Commerce Business Regulations

THE COMPITITION ACT-2002 INTRODUCTION AND OBJECTIVES

Introduction.
The new industrial Policy 1991 sought to prepare Indian industry for meeting the challenges of
globalization. Last decade of 20th century witnessed a drastic changes in the economic policies of
India due to the advent of globalization. The importance of globalization is the free flow of trade,
finance and information. Competition is one of the major outcome of globalization. It requires
the government to provide conductive atmosphere by devising appropriate competition policy

The Competition Act, 2002 was enacted by the Parliament of India and replaced The Monopolies
and Restrictive Trade Practices Act, 1969. It is in effect to govern Indian competition law

An Act to provide, keeping in view of the economic development of the country, for the
establishment of a Commission to prevent practices having adverse effect on competition, to
promote and sustain competition in markets, to protect the interests of consumers and to ensure
freedom of trade carried on by other.

The Competition Act, 2002 was enacted by the Parliament of India and governs
Indian competition law. It is a tool to implement and enforce competition policy and to prevent
and punish anti-competitive business practices by firms and unnecessary Government
interference in the market.

Two of the main features of the Competition Act, 2002 is the framework it provides for the
establishment of the Competition Commission, and the tools it provides to prevent anti-
competitive practices and to promote positive competition in the Indian market.

Objectives of the Competition Act-2002

The broad objectives of the competition Act, as laid down in its preamble are:

Competition Act, 2002 notifies in January 2003, Stated objectives in preamble is to provide “for
Establishment of a commission”

1. Eliminate practices having adverse effect on competition

2. To prevent the interest of the smaller companies or prevent the abuse of dominant
position in the market.
3. Promote and sustain competition in markets
4. To protect the interest of the consumers by providing them good products and services at
reasonable prices.
5. To Promote healthy competition in the Indian market
6. To Ensure freedom of Trade in Indian markets
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7. To regulate the operation and activities of combinations (acquisitions, mergers and

amalgamation)
8. Ensure freedom of trade carried on by other participants in markets, in India
9. To create equality in Trade
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FEATURES OF THE COMPITITION ACT-2002
Two of the main features of the Competition Act, 2002 is the framework it provides for the
establishment of the Competition Commission, and the tools it provides to prevent anti-
competitive practices and to promote positive competition in the Indian market

1) Prohibition of Anti- Competitive Agreements

2) Prohibition of Abuse of government position
3) Regulation of Combination
4) Establishment of the competition commission of India
5) Penalties for contravention and non-compliance
6) Competition Advocacy Constitution of Competition fund

01. Anti-competitive agreements 3. (1)

No enterprise or association of enterprises or person or association of persons shall enter into any
agreement in respect of production, supply, distribution, storage, acquisition or control of goods
or provision of services, which causes or is likely to cause an appreciable adverse effect on
competition within India. Such agreements would consequently be considered void. Agreements
which would be considered to have an appreciable adverse impact would be those agreements
which-

 Directly or indirectly determine sale or purchase prices,

 Limit or control production, supply, markets, technical development, investment or
provision of services,
 Share the market or source of production or provision of services by allocation of inter
alia geographical area of market, nature of goods or number of customers or any other
similar way,
 Directly or indirectly result in bid rigging or collusive bidding

Types of agreement[edit]
A 'horizontal agreement' is an agreement for co-operation between two or more competing
businesses operating at the same level in the market. A vertical agreement is an agreement
between firms at different levels of the supply chain. For instance, a manufacturer of consumer
electronics might have a vertical agreement with a retailer according to which the latter would
promote their products in return for lower prices.

2. Prohibition of abuse of dominant position Abuse of dominant position

(1) No enterprise or group shall abuse its dominant position.

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(2) There shall be an abuse of dominant position 4 [under sub-section (1), if an enterprise or a
group].—-

(a) Directly or indirectly, imposes unfair or discriminatory—

(i) Condition in purchase or sale of goods or service; or

(ii) Price in purchase or sale (including predatory price) of goods or service. Explanation.

For the purposes of this clause, the unfair or discriminatory condition in purchase or sale of
goods or service referred to in sub-clause

(i) and unfair or discriminatory price in purchase or sale of goods (including predatory
price) or service referred to in sub-clause
(ii) (ii) shall not include such discriminatory condition or price which may be adopted to
meet the competition;

3. Regulation of Combination

The Act is designed to regulate the operation and activities of combinations, a term, which
contemplates acquisition, mergers or amalgamations.

The acquisition of one or more enterprises by one or more persons or merger or amalgamation
of enterprises shall be a combination of such enterprises and persons or enterprises,

if— (a) any acquisition where— (i) the parties to the acquisition, being the acquirer and the
enterprise, whose control, shares, voting rights or assets have been acquired or are being
acquired jointly have,— (A) either, in India, the assets of the value of more than rupees one
thousand crores or turnover more than rupees three thousand crores;

No person or enterprise shall enter into a combination which causes or is likely to cause an
appreciable adverse effect on competition within the relevant market in India and such a
combination shall be void.

4. Establishment of Commission 7. (1)

With effect from such date as the Central Government may, by notification, appoint, there shall
be established, for the purposes of this Act, a Commission to be called the “Competition
Commission of India”.

Commission has the power to inquire into unfair agreements or abuse of dominant position or
combinations taking place outside India but having adverse effect on competition in India, if any
of the circumstances exists:
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 An agreement has been executed outside India

 Any contracting party resides outside India
 Any enterprise abusing dominant position is outside India
 A combination has been established outside India
 A party to a combination is located abroad.
 Any other matter or practice or action arising out of such agreement or dominant position
or combination is outside India.
To deal with cross border issues, Commission is empowered to enter into any Memorandum of
Understanding or arrangement with any foreign agency of any foreign country with the prior
approval of Central Government.

Penalties Contravention of orders of Commission 68[42.(1)

The Commission may cause an inquiry to be made into compliance of its orders or directions
made in exercise of its powers under the Act. (2) If any person, without reasonable clause, fails
to comply with the orders or directions of the Commission issued under sections 27, 28, 31, 32,
33, 42A and 43A of the Act, he shall be punishable with fine which may extend to rupees one
lakh for each day during which such non-compliance occurs, subject to a maximum of rupees
ten crore, as the Commission may determine.

5. Competition Advocacy 49. 78[(1)

The Central Government may, in formulating a policy on competition (including review of laws
related to competition) or any other matter, and a State Government may, in formulating a policy
on competition or on any other matter, as the case may be, make a reference to the Commission
for its opinion on possible effect of such policy on competition and on the receipt of such a
reference, the Commission shall, within sixty days of making such reference, give its opinion to
the Central Government, or the State Government, as the case may be, which may thereafter take
further action as it deems fit.]
COMPETITION COMMISSION OF INDIA (CCI):
An authority called the ‘Competition Commission of India’ (CCI) has been constituted by the
Central Government to enforce the provisions of the Competition Act.
The CCI will be a body corporate having perpetual succession and a common seal with power
to acquire, hold and dispose of property, both movable and immovable and can contract in its
own name.
In the discharge of its functions, the CCI shall be guided by the principles of natural justice, and
has the power to regulate its own procedures.
The Commission shall consist of a Chairperson and not less than two and not more than ten other
Members to be appointed by the Central Government from a panel of names recommended by a
Selection Committee.
All meetings of the CCI require a quorum of a minimum of three members.
The Chairperson and members will be in office for a term of 5 years from the day of
their entering such office in the said capacity and will be eligible for reappointment.
The CCI will appoint a Secretary and other officers for administration work.

COMPETITION APPELLATE TRIBUNAL (CAT):

The Competition Appellate Tribunal is a statutory organization established under the provisions
of the Competition Act, 2002 to hear and dispose of appeals against any direction issued or
decision made or order passed by the Competition Commission of India under sub-sections (2)
and (6) of section 26, section 27, section 28, section 31, section 32, section 33, section 38,
section
39, section 43, section 43A, section 44, section 45 or section 46 of the Competition Act, 2002.
The Appellate Tribunal shall also adjudicate on claim for compensation that may arise from the
findings of the Competition Commission of India or the orders of the Appellate Tribunal in an
appeal against any findings of the Competition Commission of India or under section 42A or
under sub-section (2) of section 53Q of the Act and pass orders for the recovery of compensation
under section 53N of the Act.

