Fundamentals of Business Law and Business Communication

(Tutorial Notes)
Unit - I: Sources of Law - Legislation process in India - Legal methods and Court system in India
- Primary and subordinate legislation.
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Law, as a tool of governance, has been dynamic in nature, expanding its horizons to
accommodate the requirements of the society, over centuries. As we trace the sources, let us
understand what law is, in the simplest of terms.
“Law is a set of rules…” (for the society) – Concept of Law by H.L.A. Hart.
Sources of Law and Legal System in India before Independence – Brief History
The study of Indian legal history can primarily be divided into four periods:
1) The Ancient Period
2) The Medieval Period
3) The British Administrative Period
4) Indian Legal Period
The Ancient Period of law and governance can be found in and around the geographical
boundaries of modern day India, 1500 years before and after the beginning of approximately
the first decade of the Gregorian calendar. This era is mostly ruled and governed by kings
having their own territories, and having laws and regulations that were very localized and
specific to their geographical boundaries. So, with every passing territory, the set of laws
differed.
Ancient Indian Courts can be divided into six categories based on their rank.
They are as follows:
⊙ The Kula - Family Councils or groups
⊙ The Shreni - Trade or Professional Councils
⊙ The Gana - Village Assembly
⊙ Adhikrita - Court appointed by the King
⊙ Sasita - King’s Court
⊙ Nripa – The King
But, as foreign invasions began to rise in numbers along-with the magnitude of these attacks,
it became inevitable that the Indian sub-continent continue in the model of governance, that it
had for centuries. Along with it, came changes to administration and subsequently to the legal
system concerned.
The Medieval Period begins around the 12th century majorly influenced by foreign invasions
and the idea of justice and laws they imported along-with themselves (overlapping with other
legal systems under rulers of different faith). In 12th century when Mohammed Ghori defeated
Prithviraj Chauhan at the Second Battle of Tarain in 1192 AD, shortly after which Qutubuddin
Aibak became the first Sultan of Delhi, belonging to the slave dynasty. The medieval period in
India had major influence from Delhi Sultanate ruled by Slave Dynasty to Lodhi
Dynasty(1206-1526) after that Zahiruddin Babur defeated Ibrahim Lodhi which started the
rule of the Mughal Empire effectively up to A.D. 1707 and then after the death of Bahadur
Shah Zafar, the Mughal rule and influence in India practically came to an end.
During the Sultanate period, there were several courts of Justice, related to different branches of
law. For example-
Diwan-i-Mazlim deals with disputes concerning with administration or bureaucracy.
During the Mughal period courts were categorized according to the subject and requirement
in contention, the central administration of justice was done by the central judicial system.
The chief judicial functionary of the state was the Qazi-ul-Quzat who was appointed by the
emperor to hear appeals and supervise the provincial courts. He was to be assisted by Mufti
and Mir Ad’l: the former was given the duty to expound the law on which the Qazi would
deliver the verdict, whereas the latter was associated with the functions of bringing the parties
to the court and enforcing the decrees. Similarly, there was a Chief Qadi of the provincial
court that dealt with all the cases which were civil and criminal nature and served as the
highest forum of appeal within the province. In the capital, the military had its own judge,
Qadi-e-Askar, who moved from place to place with the troops and whose office corresponds
to the present day Court Martial.
With the decline of the of the Mughal Empire, prominence of the European Powers rose in the
sub-continent, and the introduction of modern legal system took place.
The British Administrative Period lasted for approximately around 200 years. They entered
India as traders, during the medieval period, however they were not alone in their endeavour.
The Portuguese, the British, the Danes, the Dutch, and the French also reached India. All of
these nations came to India for trade, but, out of them, the English people succeeded to
establish their presence in India.
The East India Company enjoyed more than trade rights, if one is to see the complete picture,
and what followed in the aftermath of its arrival in India. The Charter of Elizabeth, 1600
empowered them legislative right, although limited, it led to the establishment of a new
judicial system in India.
But over time, new charters were executed along with several new powers being granted. The
Britishers over a period of time, exercised these powers to set up institutions for administration
of disputes, however with limited jurisdiction.
