable suspicion about the genuineness of the apparent
tenor of instrument, and if the suspicion is that of any fraud, forgery, tampering or
destruction of the instrument, it is entitled to further demand the presentment of the
truncated cheque itself for verification: Provided that the truncated cheque so
demanded by the drawee bank shall be retained by it, if the payment is made
accordingly.
Presentment for Payment when Excused

No presentment is necessary and the instrument may be treated as dishonoured in the
following cases:
a) Where the maker, drawer or acceptor actively does something so as to intentionally
obstruct the presentment of the instrument, e.g., deprives the holder of the
instrument and keeps it after maturity.
b) Where his business place is closed on the due date.
c) Where no person is present to make payment at the place specified for payment.
d) Where he cannot, after due search be found. (Section 61)
e) Where there is a promise to pay notwithstanding non-presentment.
18.20
f) Where the presentment is express or impliedly waived by the party entitled to
presentment.
g) Where the drawer could not possibly have suffered any damage by non-presentment.
h) Where the drawer is a fictitious person, or one incompetent to contract.
i) Where the drawer and the drawee are the same person.
j) Where the bill is dishonoured by non-acceptance.
k) Where presentment has become impossible, e.g., the declaration of war between the
countries of the holder and drawee.
l) Where though the presentment is irregular, acceptance has been refused on some
other grounds.
Dishonour by Non-Acceptance (Section 91)
A bill is said to be dishonoured by non-acceptance:
a) When the drawee does not accept it within 48 hours from the time of presentment for
acceptance.
b) When presentment for acceptance is excused and the bill remains unaccepted.
c) When the drawee is incompetent to contract.
d) When the drawee is a fictitious person or after reasonable search can not be found.
e) Where the acceptance is a qualified one.
Dishonour by Non-payment (Section 92)

A promissory note, bill of exchange or cheque is said to be dishonoured by non-payment
when the maker of the note, acceptor of the bill or drawee of the cheque makes default
in payment upon being duly required to pay the same. Also, a negotiable instrument is
dishonoured by non-payment when presentment for payment is excused and the
instrument when overdue remains unpaid.
If the bill is dishonoured either by non-acceptance or by non-payment, the drawer and all
the endorsers of the bill are liable to the holder, provided he gives notice of such
dishonour. The drawee is liable only when there is dishonour by non-payment.
Notice of Dishonour (Sections 91-98 and Sections 105-107)

• When a negotiable instrument is dishonoured either by non-acceptance or by non-
payment, the holder or some party liable thereon must give notice of dishonour
to all other parties whom he seeks to make liable.
• Each party receiving notice of dishonour must in order to render any prior party liable
to himself, give notice of dishonour to such party within a reasonable time after he
has received it.
• The object of giving notice is not to demand payment but to whom the party
notified of his liability and in case of drawer to enable him to protect himself as
against the drawee or acceptor who has dishonoured the instrument issued by him.
Notice of dishonour is so necessary that an omission to give it discharges all parties
other than the maker or acceptor.
• Notice may be oral or in writing, but it must be actual formal notice. It must be given
within a reasonable time of dishonour.
Notice of Dishonour Unnecessary

No notice of dishonour is necessary:
a) When it is dispensed with or waived by the party entitled thereto, e.g., where an
endorser writes on the instrument such words as “notice of dishonour waived”,
18.21
b) When the drawer has countermanded payment.
c) When the party charged would not suffer damage for want of notice.
d) When the party entitled to notice cannot after due search be found.
e) When the omission to give notice is caused by unavoidable circumstances, e.g., death
or dangerous illness of the holder.
f) Where the acceptor is also a drawer, e.g., where a firm draws on its branch.
g) Where the promissory note is not negotiable. Such a note cannot be endorsed.
h) Where the party entitled to notice promises to pay unconditionally.
Noting and Protest (Sections 99-104 A)
Noting and Protest (Section 99-104A)