The Central Government has set up the Appellate Tribunal on 15th May, 2009 having its
Headquarter at New Delhi. Hon’ble Dr. Justice Arijit Pasayat, former Judge of Supreme Court,
has been appointed as the First Chairperson of the Appellate Tribunal. Besides, the Chairperson,
the Appellate Tribunal shall consist of not more than two Members to be appointed by the
Central Government. The Chairperson of the Appellate Tribunal shall be a person, who is, or
has been a
Judge of the Supreme Court or the Chief Justice of a High Court. A Member of the Appellate
Tribunal shall be a person of ability, integrity and standing having special knowledge of, and
professional experience of not less than twenty-five years in, competition matters, including
competition law and policy, international trade, economics, business, commerce, law, finance,
accountancy, management, industry, public affairs, administration or in any other matter which
in the opinion of the Central Government, may be useful to the Appellate Tribunal. The
Chairperson or a Member of the Appellate Tribunal shall hold office for a term of five years and
shall be eligible for re-appointment. Provided that no Chairperson or other Member of the
Appellate Tribunal shall hold office after he has attained the age of sixty-eight years or sixty-five
years respectively.

Every appeal shall be filed within a period of 60 days from the date on which a copy of the
direction or decision or order made by the Competition Commission of India is received and it
shall be in the prescribed form and be accompanied by the prescribed fees. The Appellate
Tribunal may entertain an appeal after the expiry of the period of 60 days if it is satisfied that
there was sufficient cause for not filing it within that period.

An Appellate Tribunal known as the Competition Appellate Tribunal has been established by
the Central Government:
• To hear and dispose of appeals against any direction issued or decision made or order passed by
the CCI;
• To adjudicate on claim for compensation that may arise from the findings of the CCI.
The Competition Appellate Tribunal (CAT) shall consist of a chairperson and not more than
two other members.

The chairperson shall be a person, who is or has been a judge of the Supreme Court or the Chief
Justice of a High Court.
The Competition Act excludes the jurisdiction of civil courts in respect of matters which the
CCI or the CAT is empowered to determine under the Competition Act.

Competition Appellant Tribunal – important points

• Central Government shall by notification establish competition appellant tribunal

• Any person aggrieved by the order of the commission may appeal to CAT within 60days.
• CAT may accept the petition after 60days if it is satisfied that there was sufficient cause for not
filling appeal with in specified time

• CAT may confirm/modify/setting side decision of commission after giving opportunity to both
parties

• CAT shall send copy of order to parties to appeal

• CAT shall dispose the appeal within six months

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OFFENCES AND PENALTIES UNDER THE COMPETITION ACT-2002

Offences.

1) Anti- Competitive Agreements

2) Abuse of government position
3) Unfair Combination

01. Anti-competitive agreements 3. (1)

No enterprise or association of enterprises or person or association of persons shall enter into any
agreement in respect of production, supply, distribution, storage, acquisition or control of goods
or provision of services, which causes or is likely to cause an appreciable adverse effect on
competition within India.

02. Abuse of dominant position

(1) No enterprise or group shall abuse its dominant position.

(2) There shall be an abuse of dominant position 4 [under sub-section (1), if an enterprise or a
group].—-

(a) Directly or indirectly, imposes unfair or discriminatory—

For the purposes of this clause, the unfair or discriminatory condition in purchase or sale of
goods or service referred to in sub-clause

(i) and unfair or discriminatory price in purchase or sale of goods (including predatory
price) or service referred to in sub-clause
(ii) shall not include such discriminatory condition or price which may be adopted to meet
the competition;

03. Unfair Combination

The acquisition of one or more enterprises by one or more persons or merger or amalgamation
of enterprises shall be a combination of such enterprises and persons or enterprises,

if— (a) any acquisition where— (i) the parties to the acquisition, being the acquirer and the
enterprise, whose control, shares, voting rights or assets have been acquired or are being
acquired jointly have,— (A) either, in India, the assets of the value of more than rupees one
thousand crores or turnover more than rupees three thousand crores;
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Penalties Contravention of orders of Commission 68[42.(1)

The Commission may cause an inquiry to be made into compliance of its orders or directions
made in exercise of its powers under the Act. (2) If any person, without reasonable clause, fails
to comply with the orders or directions of the Commission issued under sections 27, 28, 31, 32,
33, 42A and 43A of the Act, he shall be punishable with fine which may extend to rupees one
lakh for each day during which such non-compliance occurs, subject to a maximum of rupees
ten crore, as the Commission may determine.

 Power to impose penalty for non-furnishing of information on combinations.

If any person or enterprise who fails to give notice to the Commission under sub-section (2)
of Section 6, the Commission shall impose on such person or enterprise a penalty which
may extend to one per cent of the total turnover or the assets, whichever is higher, of such a
combination.
 Penalty for making false statement or omission to furnish material information.

In case a person or a party makes a statement which is false in any material or they
know that they are furnishing a false material and/or omits to submit the material
towards compliance of the Competition Act 2002, then such a person is liable to a
penalty of not less than fifty lakh rupees and it may extend maximum to one crore
rupees as may be determined by the Commission.

 Penalty for offences in relation to furnishing of information.

(1) Without prejudice to the provisions of Section 44, if a person, who furnishes or is required to
furnish under this Act any particulars, documents or any information,—

(a) Makes any statement or furnishes any document which he knows or has reason to believe to
be false in any material particular; or

(b) Omits to state any material fact knowing it to be material; or

(c) Willfully alters, suppresses or destroys any document which is required to be furnished as
aforesaid,

Such person shall be punishable with fine which may extend to rupees one crore as may be
determined by the Commission.
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COMPETITION COMMISSION OF INDIA

An authority called the ‘Competition Commission of India’ (CCI) has been constituted by the
Central Government to enforce the provisions of the Competition Act.

The CCI will be a body corporate having perpetual succession and a common seal with power to
acquire, hold and dispose of property, both movable and immovable and can contract in its own
name.

In the discharge of its functions, the CCI shall be guided by the principles of natural justice, and
has the power to regulate its own procedures.

The Commission shall consist of a Chairperson and not less than two and not more than ten other
Members to be appointed by the Central Government from a panel of names recommended by a
Selection Committee.

All meetings of the CCI require a quorum of a minimum of three members.

The Chairperson and members will be in office for a term of 5 years from the day of their
entering such office in the said capacity and will be eligible for reappointment.

The CCI will appoint a Secretary and other officers for administration work.

Duties and Powers of Competition Commission of India

Sec 18-20 deals with the Duties, summary of the duties are:

 Eliminates practices having adverse effect on competition

 Promote and Sustain competition

 Protect the interest of the Customers

 Ensure freedom of trade carried on by other participants in the market

 Conduct enquiry into cases of abuse of dominant position and combination

Powers

• It has power to regulate its own procedure

• It shall be guided by principles of natural justice and the rules and regulations of the
central government.

• It will exercise the same power as a civil court under the code of civil procedure 1908.
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Competition Commission of India – Functions

The preamble of the Competition Act focuses on the development of the economy and the
country by avoiding unfair competition practices and promoting constructive competition. The
functions of the CCI are:

1. Ensuring that the benefit and welfare of the customers are maintained in the Indian
Market.
2. An accelerated and inclusive economic growth through ensuring fair and healthy
competition in the economic activities of the nation.
3. Ensuring the efficient utilization of the nation’s resources through the execution of
competition policies.
4. The Commission also undertakes competition advocacy.
5. It is also the antitrust ombudsman for small organizations.
6. The CCI will also scrutinize any foreign company that enters the Indian market through a
merger or acquisition to ensure that it abides by India’s competition laws – the
Competition Act, 2002.
7. CCI also ensures interaction and cooperation with the other regulating authorities in the
economy. This will ensure that the sectoral regulatory laws are agreeable with the
competition laws.
8. It also acts as a business facilitator, by ensuring that a few firms do not establish
dominance in the market and that there is a peaceful co-existence between the small and
the large enterprises.
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CONSUMER DISPUTE

According to section 2(1)(e) of the Consumer Protection Act, 1986 ‘ Consumer Dispute’ means “
a dispute where the person against whom a complaint has been made denies or dispute the
allegations contained in complaint”, Separate allegation may form separate disputes requiring
separate findings on cash dispute.
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Defect and Deficiency and unfair trade practices and Services

Introduction

Under the Consumer Protection Act, 2019, a complaint can be filed when a consumer detects
deficient in a service. However, the threshold of deficiency must fall under the ambit of the
definition of deficiency given under the Consumer Protection At, 2019. The consumer Protection
Act, 2019 came into effect on July 20, 2020. The Consumer Protection Act 2019 not only
recognizes physical relationship of buyer-seller but also has acknowledged services pertaining to
e-commerce platforms. The aim of both new and old Consumer Protection Act is to protect and
safeguard the interest of consumers.

