IPEM INTERNATIONAL SCHOOL & COLLEGE

CLASS – 12 i-Learn LEGAL STUDIES

(2021-2022)

CHAPTER 7: IMPORTANT LAWS

Prepared by Ms. Saumya Singh

1. Read Chapter 7 of Legal Studies, “IMPORTANT LAWS”, from the PDF file attached at the bottom.

2. Click on the following links to see the videos of detailed explanations of the Chapter-

a) Lokpal and Lokayukta https://www.youtube.com/watch?v=QDLY1P_vsO8

b) Concept of Direct and Indirect

Taxes

https://www.youtube.com/watch?v=y-c8i846994

c) What is GST? https://www.youtube.com/watch?v=auPWG6yyP24

d) FSSAI Act- An Umbrella

Legislation

https://www.youtube.com/watch?v=kd4eJsgABWA

e) Traffic Rules in India and the

2019 Amended Motor Vehicles

Act.

https://www.youtube.com/watch?v=ooYLJGWwcBI

https://www.youtube.com/watch?v=XvQGPiRHhAs

3. Please note: There is no prescribed textbook for Legal Studies.

4. Make sure to take a print-out of the entire chapter and read the entire chapter thoroughly.

5. Make sure you attend your Live Classes to understand the Chapter and to know about

all the important points, topic and keywords.

6. It is COMPULSORY to write the answer of ‘DIFFERENTIATE BETWEEN QUESTIONS’ in

a TABULAR FORM in all your tests/exams.

7. The portion or topics which are reduced by the Council (as of now) have been

highlighted in the chapter PDF attached below.

8. Be attentive in your Live Classes. Always keep a pen and notebook with you, so that

you are able to note down all important points and explanations given in the Live Classes.

9. LEARN EVERYTHING THAT IS TOLD TO BE IMPORTANT IN THE LIVE CLASSES FOR YOUR UNIT TEST, WHICH WILL BE HELD AFTER THE NOVEMBER ISC SEMESTER-1 EXAMINATION. TEST MARKS WILL BE ADDED TO THE PRELIMS.

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IPEM INTERNATIONAL SCHOOL & COLLEGE

CHAPTER 7 – LEGAL STUDIES (Class 12)

“IMPORTANT LAWS”

(Prepared by Ms. Saumya Singh)

Important Laws

Prevention of Corruption Act, 1988; Lokpal and Lokayukta Act, 2013; Negotiable Instrument

Act, 1881;Competition Act, 2002; Direct Tax, Indirect Tax and the concept of GST; Food

Safety and Standards Act, 2006, Human Rights Act, 1993 (with Amendment Act, 2006),

NHRC India; Information Technology Act, 2000; Motor Vehicle Act, 1988.

Object of Prevention of Corruption Act, 1988; Connotations of Public Servant and

Corruption as judicially pronounced; concept of ‘Sanction’ from the Government;

Chief Vigilance Commissioner and Chief Vigilance Officers – Santhanam Committee

Report, Scope and limitation of Lokpal and Lokayukta Act 2013.

Legal connotations of the term ‘Competition’; significance of the term ‘Competition’ for

developing countries in contemporary world; (Indian) Competition Act, 2002 - Notions of

anti-Competitive Agreements, abuse of Dominance and Regulation of Combination;

Concept of Negotiable Instrument; Negotiable Instrument Act, 1881- Key features; Cases of

‘Cheque-bouncing’ (Sec. 138); special Negotiable Instrument Act Courts.

Concept of Direct Tax and Indirect Tax- Ability to ‘Shift’ Liability and Differences between

both types of taxes; concept of GST - CGST, SGST and IGST; one Indirect Tax for entire

nation; Curious relationship of GST with direct tax Collection.

Importance of Food Safety and Hygiene; Food Business Operators; key features of Food

Safety and Standards Act, 2006 - an ‘umbrella’ Act; functions of Food Safety and Standards

Authority of India - Quality Assurance and Consumer Outreach.

Concept of Insurance; minimum requirement under Motor Vehicle Act, 1988 vis a vis Motor

Insurance; Third Party Damage Insurance - Policy-holder at fault, position of

injuries/damage sustained by policy-holder/his vehicle; Third Party Theft and Fire

Insurance; Comprehensive Motor Insurance- coverage and exclusions;

Significance of Road Safety measures; Motor Vehicle Act, 1988 and Amendment of 2019 -

Driving without Driving Licence, Owner’s liability if driven by other without Licence, age

limits for getting Driving Licence under different categories of Vehicles; Using Mobile

Phone while driving: manner dangerous to Public, leaving a Vehicle at rest in any public

place: causing hindrance to traffic or otherwise, Driving under the influence of Intoxicating

Substance, Driving without Seat Belt, Driving without Insurance, Juvenile Offences; two-

wheeler driving: more than one pillion rider, without helmet (penalties as per Motor

Vehicles Act, 2019 only) two-wheeler driving: more than one pillion rider, without helmet,

documents to be shown to policeman: driving licence, registration certificate, insurance

certificate, tax paid receipt, PUC Certificate and if it is a transport vehicle: permit and the

fitness Certificate.

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THE LOKPAL AND LOKAYUKTA ACT, 2013

Maladministration is like a termite that slowly erodes the foundation of a nation. It hinders

administration from completing its task. Corruption is the root cause of this problem that our

country faces. Though there are many anti-corruption agencies in India, most of these anti-

corruption agencies are hardly independent. Many of these agencies are only advisory bodies with

no effective powers to deal with this evil of corruption and their advice is rarely followed. There

also exists the problem of internal transparency and accountability. Moreover, there is not any

effective and separate mechanism to maintain checks on such agencies.

In this context, an independent institution of Lokpal and Lokayukta has been a landmark move in

the history of Indian polity which offered a solution to the never-ending menace of corruption. The

Lokpal and Lokayukta Act, 2013 provides for a powerful and effective measure to counter

corruption at all levels of the government. This act mandated for the establishment of Lokpal at the

Union level (centre) and Lokayukta at the State level. Maharashtra was the first State to introduce

the institution of Lokayukta in 1971.

Lokpal and Lokayuktas are statutory bodies and these do not have any constitutional status.

These institutions perform the function and role of an “Ombudsman” (an official appointed to

investigate individuals’ complaints against a company or organization, especially a public

authority). They inquire into allegations of corruption against certain public bodies/organizations

and for other related matters.

STRUCTURE OF LOKPAL –

Lokpal is a multi-member body consisting of one Chairperson and a maximum of 8 members.

The person to be appointed as the chairperson of the Lokpal must be either a former Chief

Justice of India; or a former Judge of the Supreme Court; or an eminent person with

impeccable integrity and outstanding ability, who must possess special knowledge and a

minimum experience of 25 years in matters relating to anti-corruption policy; public

administration; law and management, etc.

Out of the maximum eight members, half will be judicial members and minimum 50% of the

Members will be from SC/ ST/ OBC/ Minorities and women.

The judicial member of the Lokpal must be either a former Judge of the Supreme Court or a

former Chief Justice of the High Court.

The non-judicial member of the Lokpal needs to be an eminent person with flawless integrity

and outstanding ability. The person must possess special knowledge and an experience of a

minimum of 25 years in matters relating to anti-corruption policy; public administration; law

and management, etc.

Lokpal Chairman and the Members can hold the office for a term of 5 years or till they attain

the age of 70 years, whichever is earlier.

The members and the chairman of Lokpal are appointed by the president on the

recommendation of a selection committee.

STRUCTURE OF LOKAYUKTA –

It investigates the allegation against officials like corruption, favouratism, nepotism, injustice

and other grievances.

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It does not include Judges, Speaker, Chairman, Accountant General, Chairman and Members

of State Public Service Commission Commission, Judges of Civil and criminal court.

The Lokayukta receives the petition from the public and conducts inquiries. It has power to raid

on the houses and offices of corrupt official.

Lokayuktas are appointed for 5 years or till attaining age of 70 years, whichever is earlier.

They can be removed from the office by the governor, on the charge of misbehaviour or

incapacity proved in the state legislature by 2/3rd majority.

SCOPE OF LOKPAL & LOKAYUKTA –

a. Demand for Lokpal has mounted as people are fed up with the current system against

corruption. Despite all those reforms such as Prevention of Corruption Act and Right to

Information Act, corruption is still increasing in India and the common man’s grievances are not

heard properly.

b. All the corruption cases of the Prevention of Corruption Act, 1988 will come under the

jurisdiction of the Lokpal Act. Thus it has the function to inquire into allegations of corruption

against public officials.

c. The Lokpal will have its own autonomous machinery to inquire and investigate the corruption

cases.

d. As per the Act, a preliminary inquiry will be conducted within 30 days and completion of

investigation must take place within 6 months; although the extension of further six months can

be given but only after receiving a valid written reason. All the trials must be completed within a

year that may extend to two years after providing a valid reason in writing.

e. Unlike Prevention of Corruption Act, Lokpal does not require prior sanctions from the

government to investigate cases against a public servant and this is one of the best parts.

f. The Lokpal also has the power to search and seize documents and it can even recommend the

suspension of the accused. Even if the prosecution is pending, then too there is a provision to

confiscate the property acquired by corrupt means.

g. The major advantage of the Lokpal is it’s being independent as it is free from the influence of

politicians, police officers, and bureaucrats. The entire system is quick so no delay in the

results.

LIMITATIONS OF LOKPAL & LOKAYUKTA-

The institution of Lokpal came up as a much-needed change in the battle against corruption. The

Lokpal was a weapon to curtail the corruption that was spreading in the entire administrative

structure of India. But at the same time, there are loopholes and lacunae which need to be

corrected.

Let us have a look at such loopholes:

a. The appointing committee of Lokpal consists of members from political parties that put Lokpal

under political influence.

b. There are no criteria to decide who is an ‘eminent jurist’ or ‘a person of integrity’ which

manipulates the method of the appointment of Lokpal.

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c. The provision related to the initiation of inquiry against the complainant, in cases where the

accused is found innocent, leads to discouraging people from making complaints.

d. One of the biggest lacunae is the exclusion of the judiciary from the ambit of the Lokpal.

e. The Lokpal does not have any constitutional backing. Also, there are no adequate provisions

for appeal against the actions of Lokpal.

f. The Lokpal and Lokayukta Act also mandates that no complaint against corruption can be

registered after a period of seven years from the date on which the mentioned offense is

alleged to have been committed.

g. The major point of concern is that all the cases of corruption in which high officials are involved

go to the CBI. Lokpal is not going to completely control the administrative officers of the CBI

who will investigate the corruption cases. This is regarded as the major drawback of Lokpal.

h. Lack of prosecution powers, adequate staff, funds and lack of independence are some of the

limitation of the Lokayukta.

i. In many States, the office of the Lokayukta is vacant. For instance, Gujarat did not have a

Lokayukta for eight years.

The appointment of Lokpal in itself is not enough. The government should address the issues

based on which people are demanding a Lokpal. Merely adding to the strength of investigative

agencies will increase the size of the government but not necessarily improve governance. The

slogan adopted by the government of “less government and more governance”, should be

followed in letter and spirit. Moreover, Lokpal and Lokayukta must be financially, administratively

and legally independent of those whom they are called upon to investigate and prosecute. Lokpal

and Lokayukta appointments must be done transparently so as to minimize the chances of the

wrong sorts of people getting in. There is a need for a multiplicity of decentralized institutions with

appropriate accountability mechanisms, to avoid the concentration of too much power in any one

institution or authority.

NEGOTIABLE INSTRUMENTS ACT, 1881

The advent of modern business practices contributed to the growth of newer ways of facilitating

financial transactions. Previously, cash was the most common mode of exchanging goods and

services for their value. The rise of negotiable instruments, however, brought radical changes in

business practices. These days there are several types of such instruments which have made

commerce simpler.