The East India Company turned from the perspective of an entity interested in revenue, to one
that was invested in
administrative and political influence over the region, which was strengthened during the
Battle of Plassey in 1757, and the subsequent grant of Dewani rights (1765) in Bengal.
However, in this process of acquiring territories after territories, the need for resolution of
disputes, also arose, and it’s out of this necessity the introduction of British legal system, as
suited for the Britishers, was implemented in territories under British occupancy.
The Indian Contracts Act becomes one of the branches of law, that requires our special
attention, which in fact had many more parts than its present version. Over time separate
legislations were enacted for the same. They are:
i) The Sale of Goods Act, 1930
ii) The Indian Partnership Act, 1932.
Indian Legal Period (1950 – Present Day) – The Indian (post Independence) legal history,
begins with the Abolition of Privy Council Jurisdiction Act, 1949 (earlier Privy Council seated
in England acted as the Highest Court of Appeal, since 1726) which was passed by the Indian
Government. This Act accordingly abolished the jurisdiction of Privy Council to entertain new
appeals and petitions as well as to dispose of any pending appeals and petitions. It also
provided for transfer of all cases filed.
The Drafting Committee for the Constitution was formed and appointed with Mr. B.R.
Ambedkaras its Chairman on 29th August 1947. On 26 November 1949, the Constitution of
India was passed and adopted by the Constituent Assembly (celebrated as Law Day). On 26th
January 1950, the Constitution of India was adopted.
With this, India gained its autonomy in Independent judicial system and infrastructure under
the Constitution of India, 1950 and over the years been empowered with the same, to have a
sovereign entity, with segregation of powers at all levels and all branches of administration.
With this, the Supreme Court of India was established on 26th January 1950, established under
Article 124 (1) of the Constitution of India, 1950 with a strength of 8 (1 + 7) judges. Currently
it has a strength of 34 judges (33 judges of the Supreme Court of India and 1 Chief Justice of
India).
Parliament of India and State Legislature - Article 79 of the Constitution of India states that
The Parliament for the Union which shall consist of the President and two Houses to be known
respectively as the Council of States (Rajya Sabha) and the House of the People (Lok Sabha).
Article 168 of The Constitution of India, 1950 - Constitution of Legislatures in States - For
every State there shall be a Legislature which shall consist of the Governor and one House
(Legislative Assembly). In some states, there are two houses, Article 168 (2) of the Constitution
of India, where there are two Houses of the Legislature of a State:
Legislative Council and
Legislative Assembly.
The legislative bodies in India, i.e. at the Central Level (the Parliament) and State Level
(Legislative Assembly) derive its power to frame laws from Article 245 of the Constitution of
India.
Introduction of Bill - In order to formulate a law, all legislative proposals have to be brought
in the form of bills. The process of law making begins with the introduction of a Bill in either
House of Parliament. A bill can be introduced either by a Minister or a member other than a
Minister. In the former case, it is called a Government Bill and in the latter case, it is known
as a Private Member’s Bill.
Hierarchy of Courts in India
The Constitution of India, 1950 has provided us with a single integrated judicial system with
a pyramidal structure which consists of different types of courts each having varying powers
depending on their tier and jurisdiction.The framework of the current legal system has been
laid down by the Constitution of India, 1950 in Part V (Chapter IV-Supreme Court of India)
and Part VI (Chapter V-High Courts) and (chapter VI-Subordinate Courts).
Supreme Court
Supreme Court is the apex court under the Indian Judicial system governed under Chapter IV
of Part V- Art 124-147 of the Constitution comprising of the Chief Justice and other Judges
appointed by the President. The Constitution bestows the following powers to the Supreme
Court-
a. Original Jurisdiction - Art 131 provides for the original jurisdiction whereby the Court
can decide disputes between the Government of India and one or more states, between
two or more states, between Government of India and State (s) on one side and State(s) on
the other side.
b. Writ Jurisdiction - Any person has the right to approach the Court against violation of
his fundamental rights prescribed under Part-III, as expressly provided under Article 32
which guarantees constitutional remedies in the form of writs.
c. Appellate Jurisdiction - Being the highest court of appeal, the Supreme Court has power
to hear all appeals against any order of the High Court.
d. Advisory Jurisdiction - The Supreme Court can advise the President on any question of
public importance etc as desired.
e. Punishment for Contempt - Under Article 129 of the Constitution of India, 150 The
Supreme Court of India and the High Court of each state under Article 215 of the
Constitution of India, 1950 are declared as a Court of record with the power to punish for
contempt of itself.
f. Review Jurisdiction - The Court under Art 137 can review its own orders or judgments.