Consumer Dispute [Sec. 2(1) (e)]

Consumer Dispute means “dispute, where the person against whom a complaint has been
made, denies or dispute the allegation contained in the complaint”. The allegations referred to
may relate to any unfair trade practices adopted by a trader, or any defects in goods or any
deficiency in services or against charging exorbitant price.

Defect [Sec. 2 (1) (f)]

Defect means ''any fault, imperfection or shortcoming in the quality, quantity, potency,
purity or standard which is required to be maintained by or under any law for the time being
force, or under any contract, express or implied or as is claimed by the trader, in any manner
whatsoever in relation to any goods".
Imperfection or shortcoming as claimed by the trader is to be determined with reference
to the warranties or guarantees expressly given by a trader.
Deficiency [Sec. 2 (1) (g)]
Deficiency means "any fault, imperfection, shortcoming or inadequacy in the quality,
nature and manner of performance which is required to be maintained by or under any law for
the time being in force, or has been undertaken to be performed by a person in pursuance of a
contract or otherwise in relation to any service".

Indian Medical Association v V.P. Shanth

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 This case is a result of medical negligence from medical profession. This landmark
decision recognized patient’s rights through giving them the consumer status where
complaints could be lodged in a case of deficiency in the field of medical services under
the Consumer Protection Act, 1986. The liability of doctor and hospital management
arises when a patient is admitted. The standard duty of care must be maintained by the
hospital. When a patient is admitted, he/she is also considered as a consumer.
 The Supreme Court emphasized on the interest and safeguards of patients which is given
the upmost importance.
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Defect and Deficiency and unfair trade practices and Services

Unfair Trade Practices [Sec. 2 (1) (r)]

Unfair Trade Practice means a trade practice which, for the purpose of promoting the
sale, use or supply of any goods or for the provision of any services, adopts any unfair method or
unfair or deceptive practice.
The following six categories of such practices have been declared as unfair trade
practices:
(1) False Representation and Misleading Advertisements[Sec. 2 (1) (r) (1)]:
(2) False offer of Bargain Price [Sec. 2 (1) (r) (2)]:
(3) Offer of Gifts, prizes, etc., [Sec. 2 (1) (r) (3)]:
(4) Withholding any scheme [Sec. 2 (1) (r) (3A)]:
(5) Sale or supply of goods not complying with prescribed standard [Sec. 2 (1) (r) (4)]:
(6) Hoarding destruction or refusal to sell [Sec. 2 (1) (r) (5)]:
(7) Manufacturing or sale of spurious goods [Sec. 2 (1) (r) (6)]:

(1) False Representation and Misleading Advertisements[Sec. 2 (1) (r) (1)]:

a) False representation as to standards, etc., of goods: It consists of a written, oral or
visible representation which falsely represents the goods to be of particular standard,
quality, quantity, grade, composition, style or model.
b) False representation as to standard, etc., of services: It consists of making false
representation as to standard, quality or grade of service such as an assertion about
professional qualifications which one does not possess. [R vs. Breeze (1973) 2 All ER
1143].
It may also consist of falsely representing any rebuilt, second-hand, renovated or
reconditioned goods as new.
c) Making false representation as to sponsorship, approval, performance, characteristics,
accessories, users or benefits of such goods or services.
d) Misleading representation concerning the need for usefulness, etc., of any goods or
services: It may consist of giving the public any warranty or guarantee of performance,
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etc., of any goods that is not based on adequate or proper test; or misleading promise to
replace, maintain or repair an article, etc.,
e) Misrepresentation as to price.
f) Disparagement of goods, services or trade of others.
(2) False offer of Bargain Price [Sec. 2 (1) (r) (2)]: Explanation appended to sub-clause (2)
has defined ''bargain price to mean:
a) a price that is stated in any advertisement to be a bargain price by reference to an
ordinary price or otherwise, or
` b) a price that a person who reads, hears or sees the advertisement, would reasonably
understand to be a bargain price having regard to the prices at which like products are
sold.
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DEFECT AND DEFICIENCY AND UNFAIR TRADE PRACTICES AND SERVICES

Unfair Trade Practices [Sec. 2 (1) (r)]

Unfair Trade Practice means a trade practice which, for the purpose of promoting the
sale, use or supply of any goods or for the provision of any services, adopts any unfair method or
unfair or deceptive practice. The following six categories of such practices have been declared as
unfair trade practices:
(1) False Representation and Misleading Advertisements[Sec. 2 (1) (r) (1)]:
(2) False offer of Bargain Price [Sec. 2 (1) (r) (2)]:
(3) Offer of Gifts, prizes, etc., [Sec. 2 (1) (r) (3)]:
(4) Withholding any scheme [Sec. 2 (1) (r) (3A)]:
(5) Sale or supply of goods not complying with prescribed standard [Sec. 2 (1) (r) (4)]:
(6) Hoarding destruction or refusal to sell [Sec. 2 (1) (r) (5)]:
(7) Manufacturing or sale of spurious goods [Sec. 2 (1) (r) (6)]:

(3) Offer of Gifts, prizes, etc., [Sec. 2 (1) (r) (3)]:

This type of unfair trade practice may consist of:
a) Offer of any gifts or other items with the intention of not providing them.
b) Creating an impression that something is being given free of charge when it is fully or
partly covered by the amount charged in the transaction,
c) Conducting of any contest, lottery, game of chance or skill for the purpose of
promoting directly or indirectly - the sale, use or supply of any product or any business
interest.
(4) Withholding any scheme [Sec. 2 (1) (r) (3A)]:
It will be an unfair trade practice for a trader to withhold from the participants of
any scheme offering any gifts, etc., information about final results of the scheme on its
closure. The participants are deemed to have been informed of the final results of the
scheme if the results are published prominently in the newspaper in which the scheme
was originally advertised within a reasonable time.
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(5) Sale or supply of goods not complying with prescribed standard [Sec. 2 (1) (r)
(4)]: The prescribed standards may relate to performance, composition, contents, design,
packaging, etc., as are necessary to prevent or reduce the risk of injury to the person
using the goods.
(6) Hoarding destruction or refusal to sell [Sec. 2 (1) (r) (5)]:
Hoarding, destruction or refusal to sell the goods which raises or tends to raise the cost
of those or other similar goods or services shall amount to an unfair trade practice.
(8) Manufacturing or sale of spurious goods [Sec. 2 (1) (r) (6)]:
'Spurious goods and services' means such goods and services which are claimed to be
genuine but are not so.
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Rights of the Consumer under the Act

According to Section 6 of the Consumer Protection Act, the following rights are available to
consumers.

1) Right to be protected or right to safety:

Every consumer has the right to be protected against the marketing of goods and services
which are spurious or hazardous to life and property.
2) Right to be informed:
The right to be informed about the quality, quantity, potency, purity, standard and price
of goods or services as the case may be, so as to protect the consumers against unfair
trade practices.
3) Right to be assured/choose:
Every consumer has a right to be assured, wherever possible, access to a variety of goods
and services at competitive prices.
4) Right to be heard:
The right to be heard and to be assured that consumers interest will receive due
consideration at appropriate forums.
5) Right to seek redressal:
The right to seek redressal against unfair trade practices or restrictive trade practices or
unscrupulous exploitation of consumers.
6) Right to consumer education:
The responsibility of creating awareness amongst the consumers has been assigned to the
Central Consumer Protection Council.
7) Right to Basic Needs:
The basic needs mean those goods and services which are necessary for a dignified living
of people. It includes adequate food, clothing, shelter, energy, sanitation, health care,
education and transportation. All the consumers have the right fulfil these basic needs.
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8) Right to healthy environment or quality of life:

This right provides the consumers, protection against environmental pollution so that the
quality of life is enhanced. Not only this, it also stresses the need to protect the
environment for the future generations
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Consumer Disputes Redressal Agencies

Consumer Protection Act, 1986 has set up a three-tier quasi-judicial redressal machinery
for expeditious and inexpensive settlement of consumer disputes. It is an active to the ordinary
process of instituting actions before a civil court. According to Section 9, there shall be
established for the purpose of the Act, the following agencies, namely:

 Consumer Disputes Redressal Forum to be known as the “District Forum”. The

State Government shall establish a District Forum ach district of the state. However,
more than one District Forum may be established strict if it is deemed fit.
 State Consumer Disputes Redressal Commission (SCDRC) to be known as “State
Commission”. This is also to be established by the State Government in the state by
notification.
 National Consumer Disputes Redressal Commission (NCDRC) to be known as
“National Commission”. This is to be established by the Central Government by
notification.