A negotiable instrument (NI) is a document that guarantees payment of a specific amount of

money to a specified person (the payee). It requires payment either upon demand or at a set time

and is structured like a contract.

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Negotiable instruments are distinct from non-negotiable instruments in that they can be transferred

to different people, and, in that case, the new holder obtains full legal title to it. They are

transferable, and they contain key information such as principal amount, interest rate, date, and,

most importantly, the signature of the payor. The term “negotiable” in a negotiable instrument

refers to the fact that they are transferable to different parties. If it is transferred, the new holder

obtains the full legal title to it. Non-negotiable instruments, on the other hand, are set in stone and

cannot be altered in any way.

Negotiable instruments enable its holders to either take the funds in cash or transfer to another

person. The exact amount that the payor is promising to pay is indicated on the negotiable

instrument and must be paid on demand or at a specified date. Like contracts, negotiable

instruments are signed by the issuer of the document. In simple words, these instruments are

nothing but documents which have monetary value and are exchangeable. Hence, the two main

characteristics of Negotiable Instruments are financial worth and transferability.

In India, the Negotiable Instruments Act, 1881 is responsible for governing NIs. This law defines

these instruments and also deals with each type of them individually. It governs the use of

cheques, promissory notes, and bills of exchange.

The maxim of law nemo dat quod non-habet(no one can transfer a better title than he himself has)

comes into play here. This is the general principle relating to transfer of property is that no one can

become the owner of any property unless he purchases it from the true owner or with his authority.

Negotiable instruments are common exceptions to this very important rule requiring a proper title for

transfers. Hence, a person may validly acquire NIs from a seller who does not possess a title over

them. This only requirement of this exception is that the purchase of NIs must be for bona fide

reasons.

KEY FEATURES OF THE ACT-

The Negotiable Instruments Act was enacted, in India, in 1881.Prior to its enactment, the provision

of the English Negotiable Instrument Act were applicable in India, and the present Act is also

based on the English Act with certain modifications. Let us have a look at the features of this Act-

It facilitates the settlement of payments in business as they pass freely from holder to holder

due to easy transferability of value of instrument.

It provides legal protection to different mercantile instruments.

It regulates the different types of negotiable instruments which include Promissory notes,

Bills of Exchange and Cheques.

It explains the capacity and liabilities of the parties to the instrument.

It inculcates faith in the efficacy of banking operations and credibility in transacting business

on the negotiable instruments.

‘Negotiable’ means ‘transferable by delivery’ and the word ‘instrument’ means ‘a written document

by which a right is created in favor of some person’. Thus the term ‘Negotiable Instrument’ literally

means ‘a written document transferable by delivery’.

According to Section 13 of the Negotiable Instruments Act, 1881, a negotiable instrument

means “Promissory note, bill of exchange, or cheque, payable either to order or to bearer”.

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According to this definition, an instrument of this kind must always possess the following

characteristics:

A Negotiable Instrument is freely transferable by delivery or endorsement (The act of a person

who is a holder of a negotiable instrument in signing his or her name on the back of

that instrument, thereby transferring title or ownership is an endorsement.

An endorsement may be in favour of another individual or legal entity.)

Transferee can sue in his own name, in case the instrument gets dishonored. [Eg; Tina writes

a NI in favour of Jai and later she does not pay him on the due date. Here, Jai can sue Tina in

appropriate court for payment.]

Better title to a transferee, even if the title of transferor is defective, if the transferee takes it in

bona fide way and with a consideration. [Eg; Kartik writes a NI in favour of Riya but before the

due date the NI is stolen by Amit. Amit passes on the NI to Geeta for a consideration by

endorsing it to her (i.e. in this case forging Riya’s signature on I). Geeta accepts it in good

faith and for some value. Now on the due date Geeta will hold a good title, even though Amit’s

title was defective.]

TYPES OF NEGOTIABLE INSTRUMENTS-

Negotiable Instruments by Statue: Promissory note, Bills of exchange and Cheque.

Negotiable Instruments by Usage: Bank note, draft, Share warrants, Bearers, Debentures,

Dividend warrants and Treasury bill.

Let us have a look at some prominent forms of NI in the Act:

PROMISSORY NOTE-According to Section 4 of the Act a promissory note is an instrument in

writing (not being a bank note or a currency note) containing an unconditional undertaking,

signed by the maker to pay a certain sum of money to, or to the order of, a certain person or to

the bearer of the instrument.

A promissory note is a promise in writing by a person to pay a sum of money to a specified

person or to his order. A promissory note must always be in writing. It can never be an oral

contractual promise to pay money. This is a legal as well as a customary requirement of such

instrument. The undertaking that forms the base of a promissory note must generally be express.

Thus, merely inferring an acknowledgement to pay and calling it a promissory note is not enough.

For example, A writing “I owe B Rs. 1,000” does not amount to such notes.

Also, the promise to pay a certain amount of money must be unconditional in all cases. Hence, a

conditional promise cannot form the basis of such notes. For example, one cannot promise to pay

money only if he has it, as that amounts to a condition. However, promising to pay on a specific

date or upon the happening of an inevitable event is fine. For example, A can promise to pay B

three years from the date of the note’s execution.

It must mention a specific and precise amount. There can be neither additions nor subtractions to

them. Also, the money payable under a note must always be expressible in legal tenders like

Rupees or Dollars. Hence, a maker of a note cannot promise to pay the payee with bags of grains.

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Promissory Note Bills of Exchange

No. of parties There will be two parties namely maker

(debtor) and payee (creditor).

There will be three parties namely

drawer, drawee and payee.

Promise to

pay

It contains promise to pay by maker to

the payee or his order.

It contains an unconditional order

to the drawee to pay according to

the instructions of the drawer.

Payable It cannot be made payable to the maker

himself.

In this the drawer and payee can

be the same persons.

Acceptance

by the maker

It can be presented for the payment

without the acceptance of the maker.

It has to be accepted by the

drawee or someone else for the

presentation of the payment.

Notice of It is not necessary to send the notice of It is necessary to serve the notice

dishonour dishonour. of dishonour by holder to the

drawer and immediate endorsee.

BILLS OF EXCHANGE-According to Section 5 of the Act an instrument in writing, containing

an unconditional order, signed by the maker, directing a certain person to pay a certain sum of

money only to or to the order of, a certain person, or to the bearer of the instrument, is called a

Bill of Exchange. It should always be in writing and cannot be oral. The parties must be certain;

they cannot be ambiguous. It must comply with all legal requirements like stamping, date,

signatures, etc.

DIFFERENCE BETWEEN PROMISSORY NOTE AND BILLS OF EXCHANGE-

CHEQUE -According to sec. 6 of the Act, a Cheque is defined as 'a bill of exchange drawn on

a specified banker and not expressed to be payable otherwise than on demand’. So, it is an

order by the customer of the bank directing his banker to pay on demand, the specified

amount, to or to the order of the person named therein or to the bearer.

The Negotiable Instruments (Amendment) Act had amended this definition to make it broader in

2015. Accordingly, cheques now include the electronic image of a truncated cheque and also an

electronic cheque. Despite this amendment, the basic definition still remains the same. A truncated

cheque is one which undergoes truncation during a clearing cycle. Truncation basically means

the conversion of a physical cheque into digital format. Either a clearing-house or a bank may do

this upon generating an electronic image of a cheque. An electronic cheque is a cheque which

exists in digital format. A computer resource generates such cheques using digital

signatures (either with or without biometrics).

The main elements of cheques are that they’ve drawn on a banker and are payable on

demand. There is no need of any formal acceptance. Cheques are often payable either to the

drawer himself or to a bearer on demand. Hence, there might be two or more parties to a

cheque depending on the situation.

Another feature of cheques is that they are usually valid only for six months. There is no need

of any stamping as usually other negotiable instruments do.

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DIFFERENCE BETWEEN CHEQUE & BILLS OF EXCHANGE-

Bills of Exchange Cheque

Drawn to It is drawn to some person or firm. It is always drawn to banks.

Crossing It cannot be crossed. It can be crossed.

Grace

period

In this the grace period of 3 days can

be given.

In this no grace period is allowed for

the payment of cheque.

Stamp

duty

It is necessary to have proper stamp

duty.

No need to pay stamp duty on

cheques.

Payable It is payable on demand cannot be

drawn payable to bearer.

It can be drawn payable to bearer.

CHEQUE BOUNCING- DISHONOUR OF CHEQUE

Cheques are used in almost all transactions such as re-payment of loan, payment of salary,

bills, fees, etc. A vast majority of cheques are processed and cleared by banks on daily basis.

Cheques are issued for the reason of securing proof of payment. Chequ es remain a reliable

method of payment for many people. However, cases of cheque bounce are common these

days. Sometimes cheques bearing large amounts remain unpaid and are returned by the bank

on which they are drawn.

First let us understand what are the parties involved in a cheque:

the author or maker of the cheque is called ‘drawer’

the person in whose favour, the cheque is drawn is called ‘payee’

and the bank who is directed to pay the amount is known as ‘drawee’

Sometimes, drawee and payee may be the same person.

A person suffers a lot if a cheque issued in his favour is dishonoured due to the insufficiency of

funds in the account of the drawer of the cheque. To discourage such dishonour, the Negotiable

Instruments Act has been amended in 2015 and a new chapter VII has been added to the Act

containing Sections138 to 142.

Dishonor of Cheques, or Cheque Bounce (as it is popularly called) is considered to take place

when the drawer of the negotiable instrument draws a cheque without sufficient funds in the bank

account maintained by him. It is considered as a criminal offence under Section 138 of the

Negotiable Instruments Act, 1881 with a punishment of up to one year or fine being double the

amount of the dishonored cheque, or both. Thus, the essentials to make a person liable under

section 138 of this Act are:

There should be dishonor of cheque

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The cheque should have been drawn by its maker for discharge of some debt liability.

The cheque must have been presented to the bank within its period of validity (i.e. within a

period of 6 months from the date on which it is drawn or within the period of validity, whichever

is earlier).

The cheque must have been returned by the bank on account of “insufficient funds”. It has

been generally held in various cases that dishonour due to the insufficiency of funds has to be

interpreted liberally. Dishonour due to the remarks like “Account closed”, “Refer to the drawer”

or “Stop payment” of the cheque may be deemed to be covered by the provision contained in

Section 138 of the Act.

The payee must give a Demand Notice, in writing, to the drawer of the cheque demanding

payment of the cheque amount.

There must be failure of the drawer to make payment within 15 days of the receipt of the said

Demand Notice.

It is not necessary that all the above acts should have been perpetrated at the same locality. It is

possible that each of those five acts could be done at five different localities. But concatenation

(connection) of all the above is sine qua non for the completion of the offence under Sec. 138 of

the Act.

The requirement of sending a Demand Notice, as given above, is given under Section 138. It says

that the payee must give such notice in a written form as prescribed by the Act, within 30 days

from the date that the bank returned the cheque by stating “insufficient funds” as the reason.

Therefore, if the payee decides to proceed legally, then the drawer should be given a chance of

repaying the cheque first.

Such a chance has to be given only in the form of notice in writing by way of a Demand Notice.

The notice should mention that the cheque amount has to be paid to the payee within 15 days

from the date of receipt of the notice by the drawer.

If the drawer fails to make a fresh payment within 30 days of receiving the above mentioned

notice, the payee has the right to file a criminal complaint under Section 138 of the Negotiable

Instruments Act. Such criminal complaint should be registered in a magistrate’s court within 1

month of the expiry of the above mentioned notice period. It is essential in this case to consult

an advocate who is well versed and experienced in this area of practice to proceed further in

the matter.

