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Unit 1

1.a) A void agreement had a specific event, time and/or start that made the agreement void. You may

write a check and it is given back to you with void written on it because of any reason you can think

of.

1- Prohibited:

A void agreement is not prohibited by law.2- Punishable:

A void agreement is not punishable.

3- Nature:A void agreement is not illegal agreement.

4- object:

The object of void agreement is not illegal.

5- Collateral agreement:A collateral agreement to a void agreement is enforceable.

6- Restoration of benefits:

In void agreement the money received must be returned to the other party.

A illegal agreement is one that on it's face is not legal, such as you put a contract out on someones

pet. That agreement would be illegal from the start so in effect there is no contract.

Illegal agreement:

1- Prohibited:

An illegal agreement is prohibited by law.

2- Punishable:

An illegal agreement is punishable.3- Nature:

An illegal agreement is also void agreement.4- object:

The object of illegal agreement is illegal.

5- Collateral agreement:A collateral agreement to an illegal agreement is not enforceable.

6- Restoration of benefits:

In illegal agreement the money paid cannot be claimed back.

1.b)A void contract is not recognized by law

because the agreement cannot be enforced by eitherparty. Technically, a void contract is a no contract situation- it is as if a contract was never formed,and neither party will be able to recover in the event of a breach. The contract is invalid from the

beginning, even at the negotiation or signing stage. This usually involves performing a duty that is

illegal or impossible to perform.

On the other hand, a voidable contract is a valid contract. Usually only one party is bound to the

contract terms in a voidable contract. The unbound party is allowed to repudiate (cancel) the

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7. It is right in personam. I.e. strictly available against a person and is not available against theentire world.

8. Salmond defines quasi contracts: there are certain obligations which are not in truthcontractual in the sense of resting on agreement, but which the law treats as if they were.

9. Lord Mansfield explained that law as well as justice should try to prevent unjustenrichment. I.e. enrichment of one person at the cost of another. He explains: it is clear thatany civilized system of law is bound to provide remedies for cases of what has been called

unjust enrichment or unjust benefit, i.e. to prevent a man from retaining the money of, or

some benefit derived from, another which it is against conscience that he should keep. Suchremedies in contract or tort, and are now recognized to fall within a third category of the

common law which has been termed as quasi-contract or restitution.

10.Essentials:o It is imposed by law. It is not created by contract;o It is a right in personam;o The person who incurs expenses is entitled to receive money (unjust enrichment); ando It is raised by a legal fiction.

11.Example: A- a publisher entrusts to B a printer to print a book. Half of the printing work iscompleted. Then B finds that the book is libelous one and he may be prosecuted by the state.

He stops the work. What would be his position? Then came the doctrine of quasi-contracts.It gives reasonable remuneration for the services actually rendered by B. B is entitled to get

reasonable remuneration from A for the work completed. Here it becomes a contractimplied in law. It is a quasi-contract.

2.a) A contract creates legal obligations ,Performance of a contract means the carrying out of theseobligations. Each party must perform or offer to perform the promise which he has made. Section

37, Para 1, of the Contract Act lays down that, The parties to a contract must either perform, oroffer to perform,

their respective promises, unless such performance is dispensed with or excused

under the provisions of this act, or of any other law.

The Offer to Perform or Tender

The offer to perform the contract is called Tender. Offer to perform or Tender may be calledattempted performance. A tender, to be legally valid, must fulfill the following conditions.Sec. 38 .

1. It must be unconditional. A tender coupled with a condition is no tender.

Example

A passenger on a bus offers a rupee note for the fare which is 10p. only. It is not a valid. tender

because it imposes condition on the acceptance of the tender viz the return of the balance out of the

rupee. A tender of money must be of the exact sum due. Bireswar v. The Emperor.

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2. A tender to pay conditionally upon the other party doing something such as giving a release or

accepting the other amount in full satisfaction of all demands, is not a valid tender. But of course, areceipt may be demanded after a tender has been accepted.

3. A tender money, must be in legal tender money, not by any foreign money, or by promissory note

or cheque. Jagat v. Nabagopal.

4: The tender must be made at a proper time and place. What is proper time and place, depends uponthe intention of the parties and the provisions of Sections 46-50 of the Act.