District Forum
The District Forum shall have jurisdiction to entertain complaints where the value of
goods and services complained against and the compensation claimed, if any, is less than Rs. 20
Lakhs.
Composition of District Forum
According to Section 10 (1), each District Forum shall consist of the following:
a) President: He shall be a person who is, or has been or is qualified to be a District
Judge.
b) Members: There shall be two other members, one of whom shall be a woman. A
member must have the following qualifications:
(i) be not less than 35 years of age;
(ii) possess a bachelor's degree from a recognized university;
(iii) must be a person of ability, integrity and standing and have adequate knowledge and
experience of at least 10 years in dealing with problems relating to economics, law,
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commerce, accountancy, industry, public affairs, or administration.

Jurisdiction
The District Forum shall have jurisdiction to entertain complaints where the value of
goods and services and the compensation, if any claimed, does not exceed Rs. 20 Lakhs. A
complaint shall be filed in district forum within the local limits of whose jurisdiction the
opposition party (or parties) reside or carry on business or the cause of action has arisen.
The complaint may be filed by any of the following persons:
 The consumer concerned;
 Any recognized consumer association;
 One or more consumers for the benefit of all consumers;
 The Central or the State Government.
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Consumer Disputes Redressal Agencies

Consumer Protection Act, 1986 has set up a three-tier quasi-judicial redressal machinery
for expeditious and inexpensive settlement of consumer disputes. It is an active to the ordinary
process of instituting actions before a civil court. According to Section 9, there shall be
established for the purpose of the Act, the following agencies, namely:

 Consumer Disputes Redressal Forum to be known as the “District Forum”. The

State Government shall establish a District Forum ach district of the state. However,
more than one District Forum may be established strict if it is deemed fit.
 State Consumer Disputes Redressal Commission (SCDRC) to be known as “State
Commission”. This is also to be established by the State Government in the state by
notification.
 National Consumer Disputes Redressal Commission (NCDRC) to be known as
“National Commission”. This is to be established by the Central Government by
notification.

State Commission
The State Commission shall have jurisdiction for such complaints and claims if the value
thereof is exceeding Rs. 20 Lakhs but not exceeding Rs. 1 Crore.

Composition of State Commission

According to Section 16 (1), each State Commission shall consist of the following:
a) President: He shall be a person who is or has been a judge of the High Court. His
appointment shall not be made except after consultation with the Chief Justice of the
High Court.
b) Members: There shall be not less than two or not more than such number of members
as maybe prescribed, who shall be the person of ability, integrity and standing and have
adequate knowledge or experience of at least 10 years in dealing with problems relating
to economics law, commerce, accountancy, industry, public affairs, or administration,
one of whom shall be a women.
Commerce Business Regulations

Jurisdiction
The State Commission shall have the jurisdiction:
(i) to entertain:
 complaints where the value of the goods or services and compensation, if any
claimed exceeds rupees 20 Lakhs but does not exceed rupees one crore; and
 appeals against the orders of any District Forum within the State; and
(ii) to call for the records and pass appropriate orders in any consumer dispute which is
pending before or has been decided by any District Forum within the State, where it
appears to the State Commission that such District Forum has exercised a jurisdiction not
vested in it by law, or has failed to exercise a jurisdiction so vested or has acted in
exercise of its jurisdiction illegally or with material irregularity.
Commerce Business Regulations

Consumer Disputes Redressal Agencies

Consumer Protection Act, 1986 has set up a three-tier quasi-judicial redressal machinery
for expeditious and inexpensive settlement of consumer disputes. It is an active to the ordinary
process of instituting actions before a civil court. According to Section 9, there shall be
established for the purpose of the Act, the following agencies, namely:

 Consumer Disputes Redressal Forum to be known as the “District Forum”. The

State Government shall establish a District Forum ach district of the state. However,
more than one District Forum may be established strict if it is deemed fit.
 State Consumer Disputes Redressal Commission (SCDRC) to be known as “State
Commission”. This is also to be established by the State Government in the state by
notification.
 National Consumer Disputes Redressal Commission (NCDRC) to be known as
“National Commission”. This is to be established by the Central Government by
notification.

National Commission
The National Commission shall have jurisdiction for complaints and claims of the value
exceeding Rs. 1 Crore.
Composition of National Commission
Section 20 (1) provides that the National Commission shall consists of:
a) President: He shall be a person who is or has been judge of the Supreme Court, to be
appointed by the Central Government (in-consultation with the Chief Justice of India.
b) Members: There shall be not less than four and not more than such number of
members as may be prescribed, possessing the qualifications as are prescribed for a
member of the State Commission.

Jurisdiction
The National Commission shall have the jurisdiction:
(iii)to entertain:
Commerce Business Regulations

 complaints where the value of the goods or services and compensation, if any
claimed exceeds rupees one crore; and
 appeals against the orders of any State Commission; and
(iv)to call for the records and pass appropriate orders in any consumer dispute which is
pending before or has been decided by any State Commission where it appears to the
National Commission that such State Commission has exercised a jurisdiction not vested
in it by law, or has failed to exercise a jurisdiction so vested, or has acted in exercise of
its jurisdiction illegally or with material irregularity.

Comparative Analysis: Consumer Protection Act 1986 ( Old Act) V/s

Consumer Protection Act 2019 ( New Act)
KEY POINTS OLD ACT NEW ACT
District forum (upto 20 District forum (upto 1
lacs) State commission crore)State commission
PECUNIARY
(from 20 lacs to 1 (from 1 crore to 10
JURISDICTION
crore)National commission crore)National commission
(from 1 crore and above) (from 10 crore and above)
Earlier MRP was a criteria Now discounted price/
MRP/PURCHASE PRICE to decide pecuniary actual purchase price is
jurisdiction criteria
TERRITORIAL Where complainant resides
Where seller has office
JURISDICTION or works
Central Consumer
REGULATOR No such provision protection authority to be
formed
Court can refer for
MEDIATION No such provision settlement through
mediation (Section 80)
Earlier 30 days period for Now it is 45 days (Section
APPEAL
appeal against the order of 41)Now 50% of award
Commerce Business Regulations

District forum (Section amount

15)Earlier 50% or 25,000
whichever is less is to be
deposited
Now all provision
applicable to direct seller
E-COMMERCE Earlier no specific mention
has been extended to e-
commerce
Earlier DCF did not have Now DCF has power to
REVIEW
the power to review review
Section 49(2) and 59(2) of
the new act gives power to
the State Commission and
UNFAIR TERMS AND NCDRC respectively to
No such provision
CONDITIONS declare any terms of
contract, which is unfair to
any consumer, to be null
and void
District consumer
District commissionState
forumState consumer
commissionNational
AUTHORITY forumNational Consumer
Consumer Dispute
Dispute Redressal
Redressal Commission
Commission
COMPOSITION OF President and 2 other President and 4 other
STATE COMMISSION members members
Commerce Business Regulations

Indian Patent Laws-

Introduction:
The Patents Act 1970, along with the Patents Rules 1972, came into force on 20 th April 1972,
replacing the Indian Patents and Designs Act 1911. The Patents Act was largely based on the
recommendations of the Ayyangar Committee Report headed by Justice N. Rajagopala Ayyangar.
One of the recommendations was the allowance of only process patents with regard to inventions
relating to drugs, medicines, food and chemicals.

Later, India became signatory to many international arrangements with an objective of

strengthening its patent law and coming in league with the modern world. One of the significant steps
towards achieving this objective was becoming the member of the Trade Related Intellectual
Property Rights (TRIPS) system.

Significantly, India also became signatory of the Paris Convention and the Patent
Cooperation Treaty on 7th December 1998 and thereafter signed the Budapest Treaty on
17th December 2001.

History:

Being a signatory to TRIPS, India was under a contractual obligation to amend its Patents
Act to comply with its provisions. India had to meet the first set of requirements on 1 st January
1995 to give a pipeline protection till the country starts granting product patent.

On 26th March, 1999, Patents (Amendment) Act, 1999 came into force retrospective effect from
1st January, 1995. The main amendments are as follows:

i. Section 5(2) was introduced which provides for filing of applications for patent in the field of
drugs, medicines and agro-chemicals. These applications were kept pending in the mailbox
or black box. This mailbox was to be opened on 1st January 2005.
ii. Provision of Exclusive Marketing Rights (EMR) was brought in by way of Chapter IV A.
Thus, pipeline protection was provided for pharmaceutical and agro-chemical manufacturers
whose applications for product were lying in black box.
Commerce Business Regulations

iii. Section 39 was omitted from the Act, thereby enabling the Indian residents to file the
applications for in an outside India simultaneously.
iv. Chapter II (A) was inserted in the Indian Patent Rules dealing with International
Applications under PCT.