The Supreme Court of India was established on 26th January 1950, established under Article
124 (1) of the Constitution of India, 1950 with a strength of 8 (1 + 7) judges. Currently it has a
strength of 34 judges (33 judges of the Supreme Court of India and 1 Chief Justice of India).
High Court
High Courts are the second highest courts in the hierarchy dealt in Chapter V of Part VI of
the Constitution. The Constitution bestows the following powers to the High Court-
a. Original Jurisdiction - The Court has original jurisdiction and can decide disputes
related to enforcement of fundamental rights, settlement of disputes relating to election to
the Union and State Legislatures and jurisdiction over revenue matters.
b. Writ Jurisdiction - Any person has the right to approach the Court against violation of his
fundamental rights
as well as legal rights under Article 226. Thus, it has a wider scope than that with the
Supreme Court.
c. Appellate Jurisdiction - An appeal against orders of subordinate courts in both civil and
criminal matters lies with the High Court.
d. Power of superintendence - Article 227 of Constitution empowers all High Courts to
practice superintendence over all the courts or tribunals within its territorial jurisdiction.
Moreover, under Article 228, the High Court can transfer any case pending before a
subordinate court to itself if it involves a substantial question of law.
e. Punishment for Contempt - Like the Supreme Court, the High Court is also declared as
a Court of record with the power to punish for contempt of itself.
Lower/Subordinate Courts
Chapter VI of Part VI of the Indian Constitution incorporates provisions related to the
subordinate courts. These courts are established and controlled by the High Court taking into
account various factors. The Lower/Subordinate court structure can be divided into the
following two branches of the legal system-
Criminal Court Structure
Section 6 of the Criminal Procedure Code, 1973 prescribes for the constitution of following four
classes of criminal
courts:
a) Court of Session - Every State has session divisions with each of them having a Court of
Sessions to be presided over by the Sessions Judge who is appointed by the High Court.
The court has power to try any criminal matter and pass any punishment authorized by
law, but punishment of death penalty has to be confirmed by the High Court.
b) Court of Metropolitan Magistrate - This is a special court established by the State
Government in consultation with the High Court in metropolitan areas, i.e., areas with
population of more than a million. These Courts are subordinate to the Sessions Court.
Chief Metropolitan Magistrate can pass any punishment authorized by law, except death
penalty, penalty of life imprisonment or imprisonment for a term of more than seven
years.
c) Court of Chief Judicial Magistrate - The State Government in consultation with the
High Court establishes number of Courts of the Judicial Magistrate- Judicial Magistrate of
First Class (JMFC) and second class headed by the Chief Judicial Magistrate (CJM).
These Courts can pass any punishment authorized by law, except death penalty, penalty of
life imprisonment or imprisonment for a term of more than seven years.
d) Executive Magistrates - The functions and powers of an Executive Magistrate are more
 or less administrative in nature and are for maintaining law and order. They are appointed
by the respective State Government. Their essential job is not as a judicial officer.
Civil Court Structure
The district court is the highest civil court in a district and has judicial as well as administrative
powers including the power of superintendence with both appellate and original jurisdiction.
According to Article 233 of the Constitution the appointment of district judges that shall be
done by the Governor in consultation with the High Court in every district or more than one
district. Following are the courts subordinate to the district courts which have jurisdiction
based on subject matter, pecuniary or territorial jurisdictions-
a. Sub-Judge
b. Additional Sub-Judge
c. Munsif Courts
Thus, judiciary comprising of the court system is one of the most vital organs of the state that
not only acts as a watchdog of democracy but also as the guardian of the Constitution. It is
evident from the strong base and the proven efficiency of the structure of the Indian judiciary
being independent and impartial that the existing system is ideal for a big country like India to
ensure proper administration of justice at all levels starting from the grass root.