Noting
Where a note or bill is dishonoured, the holder is entitled after giving due notice of
dishonour, to sue the drawer and the endorsers. Section 99 provides a convenient
method of authenticating the fact of dishonour by means of “Noting”.
The noting or minute must be recorded by the notary public within a reasonable time
after dishonour and must contain the fact of dishonour, the date of dishonour, the reason,
if any, assigned for such dishonour if the instrument has not been expressly dishonoured
the reasons why the holder treats it dishonoured and notary’s charges.
Protest
• The protest is the formal notarial certificate attesting the dishonour of the bill,
and based upon the noting which has been effected on the dishonour of the bill.
• After the noting has been made, the formal protest is drawn up by the notary and
when it is drawn up it relates back to the date of noting.
• Where the acceptor of a bill has become insolvent, or has suspended payment, or his
credit has been publicly impeached, before the maturity of the bill, the holder may
have the bill protested for better security.
• The notary public demands better security and on its refusal makes a protest known
as “protest for better security”.
• Where a bill is required by law to be protested, then instead of a notice of dishonour,
notice of protest must be given by the notary public.
• A protest to be valid must contain on the instrument itself or a literal transcript
thereof, the names of the parties for and against whom protest is made, the fact and
reasons for dishonour together with the place and time of dishonour and the
signature of the notary public. Protest affords an authentic evidence of dishonour
to the drawer and the endorsee.
Discharge
The discharge in relation to negotiable instrument may be either
Ø discharge of the instrument or
Ø discharge of one or more parties to the instrument from liability.
1. Discharge of the Instrument

A negotiable instrument is discharged:
i. by payment in due course;
ii. when the principal debtor becomes the holder;
iii. by an act that would discharge simple contract;
18.22
iv. by renunciation; and
v. by cancellation.
2. Discharge of a Party or Parties

When any particular party or parties are discharged, the instrument continues to be
negotiable and the undischarged parties remain liable on it. A party may be
discharged in the following ways :
i. By cancellation by the holder of the name of any party to it with the intention of
discharging him.
ii. By release, when the holder releases any party to the instrument
iii. Discharge of secondary parties, i.e., endorsers.
iv. By the operation of the law, i.e., by insolvency of the debtor.
v. By allowing drawee more than 48 hours to accept the bill, all previous parties are
discharged.
vi. By non-presentment of cheque promptly the drawer is discharged.
vii. By taking qualified acceptance, all the previous parties are discharged.
viii. By material alteration.
Material Alteration (Section 87)
Material Alteration (Section 87)
• An alteration is material which in any way alters the operation of the instrument
and the liabilities of the parties thereto.
• A material alteration renders the instrument void, but it affects only those persons
who have already become parties at the date of the alteration. Those who take the
altered instrument cannot complain.
• Section 88 provides that an acceptor or endorser of a negotiable instrument is bound
by his acceptance or endorsement notwithstanding any previous alteration of the
instrument.
• Examples of material alteration are :
Alteration
Ø of the date of the instrument
Ø of the sum payable,
Ø in the time of payment,
Ø of the place of payment,
Ø of the rate of interest,
Ø by addition of a new party,
Ø tearing the instrument in a material part.
• There is no material alteration and the instrument is not vitiated in the following
cases:
a) correction of a mistake,
b) to carry out the common intention of the parties,
c) an alteration made before the instrument is issued and made with the consent of
the parties,
d) crossing a cheque,
e) addition of the words “on demand” in an instrument where no time of payment is
stated.
• Section 89 affords protection to a person who pays an altered note bill or cheque.
However, in order to be able to claim the protection, the following conditions must
be fulfilled:
18.23
i. the alteration should not be apparent;
ii. the payment must be made in due course; and
iii. the payment must be by a person or banker liable to pay.
• Section 89 has been amended so that it also provides that any bank or a clearing
house which receives a transmitted electronic image of a truncated cheque, shall
verify from the party who transmitted the image to it, that the image so transmitted
to it and received by it, is exactly the same. Where there is any difference in apparent
tenor of such electronic image and the truncated cheque, it shall be a material
alteration. In such a case, it shall be the duty of the bank or the clearing house, as the
case may be, to ensure the exactness of the apparent tenor of electronic image of the
truncated cheque while truncating and transmitting the image. If the bank fails to
discharge this duty, the payment made by it shall not be regarded as good and it
shall not be afforded protection.
Retirement of a Bill under Rebate