On receiving the complaint, the court will issue summons and hear the matter. If found guilty,

the defaulter can be punished with monetary penalty which may be twice the amount of the

cheque or imprisonment for a term which may be extended to two years or both.The bank also

has the right to stop the cheque book facility and close the account for repeat offences of

bounced cheques.

If the drawer makes payment of the cheque amount within 15 days from the date of receipt of

the demand notice, then drawer does not commit any offence. Otherwise, the payee may

proceed to file a complaint in the court of the jurisdictional magistrate.

It must be noted that the Act provides for making a complaint with the Court and no FIR or police

complaint can be made in such situation. Hence there is no question of sec. 138 being a bailable

or non bailable offence, as police is never directly involved.

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This is because an offence u/s 138 is a civil wrong, which has been given criminal overtone. As

such, section 138 cannot be equated with IPC or other criminal offences.

Section 141 talks about the offence of cheque bounce, but done by a company. A juristic person

like, incorporated companies and partnership firms, are also liable for the offence of dishonour of

cheque and such liability is given u/s 141.

Section 141 covers 3 categories of person liable for offence under Section 138-

The company as principal offender, and

Persons who were in charge and were responsible for the business of company, and

Any other person who is director or a manager or secretary or officer of the company.

There must be a specific accusation against each of the persons alleged as accused that such

person was in charge of and responsible for the conduct of the business of the company or the

firm at the relevant time when the alleged offence was committed by the company or the firm.

Section 142 of the Act deals with cognizance of such offences. For initiating proceedings against

the drawer of dishonoured cheque, drawee/payee has to fulfil following conditions –

The payee or the holder in due course has to file a written complaint.

The complaint is to be made within 30 days of the date on which the cause of action arose. It

means that if the drawer fails to make a fresh payment within 30 days of receiving the

demand notice, the payee has the right to file a criminal complaint under Section 138 of the

Negotiable Instruments Act.

Only the court of Metropolitan Magistrate or a Judicial Magistrate of First Class is empowered

to try the offence defined under the provision of Section 138.

Circumstances in which a banker is justified in dishonouring customer’s cheque –

1) Payment countermanded by the drawer - When the cheque drawer of the cheque

countermands the payment, that is it issues the instruction to the bank not to make the

payment. On receipt of a valid stop payment order, the cheque must be returned unpaid

with the remark “payment countermanded by drawer”

2) Notice of drawer’s death - On receipt of the confirmed news of death of account holder,

cheques signed by him should be returned unpaid with the remark “Drawer deceased”.

3) Notice of customer’s insanity - Where the account holder is certified as insane by a

recognised medical practitioner then the cheques signed by him should be signed by him

should be returned unpaid.

4) Notice of customer’s insolvency - Where a customer is adjudged insolvent, the banker must

refuse to pay cheques drawn by the customer.

5) Liquidation of company - When a bank receives notice from the liquidator in accordance

with the provisions of Companies Act, requiring to pay the balance to liquidator’s account ,

all the cheques by the companies should be returned unpaid.

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Reasons for dishonour of Cheque -

o Insufficient Funds

o Signature not matching

o Account Closed

o Cheque was presented after three months or its validity.

o Payment stopped by account holder

o Disparity in the words and figures mentioned in the cheque

o In case of a joint account where both signatures are required but only one is there

o Death of the customer

o Insanity of the customer, etc.

Liability & recourse - There are two recourses in the case of a cheque bounce – Civil and Criminal

Civil: Where a cheque is dishonoured, the legal position of the drawer of the cheque becomes

that of a principal debtor to the payee/holder. The holder can bring a civil suit just like any

creditor to recover the amount from the drawer making him liable as principal debtor.

Criminal: A drawer of a cheque is deemed to have committed a criminal offence when the

cheque drawn by him is dishonoured by the drawee on account of insufficiency of funds. The

maximum punishment for such an offence, given u/s 138, is imprisonment upto 2 years or fine

upto twice the amount of cheque or both. Where the cheque is drawn by a company, a firm, or

association of individuals, the punishment can be awarded to every person who was in-charge

of and was responsible for its conduct of business and also to the company.

The difference between the Civil Suit and Criminal Complaints is that of the procedure of filing the

case, the quantum of punishment and the stages of litigation. The criminal complaint is filed for

awarding of punishment to the defaulter while the civil suit is filed for the recovery of the amount

due.

Compounding of Offence - Section 147 of the Negotiable Instrument states about the

compounding of offence, it says that the if the appellant or original complainant comes to the Court

who has taken the cognizance and says that he wants to withdraw from the side of the prosecution

on account of compromise and he has compounded the matter, then the sentence and conviction

have to be set aside anyhow.

IMPORTANT CASES

AparnaShaha vs. Sheth Developers Pvt. Ltd. (2014)–Supreme Courttook a view that a Joint

Account holder cannot be prosecuted unless the cheque is signed by each person who is Joint

Account Holder. In the present case, the cheque was signed by the husband of the appellant. The

Apex Court quashed the proceeding against the appellant (wife). The court observed that as a

natural corollary each joint account holder must sign the cheque before they are considered for

criminal action under section 138 of the Act.

Meters and Instruments (P) Ltd. vs. Kanchan Mehta (2018), it was held that the though the

compounding requires consent of both parties, even in absence of such consent, the court, in the

interest of justice, on being satisfied that the complainant has been duly compensated, can its

discretion close the proceedings and discharge the accused.

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JURISDICTION & SPECIAL COURTS

The ground rule for jurisdiction in such cases was given in the following case:

K. Bhaskaran vs. Shankaran (1999) – The issue was regarding jurisdiction of the courts. Hon’ble

Supreme Court had given jurisdiction to initiate the prosecution at any of the following places:

1. Place of the bank on which the cheque is drawn.

2. Placed of residence or business of Complainant/Payee.

3. Place of residence or business of Drawer/Accused.

4. Place where cheque is presented to the bank and the same is dishonoured.

5. Place from where notice is served to drawer, demanding the amount.

Dashrath Rupsingh Rathore vs. State of Maharashtra (2014) - In this case, a 3-Judge bench of the

Supreme Court had held that a cheque bouncing case can be filed only in a court which has the

territorial jurisdiction over the place where the cheque is dishonoured by the bank on which it is

drawn. Thus, if a cheque is drawn by a person on his bank account at Mumbai, the cheque

dishonour case in respect of this cheque can be filed only in a court at Mumbai within whose

territorial jurisdiction the said bank is located. Such a case cannot be filed in any other court at

any other place.

For example, if you are the payee of the cheque and if you present this cheque for clearing at

Delhi, it cannot be filed at Delhi.

Thus, the uncertainty about the place where such a case can be filed was removed. As per this

judgment, the payee of a cheque could not unnecessarily harass the drawer of the cheque by filing

the cheque bouncing case at the place of his choice by deliberately choosing a different place for

presenting the cheque or for sending the notice, etc.

Subsequently, many people had raised difficulties about this judgment. This is so because the

payee of the cheque had to file the case at the place where the drawer of the cheque has a bank

account. Thus, if you reside at Delhi and have a bank account in Delhi, and you get a cheque from

a person from his bank account at Mumbai, you’ll have to go to Mumbai to file the case, even

though the fault for cheque dishonour may be that of the person who gave you the cheque.

Scenario after 2015 Amendment Act–

Now, the jurisdiction to file cases of cheque bouncing has now been changed by Negotiable

Instruments (Amendment) Act, 2015 which came into effect on 15th June, 2015. As per this

Amendment Act, a cheque dishonour case under Section 138 needs to be filed in the court as per

provisions of Section 141(1) and 142(2), and even all pending cheque bouncing cases shall also

get transferred to the courts as per this Amendment Act.

The Amendment Act states that if the cheque is delivered through an account, then the court

having local jurisdiction over the branch where the payee or the holder maintains the account

would try the case. The Amendment Act further requires all the subsequent complaints arising out

of Section 138 against the same drawer to be filed in the same court as the first complain, if it is

still pending in the court, irrespective of whether those cheques were delivered for collection or

presented for payment within the territorial jurisdiction of that court.

So we can understand this amendment in simpler terms as follows:

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Now a cheque bouncing case can be filed only in the court at the place where the bank in

which the payee has his account. For example, if you are based at Delhi and you have an

account in a bank in a particular area of Delhi. You receive a cheque from someone in

Mumbai. You present your cheque in Delhi in the bank where you have your account. Now, if

this cheque is dishonoured, then the cheque bounce case can be filed only in Delhi in the court

which has jurisdiction over the area where your bank is located.

Secondly, once you have filed a cheque bounce case in one particular court at a place in this

manner, subsequently if there is any other cheque of the same party (drawer) which has also

bounced, then all such subsequent cheque bounce cases against the same drawer will also

have to filed in the same court (even if you present them in some bank in some other city or

area). This will ensure that the drawer of cheques is not harassed by filing multiple cheque

bounce cases at different locations. So, even multiple cheque bounce cases against the same

party can be filed only in one court even if you present the cheques in different banks at

different locations.

Thirdly, all cheque bounce cases which are pending as on 15 June 2015 in different courts in

India, will be transferred to the court which has jurisdiction to try such case in the manner

mentioned above, i.e., such pending cases will be transferred to the court which has

jurisdiction over the place where the bank of the payee is located. If there are multiple cheque

bounce cases pending between the same parties as on 15 June 2015, then all such multiple

cases will be transferred to the court where the first case has jurisdiction as per above

principle.

This Amendment Act superseded the judgment of Supreme Court in the matter of Dashrath

Rupsingh Rathod vs. State of Maharashtra.

Himalaya Self Farming Group vs. Goyal Feed Suppliers (September 2020)– the same was

reiterated i.e. case can only be filed at the place where the payee maintains its bank account.

In our country, with over 35 lakh cheque bounce cases pending in district courts, the Supreme

Court has decided to evolve a "concerted" and "coordinated" mechanism for expeditious disposal

of such cases. In March 2020, the apex court has registered a suomotu case (on its own) in this

regard and sought responses from the Centre and other stakeholders, including the Reserve Bank

of India. Supreme Court noted that a dispute of this nature has remained pending for 15 years in

various courts and taken judicial time."Despite many changes brought through legislative

amendments and various decisions of this court mandating speedy trial and disposal of these

cases, the trial courts are filled with a large number of pendency of these cases," the Court said.

The top court has issued notices to the Centre, registrar general of all high courts, director-general

of police of all states and union territories, member secretary of the National Legal Services

Authority, RBI and Indian Bank Association, Mumbai, and asked them to file their response on the

issue.

The Court noted that as per the legal mandate, an endeavour must be made to conclude the trial

in cheque bounce case within six months from the date of filing of a complaint. It said, one of the

major factors for high pendency is delay in ensuring the presence of the accused before the court

for trial. As per a recent study, more than half of the pending cases are pending due to absence of

accused.

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The top court also said there is a need of developing a mechanism for pre-litigation settlement in

cheque bounce cases and National Legal Services Authority may evolve a scheme for settlement

of dispute at pre-litigation stage.

DIRECT & INDIRECT TAX

Taxes are one of the biggest sources of income for the government. From your salary, meals at a

restaurant, watching a movie at the multiplex, driving your car on roads, to simply purchasing a

packet of biscuit from a general store, you pay many different types of taxes in many different

ways.

As a responsible citizen of the country, it is your duty to pay the taxes. But it is also equally

important to know the different types of taxes implemented in the country. All the various taxations

in India can be broadly classified into two categories- direct and indirect tax. These are defined

according to the ability of the end taxpayer to shift the burden of taxes to someone else. Direct

taxes allow the government to collect taxes directly from the consumers while indirect taxes allow

the government to expect stable and assured returns through the society.