The Tribunal System in
India Key insights
🖸 Tribunals are institutions established for discharging judicial or quasi-judicial duties. The
objective may be to reduce case load of the judiciary or to bring in subject expertise for
technical matters.
🖸 The Supreme Court has ruled that tribunals, being quasi-judicial bodies, should have the
same level of independence from the executive as the judiciary. Key factors include the
mode of selection of members, the composition of tribunals, and the terms and tenure of
service.
🖸 In order to ensure that tribunals are independent of the executive, the Supreme Court had
recommended that all administrative matters be managed by the law ministry rather than
the ministry associated with the subject area. Later, the Court recommended creation of an
independent National Tribunals Commission for the administration
of tribunals. These recommendations have not been implemented.
🖸 Whereas the reasoning for setting up some tribunals was to reduce pendency of cases in
courts, several tribunals are facing the issue of a large case load and pendency.
Evolution of the Tribunal System
Tribunals are judicial or quasi-judicial institutions established by law. Currently, tribunals have
been created both as substitutes for High Courts and as subordinate to High Courts (see Figure).
In the former case, appeals from the decisions of Tribunals (such as the Securities Appellate
Tribunal) lie directly with the Supreme Court. In the latter case (such as the Appellate Board
under the Copyright Act, 1957), appeals are heard by the corresponding High Court.
Composition of Tribunals: The Supreme Court has noted that the members of a tribunal
may be selected from departments of the central government as well as from various other
fields of expertise. The presence of expert members (technical members) along with
judicial members is a key feature of tribunals which distinguishes them
 from traditional courts. Only persons with a judicial background (such as Judges of the
High Court and lawyers with the prescribed experience who are eligible for appointment
as High Court Judges) may be considered for appointment as Judicial Members.
The Tribunals Reforms (Rationalisation and Conditions of Service) Ordinance, 2021 has
abolished nine tribunals and transferred their functions to High Courts. This action would
add to the pending cases in such High Courts.
Appeals from tribunals usually lie with the concerned High Court. However, some laws
specify that appeals will be heard by the Supreme Court. Table illustrates some tribunals
and the court with appellate jurisdiction over them.
In modern day world, government activity influences almost every field of human
behaviour, thus necessitating laws in regulating this ever-widening sphere of activity.
Therefore, there is constant need to legislate, at a rapid pace, with a localized
understanding, which however is cumbersome and impractical to perform, for the Union
Legislature and State Legislature. As we move towards a more dynamic society,
therefore the governance of
the same extends to various levels of government bodies, as according to the complexity,
furthermore delegated
power (subordinate legislation) to authorities and officials.
Primary Legislation is the law that derives its source from the enactments passed by the
Parliament or the State Legislatures, the bodies empowered by the Constitution of India, 1950
by its provisions. In addition to these the President and the Governor have limited powers to
issue ordinances when the Parliament or the State Legislature are not in session.
Secondary Legislation/Sub-Ordinate Legislation arises from the need for empowering
authorities (to legislate) working at the grass-root level to counter the daily challenges to the
existing laws becomes a necessity. The provision for secondary legislation (in the form of
regulations/bye laws) has been ingrained in the Constitution of India, 1950. Article 13.3 (a) of
the Constitution of India, 1950 mentions law includes any Ordinance, order, bye-law, rule,
regulation, notification, custom or usage having in the territory of India the force of law;
therefore provision for such delegation (subordinate legislation) gains its prominence.