An acceptor of a bill may make payment before maturity, and the bill is then said to
be retired, but it is not discharged and must not be cancelled except by the acceptor
when it comes into his hands. It is customary in such a case to make allowance of
interest on the money to the acceptor for the remainder of the time which the bill has
to run. The interest allowance is known as rebate.
Hundis
• Hundis are negotiable instruments written in an oriental language.
• They are not covered under the Negotiable Instruments Act, 1881.
• Generally, they are governed by the customs and usages in the locality but if custom
is silent on the point in dispute before the Court, this Act applies to the hundis.
• Generally understood, the term “hundi” includes all indigenous negotiable
instruments whether they are bills of exchange or promissory notes. An instrument
in order to be a hundi must be capable of being sued by the holder in his own name,
and must by the custom of trade be transferred like cash by delivery.
The following types of hundis are worth mentioning :

1. Shah Jog Hundi
“Shah” means a respectable and responsible person or a man of worth in the bazar.
Shah Jog Hundi means a hundi which is payable only to a respectable holder, as
opposed to a hundi payable to bearer. In other words the drawee before paying the
same has to satisfy himself that the payee is a ‘SHAH’.
2. Jokhmi Hundi
A “jokhmi” hundi is always drawn on or against goods shipped on the vessel
mentioned in the hundi. It implies a condition that money will be paid only in the
event of arrival of the goods against which the hundi is drawn. It is in the nature of
policy of insurance. The difference, however, is that the money is paid before hand
and is to be recovered if the ship arrives safely.
3. Jawabee Hundi
According to Macpherson, “A person desirous of making a remittance writes to the
payee and delivers the letter to a banker, who either endorses it on to any of his
18.24
correspondents near the payee’s place of residence, or negotiates its transfer. On the
arrival, the letter is forwarded to the payee, who attends and gives his receipt in the
form of an answer to the letter which is forwarded by the same channel of the drawer
or the order.” Therefore, this is a form of hundi which is used for remitting money
from one place to another.
4. Nam jog Hundi

It is a hundi payable to the party named in the bill or his order. The name of the payee
is specifically inserted in the hundi. It can also be negotiated like a bill of exchange. Its
alteration into a Shah Jog hundi is a material alteration and renders it void.
5. Darshani Hundi
This is a hundi payable at sight. It is freely negotiable and the price is regulated by
demand and supply. They are payable on demand and must be presented for payment
within a reasonable time after they are received by the holder.
6. Miadi Hundi
This is otherwise called muddati hundi, that is, a hundi payable after a specified period
of time. Usually money is advanced against these hundis by shroffs after deducting
the advance for the period in advance.
Presumptions of Law
A negotiable instrument is subject to certain presumptions. These have been recognised
by the Negotiable Instruments Act under Sections 118 and 119 with a view to facilitate
the business transactions. These are described below:
It shall be presumed that:
i. Every negotiable instrument was made or drawn for consideration irrespective
of the consideration mentioned in the instrument or not.
ii. Every negotiable instrument having a date was made on such date.
iii. Every accepted bill of exchange was accepted within a reasonable time before
its maturity.
iv. Every negotiable instrument was transferred before its maturity.
v. The instruments were endorsed in the order in which they appear on it.
vi. A lost or destroyed instrument was duly signed and stamped.
vii. The holder of the instrument is a holder in due course.
viii. In a suit upon an instrument which has been dishonoured, the Court shall presume
the fact of dishonour, or proof of the protest.
However these legal presumptions are rebuttable by evidence to the contrary. The
burden to prove to the contrary lies upon the defendant to the suit and not upon the
plaintiff.
Payment of Interest in case of dishonour