DIRECT TAX

In simple words, a direct tax is a tax that you directly pay to the authority imposing the tax. For

instance, income tax is imposed by the government, and you pay it directly to the government.

These taxes cannot be transferred to any other entity or person. There are several acts which

govern direct taxes.

In India, CBDT (Central Board of Direct Taxes) which is governed by the Department of Revenue

is responsible for the administration of direct taxes. The department is also involved in planning

and providing inputs to the government regarding the implementation of direct taxes.

Some important direct taxes imposed in India are as under:

1. Income Tax: It is levied on and paid by the same person according to the different tax brackets

as defined by the income tax department. It is imposed by the government on all the income that is

generated by various entities within their jurisdiction. All individuals and businesses have to file an

income tax return every year to determine whether they owe any taxes or are eligible for any tax

refund.

2. Corporate Tax:It is also known as the corporation tax. It is the tax on all the income or gains

generated by corporations. It is generally levied on the profits earned. The companies and

business organizations are taxed on the income under the provisions of Income Tax rules.

3. Inheritance (Estate) Tax: An inheritance tax which is also known as an estate tax or death duty

is a tax which arises on the death of an individual. It is a tax on the estate, or the total value of the

money and property, of a person who has died.

4. Gift Tax: It is the tax that an individual receiving the taxable gift pays to the government.

BENEFITS OF DIRECT TAXES

There are some key benefits of direct taxes such as-

Curbs Inflation- In case if there is monetary inflation, the government can

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increase direct tax rates so that the goods and services demand can be reduced. As the

demand falls, it helps in condensing inflation.

Equitable- Direct taxes are also known to be equitable as the progression principle is at its

foundation. People with lower income pay lower taxes, and people with higher income pay

higher taxes.

Reduces Inequalities- The higher taxes collected from the rich are used by the

government to launch newer initiatives for the poor. The initiatives provide income sources

to people with lower income, helping them improve their living standards.

DISADVANTAGES OF DIRECT TAXES

Direct taxes also have some drawbacks such as -

Considered a Burden- As taxpayers are required to pay direct taxes like income tax in a

single lump sum every year, they are considered a burden. Moreover, even the

documentation process is generally complex and time-consuming.

Evasion is Possible- While the government has made tax evasion very difficult now, there

are still many fraudulent practices through which individuals and businesses can avoid or

pay lower taxes than they should.

Restrains Investments- Due to the imposition of direct taxes like securities transaction tax

and capital gains tax, a lot of people avoid investing. So, in a way, direct taxes restrain

investments.

INDIRECT TAX

While direct taxes are imposed on income and profits, indirect taxes are levied on goods and

services. A major difference between direct and indirect tax is the fact that while direct tax is

directly paid to the government, there is generally an intermediary for collecting indirect taxes from

the end-consumer. It is then the responsibility of the intermediary to pass on the received tax to

the government.

Unlike a direct tax, indirect taxes do not depend on the income of an individual. The tax rate is the

same for everyone. The CBIC (Central Board of Indirect Taxes and Customs) is mostly

responsible for handling indirect taxes in India. Just like CBDT, CBIC also works under the

Department of Revenue.

Some of the most important types of indirect tax in India are as follows-

1. Goods and Services Tax (GST): GST subsumed as many as 17 different indirect taxes in

India like Service Tax, Central Excise, State VAT, and more. It is a single, comprehensive, indirect

tax which is imposed on all the goods and services as per the tax slabs laid by the GST council.

One of the biggest benefits of GST is that it mostly eliminated the cascading or tax-on-tax effect of

the previous tax regime.

2. Customs Duty: When you purchase something that needs to be imported from a foreign

country, you are required to pay customs duty on it. Irrespective of whether the product has come

to India by air, land, or sea, you will have to pay the customs duty on it. The goal of imposing this

indirect tax is to make sure that every product entering India is taxed.

3. Value Added Tax (VAT): A VAT is a type of consumption tax imposed on products whenever

its value increases throughout the supply chain. It is imposed by the state government, which

also decides the VAT percentage on different goods. While GST has mostly eliminated VAT, it is

still imposed on some products such as items that contain alcohol.

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BENEFITS OF INDIRECT TAX

Some significant benefits of indirect taxes are listed below-

Poor Contributes Too- It is essential for the country that every individual contributes

towards its development. As the poor are often exempt from paying direct taxes, the indirect

taxes ensure that even poor contribute towards nation-building.

Convenience- Unlike direct taxes which are generally paid in a lump-sum, indirect taxes

like GST are paid in small amounts. When you purchase a product or service, a small

amount of GST is already included in the price, and this makes its payment more

convenient for the taxpayers.

The collection is Easy- Unlike direct taxes, there are no documents or complex

procedures involved in paying indirect taxes. You are required to pay the tax right when you

purchase a product or service.

DISADVANTAGES OF INDIRECT TAXES

A few cons of indirect taxes are as follows-

Regressive- Indirect taxes are widely known to be regressive in nature. While they make

sure that everyone pays taxes irrespective of their income, they are not equitable. People

from every income group are required to pay indirect taxes at the same rate.

Makes Products and Services More Expensive- As indirecttax is added to the price of

goods and services, it makes them more expensive. For instance, products like cigarettes,

high-end bikes, premium cars, etc. are included in the 28% tax slab of GST.

Lacks Civic Consciousness- As indirect tax is added to the price of the product or

service, the consumers are generally unaware of the tax they are paying. This is opposite to

direct taxes where the taxpayer clearly knows the taxes he/she is paying.

SHIFTING THE BURDEN OF TAX –The meaning of ‘incidence of taxation’ refers to the question

of who and in what proportion bears the final burden of a tax. It is not necessary that a person or a

firm who pays a tax to the Government i.e. bears the initial burden of a tax will also be the one on

whom the final burden of that tax rests.

This is because a tax can be shifted or transferred to others. However, not the whole burden can

be shifted. Only a part of the tax may be shifted on others. This is seen with Indirect Taxes. Here,

the supplier can pass on the burden of an indirect tax to the final consumer – depending on the

price elasticity of demand and supply for the product.

GST – ONE INDIRECT TAX FOR THE WHOLE NATION

GST is known as the Goods and Services Tax. It is an indirect tax which has replaced many

indirect taxes in India such as the excise duty, VAT, services tax, etc. The Goods and Service Tax

Act was passed in the Parliament on 29th March 2017 and came into effect on 1st July 2017.

In other words, Goods and Service Tax (GST) is levied on the supply of goods and services.

Goods and Services Tax Law in India is a comprehensive, multi-stage, destination-based tax that

is levied on every value addition. GST is a single domestic indirect tax law for the entire country.

The imposition of this tax takes place jointly by the center and the state. Furthermore, the

imposition happens with the recommendation of a central council.

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India established a dual GST structure in 2017, which was the biggest reform in the country's tax

structure in decades. The main objective of incorporating the GST was to eliminate tax on tax,

or double taxation, which cascades from the manufacturing level to the consumption level.

The regime is regulates by a GST council. It is a governing body to regulate and direct each and

every step for the implementation of goods and service tax in the nation with decisions over tax

rates and further implementation measures. GST council assimilate ssuggestions and regulation

into one form and improvise the changes formally through notifications and circulars with its

departments and finance ministry. This Council is headed by the Union Finance Minister, who is its

Chairman.

Let us understand the GST concept by an example –

A manufacturer that makes notebooks obtains the raw materials forRs.10, which includes a

10% tax.

This means that they pay Rs.1 in tax for Rs.9 worth of materials.

In the process of manufacturing the notebook, the manufacturer adds value to the original

materials of Rs.5, so the total value becomes Rs.10 + Rs.5 = Rs.15.

The 10% tax due on the finished good will be Rs.1.50.

Under a GST system, the previous tax paid can be applied against this additional tax to

bring the effective tax rate to Rs.1.50 – Rs.1.00 = Rs.0.50.

In turn, the wholesaler purchases the notebook for Rs.15 and sells it to the retailer at a

Rs.2.50 markup value for Rs.17.50. The 10% tax on the gross value of the good will be

Rs.1.75, which the wholesaler can apply against the tax on the original cost price from the

manufacturer (i.e., Rs.15).

The wholesaler's effective tax rate will, thus, be Rs.1.75 – Rs.1.50 = Rs.0.25.

Similarly, if the retailer's margin is Rs.1.50, his effective tax rate will be (10% x Rs.19) –

Rs.1.75 = Rs.0.15.

Total tax that cascades from manufacturer to retailer will be Rs.1 + Rs.0.50 + Rs.0.25 +

Rs.0.15 = Rs.1.90.

MULTI STAGE MEANING: An item goes through multiple change-of-hands along its supply

chain: Starting from manufacture until the final sale to the consumer.

Let us consider the following stages:

Purchase of raw materials

Production or manufacture

Warehousing of finished goods

Selling to wholesalers

Sale of the product to the retailers

Selling to the end consumers

The Goods and Services Tax is levied on each of these stages making it a multi-stage tax. A

manufacturer who makes biscuits buys flour, sugar and other material. The value of the inputs

increases when the sugar and flour are mixed and baked into biscuits.

The manufacturer then sells these biscuits to the warehousing agent who packs large quantities of

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biscuits in cartons and labels it. This is another addition of value to the biscuits. After this, the

warehousing agent sells it to the retailer.

The retailer packages the biscuits in smaller quantities and invests in the marketing of the biscuits,

thus increasing its value.

GST is levied on these value additions, i.e. the monetary value added at each stage to achieve the

final sale to the end customer.

DESTINATION-BASED MEANING: Consider goods manufactured in Maharashtra and sold to

the final consumer in Karnataka. Since the Goods and Service Tax is levied at the point of

consumption, the entire tax revenue will go to Karnataka and not Maharashtra.

COMPONENTS OF GST -

There are three taxes applicable under this system: CGST, SGST & IGST.

CGST: It is the tax collected by the Central Government on an intra-state sale (e.g., a

transaction happening within Maharashtra)

SGST: It is the tax collected by the State government on an intra-state sale (e.g., a

transaction happening within Maharashtra)

IGST: It is a tax collected by the Central Government for an inter-state sale (e.g.,

Maharashtra to Tamil Nadu)

Illustration -

Let us assume that a dealer in Gujarat had sold the goods to a dealer in Punjab worth Rs.50,000.

The tax rate is 18% comprising of only IGST.

In such a case, the dealer has to charge IGST of Rs.9000. This revenue will go to Central

Government.

The same dealer sells goods to a consumer in Gujarat worth Rs.50,000. The GST rate on goods is

12%. This rate comprises CGST at 6% and SGST at 6%.

The dealer has to collect Rs.6000 as Goods and Service Tax, Rs.3000 will go to the Central

Government and Rs.3000 will go to the Gujarat government since the sale is within the state.

ADVANTAGES OF GST REGIME -

1. GST eliminates the cascading effect of tax - GST is a comprehensive indirect tax that was

designed to bring the indirect taxation under one umbrella. More importantly, it is going to

eliminate the cascading effect of tax that was evident earlier. Cascading tax effect can be best

described as ‘Tax on Tax’.

2. Higher threshold for registration -Earlier, in the VAT structure, any business with a turnover

of more than Rs 5 lakh (in most states) was liable to pay VAT. Please note that this limit

differed state-wise. Also, service tax was exempted for service providers with a turnover of

less than Rs 10 lakh.

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3. Simple and easy online procedure - The entire process of GST (from registration to filing

returns) is made online, and it is super simple. This has been beneficial for start-ups especially,

as they do not have to run from pillar to post to get different registrations such as VAT, excise,

and service tax.