2.b) The time and place of performance

General Rules

The time and the place of performance of a contract are matters to be determined by agreement

between the parties to the contract.-

In sections 46 to 50 of the Indian Contract Act certain general

rules have been laid down regarding the time and place of performance. They are as follows

1.Time for performance without application

Where, by the contract, a promisor is to perform his promise without application by the promisee,,and no time for performance is specified, the engagement must be performed within a reasonable

time

Explanation-The question what is a reasonable time, is, in each particular case, a question of fact-

Sec. 46.

2.time and. place, where time is specified

When a promise is to be performed on a certain day, And the promisor has undertaken to perform itwithout application by the promisee, the promisor may perform it at any time during the usual hours

of business on such day and at the place at which the promise ought to be performed-Sec. 47.

Example :

D promises to deliver goods at Bs warehouse on the first January. On that day D brings the goods toBs warehouse but after the usual hour for closing -it and they are not received. D has not performed

his promise.

3. Application for performance to be at proper time and place

When a promise is to be performed on a certain day, am, the promisor has not undertaken toperform it without application

by the promisee, it is the duty of the promisee to apply for performance at a proper place and within

the usual hours of . business.

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Explanation-The question `what is a proper time and place is, in each particular, case, a question of

fact.-Sec. 48.

4,to appoint A reasonable place for the performance.

When a promise is to be performed without application by the promisee, and no place is fixed forthe Performance. of it, it is the duty of the promisor to apply to the promisee to appoint a reasonable

place for the performance of the promise, and to perform it at such place.-Sec. 49. .

Example :

D undertakes to deliver a thousand mounds of jute to B on a fixed day. D must apply to B to appoint

a reasonable place for the purchase of receiving it, and must deliver it to him at such place.

5.manner and time prescribed or sanctioned by promisee The performance of any promise may be

made in any manner or at any time which the promisee prescribes or sanctions. Sec. 50.

PERFORMANCE WITHIN STIPULATED TIME

Rules

Section 55 of the Contract Act lays down certain rules ,regarding the effects of failure to perform a

contract within the stipulated time. They are as follows :

1. In contracts where time is of the essence of the contract, if there is failure to perform within the

fixed time, the contract (or so much of it as remains unperformed) becomes voidable at the option of

the promisee.

2. In such cases, the promisee may accept performance after the fixed time but if he does so he

cannot claim compensation unless he gives notice of his intention to claim compensation at the timeof accepting the delayed performance.

3. In contracts where time is -not of the essence of the contract, failure to perform within the , fixedtime does not make the contract voidable, but the promisee is entitled to get compensation for any

loss occasioned to him by such failure. .

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Unit II

3)No one can transfer a better title in property than he himself has.

Two principles are competing at law:

1. the protection of property; and

2. the protection of commercial transactions and in particular the person who takes in goodfaith.

SGA s. 26 (1) Subject to this Act, if goods are sold by a person who is not the owner of them,

and who does not sell them under the authority or with the consent of the owner, the buyeracquires no better title to the goods than the seller had, unless the owner's conduct precludes

the owner from denying the seller's authority to sell.

29 (1) If goods have been stolen and the offender is prosecuted to conviction, the property inthe goods stolen revests in the person who was the owner of the goods, or that person's

personal representative, despite any intermediate dealing with them, whether by sale inmarket overt or otherwise.(2) Despite any enactment to the contrary, if goods have been obtained by fraud or other

wrongful means not amounting to theft, the property in the goods does not revest in the

person who was the owner of the goods, or that person's personal representative, merelybecause of the conviction of the offender.

Estoppel.

An estoppel is where a man is concluded by his own act or acceptance to say the truth.Coke.

"a principle of justice and equity. It comes to this: when a man, by his words or conduct, hasled another to believe in a particular state of affairs, he will not be allowed to go back on it

when it would be unjust or inequitable for him to so." Moorgate Mercantile v Twitchings

[1976] 1 QB 225, CA at 241 per Lord Denning MR.

26 (1) Subject to this Act, if goods are sold by a person who is not the owner of them, andwho does not sell them under the authority or with the consent of the owner, the buyer

acquires no better title to the goods than the seller had, unless the owner's conduct precludes

the owner from denying the seller's authority to sell.