The Negotiable Instruments Act, 1881 was amended in the year 1988, revising the rate of
interest as contained in Sections 80 and 117, from 6 & to 18 % p.a. payable on negotiable
instruments from the due date in case no rate of interest is specified, or payable to an
endorser from the date of payment on a negotiable instrument on its dishonour with a
view to discourage the withholding of payment on negotiable instruments on due dates.
18.25
Penalties in case of dishonour of cheques

Chapter XVII of the Negotiable Instruments Act provides for penalties in case of
dishonour of certain cheques for insufficiencies of funds in the accounts.
Chapter XVII has been amended by the Negotiable Instruments (Amendment and
Miscellaneous Provisions) Act, 2002.
The provisions contained in this Chapter provide that where any cheque drawn by a
person for discharge of any liability is returned by the bank unpaid for the reason of
insufficiency of the amount of money standing to the credit of the account on which the
cheque was drawn or for the reason that it exceeds the arrangement made by the drawer
of the cheque with the banker for that account, the drawer of such cheque shall be
deemed to have committed an offence and shall be punishable with imprisonment
for a term which may extend to 2 years, or with fine which may extend to twice the
amount of the cheque, or with both.
In order to constitute the said offence
a) such cheque should have been presented to the bank within a period of 6 months from
the date on which it is drawn or within the period of its validity, whichever is earlier;
and
b) the payee or holder in due course of such cheque should have made a demand for the
payment of the said amount of money by giving notice, in writing, to the drawer of the
cheque within 30 days of the receipt of information by him from the bank regarding
the return of the cheque unpaid; and
c) the drawer of such cheque should have failed to make the payment of the said amount
of money to the payee or the holder in due course of the cheque within 15 days of the
receipt of the said notice.
It has also been provided that it shall be presumed, unless the contrary is proved, that
the holder of such cheque received the cheque in the discharge of a liability.
The Supreme Court in Modi Cements Ltd. v. K.K. Nandi, held that merely because the
drawer issued a notice to the drawee or to the Bank for ‘stop payment’, it would not
preclude an action u/s 138 by the drawee or holder in due course.
In order to ensure that genuine and honest bank customers are not harassed or put
to inconvenience, sufficient safeguards have also been provided in the new Chapter, as
under:
a) that no court shall take cognizance of such offence except on a complaint in writing,
made by the payee or the holder in due course of the cheque;
b) that such complaint is made within one month or the date on which the cause of action
arises;
c) that no court inferior to that of a Metropolitan Magistrate or a Judicial magistrate of
the first class shall try any such offence. (Section 142)
Moreover, the new Sections inserted by the Amendment Act, 2002 provide that all
offences under this Chapter shall be tried by a Judicial Magistrate of the first class
or by a Metropolitan Magistrate:
According to Section 142(2) of the Negotiable Instrument (Amendment) Act, 2015, the
offence under section 138 shall be inquired into and tried only by a court within whose
local jurisdiction, the branch of the bank where the payee or holder in due course, as the
case may be, maintains the account, is situated; or if the cheque is presented for payment
18.26
by the payee or holder in due course, otherwise through an account, the branch of the
drawee bank where the drawer maintains the account, is situated.
Where an acknowledgement purporting to be signed by the accused or the witness or an