The second phase of amendment was brought in by the Patents (Amendment) Act, 2002 which came
into force on 20th May 2003. The main features of the amendments included:

i. Term of patent was extended from 14 to 20 years, wherein the date of

patent was the date of filing of complete specification. Also the difference in
term of a drug/food patent and other patent was removed.

ii. The definition of "invention" was made in conformity with the provisions
of TRIPS Agreement by introducing the concept of inventive step, thereby
enlarging the scope of invention.

iii. Deferred examination system was introduced.

iv. Introdutcion of the provision of publication of application after 18 months

from the date of filing thereby bringing India at par with the rest of the world.

v. Microorganisms became patentable, whereas inventions relating to

traditional knowledge were included in the list of "what are not inventions".

vi. The concept of unity of invention in accordance with EPC and PCT.

vii. Section 39 was reintroduced thereby prohibiting the Indian residents to

apply abroad without prior permission or first filing in India.

viii. Provisions of Appellate Board were brought in by inserting section 116.

All appeals to the decision of the Controller would be appealable before the
Appellate Board. The Head Quarter of the Appeallate Board is to be in
Chennai.
Commerce Business Regulations

ix. Section 117 provided for Bolar provision for the benefit of agrochemical
and pharmaceutical industry.

The third and final amendment to the Patents Act, 1970 came by way of Patents (Amendment)
Ordinance, 2004, which was later replaced by The Patent (Amendment) Act, 2005, and Patents
(Amendment) Rules, 2006 with retrospective effect from 1st January, 2005. With the third
amendment India met with the international obligations under the TRIPS. Significant achievements
of this amendment were:

i. Deletion of section 5, opening of mailbox and grant of product patents. Thus this amendment
led to the dawn of the "product patent regime" in India.
ii. Abolition of Exclusive Marketing Rights (EMR).

Current Position:

The present Indian position in respect of patent law is governed by the provisions of the Patents Act,
1970 as amended by the Patents (Amendment) Act, 2005 (hereinafter referred to as the Act) and
Patents Acts Rules, 2006 (hereinafter referred to as the Rules)

The Head Patent Office is located at Kolkata and its branch offices are located at Delhi, Mumbai and
Chennai. Patent system in India is administered by the Controller General of Patents, Designs,
Trademarks and Geographical Indications. Each office has its own territorial jurisdiction for
receiving patent applications and is empowered to deal with all sections of Patent Act.

The jurisdiction for filing the patent application depends upon:

i. Indian applicant(s): determined according to place of residence, place of business of the

applicant or where the invention actually originated.
ii. Foreign applicant(s): determined by the address for service in India.
Commerce Business Regulations

WTO Patent Rule-Meaning of IPR

The concept of intellectual property is not new as Renaissance northern Italy is thought to be the
cradle of the Intellectual Property system. A Venetian Law of 1474 made the first systematic attempt to
protect inventions by a form of patent, which granted an exclusive right to an individual for the first time.
In the same century, the invention of movable type and the printing press by Johannes Gutenberg around
1450, contributed to the origin of the first copyright system in the world.

Towards the end of 19th century, new inventive ways of manufacture helped trigger large-scale
industrialization accompanied by rapid growth of cities, expansion of railway networks, the investment of
capital and a growing transoceanic trade. New ideals of industrialism, the emergence of stronger
centralized governments, and nationalism led many countries to establish their modern Intellectual
Property laws. At this point of time, the International Intellectual Property system also started to take
shape with the setting up of the Paris Convention for the Protection of Industrial Property in 1883 and the
Berne Convention for the Protection of Literary and Artistic Works in 1886. The premise underlying
Intellectual Property throughout its history has been that the recognition and rewards associated with
ownership of inventions and creative works stimulate further inventive and creative activity that, in turn,
stimulates economic growth.

Over a period of time and particularly in contemporary corporate paradigm, ideas and knowledge
have become increasingly important parts of trade. Most of the value of high technology products and
new medicines lies in the amount of invention, innovation, research, design and testing involved. Films,
music recordings, books, computer software and on-line services are bought and sold because of the
information and creativity they contain, not usually because of the plastic, metal or paper used to make
them. Many products that used to be traded as low-technology goods or commodities now contain a
higher proportion of invention and design in their value, for example, brand-named clothing or new
varieties of plants. Therefore, creators are given the right to prevent others from using their inventions,
designs or other creations. These rights are known as intellectual property rights.

Meaning of IPR :
Intellectual property rights (IPR) can be defined as the rights given to people over the creation of
their minds. They usually give the creator an exclusive right over the use of his/her creations for a certain
period of time. Intellectual property (IP) refers to creations of the mind: inventions, literary and artistic
works, and symbols, names, images, and designs used in commerce.
Commerce Business Regulations

With the establishment of the world trade Organization (WTO), the importance and role of the
intellectual property protection has been crystallized in the Trade-Related Intellectual Property Systems
(TRIPS) Agreement. It was negotiated at the end of the Uruguay Round of the General Agreement on
Tariffs and Trade (GATT) treaty in 1994.
The TRIPS Agreement, which came into effect on 1 January 1995, is to date the most
comprehensive multilateral agreement on intellectual property. The areas of intellectual property that it
covers are:
(i) Copyright and related rights (i.e. the rights of performers, producers of sound recordings
and broadcasting organisations);
(ii) Trade marks including service marks;
(iii) Geographical indications including appellations of origin;
(iv) Industrial designs;
(v) Patents including protection of new varieties of plants;
(vi) The lay-out designs (topographies) of integrated circuits;
(vii) The undisclosed information including trade secrets and test data.
Commerce Business Regulations

Invention and Non-Invention

Invention:
Patent is a grant for an invention by the Government to the inventor in exchange for full
disclosure of the invention. A patent is an exclusive right granted by law to applicants / assignees
to make use of and exploit their inventions for a limited period of time (generally 20 years from
filing). The patent holder has the legal right to exclude others from commercially exploiting his
invention for the duration of this period. In return for exclusive rights, the applicant is obliged to
disclose the invention to the public in a manner that enables others, skilled in the art, to replicate
the invention. The patent system is designed to balance the interests of applicants / assignees
(exclusive rights) and the interests of society (disclosure of invention).

According to Sec.2(1)(J) – “Invention” means a new product or process involving an

inventive step and capable of industrial application.
“New invention” is defined as any invention or technology which has not been
anticipated by publication in any document or used in the country or elsewhere in the world
before the date of filing of patent application with complete specification, i.e., the subject matter
has not fallen in public domain or that it does not form part of the state of the art [Section 2(1)(l);
Where, capable of industrial application, in relation to an invention, means that the invention is
capable of being made or used in an industry [Section 2(1)(ac)].

In Raj Prakash v. Mangat Ram Choudhary, it was held that invention, as is well known,
is to find out some thing or discover some thing not found or discovered by anyone before. It is
not necessary that the invention should be any thing complicated. The essential thing is that the
inventor was first to adopt it. The principal therefore, is that every simple invention that is
claimed, so long as it is something which is novel or new, it would be an invention and the claims
and specifications have to be rea in that light.

Therefore, the conditions of patentability are:

• Novelty
• Inventive step (non-obviousness) and
• Industrial applicability (utility)
Commerce Business Regulations
Commerce Business Regulations

Invention and Non-Invention

What is not an ‘Invention’

According to Sec 3 of the Patent Act, 1970
 Frivolous inventions
 Inventions contrary to well established natural laws
 Commercial exploitation or primary use of inventions,
o which is contrary to public order or morality
o which causes serious prejudice to health or human, animal, plant life or to the
environment
 Mere Discovery of a Scientific Principle or
 Formulation of an Abstract Theory or
 Discovery of any living thing or
 Discovery of non–living substance occurring in nature
 Mere discovery of any new property or new use for a known substance or of the mere use of a
known process, machine or apparatus, unless such known process results in a new product or
employs at least one new reactant.
 • Substance obtained by mere admixture resulting only in the aggregation of the properties of the
components thereof or a process for producing such substance
 Mere arrangement or re-arrangement or duplication of known devices, each functioning
independently of one another in a known way
 Method of Agriculture or Horticulture
 Any process for medicinal, surgical, curative, prophylactic, diagnostic, therapeutic or other
treatment of human beings or a similar treatment of animals to render them free of disease or to
increase their economic value or that of their products
 Plants & animals in whole or any part thereof other than micro- organisms, but including seeds,
varieties an d species and essentially biological process for production or propagation of plants &
animals
 mathematical method or
 business method or
 algorithms or
 computer programme per se
Commerce Business Regulations

 A literary,dramatic, musical or artistic work or any other aesthetic creation including

cinematographic work and television productions
 Presentation of information
 Topography of integrated circuits.
 Inventions which are Traditional Knowledge or an aggregation or duplication of known
properties of traditionally known component or components
What is a patent
A patent is a legal document that is granted by the government of the state or the country,
depending on the national rules. It gives an inventor of a particular thing, the exclusive right to
make, use and sell his or her creation for a specified period of time.
The basic idea of this system is to encourage the inventors to safeguard their own creations.
Books, movies, and some artworks cannot be patented. However, one can protect these assets
under the law of copyright. The law of patent is one branch of the larger legal field known as
intellectual property, which also includes trademark and copyright law.