4. The number of compliances is lesser - Earlier, there was VAT and service tax, each of

which had their own returns and compliances. Under GST, however, there is just one, unified

return to be filed. Therefore, the number of returns to be filed has come down. There are about

11 returns under GST, out of which 4 are basic returns which apply to all taxable persons

under GST. The main GSTR-1 is manually populated and GSTR-2 and GSTR-3 will be auto-

populated.

5. Defined treatment for E-commerce operators - Earlier to GST regime, supplying goods

through e-commerce sector was not defined. It had variable VAT laws. Let us look at this

example: Online websites (like Flipkart and Amazon) delivering to Uttar Pradesh had to file a

VAT declaration and mention the registration number of the delivery truck. Tax authorities

could sometimes seize goods if the documents were not produced. Again, these e-commerce

brands were treated as facilitators or mediators by states like Kerala, Rajasthan, and West

Bengal which did not require them to register for VAT.

All these differential treatments and confusing compliances have been removed under GST.

For the first time, GST has clearly mapped out the provisions applicable to the e-commerce

sector and since these are applicable all over India, there should be no complication regarding

the inter-state movement of goods anymore.

DISADVANTAGES OF GST –

1. Increased costs due to software purchase -Businesses have to either update their existing

accounting or ERP software to GST-compliant one or buy a GST software so that they can

keep their business going. But both the options lead to increased cost of software purchase

and training of employees for an efficient utilization of the new billing software.

2. Being GST-compliant - Small and medium-sized enterprises (SME) who have not yet signed

for GST have to quickly grasp the nuances of the GST tax regime. They will have to issue

GST-complaint invoices, be compliant to digital record-keeping, and of course, file timely

returns. This means that the GST-complaint invoice issued must have mandatory details such

as GSTIN, place of supply, HSN codes, and others.

3. GST will mean an increase in operational costs - As we have already established that GST

is changing the way how tax is paid, businesses will now have to employ tax professionals to

be GST-complaint. This will gradually increase costs for small businesses as they will have to

bear the additional cost of hiring experts. Also, businesses will need to train their employees in

GST compliance, further increasing their overhead expenses.

Change is definitely never easy. The government is trying to smoothen out the road to GST. It is

important to take a leaf from global economies that have implemented GST before us, and who

overcame the teething troubles to experience the advantages of having a unified tax system and

easy input credits.

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RELATIONSHIP OF GST WITH DIRECT TAXES

Former Finance Minister, Arun Jaitley, had once said that “The GST-direct tax relationship is a

very curious one.” He explained the curious relationship between the GST and the direct taxes. He

said, back in 2018, that the GST has a direct impact on income tax (which as a direct tax).

The GST-direct tax relationship is a very curious one. Because of the GST, there is a direct impact

on the income tax side also. Due to the GST, the volume of a business gets known, and thereby it

adds an impact to the direct tax side.

The rationalising of the GST tariffs also increases the profitability of some companies. This was

seen when it happened in the October-December quarter of 2017 i.e. the year when GST was

implemented, as it resulted in the sudden moving up of corporate tax which was lagging behind.

So if the companies are getting benefitted from the GST rationalisation, then their profits are also

impacted and therefore the corporate taxes have gone up. That’s why we are running ahead of the

direct taxation targets. Direct taxes include the personal income tax paid by individuals, the

corporate tax, and the wealth tax.

Over the period of time, it has been noticed that payment of taxes has reduced mainly due to tax

evasion and undisclosed sales. Accordingly, in order to reduce tax evasion and increase reporting

of turnover, the two tax authorities of India i.e. the Central Board of Direct Taxes (CBDT) and

Central Board of Indirect Taxes and Customs (CBIC) have signed a Memorandum of

Understanding (MoU) in 2020 for exchange of information between two taxing authorities.

This MoU has resulted in income tax website now showing GST data of a taxpayer. As discussed

above, the sharing of information was to avoid tax evasion and increase reporting of turnover. This

sharing of information includes tracing non-filers under the Income Tax Act, 1961 and the Goods

and Services Act, 2017. This shall help both the authorities to match revenue reported by taxpayer

under Income Tax and GST. Any mismatch in data will be auto-populated or reflected in the E-

Campaign tab of Compliance Portal on the website of the IT Department.

DIFFERENCE BETWEEN DIRECT AND INDIRECT TAXES

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FOOD SAFETY & STANDARDS ACT, 2006

FOOD SAFETY & HYGIENE –

Food safety is an umbrella term that encompasses many facets of handling, preparation and

storage of food to prevent illness and injury. Access to sufficient and safe food is a basic human

necessity and essential for creating a world without hunger and for achieving poverty reduction

worldwide.

Cross-contamination is a major cause of food poisoning and can transfer bacteria from one food to

another (usually raw foods to ready to eat foods). It is crucial to be aware of how it spreads so you

will know how to prevent it. Good food hygiene is therefore essential for food factories to make

and sell food that is safe to eat. The first step is for the management and staff to have the

knowledge and understand of what food hygiene and food safety is.

It is the moral responsibility of every food business operator to prevent any harm to

customers. If the Food safety and hygiene norms are not followed then they may lead to food

borne disease outbreak. To prevent such incidents, World Health Organization considers

Food Safety and Hygiene is Paramount. According to WHO(World Health Organization), it must

include these five key Food Safety principles:

Prevent contamination of food with pathogens

Prevent contamination of cooked food from separate raw and cooked foods.

Kill pathogens by cooking food for the appropriate length of time and at the appropriate

temperature.

Storage of food at proper temperatures as per the specific requirements.

Use of potable water and safe raw materials

Every establishment dealing with the handling, processing, manufacturing, packaging, storing,

and distribution of food by any food business operator should adhere to the Food Safety and

Hygiene Norms. It is the responsibility of the food business operator and the persons handling

food in the food establishments to ensure adherence to General hygienic and sanitary

practices. This means that every food business operator shall practice steps which are critical

to ensuring food safety in the activities of the food business. These procedures ensure

better Food Safety and Standards Regulations.

All kinds of Food hygiene legislation in India is developed by Food Safety and Standards

Authority of India (FSSAI). It is a premier organization that is administered by Ministry of

Health and Family Welfare dedicated to ensuring Food Safety and Hygiene Requirements in

India. It has its Head Office in Delhi. The law relating to it is the Food Safety and Standards

Act, 2006.It is an Act to consolidate the laws relating to food and to establish the FSSAI for laying

down science-based standards for articles of food and to regulate their manufacture, storage,

distribution, sale, and import, to ensure availability of safe and wholesome food for human

consumption and for matters connected therewith or incidental thereto.

FOOD BUSINESS OPERATORS (FBO) -

Food business operator means the natural or legal persons responsible for ensuring that the

requirements of food law are met within the food business under their control.

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Unless a person is a petty retailer, hawker, itinerant vendor or a temporary stallholder or cottage

industry relating to the food business, it requires to have a valid food business operator licence to

commence or carry on any food business.

Therefore, it requires a food business operator licence for anyone who involves in the production,

processing, import, distribution and sale of the food product within the business under his/her

control. If the articles of food are manufactured, stored, sold or exhibited for sale at different

premises situated in more than one area, separate applications have to be made for each such

premises not falling within the same area.

The Food Safety and Standards Authority of India (FSSAI) is a legal authority that offers a

food licence to all food business operators (FBO) in India.All the FBOs must follow all the rules

and regulations of FSSAI for food quality control. All the manufacturers, traders, restaurants,

grocery shops, importers and exporters, etc. are eligible for issuing FSSAI Licence.

How to apply for a food business operator licence -

To apply for a Food Business Operator licence, put an application for grant of a licence to the

Designated State Government or Central Government office along with the fees, in the specific

manner containing the relevant documents. The Designated Officer then grants the licence or

refuses to grant a licence after giving the applicant an opportunity of being heard.

In case of not issuing the licence for Food Business Operators within two months from the date of

making the application and it does not reject the application, the applicant may start the food

business after the expiry of the said period.

Penalty/punishment for carrying out a food business without a licence -

If any person or food business operator, manufactures, sells, stores or distributes or imports any

article of food without a licence, he/she shall be punishable with imprisonment for a term, which

may extend to six months and also with a fine of not more than five lakh rupees.

Therefore, considering the gravity of the penalty and punishment, all food business operators have

to apply for and obtain a food business operators licence at the earliest.

The food licence allotted has a validity of one year and can be increased to a maximum of 5 years

by the food regulatory body. The moment licence validity gets expired the food business operator

becomes liable for FSSAI licence renewal. FSSAI has allotted the guideline that in 30 days and

before the expiry of the licence the food safety registration has to get renewed.

FOOD SAFETY AND STANDARDS ACT, 2006 – AN UMBRELLA ACT

FSS Act, 2006 combines various acts & orders that had first handled food-related issues in

different Ministries and Departments, such as–

1. Prevention of Food Adulteration Act, 1954

2. Fruit Products Order, 1955

3. Meat Food Products Order, 1973

4. Vegetable Oil Products (Control) Order, 1947

5. Edible Oils Packaging (Regulation) Order 1988

6. Milk and Milk Products Order, 1992

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These were revoked after the commencement of the FSS Act, 2006.FSSAI was consequently

built-in 2008, but work within the Food Authority finally began in 2011 after its Rules and key

Regulations were notified. This marked a transfer from a multi-level to a single line of control with

a focus on self-compliance rather than a pure administrative regime

The development of food standards is a process that is constantly undergoing changes. It is based

on the latest developments in the fields of food science, food consumption patterns, additives or

preservatives and new risks that have been identified. Before 2006, there were several acts and

regulatory bodies that were in the domain of food safety. There was a lack of standardization or

uniformity across these bodies. So, there was a severe need to merge all of these into one

umbrella body to make food security all over the country simpler and more accessible. Moreover,

there were different departments at various levels responsible for efficient administration. This

created a lot of confusion and brought about the need for one single reference point for all matters

relating to Food Safety Standards and their enforcement.

The Food Safety and Standards Act of 2006 came into existence by merging 7 older acts into one

new act. These older laws also revolved around ensuring the utmost food safety but were each

restricted to only one category of food items. It is the reason why this Act is also termed as an

‘umbrella’ Act. By bringing all the acts together, the new Food Safety and Standards Act of 2006

also takes into account internationally set standards.

The Food Safety and Standards Act of 2006 is a statute related to all food safety and regulati on in

India. Its main objective is to protect overall public health by regulating and supervising food safety

every step of the way in food production. The food business operators, who were already licenced

or registered with the previously existing food laws were supposed to register or to obtain a licence

under the new Food Safety Standards Act of 2006. Today, it is illegal for any food business to

carry out its operations without first acquiring a licence by the FSSAI. The Act also lays down the

penalties that have to be incurred, if a business is found not adhering to the norms laid down by

the act. With more and more awareness about food safety, customers prefer to visit a restaurant

that has an FSSAI licence. They look for places that meet internationally laid down standards so

that they don’t have to worry about the food they’re consuming.

FUNCTIONS OF FSSAI –

The two most important functions of FSSAI are Quality assurance and Consumer outreach. Let us

understand both of them.

Quality assurance -FSSAI has been mandated to perform various functions related to quality

and standards of food. As per Chapter VIII, Section 43 of the Food Safety and Standards Act,

2006, FSSAI fosters an ecosystem for testing of food at food laboratories for compliance with

the food safety standards. Quality Assurance Division notifies food laboratories and research

institutions accredited by National Accreditation Board for Testing and Calibration Laboratories

for the purposes of carrying out analysis of samples by the Food Analysts. Notification of food

testing laboratories/referral laboratories including recognition, renewal, suspension, de-

recognition, etc. is also done. There are set standards framed by the FSSAI which are

prescribed under the Food Safety and Standards Regulation, 2011.