1. Sales by mercantile agent.59 (1) If a mercantile agent is, with the consent of the owner, in possession of goods or of

the documents of title to goods, any sale, pledge or other disposition of the goods made bythe mercantile agent when acting in the ordinary course of business of a mercantile agent

is, subject to this Act, as valid as if the mercantile agent were expressly authorized by the

owner of the goods to make the sale, pledge or other disposition, if the person taking under

the disposition acts in good faith, and has not at the time of the disposition notice that theperson making the disposition has not authority to make it.

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(2) If a mercantile agent has, with the consent of the owner, been in possession of goods, or

of the documents of title to goods, any sale, pledge or other disposition that would havebeen valid if the consent had continued is valid despite the termination of the consent, if the

person taking under the disposition has not at that time notice that the consent has been

terminated.

2. Where you have the sellers in possession.

30 (1) If a person having sold goods continues or is in possession of the goods, or of the

documents of title to the goods, the delivery or transfer by that person, or by a mercantile

agent acting for that person, of the goods or documents of title under any sale, pledge orother disposition of them, or under any agreement for the sale, pledge or other disposition of

them, to any person receiving the same in good faith and without notice of the previous sale

has the same effect as if the person making the delivery or transfer were expressly authorized

by the owner of the goods to make the delivery or transfer.

3.

Buyer in possessionS. 30 (3) If a person having bought or agreed to buy goods obtains, with the consent of the

seller, possession of the goods or the documents of title to the goods, the delivery or transfer

by that person, or by a mercantile agent acting for that person, of the goods or documents of

title under any sale, pledge or other disposition of them, or under any agreement for the sale,pledge or other disposition of them, to any person receiving the same in good faith and

without notice of any lien or other right of the original seller in respect of the goods has the

same effect as if the person making the delivery or transfer were a mercantile agent inpossession of the goods or documents of title with the consent of the owner.

4. Sales under voidable title28 When the seller of goods has a voidable title to them, but the seller's title has not beenavoided at the time of the sale, the buyer acquires a good title to the goods, if they are bought

in good faith and without notice of the seller's defect of title.

4) Negotiation:

When a Promissory Note, Bill of Exchange or Cheque is transferred to any person, so as to

constitute that person the holder thereof, the instrument is said to be negotiated. The holder of theinstrument also gets the right to recover the amount mentioned on it. Negotiation may be carried out

by delivery or delivery and endorsement. On the other hand, an assignment can be defined as, when

the possession of a negotiable instrument is transferred by writing a discrete deed of transfer.

Negotiation Assignment

Negotiation can be done either by delivery or

by delivery and endorsement.

Written document duly signed by the

transferor is mandatory for an assignment.

The consideration in case of negotiation is

presumed.

The consideration has to be proved in case of

an assignment.

A notice of transfer to the creditor is not Informing the creditor about the assignment

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mandatory. is mandatory.

The Act governing negotiation of negotiableinstruments is the Negotiable Instruments

Act, 1881

The activities concerning an assignment areregulated by the Transfer of Property Act,

1882

The various points of distinction between negotiation and assignment are discussed below:-

1. Negotiation requires delivery only to constitute a transfer, whereas assignment requires a

written document signed by the transferor.

2. Consideration is always presumed in the case of transfer by negotiation. In the case of

assignment consideration must he proved.

3. In case of negotiation, notice of transfer is not necessary, whereas in the case of

assignment notice of the transfer must be given by the assignee to the debtor.

4. The assignee takes the instrument subject to all the defects in the title of the transferor. Ifthe title of the assignor was defective the title of the assignee is also defective. However, incase of negotiation the transferee takes the instrument free from all the defects in the title of

the transferor. A holder in due course is not affected by any defect in the title of the

transferor, He may therefore have a better title than the transferor.

5. In case of negotiation a transferee can sue the third party in his own name. But an assignee

cannot do so.

Effect of negotiation:

Negotiation involves transfer of ownership of the instrument from its holder to the other

person. When the instrument has been transferred by negotiation the holder who has taken itfor value gets good title to the instrument notwithstanding any defect in the title of the

transferor, except in the case of forgery because forgery conveys no title. Thus, where the

title of any prior endorser is defective by virtue of fraud, coercion or misrepresentation, thebonafide holder who has taken the instrument, in good faith gets a good title. Negotiation

thus conveys a better title to the transferee than the transferor, when the holder is a holder in

due course.