Procedure to get patent

Step 01: Invention disclosure

The first step is to disclose your invention to the professional. This is done by signing a non-
disclosure agreement.
Pro-tip: It is recommended to submit each known fact about your invention. Do not hold
anything back.

Step 02: Patentability search

Usually, a professional charges a fee (approx INR 10,000 to INR 20,000) at this step. At this
stage, your professional performs extensive research for prior evidence in all the possible
databases. Further, he or she builds a patentability search report based on your invention.

Step 03: Decision to file an application for patent

This is where the actual process begins. After detailed research about (any) existing history of
your invention, you can decide if you want to go ahead with the patent application filing.
Please note: Your invention must have an ‘inventive step’ as compared with existing prior art
pieces to qualify for a patent. It must have either ‘technical advanced’ or ‘economically
significant’ or both, over any existing piece of arts.
The step where you decide to go ahead with the filing process by writing an application is called
patent drafting.
Step 04: Patent drafting

You can choose to draft the application on your own or take a professional’s help to do this. If
you choose to take help, you might have to pay somewhere around INR 20,000 to INR 30,000.
Please note: This is one of the most crucial steps of the entire process. It requires both technical
and legal understanding. If not drafted the right way, all the efforts you out in gets wasted. Hence
it’s a good idea to take professional help here.

Step 05: Filing the patent application

After you are done with a review of your patent draft and are satisfied with the scope and details,
you are ready to file for a patent.
You can file the patent application in a prescribed manner with appropriate forms with fees. You
need to pay fees of INR 1,600 or 4,000 or 8,000 (based on the type of application) while
submitting the patent application in the patent office. If you do not file a request for early
publication, the patent application will be published on expiry of 18 months.

Step 06: Request for examination

This is the step where the applicant is required to request the Indian patent office to examine
your patent application, within 48 hours. Request for examination fees ranges from INR 4,000 to
INR 20,000 (based on the type of applicant).

Step 07: Responding to objections (if any)

The draft and the report submitted to the officers in the patent office are thoroughly examined at
this step. At this step, there is a chance for the inventor to communicate his novelty or inventive
step over any other piece of art found during the assessment. If all the things are well clarified
and solved, the patent application is almost ready to come to action.

Step 08: Grant of patent

If the application meets all the prescribed requirements, it is placed in order for the grant.
Usually, the final grant of the application is notified through a journal that is published
Step 09: Renewal of your patent

Usually, a patent is in force for 20 years. On completion of 20 years, the owner is required to renew
the patent by paying a small fee.
Commerce Business Regulations

Restoration and Surrender of Lapsed patent

Restoration of Lapsed patent:
Section 60 provides that where a patent has ceased to have effect by reason of failure to pay any
renewal fee within the period prescribed under section 53 or within period as may be allowed under
section 142(4), the patentee or his legal representative and where the patent was held by two or more
persons jointly, then with the leave of the Controller one or more of them without joining the others, may
within eighteen months from the date on which the patent ceased to have effect, make an application for
the restoration of the patent.
Procedure for Disposal of Applications for Restoration of Lapsed Patents
Section 61 provides that if, after hearing the applicant in cases where the applicant so desires or
the Controller thinks fit, the Controller is prima facie satisfied that the failure to pay the renewal fee was
unintentional and that there has been no undue delay in the making of the application, he shall publish the
application in the prescribed manner; and within the prescribed period, any person interested may give
notice to the Controller of opposition thereto on either or both of the following grounds that —
(a) the failure to pay the renewal fee was not unintentional; or
(b) there has been undue delay in the making of the application. If notice of opposition is given
within the prescribed period aforesaid, the Controller shall notify the applicant, and shall give to him and
to the opponent an opportunity to be heard before deciding the case. If no notice of opposition is given
within the prescribed period aforesaid or if in the case of opposition, the decision of the Controller is in
favour of the applicant, the Controller shall, upon payment of any unpaid renewal fee and such additional
fee as may be prescribed, restore the patent and any patent of addition specified in the application which
has ceased to have effect on the cesser of that patent. The Controller may, if he thinks fit as a condition of
restoring the patent, require that an entry shall be made in the register of any document or matter which
has to be entered in the register but which has not been so entered.
Procedure for Restoration of Patents
Rule 84 requires that an application for the restoration of a patent under section 60 be made in
Form 15. Where the Controller is satisfied that a prima facie case for the restoration of any patent has not
been made out, he shall intimate the applicant accordingly and unless the applicant makes a request to be
heard in the matter within one month from the date of such intimation, the Controller shall refuse the
application. Where applicant requests for a hearing within the time prescribed and the Controller, after
giving the applicant such a hearing, is prima facie satisfied that the failure to pay the renewal fees was
unintentional, he shall publish the application. Rule 85 provides the procedure for opposition to
restoration under section 61 and says that at any time, within two months from the date of publication of
Commerce Business Regulations

the application under sub-rule (3) of rule 84, any person interested may give notice of opposition thereto
in Form 14. A copy of the notice of opposition shall be sent by the Controller to the applicant. The
procedure specified in rules 57 to 63 relating to the filing of written statement, reply statement, leaving
evidence, hearing and costs shall, so far as may be, apply to the hearing of the opposition under section 60
as they apply to the hearing in the opposition proceeding. Rule 86 dealing with payment of unpaid
renewal fees provides that where the Controller decides in favour of the applicant, the applicant shall pay
the unpaid renewal fees and the additional fee as specified in the First Schedule, within a month from the
date of the order of the Controller allowing the application for restoration. The Controller has been put
under obligation to publish his decision.

SURRENDER OF LAPSED PATENTS

Section 63 entitles the patentee to offer to surrender his patent, at any time by giving notice to the
Controller. Where such an offer is made, the Controller shall publish the offer in the prescribed manner
and also notify every person other than the patentee whose name appears in the register as having an
interest in the patent. Any person interested may, within the prescribed period after such publication, give
notice of opposition to the Controller and where such notice in given the Controller shall notify the
patentee. If the Controller is satisfied after hearing the patentee and any opponent, if desirous of being
heard, that the patent may properly be surrendered, he may accept the offer and by order revoke the
patent.
Commerce Business Regulations

Infringement of Patent
Infringement of a patent consists of the unauthorized making, importing, using, offering for sale
or selling any patented invention within the India.

Remedies against infringement of a patented invention

1. Interlocutory Injunction
A patent owner at the start of a trial can request for an interim injunction to restrain the
defendant from committing the acts complained of until the hearing of the action or further
orders. Permanent injunction is given based on the merits of the case at the end of the trial.

2.Relief of damages:
An award of damages focuses on the losses sustained by the claimant. A patent owner is
entitled to the relief of damages as compensation to the patentee and not punishment to the
infringer.

3. Account of profits:
Account of profits focuses on the profits made by the defendant, without reference to the
damage suffered by the claimant at the hands of the defendant. The purpose of the account is to
prevent the unjust enrichment of the defendant by the use of the claimant’s invention. The patent
owner may also opt for the account of profits where he has to prove use of invention and the
amount of profit derived from such illegal use.
Commerce Business Regulations
Commerce Business Regulations

FEMA-1999- Objectives of FEMA

Foreign Exchange Regulation Act, 1973 (FERA) was replaced by the Foreign Management Act,
1999 (FEMA). FEMA was enacted by Parliament of India and it came into force on 1st June, 2000. There
are a total of 49 Sections divided into 7 chapters. The reason for the replacement emerged because it was
not suitable for the prevailing environment and was harsh as it contained a provision for imprisonment.

On the other hand, FEMA was introduced with the changes because of the new, liberal and
changing environment.

Also, earlier FERA was passed due to the insufficient foreign exchange in the country and FEMA
was passed with the objective to relax the controls on foreign exchange in India.