Consumer Outreach –The consumers can connect to FSSAI through various channels or can

call on the given toll free number. An online platform called “Food Safety Voice” has been

launched which helps the consumers to register their complaints and feedbacks about food

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safety issues related to adulterated food, unsafe food, substandard food, labeling defects in

food and misleading claims and advertisements related to various food products.

The other important functions of FSSAI are as follows -

Framing of Regulations to lay down the Standards and guidelines in relation to articles of

food and specifying appropriate system of enforcing various standards thus notified.

Laying down mechanisms and guidelines for accreditation of certification bodies engaged in

certification of food safety management system for food businesses.

Laying down procedure and guidelines for accreditation of laboratories and notification of

the accredited laboratories.

To provide scientific advice and technical support to Central Government and State

Governments in the matters of framing the policy and rules in areas which have a direct or

indirect bearing of food safety and nutrition.

Collect and collate data regarding food consumption, incidence and prevalence of biological

risk, contaminants in food, residue of various contaminants in foods products, identification

of emerging risks and introduction of rapid alert system.

Creating an information network across the country so that the public, consumers,

Panchayats etc. receive rapid, reliable and objective information about food safety and

issues of concern.

Provide training programmes for persons who are involved in food businesses.

Promote general awareness about food safety and food standards.

MOTOR VEHICLES ACT

Importance of Road Safety

Every country has its own road safety rules and regulations for the best interests of citizens. Road

safety rules in India are designed as per the best interests of citizens. For making the safety efforts

successful, you need to follow the rules persistently. The most obvious reason why road safety is

so important is that many lives are at stake when you’re on the road. The potential for death or a

serious injury is always a prominent risk when someone is not focused while driving. All it takes is

a couple of seconds looking away from the road. This is especially true when you consider the fact

that other drivers might also not be paying attention. It’s important to remember that even if you

are a safe driver, others might not be.

The measures and methods taken to establish road safety include the use of various road safety

products. Well-designed and uniquely engineered road safety products ensure the constant safety

of vehicles and pedestrians. These road safety products intimate people about parts of a road they

should avoid and accident-prone zones as well as simply organize traffic and vehicles in an orderly

manner. Some important road safety products that are used worldwide are road barriers, road

fences, and safety barricades.

India has a National Road Safety Policy, which outlines the initiatives to be framed / taken by the

Government at all levels to improve the road safety activities in the country. In order to achieve a

significant improvement in road safety, the Government of India is committed to raise awareness

about Road Safety Issues. The Government would increase its efforts to promote awareness

about the various aspects of road safety, the social and economic implications of road accidents

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and what needs to be done to curb the rising menace of road accidents. This would enable and

empower the different stakeholders to play a meaningful role in promoting road safety.

The Supreme Court had set up the three-member KS Radhakrishnan Panel on Road Safety in

April 2014.The main recommendation of the committee were-

o Ban on the sale of alcohol on highways (both state and national) to restrain drunk driving.

o The states were directed to implement laws on wearing helmets.

o Audit of road safety to be implemented by states to ensure the safety standards in the design,

construction, and maintenance of roads.

o The committee stressed the importance of creating awareness among people on road safety

rules.

In India, criminal apathy towards road safety risk must stop. It is time to reserve space for

walkers, cyclists and public transport users on roads. Urgent legal reforms are needed to

comprehensively enforce safety guidelines to achieve zero fatality. India needs a Central legislation

to notify the revised Indian Road Congress guidelines and make its implementation mandatory

across the country. Pre- and post-construction safety audits of roads must become mandatory for

all road projects. All public transport plans must integrate plans on safety and accessibility of roads.

The need is to design cities for people, not vehicles. The Collective efforts of all stakeholders are

bound to make significant impact on making roads safer, arresting human suffering due to road

related mishaps and achieving goals set by UN.

MOTOR VEHICLE ACT

(TRAFFIC RULES)

As is common knowledge, breaking traffic rules is not only illegal but even dangerous to the

safety of road users. Hence, it’s not surprising to see the authorities imposing penalties on traffic

rule violators, with the severity of the punishment varying as per the nature of the offence. The

consequences of breaking a traffic law could vary from a fine of a few hundred rupees to

disqualification of the driving licence and, in some cases, even imprisonment.

The penalties for traffic rule violations are revised every few years and in line with this, the

punishments have been revised in 2019. The Motor Vehicles (Amendment) Bill, 2019 was

introduced in Lok Sabha on July 15, 2019, passed, and then sent to Rajya Sabha and passed by

the same on 31st July 2019. It got implemented in the country from 1st September, 2019.

The new Motor Vehicles Act, 2019, has increased the fines for driving errors and traffic

violations. The step has been in the hope to reduce the number of accidents caused due to road

rash and traffic rule violations. The Vehicles Act, 2019 has come to effect from September 1. The

commencement of the law has made people serious about their ignorance of traffic rules.

Driving errors now attract higher penalties and imprisonment for up to one month for racing and

speeding. On the other hand, offences relating to accidents can lead up to six months and drive

without insurance bears a fine of Rs. 2000 and/ or imprisonment for up to three months. Other

penalties include hefty penalties for driving without a license, drunken driving, dangerous driving,

etc.

The new Motor Vehicle Act, 2019, is believed to bring back things in order by making the public

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understand the value of traffic rules and responsible driving.

As informed by the Central government, the penalties in the new motor act, 2019, will increase

by 10 % every year. Also, the latest law has extended the driving license renewal period from

one month to one year after the date of expiry. However, if the renewal process gets delayed for

more than a year, the driver will have to go through a test of competence. The best part of the

law is that it promises to protect the people who help a road accident victim, medically or non-

medically a victim of an accident, from any civil or criminal liability. Lastly, the compensation for

grievous injury or death due to hit and run has been moved up substantially.

The new Act seeks to amend the Motor Vehicles Act, 1988 to provide for road safety. The Act

provides for grant of licenses and permit related to motor vehicles, compensation for the victims

of accidents, standards for motor vehicles, and made the rules more stringent for the offenders

and has created provisions for more severe punishments.

1. DRIVING WITHOUT DRIVING LICENCE –

This can be seen in Section 3 read with Section 181 of MV Act. Section 3 says that no person

shall drive a motor vehicle in any public place unless he holds an effective driving licence

issued to him, authorising him to drive the vehicle. And Section 181 mentions the penalty for

the contravention of Section 3.

Earlier the penalty was imprisonment of 3months or Rs. 500 or both. The new law enhances

the penalty for driving without a licence to Rs 5,000 from up to Rs 500.

The fine for driving despite disqualification has been increased to Rs. 10,000.

A new provision has been added with regard to underage drivers under which the guardians

or vehicle owners shall be held guilty in case of an offence by a juvenile. A fine of Rs. 25,000

with three year imprisonment will be imposed and the juvenile will be tried under the Juvenile

Justice (Care and Protection of Children) Act while the registration of the vehicle will be

cancelled.

2. OWNER’S LIABILITY IF DRIVEN BY OTHERS WITHOUT LICENCE –

This is seen under Section 5 read with Section 180 of MV Act. Section 5 says that in case a

person who is ineligible under sections 3 & 4 of the Act [Section 3 talks about having a valid

driving licence, Section 4 talks about the age-limit for getting a valid driving licence] is driving

any vehicle, then in such case the owner or the person in charge of that vehicle shall be

made liable.

Earlier the penalty was jail term of 3months or Rs. 1000 or both. Now, the fine has been

increased to Rs. 5000.

3. AGE LIMIT FOR GETTING DRIVING LICENCE UNDER DIFFERENT CATEGORIES OF

VEHICLES –

A driving licence is an official document issued by the government of India, permitting an

individual to drive a vehicle on Indian roads. This document certifies that the individual is

eligible to drive or ride motorized vehicles such as a car, truck, bike, bus, etc., without any

supervision. Commonly referred to as DL, a driving licence specifies that you have undergone

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the required training and tests and are well-aware of all the traffic rules and regulations.

In India, a driving licence is issued by the Regional Transport Authority (RTA) or Regional

Transport Office (RTO) of the state you reside in. A driving licence contains a registration

number and a passport size photo that gives you the identity of the owner of the vehicle. It

must have a rubber stamp and the signature of the officer-in-charge along with the mention of

the office it was issued from.

Section 4 of the MV Act says that no person under the age of eighteen years shall drive a

motor vehicle in any public place. However, a motorcycle without gear may be driven in a

public place by a person after attaining the age of sixteen years. It further says, no person

under the age of twenty years shall drive a transport vehicle in any public place, or as

directed by the Central Government but never below the age of 18 years).

Motorcycles with gear - The applicant must be at least 18 years old. He should be aware of

traffic rules and regulations and should have a valid age proof and address proof.

Motorcycles without gear (capacity of up to 50CC) - The applicant should be minimum 16

years old and should have the consent of his guardian or parents. He must be aware of traffic

rules and regulations, and should possess a valid age proof and address document.

Heavy commercial vehicles - The applicant should have cleared the 8th standard. The

applicant should be above the age of 18 (In some states, the minimum age for this vehicle

type is 20 years).The applicant should be trained from a government training school or one

that is affiliated with the state government.

TYPES OF LICENCES –

Learner’s licence - Before you get your permanent licence, the Road Transport Authority

issues you a learner’s licence. The validity of the same is only for up to 6-months; which

implies that you must polish your driving skills within this time frame. It is given under section

8 of the Act.

Permanent licence- As soon as the waiting period of 6-months is over, the RTO issues a

permanent licence to the applicant. The age of the applicant should be 18 years old and

she/he should clear the driving exam. The process of applying is made online and hence the

complete process is pretty simple and hassle-free. The permanent licence is issued for private

vehicles like cars and bike. The issue of a permanent driver’s licence means that the authority

RTO is assured about the driving skills of the applicant. It is given under section 9 of the Act.

Commercial Driving licence - This type of licence authorizes the driver to drive heavy vehicles.

Such kind of vehicle is used to transport passengers or goods. The minimum eligibility to

apply for a commercial driver's licence is a bit different. Here, the candidate should have

necessarily cleared the examination of 8th standard.

International Driving Permit - When an applicant looks for an international driving licence it

implies that the person is eligible to rent and drive any vehicle in a foreign land. However,

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it can only be issued if you already have a permanent driving licence. Unlike your driver's

licence, the IDP has validity for 1 year only. And on the expiry, one would need to apply again.

4. USING MOBILE PHONE WHILE DRIVING: DANGEROUS FOR THE PUBLIC –

The Indian traffic rules clearly designate the usage of mobile phones while driving as a

violation of law. The usage of cell phones while driving is bound to make the driver distracted

and thus increases the chances of a mishap.

The road transport and highways ministry on Saturday said that mobile phones can be used

while driving a vehicle solely for route navigation, without disturbing the ‘concentration of the

driver while driving’. Talking on the phone while driving earlier had a finer of Rs. 1000, which

the new 2019 Amendment has increased to Rs. 5000! This drastic action was taken to

prevent the issue of distracted driving and ensure that motorists don’t use their phones on the

road. In case of an urgent call, motorists need to stop their vehicle at a safe area first and

then use their phone. If this is practiced by all drivers, the accident rates in the country can be

reduced drastically.

5. LEAVING A VEHICLE AT REST IN ANY PUBLIC PLACE –

The section 122 of the MV Act talks about leaving vehicle in a dangerous position at a public

place. It says that no person in charge of a motor vehicle shall cause or allow the vehicle to

be abandoned or to remain at rest on any public place in such a position or in such a condition

or in such circumstances as to cause or likely to cause danger, obstruction or undue

inconvenience to other users of the public place or to the passengers. This is also commonly

known as Illegal Parking.