Unit III

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5) Procedure for conversion of private company to public company

Procedure

1. Convene a board meeting and decide the time, date, place and agenda for the general me

eting to approve the draft notice of the general meeting to alter the Articles ofAssociation and change the Objects clause as well in the Memorandum of Association

along with the Articles of Association and consequently the name by passing a special resolution.

2. Send 21 days clear notice of the general meeting in writing to all the eligible members of

the attach along with the notice suitable explanatory statement for the proposed specia

l resolutions.

3. Take a decision in the aforesaid board meeting with regard to increasing the paid up capit

al of the company to Rs. 5 lakhs if the existing capital is less than Rs. 5 lakhs or such higher

amount as may be prescribed. Such increase is not required if the existing private limited company is registered under Section 25 of the Act.

4. In the general meeting pass a special resolution for deletion of the restrictive conditionof section 3(1)(iii) from its articles and for deletion of the word `Private' from the name of th

e co-mpany.

5. File minutes of the meeting in the minutes book within 30 days of the conclusion of the

meeting.

6. File Form No. 23 within 30 days of passing a special resolution with the Registrar of Co

mpanies with requisite fees prescribed under Schedule X of the Act.

7. File within 30 days of passing of the above special resolution , the prospectus in the form

as per Schedule II or the statement in lieu of prospectus in the form as perSchedule IV , with the Registrar, alongwith the filing fee.

8. Make an application to the Registrar of Companies for issue of a fresh certificate of incorporation with the changed name.

9. Appropriate alterations will be made by the Registrar in the Memorandum of Association of the company immediately after issuing of fresh certificate of incorporation.

10. Increase the number of directors from 2 to 3 and number of members to 7 in case the

number of directors is less than 3 and members is less than 7.

11. Amend the Articles of Association in relation to quorum for general meeting, period ofnotice required for general meetings, and mode of appointment/retirement by rotation of the

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director, etc. bypassing a special resolution. File a copy of the amended Articles with the Registrar of Companies.

12.It is not required to obtain certificate of commencement of business in case

of conversion of private company into public.

13. Hold a statutory meeting if the conversion is within 6 months of the incorporation of thecompany and comply with all the provisions with regard to holding of statutory meeting.

14. No consent is required to be obtained from the existing directors to act as such after con

version, such consent is however is required for the subsequent appointment(s).

15. The change of name on conversion will not affect any rights or obligations of the

company and any legal proceedings by or against the company which was commenced

in its former name, can be continued under its new name.

Difference between private and public company

Private Company

It's minimum number of persons is two and the maximum is 50. It makes the use of private limited after its name. It can commence its business operation after getting certificate of incorporation. The memorandum of association and the articles of association is signed by at least two

persons.

The filling of both memorandum and article of association is obligatory.

It does not require the filling of the prospectus or statement-in-lieu of prospectus. It cannot sell shares to the general public in the open market. Transfer of share is restricted in the articles of association. There are of least two directors and they need not retire by rotation. There is no legal restriction on director's remuneration.

Public Company

It's minimum number of persons is seven and the maximum is unlimited. It makes the use of the word limited after the name. It requires both the certificate of incorporation and the certificate of commencement for its

commencement. It's memorandum and articles of association is signed by at least seven persons. It may not have its own articles of association because it may adopt table 'A'. It must file prospectus or statement in lieu of prospectus before allotment of shares. it sell shares to the general public in the open market. Transfer of shares is not restricted and as such shares are freely transferable and are quoted in

the stock exchange.

it has at least 3 directors and they are subject to retire by rotation.

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The directors cannot draw remuneration more than 11 percent of the net profit of thecompany.

6)Shares and its type

A share is the interest of a shareholder in a definite portion of the capital. It expresses aproprietary relationship between the company and the shareholder. A shareholder is the

proportionate owner of the company.

Types of shares:

According to section 86 of the companies act, a company can issue only two types of shares:

(a) Preference shares; and

(b) Equity shares.

Preference shares:

A preference share must satisfy the following two conditions:

I) It shall carry a preferential right as to the payment of dividend at a fixed rate; and

II) In the event of winding up, there must be a preferential right to the repayment of the paidup capital.

These are two dominant characteristics of preference shares. So preference share may or maynot carry such other right as:

(a) A preferential right to any arrears of dividend;

(b) A right to share in surplus profits by way of additional dividend;

(c) A right to be paid a fixed premium specified in the memorandum; and

(d) A right to share in surplus assets in the event of a winding up, after all kinds of capital

have been repaid.