1. The Head Office of FEMA, also known as Enforcement Directorate, headed by

the Director is located in New Delhi.
2. There are 5 zonal offices in Delhi, Mumbai, Kolkata, Chennai, and Jalandhar, each
office is headed by Deputy Director.
3. Every 5 zones are further divided into 7 sub-zonal offices headed by Assistant Directors
and 5 field units headed by Chief Enforcement Officers.

Authorities

Reserve Bank of India and the Central Government is the controlling authority- Central
Government enacts the laws and RBI ensures its enforcement.

The Directorate of Enforcement is the administrative and managing authority.

Objectives

 To reinforce and amend the law relating to foreign exchange.

 To simplify and ease the external trade and payments.
 To promote the systematized development and maintenance of a healthy foreign exchange market
in India.
 To remove disparity of payments.
Commerce Business Regulations

 To control and direct the employment business and investment of the non-residents.
 To utilize the foreign exchange resources effectively for the country.
Commerce Business Regulations

FEMA-1999- Objectives of FEMA

Foreign Exchange Regulation Act, 1973 (FERA) was replaced by the Foreign Management Act,
1999 (FEMA). FEMA was enacted by Parliament of India and it came into force on 1st June, 2000. There
are a total of 49 Sections divided into 7 chapters. The reason for the replacement emerged because it was
not suitable for the prevailing environment and was harsh as it contained a provision for imprisonment.

On the other hand, FEMA was introduced with the changes because of the new, liberal and
changing environment.

Also, earlier FERA was passed due to the insufficient foreign exchange in the country and FEMA
was passed with the objective to relax the controls on foreign exchange in India.

The head office of FEMA is situated in New Delhi known as Enforcement Directorate and is
headed by a Director.

Features of FEMA

 FEMA does not apply to the Indian citizens who resides outside India. This criteria is checked
by the number of days a person stays in India for more than 182 days in the preceding
financial year.
 Central Government has the authority given by FEMA to impose restrictions on and supervise
three things which are- payments made to any person outside India or receipts from them,
forex and foreign security deals.
 It specified the areas for holding of forex that required specific permission of the Reserve
Bank of India (RBI) or the government.
 FEMA classified the transaction into a current and capital account.
 It gives powers to the Central Government to regulate the flow of payments to and from a
person situated outside the country.
 All financial transactions concerning foreign securities or exchange cannot be carried out
without the approval of FEMA. All transactions must be carried out through “Authorised
Persons.”
 In the general interest of the public, the Government of India can restrict an authorized
individual from carrying out foreign exchange deals within the current account.
Commerce Business Regulations

 Empowers RBI to place restrictions on transactions from capital Account even if it is carried
out via an authorized individual.
 As per this act, Indians residing in India, have the permission to conduct a foreign exchange,
foreign security transactions or the right to hold or own immovable property in a foreign
country in case security, property, or currency was acquired, or owned when the individual
was based outside of the country, or when they inherit the property from individual staying
outside the country.
Commerce Business Regulations

FEMA-1999- Definition of Authorised Person, Currency, Foreign Currency

1. Authorised Person :

Section 2(c) of the Foreign Exchange Management Act,1999 defines Authorised person. An
authorised person is a person who has given the authority for the conversion of the foreign exchange.

For example, if an Indian resident wants to visit the USA and requires their currency which is dollars so
for the exchange he/she will only go to the authorised person or if a person residing abroad wants to visit
India and requires Indian currency then similarly he/she will approach an authorised person for the
foreign exchange.

The Reserve Bank on an application made on this behalf may authorise any person to deal in foreign
exchange or in foreign securities. So, an authorised person is governed under this section which states 4
persons as an authorised person-

 Authorised dealer, or
 Money changer, or
 Off-shore banking unit, or
 Any other person for the time being authorised to deal in foreign exchange or foreign
securities under Section 10 (1) of FEMA.

Section 10 of the Act in brief

 Authorisation under this Section should be in writing and should be subjected to the
regulations mentioned in that. –
 Any authorised person made, the reserve bank at any time can revoke such person if it is
satisfied that-
 It is in the public interest to do so; or
 An authorised person has failed to comply with the conditions on the grounds for which the
authorisation was granted; or
Commerce Business Regulations

 The authorised person has violated any of the provisions, rules, regulations mentioned in this
Act.

The Reserve Bank may order an authorised person to comply with a general or special direction to deal
with the foreign exchange or foreign securities.

And also if any transaction which involves any foreign exchange or foreign currency which is not in
compliance with the terms of this provision then an authorised person without any prior permission from
the Reserve Bank must not engage in any type of this transaction.

Before undertaking any transaction in foreign exchange on behalf of any person an authorised person
shall require the declaration or information of that person that the transaction is not designed for the
purpose of contravention of this Act, rule or regulation etc.

If the person refuses to undertake the declaration then an authorised person shall refuse in writing to
undertake the transaction and also if the authorised person believes that a person contravenes the
provision of the Act can report the matter to the Reserve Bank.

Other than the authorised person, if any person acquires or purchases the foreign exchange and use it for
any other purpose which is not permissible under the provisions of this Act or does not surrender within a
specified time to the authorised person shall be considered to have committed the violation under the
provisions of this Act.

2. Currency [Sec 2 (h)]

 (h) “currency” includes all currency notes, postal notes, postal orders, money orders, cheques,
drafts, travellers cheques, letters of credit, Acts of exchange and promissory notes, credit cards or
such other similar instruments, as may be notified 1 by the Reserve Bank;
 (i) “currency notes” means and includes cash in the form of coins and bank notes;
Commerce Business Regulations

Foreign currency

It means any currency but other than Indian currency.

Foreign Exchange

It means foreign currency and it also includes deposits, credits, and balances which are payable in
foreign currency. Also the drafts, travellers cheques, letters of credit or bills of exchange which are
expressed or drawn in Indian currency but is payable in any foreign currency.

Also, the drafts, travellers cheques, letters of credit or bills of exchange drawn by banks, or any
institutions or person outside India but are payable in Indian currency.
Commerce Business Regulations

FEMA-1999- Definition of Foreign Exchange and Foreign Security

Foreign Exchange

It means foreign currency and it also includes deposits, credits, and balances which are
payable in foreign currency. Also the drafts, travellers cheques, letters of credit or bills of
exchange which are expressed or drawn in Indian currency but is payable in any foreign
currency.

Also, the drafts, travellers cheques, letters of credit or bills of exchange drawn by banks,
or any institutions or person outside India but are payable in Indian currency.

Foreign Security

It means any security which is in the form of shares, stocks, bonds, debentures or any
other instrument denominated or expressed in foreign currency. It also includes foreign securities
which are denominated or expressed in foreign currency, but where the redemption or any form
of return on these securities such as interest or dividends should be payable in Indian currency.
Commerce Business Regulations

FEMA-1999- Defintion of Offences and Penalties

Offences and Penalties
Penalties.—(1) If any person contravenes any provision of this Act, or contravenes any rule,
regulation, notification, direction or order issued in exercise of the powers under this Act, or
contravenes any condition subject to which an authorisation is issued by the Reserve Bank, he
shall, upon adjudication, be liable to a penalty up to thrice the sum involved in such
contravention where such amount is quantifiable, or up to two lakh rupees where the amount is
not quantifiable, and where such contravention is a continuing one, further penalty which may
extend to five thousand rupees for every day after the first day during which the contravention
continues.

1 [(1A) If any person is found to have acquired any foreign exchange, foreign security or
immovable property, situated outside India, of the aggregate value exceeding the threshold
prescribed under the proviso to sub-section (1) of section 37A, he shall be liable to a penalty up
to three times the sum involved in such contravention and confiscation of the value equivalent,
situated in India, the Foreign exchange, foreign security or immovable property.

(1B) If the Adjudicating Authority, in a proceeding under sub-section (1A) deems fits, he may,
after recording the reasons in writing, recommend for the initiation of prosecution and if the
Director of Enforcement is satisfied, he may, after recording the reasons in writing, may direct
prosecution by filing a Criminal Complaint against the guilty person by an officer not below the
rank of Assistant Director.

(1C) If any person is found to have acquired any foreign exchange, foreign security or
immovable property, situated outside India, of the aggregate value exceeding the threshold
prescribed under the proviso to sub-section (1) of section 37A, he shall be, in addition to the
penalty imposed under sub-section (1A), punishable with imprisonment for a term which may
extend to five years and with fine.