The Constitution of India, 1950 in its provisions illustrates of power delegation (if need be),
Article 312- All India Services (1) Notwithstanding anything in Chapter VI of Part VI or Part
XI, if the Council of States (Rajya Sabha) has declared by resolution supported by not less
than two thirds of the members present and voting that it is necessary or expedient in the
national interest so to do, Parliament may by law provide for the creation of one or more all
India services (including an all India judicial service) common to the Union and the States,
and, subject to the other provisions of this Chapter, regulate the recruitment, and the
conditions of service of persons appointed, to any such service. (the Indian Administrative
Service and the Indian Police Service shall be deemed to be services created by Parliament
under this article)
Supreme Court of India in the Gwalior Rayon Mills Mfg. (Wing.) Co. Ltd.V.Asstt.
Commissioner of SalesTaxand Others (All India Reporter1974 SC 1660 (1667)), The
legislatures because of limitations imposed upon by the time factor hardly go into matters of
detail. Provision is, therefore, made for delegated legislation to obtain flexibility, elasticity,
expedition and opportunity for experimentation. The practice of empowering the executive to
make subordinate legislation within a prescribed sphere has evolved out of practical necessity
and pragmatic needs of a modern welfare state.
Subordinate legislation is the legislation made by an authority subordinate to the legislature.
Subordinate legislation is that which proceeds from any authority other than the sovereign
power and is, therefore, dependent for its continued existence and validity on some superior
or supreme authority. Most of the enactments provide for the powers for making rules,
regulations, bye-laws or other statutory instruments which are exercised by the specified
subordinate authorities. Such legislation is to be made within the framework of the powers so
delegated by the legislature and is, therefore, known as delegated or subordinate legislation.
The sub-ordinate legislation cannot go beyond the act or the objective of the act, or the same
would be held invalid.
There are instances where pieces of subordinate legislation which tended to replace or modify
the provisions of the basic law or attempted to lay down new law by themselves had been
struck down as ultra vires either because of transgressing the ambit of the Act or the Act itself
is inconsistent with the provisions of the Constitution of India.
Local Governance - The Constitution of India, 1950 itself provides provisions for
decentralization of governance, for effective and adequate authority over a territory to look
after the requirements. Part IX (Panchayat System) and Part IXA (Municipalities) of the
Constitution of India, 1950 give them adequate powers and autonomy over their jurisdiction.
These two bodies are one of the largest sources of sub-ordinate legislation, as regulations in
these territories need to be revised very rapidly.
As, we have observed in the Covid-19 pandemic, how frequently, guidelines and regulations
have been required to cater to the unprecedented circumstances we have been through. This
would have been a cumbersome task for the Parliament or the State legislature to be able to
analyse and react to the situation in a localized manner, taking adequate measures for the
general well being and requirements of the population.
Multiple Choice Questions (MCQ)
1. What are the sources of law?
(a) Constitution of India
(b) Constitution of India, judicial precedents, customary laws, statutes and ordinance
(c) Statutes enacted by the Parliament of India and State Legislatures
(d) Religion
2. Which Article in the Constitution of India, 1950 has provisions for introduction of a bill in
the Parliament of India?
(a) Article 119
(b) Article 141
(c) Article 107
 (d) Article 243
3. Money Bill is introduced in which House of the Parliament?
(a) Council of People – Lok Sabha
(b) Council of States – Rajya Sabha
(c) Both the Houses
(d) None of the Houses
4. Under what Article of the Constitution of India, 1950 is The President of India empowered to
make an Ordinance?
(a) Article 243
(b) Article 123
(c) Article 129
(d) Article 368
5. The essence of Sub-Ordinate legislation can be found in which Article of the Constitution
of India, 1950?
(a) Article 12
(b) Article 32
(c) Article 13
(d) Article 14
6.When was the Constitution of India passed by the Constituent Assembly?
(a) 26th January 1950
(b) 26th November 1949
(c) 25th November 1949
(d) 15th August 1947
7.Which is the highest Court in India?
(e) High Court
(f) Supreme Court of India
(g) International Court of Justice
(h) Sessions Court
8.Which Articles of the Constitution of India have the power to entertain petitions of
violation of Fundamental Right?
 (i)Article 32
(j)Article 226
(k) Article 226 and Article 32
(l)Article 356
9.Which is the highest civil court in a district?
(m) Sessions Court
(n) Supreme Court of India
(o) District Court
(p) High Court