Equity shares:

All shares which are not preference shares are equity shares. Equity shareholders have the

residual rights of the company. They may get higher dividend than preference shareholders if

the company is prosperous or get nothing if the business of the company flops. In thewinding up, the equity shares are entitled to the entire surplus assets remaining after the

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payment of the liabilities and the capital of the company; unless the articles confer right on

the preference shares a right to participate in the distribution of surplus assets.

1. Cumulative and non-cumulative preference shares:

With regard to the payment of dividend, preference shares may be cumulative or non-cumulative. In the case of cumulative preference shares, if the profits of the company in any

years are not sufficient to pay the fixed dividend, on the preference shares the deficiencymust be made up out of the profits of subsequent years. The accumulated arrears of dividend

must be paid before anything is paid out of the profits to the holders of any other class of

shares. In the case of non-cumulative preference shares, the dividend is only payable out ofthe net profits of each year. If there are no profits in any year, the arrears of dividend cannot

be claimed in the subsequent years. Preference shares are presumed to be cumulative unless

expressly described as non-cumulative. Any ambiguous language in the articles will not be

enough to make them non-cumulative.

2. Participating and Non-participating Preference Share:

Participating preference shares are those shares which are entitled, in addition to preference

dividend at a fixed rate, to participate in the balance of profits with the equity shareholdersafter they get a fixed rate of dividend on their shares. The participating preference shares may

also have the right to share in the surplus assets of the company on its winding up. Such aright must be expressly provided in the memorandum or the articles of association of the

company.

Non-participating preference shares are entitled only to a fixed rate of dividend and do not

share in the surplus profits. The preference shares are presumed to be non-participating,

unless expressly provided in the memorandum or the articles or the terms of issue. A merefact that the articles of a company confer on the preference shareholders a right to participate

with the equity shareholders in the surplus profits does not necessarily mean that thepreference shareholders are entitled to participate in the surplus assets also.

3. Redeemable preference shares:

According to section 80, a company limited by shares, if so authorized by its articles, mayissue redeemable preference shares. Such shares may be redeemed either after a fixed period

or earlier at the option of the company. In the case of irredeemable shares, the capital is to be

returned on the winding up of the company. The redeemable preference shares can be

redeemed, only subject to the following conditions:

i) Such shares must be fully paid

ii) Such shares shall be redeemed out of distributable profits or out of the proceeds of a fresh

issue made for the purposes of redemption.

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iii) Any premium to be paid on redemption of such shares must be paid out of profits or out

of the share premium account.

iv) Where shares are so redeemed out of profits, a sum equal to the nominal value of the

shares redeemed must be transferred to the capital redemption reserve account. This

amount shall be treated as capital of the company and the provisions as regards reduction ofcapital shall apply. The amount credited to the account cannot be paid out to the shareholders

as dividend. But it can be used to pay up unissued shares to be issued as fully paid bonusshares.

Redemption of preference shares is not to be taken as reduction of the companys authorizedshare capital. Shares already issued cannot be converted into redeemable preference shares.

Where a company fails to comply with these provisions, the company and every officer ofthe company who is in default shall be punishable with fine which may extend to Rs. 1,000.

Redemption of redeemable preference shares shall be notified to the registrar within onemonth of redemption. Where redeemable preference shares have been issued, the balance

sheet must contain a statement specifying what part of the capital consists of such shares and

the earliest date on which the company has power to redeem the shares.

Procedure for allotment of shares:

(1) Fulfillment of statutory conditions which need to be fulfilled: The company secretary hasto see that the statutory conditions regarding the allotment of shares are fulfilled before the

Board proceeds to allot the shares.

The following are the statutory conditions which need to be fulfilled:

(i) Valid offer and acceptance: There should be a valid offer and acceptance for the allotment

to be a valid one. Here the company is the offertory and the acceptors are the general public.If there is no company to offer then there would be no public to accept.

(ii) Unconditional Allotment: The allotment must be absolute and unconditional and also as

per the terms and conditions mentioned in the application. The allotment should be unbiased,and not according to the caste, creed, religion. It is not that rich shareholders pay more on the

shares and the poor share holders pay less on the shares. All have to pay the same price on

the shares.