Any Adjudicating Authority adjudging any contravention under sub-section (1), may, if he
thinks fit in addition to any penalty which he may impose for such contravention direct that any
currency, security or any other money or property in respect of which the contravention has
taken place shall be confiscated to the Central Government and further direct that the foreign
exchange holdings, if any, of the persons committing the contraventions or any part thereof, shall
be brought back into India or shall be retained outside India in accordance with the directions
made in this behalf.

Explanation.—For the purposes of this sub-section, “property” in respect of which contravention

has taken place, shall include— (a) deposits in a bank, where the said property is converted into
Commerce Business Regulations

such deposits; (b) Indian currency, where the said property is converted into that currency; and
(c) any other property which has resulted out of the conversion of that property.
 Commerce Business Regulations

Environment protection Act, 1986-

Environment Protection Act, 1986 Act of the Parliament of India. In the wake of the Bhopal gas
Tragedy or Bhopal Disaster, the [Government of India] enacted the Environment Protection Act of 1986
under Article 253 of the Constitution. Passed in May 1986, it came into force on 19 November 1986. It
has 26 sections and 4 chapters. The purpose of the Act is to implement the decisions of the United
Nations Conference on the Human Environment. They relate to the protection and improvement of the
human environment and the prevention of hazards to human beings, other living creatures, plants and
property. The Act is an “umbrella” legislation designed to provide a framework for central government
coordination of the activities of various central and state authorities established under previous laws, such
as the Water Act and the Air Act.

The Environment Protection Act,1986 was enacted as per the spirit of the Stockholm Conference
(1972), to take appropriate steps for the protection and improvement of the environment and to prevent
hazards to human beings, living creatures, and property.

Salient Features of the Act:

 EPA provides a single focus in the country for the protection of the environment and to plug the
loopholes in the earlier laws.
 The Act ensures the enforcement of several Acts/Regulations concerning pollution control.
 EPA is umbrella legislation that provides a framework for the coordination of Central and State
Governments and authorities established under the Water and Air Acts
The Main objectives of the Environment Protection Act, 1986 are listed below.

1. To protect and improve the environment and environmental conditions.

2. To take strict actions against all those who harm the environment.
3. To enforce laws on environment protection in the areas that is not included by the existing laws.
4. To give all the powers to the Central Government to take strict measures in favour of
environmental protection.
5. Implementing the decisions made at the United Nations Conference on Human Environment held
in Stockholm.
Commerce Business Regulations

Environment protection Act, 1986-

Environment Protection Act, 1986 Act of the Parliament of India. In the wake of the Bhopal gas
Tragedy or Bhopal Disaster, the [Government of India] enacted the Environment Protection Act of 1986
under Article 253 of the Constitution. Passed in May 1986, it came into force on 19 November 1986. It
has 26 sections and 4 chapters. The purpose of the Act is to implement the decisions of the United
Nations Conference on the Human Environment. They relate to the protection and improvement of the
human environment and the prevention of hazards to human beings, other living creatures, plants and
property. The Act is an “umbrella” legislation designed to provide a framework for central government
coordination of the activities of various central and state authorities established under previous laws, such
as the Water Act and the Air Act.

The Environment Protection Act,1986 was enacted as per the spirit of the Stockholm Conference
(1972), to take appropriate steps for the protection and improvement of the environment and to prevent
hazards to human beings, living creatures, and property.

The Main objectives of the Environment Protection Act, 1986 are listed below.

6. Creation of a government authority to regulate industry that can issue direct orders including
closure orders.
7. Coordinating activities of different agencies that are operating under the existing laws.
8. Enacting regular laws for the protection of the environment.
9. Imposing punishments and penalties on those who endanger the environment, safety and health.
For each failure or contravention, the punishment includes a prison term of up to five years or a
fine of up to Rs. 1 lakh, or both. This can also be extended for up to seven years in cases.
10. Engaging in the sustainable development of the environment.
11. Attaining protection of the right to life under Article 21 of the Constitution.
Commerce Business Regulations

Environment protection Act, 1986-

Environment Protection Act, 1986 Act of the Parliament of India. In the wake of the Bhopal gas
Tragedy or Bhopal Disaster, the [Government of India] enacted the Environment Protection Act of 1986
under Article 253 of the Constitution. Passed in May 1986, it came into force on 19 November 1986. It
has 26 sections and 4 chapters. The purpose of the Act is to implement the decisions of the United
Nations Conference on the Human Environment. They relate to the protection and improvement of the
human environment and the prevention of hazards to human beings, other living creatures, plants and
property. The Act is an “umbrella” legislation designed to provide a framework for central government
coordination of the activities of various central and state authorities established under previous laws, such
as the Water Act and the Air Act.

The Environment Protection Act,1986 was enacted as per the spirit of the Stockholm Conference
(1972), to take appropriate steps for the protection and improvement of the environment and to prevent
hazards to human beings, living creatures, and property.

Definitions
a) "environment" includes water, air and land and the inter- relationship which exists among and
between water, air and land, and human beings, other living creatures, plants, micro-organism and
property.
(b)
(c) "environmental pollution" means the presence in the environment of any environmental pollutant;
(d) "handling", in relation to any substance, means the manufacture, processing, treatment,
package, storage, transportation, use, collection, destruction, conversion, offering for sale,
transfer or the like of such substance;
(e) "hazardous substance" means any substance or preparation which, by reason of its chemical or
physico-chemical properties or handling, is liable to cause harm to human beings, other living
creatures, plant, micro-organism, property or the environment;
(f) "occupier", in relation to any factory or premises, means a person who has, control over the affairs of
the factory or the premises and includes in relation to any substance, the person in possession of the
substance;
Commerce Business Regulations

Environment protection Act, 1986- Types of Pollution

“Pollution is the introduction of substances (or energy) that cause adverse changes in the
environment and living entities” Pollution need not always be caused by chemical substances such as
particulates (like smoke and dust). Forms of energy such as sound, heat or light can also cause pollution.
These substances that cause pollution are called pollutants.
Pollution, even in minuscule amounts, impacts the ecological balance. Pollutants can make their
way up the food chain and eventually find their way inside the human body. Read on to explore the types
of pollution and their implications.
Types of Pollution

 Air Pollution
 Water Pollution
 Soil Pollution
 Noise Pollution
Besides these 4 types of pollution, other types exist such as light pollution, thermal pollution and
radioactive pollution. The latter is much rarer than other types, but it is the deadliest.
Air pollution: It refers to the release of harmful contaminants (chemicals, toxic gases, particulates,
biological molecules, etc.) into the earth’s atmosphere. These contaminants are quite detrimental and in
some cases, pose serious health issues. Some causes that contribute to air pollution are:

 Burning fossil fuels

 Mining operations
 Exhaust gases from industries and factories

Water pollution is said to occur when toxic pollutants and particulate matter are introduced into water
bodies such as lakes, rivers and seas. These contaminants are generally introduced by human activities
like improper sewage treatment and oil spills. However, even natural processes such as eutrophication can
cause water pollution.
Other significant causes of water pollution include:
 Dumping solid wastes in water bodies
 Disposing untreated industrial sewage into water bodies
 Human and animal wastes
 Agricultural runoff containing pesticides and fertilizers
Commerce Business Regulations

Soil pollution, also called soil contamination, refers to the degradation of land due to the presence of
chemicals or other man-made substances in the soil. The xenobiotic substances alter the natural
composition of soil and affect it negatively. These can drastically impact life directly or indirectly. For
instance, any toxic chemicals present in the soil will get absorbed by the plants. Since plants are
producers in an environment, it gets passed up through the food chain. Compared to the other types of
pollution, the effects of soil pollution are a little more obscured, but their implications are very noticeable.

Some of the common causes of soil pollution are:

 Improper industrial waste disposal

 Oil Spills
 Acid rain which is caused by air pollution
 Mining activities
 Intensive farming and agrochemicals (like fertilisers and pesticides)
 Industrial accidents

Noise pollution refers to the excessive amount of noise in the surrounding that disrupts the natural
balance. Usually, it is man-made, though certain natural calamities like volcanoes can contribute to noise
pollution.
In general, any sound which is over 85 decibels is considered to be detrimental. Also, the duration an
individual is exposed plays an impact on their health. For perspective, a normal conversation is around 60
decibels, and a jet taking off is around 15o decibels. Consequently, noise pollution is more obvious than
the other types of pollution.

Noise pollution has several contributors, which include:

 Industry-oriented noises such as heavy machines, mills, factories, etc.

 Transportation noises from vehicles, aeroplanes, etc.

 Construction noises

 Noise from social events (loudspeakers, firecrackers, etc.)

 Household noises (such as mixers, TV, washing machines, etc.)