endorsement purported to be made by any person authorised by the postal department
or the courier services that the accused or the witness refused to take delivery of
summons has been received, the court issuing the summons may declare that the
summons has been duly served. (Section 144)
The court may, if it thinks fit, and shall, on the application of the prosecution or the
accused, summon and examine any person giving evidence on affidavit as to the facts
contained therein. (Section 145)
The court shall, in respect of every proceeding under this Chapter, on production of
bank’s slip or memo having thereon the official mark denoting that the cheque has been
dishonoured, presume the fact of dishonour of such cheque, unless and until such fact is
disproved. Every offence punishable under this Act shall be compoundable. (Sections
146 & 147)
National Electronic Fund Transfer (NEFT) & Real Time Gross Settlement (RTGS)
• NEFT is a nation-wide payment system facilitating one-to-one funds transfer. Under
this Scheme, individuals, firms and corporates can electronically transfer funds
from any bank branch to any individual, firm or corporate having an account with any
other bank branch in the country participating in the Scheme.
• NEFT is an electronic fund transfer system that operates on a Deferred Net
Settlement (DNS) basis which settles transactions in batches. In DNS, the settlement
takes place with all transactions received till the particular cut-off time.
• These transactions are netted (payable and receivables) in NEFT whereas in RTGS the
transactions are settled individually.
• For example, currently, NEFT operates in hourly batches. Any transaction initiated
after a designated settlement time would have to wait till the next designated
settlement time Contrary to this, in the RTGS transactions are processed continuously
throughout the RTGS business hours.
• RTGS which can be defined as the continuous (realtime) settlement of funds
transfers individually on an order by order basis (without netting). ‘Real Time’
means the processing of instructions at the time they are received rather than at
some later time; ‘Gross Settlement’ means the settlement of funds transfer
instructions occurs individually (on an instruction by instruction basis). Considering
that the funds settlement takes place in the books of the Reserve Bank of India, the
payments are final and irrevocable.
18.27

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INDEX

Sr. No. Chapter Page no.

2. Constitution of India 2.1 – 2.27

7.1 Indian Penal Code, 1860 7.1 – 7.18

7.2 Criminal Procedure Code, 1973 7.19 – 7.35

9. Specific Relief Act 9.1 – 9.18

11. Arbitration and Conciliation Act, 1996 11.1 – 11.24

12. Indian Stamp Act, 1899 12.1 – 12.11

14. Right to Information Act, 2005 14.1 – 14.10

15. Information Technology Act, 2000 15.1 – 15.9

16. Indian Contract Act 1872 16.1 – 16.42

Various definitions of law can be classified in to following 5 classes:

2. Positivistic Definition of Law

norm called Grund norm.

3. Historical Definition of Law

4. Sociological Definition of Law

5. Realist Definition of Law

Main features of Law:

Laws are made effective:

ii. By requiring one, in some instances, to complete an obligation he has failed to

SOURCES OF INDIAN LAW

A. Principle or Primary source

1. Customs or Customary Law

Requisites of a Valid Custom

and it must have been regarded by those affected by it as an obligatory or

2. Judicial Decision or Precedents

(iii) Absolutely Authoritative Precedents: An authoritative precedent is one

(iv) Conditionally Authoritative Precedents: A conditionally authoritative

Doctrine of Stare Decisis

Ratio decidendi contains the following basic ingredients:

• The Parliament of India possesses the power of supreme legislation. Legislative

Hindu Sources Shruti and Smriti

B. Secondary source of Law

2. Sources of English Law

Mercantile Law or Commercial Law

The following are the main sources of Mercantile Law in India:

2. Acts enacted by Indian Legislature or Statute Law:

4. Customs and Trade Usages:

John Austin’s command theory of law

Roscoe pound Theory

Roscoe pound’s classify interest in following 3 categories

John William Salmond’s theory

Hans Kelson’s pure theory of Law

Kelsen described law as a “normative science’ as distinguished from natural sciences

Jaremy Banthem’s theory of Law

defined as an assemblage of signs, declarative of volition, conceived or adopted by a

The essential features of a Federal Polity or System are—

The Nehru Committee recommended the inclusion of Fundamental Rights in the

Part III of the Indian Constitution guarantees 6 categories of fundamental rights.

performs judicial functions, e.g. determination of scope of fundamental rights vis-a-

While in exercise of non-judicial functions e.g. in exercise of rule-making powers,

Test for instrumentality or agency of the State

Justifiability of Fundamental Rights

Single Person Law

Test of valid classification

i. the classification must be founded on an intelligible differentia which must distinguish

Possession of higher qualification can be treated as a valid base or classification of two

Article 15: Prohibition of discrimination on grounds of religion etc.

Article 16: Equality of opportunity in matters of public employment.

Article 17: Abolition of untouchability