Further, section 126 talks about a stationary vehicle. It says that no person driving or in

charge of a motor vehicle shall cause or allow the vehicle to remain stationary in any public

place, unless there is in the driver's seat a person duly licenced to drive the vehicle or unless

the mechanism has been stopped and a brake or brakes applied or such other measures

taken as to ensure that the vehicle cannot accidentally be put in motion in the absence of the

driver.

Section 127 talks about towing of illegally parked vehicles which are unattended or causing

public hindrance or traffic hazard.

For all such above mentioned offences, the punishment is given Section 177. It says that for

the first time that such offence is committed, it will be punishable with fine up to Rs. 100, and

for any second or subsequent offence with fine which may extend to Rs. 300.

6. CAUSING HINDRANCE TO TRAFFIC OR OTHERWISE –

Section 201 talks about the penalty for causing obstruction to free flow of traffic. It says,

whoever keeps a disabled vehicle on any public place, in such a manner, so as to cause

impediment to the free flow of traffic, shall be punishable.

The penalty is a fine of up to Rs. 50 per hour, so long as it remains in that position. Penalties

under this section shall be recoverable by the prescribed officers or authorities.

7. DRIVING UNDER THE INFLUENCE OF INTOXICATING SUBSTANCE –

Section 201 talks about the penalty for causing obstruction to free flow of traffic. It says,

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whoever keeps a disabled vehicle on any public place, in such a manner, so as to cause

impediment to the free flow of traffic, shall be punishable.

The penalty is a fine of Rs. 10,000 and/or 6 months in prison. For any subsequent act, the

punishment increases to a fine of Rs. 15,000 and/or 2 years in prison.

8. DRIVING WITHOUT SEAT BELT –

The penalty in such a case is a fine of Rs. 1,000 and/or community service.

9. DRIVING WITHOUT INSURANCE –

The penalty in such a case is a fine of Rs. 1,000 and/or up to 3 months in prison, as well as

community service.

10. OFFENCES BY JUVENILES –

The penalty in such a case is a fine of Rs. 25,000 with 3-years prison and cancellation of

registration for 1-year. In addition to this, the juvenile is ineligible for licence until 25 years of

age.

11. TWO WHEELER DRIVING: MORE THAN ONE PILLION RIDER –

A pillion means “a seat or place behind the person riding a motorcycle where a

passenger can sit”. So, a Pillion rider is a person travelling on the pillion seat which is behind the

rider of a motorcycle.

Section 128 specifies that a rider of a motorcycle shall not carry more than one pillion rider

along with him, this is in the form of a safety measure. By virtue of this section, it is mandatory

for all riders to wear protective headgear/helmets.

Whoever drives a motor cycle or causes or allows a motor cycle to be driven in contravention

of the provisions of section 128 shall be punishable with a fine of Rs. 1000 and he shall be

disqualified for holding licence for a period of three months.

Compensation to Pillion Riders -Section 147 of the Act provides for the requirements of

having an insurance policy and also deals with affixing liability. The Courts have established

the rule with respect to the question of whether an Insurance company’s liability extends to a

pillion rider involved in a motor vehicles accident, by way of several precedents.

In Oriental Insurance Co. Ltd. vs. Sudhakaran K.V, the Supreme Court summarised the law

regarding the pillion rider on a two wheeler and held as follows:

the liability of the insurance company in a case of this nature is not extended to a pillion

rider of the motor vehicle unless the requisite amount of premium is paid for covering

his/her risk.

the legal obligation arising under Section 147 of the Act cannot be extended to an injury

or death of the owner of vehicle or the pillion rider;

the pillion rider in a two wheeler is not to be treated as a third party when the accident

has taken place owing to rash and negligent riding of the scooter and not on the part of

the driver of another vehicle.”

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The view adopted by the Supreme Court in the above-mentioned judgment has been

reiterated in several subsequent precedents, one such judgment is - General Manager United

Insurance Co. Ltd. vs. M. Laxmi, where the Court settled that “the liability of the insurance

company is not extended to a pillion rider of the motor vehicle unless the requisite amount of

premium is paid for covering this risk. The legal obligation arising under Section 147 of the Act

cannot be extended to an injury or death of the owner of vehicle or the pillion rider.”

Following the Amendment in 2019 to the Motor Vehicles Act, 1988, it is now mandatory for all

pillion riders above the age of four to wear helmets and non-compliance of this rule will attract

penalties. As far as an insurance policy extending to a pillion rider is concerned, the Courts

have been abundantly clear that an Insurer is only liable to a pillion rider if they are covered in

the policy by way of paying the required premium.

12. TWO WHEELER DRIVING: WITHOUT HELMET –

Section 129 of the Motor Vehicle Act says that every person, above four years of age, driving

or riding or being carried on a motorcycle of any class or description shall, while in a public

place, wear protective headgear conforming to ISI standards.

The old Act exempted Sikhs from the said rule. However, the new MV Act, introduced in

2019, doesn’t exempt even Sikh men or women from wearing helmets unless they are

turbaned.

The fine for not wearing a helmet earlier was up to Rs. 100, which has been increased and

made to be up to Rs. 1000. Also, he shall be disqualified for holding licence for a period of

three months.

The State Government had a right to make Rules regarding exemptions with respect to the

same under the section, however this power of the State Government was curtailed after the

amendment to section 129 was introduced in 2019.

13. DOCUMENTS TO BE SHOWN TO POLICE: DRIVING LICENCE, REGISTRATION

CERTIFICATE, INSURANCE CERTIFICATE AND IF IT IS A TRANSPORT VEHICLE THEN

PERMIT AND FITNESS CERTIFICATE –

Section 130 of the Act explains about the duty of the citizen to produce licence and certificate

of registration and other documents as asked by the police officer. Let us see what these

documents are:

Driving Licence -Section 4 of the Act talks about Driving Licence. A driving licence is an

official document issued by the government of India, permitting an individual to drive a vehicle

on Indian roads. This document certifies that the individual is eligible to drive or ride

motorized vehicles such as a car, truck, bike, bus, etc., without any supervision. Commonly

referred to as DL, a driving licence specifies that you have undergone the required training

and tests and are well-aware of all the traffic rules and regulations.

Registration Certificate -The Regional Transport Office (RTO) is responsible for registering

and keeping track of every vehicle that runs on the Indian roads. Each state has many RTOs

spread across their length and breadth and these offices offer citizens a wide range of

services related to their vehicles. One of the most important services RTOs offer are vehicle

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registration.

As soon as you buy a vehicle, you must register it. You can get a temporary registration

number immediately, but you must follow it up with a permanent registration within one

month.

The Motor Vehicle Act 1998 makes it mandatory to for the owner to apply for vehicle

registration at the local RTO office within the stipulated time. You can allow the dealer to

complete the registration on your behalf or you could do it yourself. On completion of the

registration process, you will receive the Registration Certificate (RC) for your car. The RC

copy is an official document which comprises general information regarding the vehicle –

including the make, date of purchase, colour, chassis number, registration number, the name

of the owner etc. It is mandatory to keep the RC copy in the car while driving.

Vehicle registration comes with a validity period of 15 years. You must renew or re-register

your vehicle within 30 days from the date of expiry.

Insurance Certificate –It refers to the compulsory and mandatory third-party insurance

certificate which has to be taken as under section 147 of this Act.

Fitness Certificate -A fitness certificate is an official document certifying that the holder’s

vehicle is fit for being driven in public places & is also required to be eligible for compensation

against the own damage or third party insurance claim. Section 56 of the MV Act mentions

about Certificate of Fitness of vehicles. As per the Act, a vehicle must have a fitness

certificate issued by the manufacturer, and also, another fitness certificate issued by the state

RTO authorities after the inspection of its condition, its pollution certificate, tax, insurance,

and other such details. A certificate of fitness issued under this Act shall, while it remains

effective, be valid throughout India.

Under the Act, the registration of vehicle is treated as valid only if it has valid certificate of

fitness from the manufacturer and the inspecting authority. Granting new registration

certificates without proper fitness certificates and merely on the basis of the manufacturers’

certificates is not correct.

In case of Private vehicles like cars, there is no requirement of periodic renewal of the fitness

certificate & fitness is valid throughout the life span of the vehicle i.e. for15 years. There is a

provision for re-registering the vehicle after 15 years & only then a fresh fitness certificate is

required for the purpose. A vehicle is not considered validly registered if it does not possess

the certificate of fitness.

Permit –Permit is mandatory for transport or commercial vehicles. The need or necessity for

permits is mentioned under Section 66 of the Act. According to the provisions made under the

Motor Vehicle Act, it is a legal permission issued by the Transport Authority to use a vehicle

as a transport mean. However, transport vehicle that belongs to government, police, fire

brigade, ambulances and cranes are not included in the list. The other goods vehicles with

below 3000 kg weight are also exempted from the list of vehicles that require permit. So, it

means that if you want to operate your transport vehicle either in a state or across the

country, you need permission in the form of;

State Permit (if you want to operate in one state only, go for state permit only)

National Permit (if you want to operate your vehicle in different state, choose national or multi-

state permit)

Passenger Vehicles Permit (for Auto rickshaw and taxis, etc.)

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It is important to know that according to the provision of the new Motor Vehicle Act, when asked

by a police officer, if the driver does not have a driving license, vehicle registration certificate

(RC), third party insurance documents, pollution and control certificate and permit certificate

while driving, then it is not a crime.

The Rule 139 of the Central Motor Vehicle Rules has provided 15 days’ time limit to the driver to

present the driving license, vehicle registration certificate (RC), third party insurance documents,

pollution and control certificate and permit certificate if asked. If the driver does not have these

documents together, the traffic police cannot immediately cut off his challan. If the driver claims

to show the relevant documents within 15 days, then the traffic police or RTO officials will not

deduct the challan of the vehicle. If the driver does not have the above documents while driving,

the driver will have to show these documents to the traffic police or officer within 15 days.

At the same time, under Section 158 of the New Motor Vehicle Act 2019; 7 days’ time has been

given to show these documents in case of accident or any special cases. According to the new

act, in case of non-availability of driving license, vehicle registration certificate (RC), third party

insurance documents, pollution and control certificate and permit certificate, if the traffic police

issue the challan and do not give 15 day time to the driver to present those documents, then the

driver has the option to dismiss this challan in the court.

PREVENTION OF CORRUPTION ACT, 1988

INTRODUCTION -

When the Indian Penal Code was enacted it also defined and provided punishment for the offence

of bribery and corruption amongst public servants. But later on it was realized that the existing law

in Indian Penal Code was not adequate to meet the exigencies of the time and an imperative need

was felt to introduce a special legislation with a view to eradicate the evil of bribery and corruption,

and thereby the Prevention of Corruption Act, 1947 was enacted which was later on amended

twice; once by the Criminal Law Amendment Act, 1952 and later in 1964 by the Anti -Corruption

Laws (Amendment) Act, 1964 based on the recommendations of the Santhanam Committee.

The 1947 Act became a pilot to the Prevention of Corruption Act, 1988 which came in force on 9th

September 1988. It was aimed at making anti-corruption laws more effective by widening their

coverage and by strengthening the provisions to make the overall statute more effective. This

1988 act contains 31 sections and 5 chapters.

The term ‘Corruption’ is derived from the Latin word “corrupts” meaning “corrupted”. Corruption

refers to dishonest or deceitful behavior on account of the persons possessing power including

government officials or other managers. Corruption certainly includes either giving or accepting

inappropriate gifts and bribes, under table payments, money laundering, and black money,

tampering elections and cheating the investors. India is considered to be one of the nations with

high corruption. The major reasons behind individuals indulging in corruption so frequently are

their desire for illegal gains, greed for money and prevention of furtherance of any offence.