(iii) Collection of minimum subscription amount: The minimum subscription amount as

noted in the prospectus has been received within 120 days of the issue of prospectus.

(iv) Receipt of application money: Not less than 5% of the nominal value of the share has

been secured and has been received along with the applications.

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(v) Deposition of application of money in a scheduled bank: All application money received

along with the applications must be deposited in a scheduled bank. It cannot be withdrawnuntil the company gets trading certificate or where such certificate is already received or till

the minimum subscription amount is received.

(vi) Filing of prospectus with the registrar: A copy of the prospectus or statement in lieu ofprospectus has been duly filed with the registrar and at least three days have elapsed after

such filing before the allotment is taken up.

(vii) Time of allotment: No allotment of shares can be effected until the beginning of the fifth

day from the date of issue of prospectus. The subscription list must be opened for at least 3

days as disclosed in the prospectus.

(viii) Proper communication: The allotment must be duly communicated to the applicant

through post i.e. registered post with necessary details.

(ix) Allotment strictly as per documents issued: The Board of Directors have to make theallotment of shares strictly as per the documents issued which include the prospectus and the

application form. The provisions made in the Memorandum of Association and the Articlesof Association must also be given due consideration.

(x) SEBI nominee: If the issue is over subscribed, the shares are allotted on a proportionate

basis. SEBI's nominee is associated while finalizing the basis of allotment. The purpose is tosee that the allotment is done on a fair and just basis. The allotment also needs to be

approved by a leading stock exchange.

(2) Appointment of allotment committee: The secretary informs the Board, that the share

applications are received and are ready for allotment. If the issue is just subscribed or under

subscribed, the Board will do the allotment of shares, but if the issue is over subscribed, the

Board appoints an allotment committee to do the allotment work. The allotment committeewill study the problem, prepare a report and submit to the Board.

(3) Board meeting for finalization of allotment formula: A meeting of the Board of Directorswill be called to finalize the allotment formula, which is being prepared by the allotment

committee. If the shares are listed, the allotment formula is to be finalized with the approval

of the concerned Stock Exchange Authorities.

(4) SEBI's association with allotment work: A representative of SEBI need to be associated

while finalizing the allotment formula. For this, the company has to request SEBI to

nominate a public representation for allotment work. SEBI's nominee is necessary when theissue is over subscribed.

(5) Signature of chairman on application and allotment list: The secretary has to see that

every sheet of application and allotment list is signed by the chairman. The secretary also hasto sign the application and allotment lists.

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(6)Resolution of the Board for allotment: The secretary has to see that the Board passes a

resolution regarding the allotment of shares and authorizing him to issue letters of allotmentand letters of regret.

(7) Issue of letters of allotment and letters of regret: After the Board's resolution to allot

shares, the secretary prepares the allotment list. Then he will send allotment letters to thosewho have been allotted shares and regret letters to those who could not be allotted shares.

(8) Refund / Adjustment of application money: The secretary has to make suitablearrangement for the repayment of application money sent by the applicant. The refunded

application money is made to those share holders who could bot be allotted shares. The

refund order is sent along with the letters of regret. If an applicant has been allotted a smallernumber of shares than the number applied for, the secondary has to adjust the excess amount

with the amount due on allotment.

(9) Collection of allotment money: The secretary has to make suitable arrangements with the

Company's Bankers for collection of allotment money against the allotment letters.

(10) Arrangement relating to letters of renunciation: To renounce means to give up. Certainapplicants who are being allotted shares do not want them, so they return the shares back to

the company. this is known as renunciation. The blank form of letter of renunciation and

letter of request for allotment along with the letter of renunciation duly executed and the

original letter of allotment from the renounces, the secretary has to make necessary changesin the Application of Allotment list in order to enter the names of the new allot-tees.

(11) Arrangement relating to splitting of allotment letters: Splitting means putting the sharesin one or more names. In case any allottee requests for a split of the allotment letter, the

secretary places such a request before the Board for approval. Once the Board approves the

splitting of the allotment letter, the secretary has to enter the details of the split in a separate

list of split allotments and issue the necessary 'split' letters.

(12) Submission of return of Allotment: Every company whether public or private and

having a share capital ans within 30 days of allotment is required to send to the Registrar, adocument known as the "Return of Allotment". The return of allotment contains various

details on allotment of shares such as the nominal value of shares allotted, names and

addresses of allotees, amount paid or payable on each share and particulars of bonus sharesand shares issued at discount. The secretary has to see that these documents are prepared and

submitted in time to the Registrar.

(13) Preparation of Register of members and issue of share certificates: The secretary has toprepare the Register of members from the Application and Allotment lists. He has to see that

the shares certificates are properly printed, sealed, signed and distributed to all the allot-tees

within three months after the allotment of shares. He has also to see that the share certificates

are issued against the letters of allotment.

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Unit IV

7)Consumer Protection Councils

The interests of consumers are enforced through various authorities set up under the CPA.The CPA provides for the setting up of the Central Consumer Protection Council, the State

Consumer Protection Council and the District Forum

Central Consumer Protection Council

The Central Government has set up the Central Consumer Protection Council which consists

of the following members:-

(a) The Minister in charge of Consumer Affairs in the Central Government who is itsChairman, and

(b) Other official and non-official members representing varied interests

The Central council consists of 150 members and its term is 3 years. The Council meets as

and when necessary but at least one meeting is held in a year.

State Consumer Protection Council

The State Council consists of :-

(a) The Minister in charge of Consumer Affairs in the State Government who is its Chairman,and

(b) Other official and non-official members representing varied interests

The State Council meets as and when necessary but not less than two meetings must be held

every year.

Powers of the Redressal Agencies

The District Forum, State Commission and the National Commission are vested with thepowers of a civil court under the Code of Civil Procedure while trying a suit in respect of the

following matters:-

1. the summoning and enforcing attendance of any defendant or witness examining the

witness on oath;

2. the discovery and production of any document or other material producible as evidence;

3. the reception of evidence on affidavits:

4. the requisitioning of the report of the concerned analysis or test from the appropriatelaboratory or from any other relevant source;

5. issuing of any commission for the examination of any witness; and

6. any other matter which may be prescribed.

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Under the Consumer Protection Rules, 1987, the District Forum, Commission and the

National Commission have the power to require any person :-

(i) To produce before, and allow to be examined by an officer of any authorities, such books

of accounts, documents or commodities as may be required and to keep such book,documents etc. under its custody for the purposes of the Act;

(ii) To furnish such information which may be required for the purposes to any officer so

specified.

They have the power to :-

(i) To pass written orders authorising any officer to exercise power of entry and search of any

premises where these books, papers, commodities, or documents are kept if there is any

ground to believe that these may be destroyed, mutilated, altered, falsified or secreted. Suchauthorised officer may also seize books, papers, documents or commodities if they are

required for the purposes of the Act, provided the seizure is communicated to the District

Forum / State Commission / National commission within 72 hours. On examination of such

documents or commodities, the agency concerned may order the retention thereof or mayreturn it to the party concerned.

(ii) to issue remedial orders to the opposite party.

(iii) to dismiss frivolous and vexatious complaints and to order the complainant to make

payment of costs, not exceeding Rs. 10,000 to the opposite party.

8) Members of a company

On the other hand, a "member" denotes a person whose name appears on the Register of

Members. For all practical purposes the words "shareholder" and "member" are used

interchangeably because in the normal course a shareholder will also be a member and amember will also be a shareholder. But if looked at from a closer angle, we may come across

a few exceptional cases where a shareholder may not necessarily be a member and a member

may not necessarily be a shareholder.

For example, companies limited by guarantee or unlimited companies having no share capitalwill have only members but no shareholders. Contrarily, a holder of a share warrant is a

shareholder but not a member as his name is removed from the register of members

immediately after the issue of such share warrant. Similarly, a transferee or the legalrepresentative of the deceased may be a shareholder but he may not be member until he gets

his name entered in the register of members. On the other hand, the transferor or the deceased

person is a member so long as his name is on the register of members whereas he cannot betermed a shareholder.

Difference between a Member and a Shareholder

S.no Shareholder Member

1 Is a member May not be a shareholder

because the company may

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not have a share capital

2 Person who owns a bearer share warrant is ashareholder

Struck off from the list

3 legal representative of a member Applies for registration

4 No share are allotted to a subscriber to the

memorandum

Subscriber to a

memorandum

Membership termination:

(1) A member may withdraw from membership of the company by giving 7 days notice tothe company in writing.

(2) Membership is not transferable.

(3) A persons membership terminates when that person dies or ceases to exist.