SALIENT FEATURES & OBJECTIVES OF THE ACT –

It incorporates the Prevention of Corruption Act, 1947, the Criminal Law Amendment Act, 1952,

and Sec. 161 to 165-A of the Indian Penal Code with certain tweaks in the original provisions.

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It has enlarged the scope of the definition such as Public Duty and Public Servant under the

definition clause, Section 2, of the act.

It has shifted the burden of proof from the prosecution, as mentioned in the CrPC, to the

accused who is charged with the offence.

The provisions of the Act clearly state that the investigation is to be made by an officer who is

not below the rank of Deputy Superintendent of Police.

The 1988 Act enlarged the scope of the term ‘public servant’ which now includes employees of

the central government, union territories, nationalized banks, employees of the University

Grants Commission (UGC), vice-chancellors, professors, and the like.

The Act covers ‘corrupt’ acts as bribe, misappropriation, obtaining a pecuniary advantage, pos-

sessing assets disproportionate to income and the like.

The Prevention of Corruption Act, 1988 (the "Act") was recently amended by the Prevention of

Corruption (Amendment) Act, 2018 (the "Amendment Act"). Most of the amendments are aimed at

tightening up the existing provisions in the Act and expanding the coverage of the offences. Some

new definitions have been added to the interpretation clause, like “undue advantage” & “legal

remuneration”.

Key amendments -

a) Time extensions - Under Section 4(4), the courts no longer have complete trails for offences

under the Act within 2 years, failing which the judges will need to record the requirement for

extension in time. A trial can now be extended by 6 months at a time for up to a maximum of 4

years.

b) Exemptions for compulsion - Section 8 prescribes punishment for persons abetting a bribe or

attempting to indulge in corruption with a public servant. The Amendment Act exempts those

acts committed out of compulsion, provided a person so compelled files a complaint with the

police or investigating agency within 7 days of giving a bribe under compulsion.

c) Commercial organisations - Section 9 now specifically deals

with commercial organizations and persons associated with commercial organizations. The

term commercial organization is clarified to include all forms of business structures and the

phrase 'persons associated with commercial organization' is wide enough to include

employees and vendors.

d) Punishment - Section 10 now imposes specific terms for imprisonment and a fine where the

commercial organization's directors, officers in default or a person with control over the

organization has consented to the corrupt act violating the provisions of the Act.

e) Corruption by public servants - The Amendment Act seems to have diluted the instances

where a public servant can be accused of alleged criminal misconduct. The amended Section

13 of the Act only refers to the misuse of property and unjust enrichment as grounds for

misconduct (which is assessed by disproportionate assets). Earlier, Section 13 accounted for

general tendencies to seek bribes or indulge in corrupt practices as grounds of criminal

misconduct.

f) Permission to prosecute by an investigative authority - The Amendment Act appears to make it

more difficult to prosecute government employees. The amendment under Section 19 states

that for prosecution of a public servant under Sections 7, 11, 13 and 15 of the Act, firstly a

sanction must be obtained from an authority that has the right to dismiss them. Secondly, an

investigative authority (such as a police officer) must seek an application for permission, or

else there are multiple layers of compliances that need to be cleared before the court can take

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cognizance of the offence.

‘PUBLIC SERVANT’ MEANING UNDER THE ACT

Before understanding this, we will first have to see what is meant by Public Duty? It is defined

under Section 2(b) of this Act - It means a duty in the discharge of which the State, the public or

the community at large has an interest.

In State of Gujarat vs. Mansukhbhai Kanjibhai Shah, the Supreme Court observed that evidently,

the language of Section 2(b) of the Act indicates that any duty discharged wherein State, the

public or community at large has any interest is called a public duty.

The term Public Servant is then defined under Section 2(c) of the Act. This list of Public Servants

in the Act is too long which includes from the clerk of a bank to the President of the country. Public

servant is basically a person who performs above mentioned public duty. It has been made clear

by the Act itself that the person listed in sec. 2(c) is a public servant irrespective of his

appointment being made by the government or not. The Act further clarifies that the person

actually in the possession of a situation of the public servant shall be responsible with respect to

such a situation as a public servant and shall be construed as a public servant even if there arises

any kind of issues related to the right of his being appointed as the public servant or similar kind of

such issues.

Section 2(c) “public servant” means—

i. any person in the service or pay of the Government or remunerated by the Government by

fees or commission for the performance of any public duty;

ii. any person in the service or pay of a local authority;

iii. any person in the service or pay of a corporation established by or under a Central,

Provincial or State Act, or an authority or a body owned or controlled or aided by the

Government or a Government company as defined in section 617 of the Companies Act,

1956 (1 of 1956);

iv. any Judge, including any person empowered by law to discharge, whether by himself or as

a member of any body of persons, any adjudicatory functions;

v. any person authorized by a court of justice to perform any duty, in connection with the

administration of justice, including a liquidator, receiver or commissioner appointed by such

court;

vi. any arbitrator or other person to whom any cause or matter has been referred for decision

or report by a court of justice or by a competent public authority;

vii. any person who holds an office by virtue of which he is empowered to prepare, publish,

maintain or revise an electoral roll or to conduct an election or part of an election;

viii. any person who holds an office by virtue of which he is authorized or required to perform

any public duty;

ix. any person who is the president, secretary or other office-bearer of a registered co-

operative society engaged in agriculture, industry, trade or banking, receiving or having

received any financial aid from the Central Government or a State Government or from any

corporation established by or under a Central, Provincial or State Act, or any authority or

body owned or controlled or aided by the Government or a Government company as

defined in section 617 of the Companies Act, 1956 (1 of 1956);

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x. any person who is a chairman, member or employee of any Service Commission or Board,

by whatever name called, or a member of any selection committee appointed by such

Commission or Board for the conduct of any examination or making any selection on behalf

of such Commission or Board;

xi. any person who is a Vice-Chancellor or member of any governing body, professor, reader,

lecturer or any other teacher or employee, by whatever designation called, of any University

and any person whose services have been availed of by a University or any other public

authority in connection with holding or conducting examinations;

xii. any person who is an office-bearer or an employee of an educational, scientific, social,

cultural or other institution, in whatever manner established, receiving or having received

any financial assistance from the Central Government or any State Government, or local or

other public authority.

Section 2(d) defines “undue advantage”, and it means any gratification whatever, other than legal

remuneration.

For the purposes of this clause,—

a) the word “gratification” is not limited to pecuniary gratifications or to gratifications estimable

in money;

b) the expression “legal remuneration” is not restricted to remuneration paid to a public

servant, but includes all remuneration which he is permitted by the Government or the

organisation, which he serves, to receive.

Gratification is not limited. Legal remuneration is permitted by a government organization and all

the permissible to be received by the public servants. Public servants mean who are appointed by

the government or not, who are in the actual possession of the situation. This implies that even

non-pecuniary or non-monetary considerations such as gifts and favors not estimable in terms of

money are also covered under “undue advantage”.

In State of Maharashtra & Anr. vs. Prabhakar Rao &Anr., the Supreme Court held that the

definition of Public Servant‘ U/s 21 of IPC is of no relevance under the Prevention of Corruption

Act, 1988.

In C.B.I. Bank Securities & Fraud Cell vs. Ramesh Gelli & others, the managing director and

chairman of a private banking company were held to be public servants for the purposes of

prosecution under the Prevention of Corruption Act 1988. The question was that what bodies

come under the definition of Public Servant. The Apex Court here held that officers of private

banks come under the definition of public servants under the Prevention of Corruption Act, 1988.

About the objectives of the Act, the court also held that it was aimed at making anti-corruption law

more effective thereby widening its coverage. The principles laid down by this judgment are

indicative of the judicial mind to give effect to the spirit and intent of the Prevention of Corruption

Act and not to let the legislature's inadvertent lapse prevent a broad interpretation to the term

'public servant' under the Prevention of Corruption Act.

In P.V. Narsimha Rao v. State (JMM Bribery Case), the Supreme Court held that MLA is public

servants U/s 2(c)(viii) of Prevention of Corruption Act, 1988, and can be prosecuted for the

offences under this act.

In M. Karunanidhi v. Union of India, the Supreme Court held that a Chief Minister or a Minister are

in the pay of the Government and are, therefore, public servants. It can be inferred that to

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designate a person as a Public Servant and to thereby hold such person liable under the Act, the

emphasis lies upon the nature of duty i.e. public duty carried out by such person and not the

position held by him or her.

Gujarat vs. Mansukhbhai Kanjibhai Shah (Mansukbhai case,2020) - In a landmark judgment, the

Supreme Court held that a 'deemed university' will come under the ambit of Prevention of

Corruption Act, 1988. The Supreme Court while reversing the decision of the Gujarat High Court,

held that a Deemed University is not excluded from the ambit of the term 'University' under Section

2(c)(xi) of the Act and that the Trustee on the board of the Deemed University is a 'public servant'

under Section 2(c) of the Prevention of Corruption Act, 1988.

To reiterate, Section 2(c) of the Act in order to define the term ‘Public Servant’ now lists down the

categories of individuals under sub-clauses (i) to (xii) who shall be classified as a ‘Public Servant’.

The first explanation to the said provision also clarifies that persons falling under the said sub-

clauses shall be deemed to be public servants irrespective of their appointing authority. The

second explanation further expands the ambit to include every person who de facto discharges the

functions of a public servant, and that he should not be prevented from being brought under the

ambit of ‘Public Servant’ due to any legal infirmities or technicalities.

‘CORRUPTION’ AND OTHER OFFENCES UNDER THE ACT

Corruption is some dishonest behaviour by those in positions of power, such as managers or

government officials. Corruption can include giving or accepting bribes or inappropriate gifts,

double dealing, under-the-table transactions, manipulating elections, diverting funds, laundering

money and defrauding investors. The Prevention of Corruption of Act, 1988 is an important

legislation to fight with evil of corruption. It is an effective instrument to curb this evil. The success

of movement against the evil of corruption depends upon the performance of this legislation. The

chapter III of this Act talks about various offences and their penalties.

Forms of Corruption or Bribery under Section 7 (i.e. offence of Public Servant taking bribe)-

a) Obtaining or attempting to obtain any undue advantage from any person, with the intention to

perform his official public duty improperly or dishonestly. However if he, the public servant, has

no intention to work dishonestly or improperly after getting or being promised to get some

undue advantage, then he would not be liable under this Act. For e.g., a person offers a public

servant a box of sweets saying that he got blessed with a baby girl and that's why he is offering

sweets to all and even if public servant accepts such a box of sweets, he, the public servant,

shall not be liable because he has no intention to misbehave with his official duty. And even if

some improper work has been done by such a public servant after getting the sweets box, he

would not be liable under this Act, though sweets box falls under the definition of undue

advantage, rather such performance of an improper work shall be construed as a mistake etc.

but not the corrupt practice because of non-involvement of the intention i.e. mens rea.

b) Obtaining or attempting to obtain any undue advantage from any person as a reward to

perform his official public duty improperly or dishonestly. Here, undue advantage is accepted or

attempted to be accepted after the dishonest official public duty has been performed by the

public servant. Therefore, the concept of intention becomes irrelevant in this case because he,

the public servant, knows that he has performed his official public duty in an improper manner

and that is why he is asking for or accepting undue advantage as a reward. Here, intention

becomes obvious.

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c) Performing himself or inducing another public officer perform a public duty improperly or

dishonestly, in anticipation of or in consequence of accepting any undue advantage from any

person. When a public servant gets a hint by any means that if he performs his official duty in

an improper manner or dishonestly then he shall be paid undue advantage, such an act is a

form of corruption and it becomes irrelevant whether he gets paid or not at later stage. This is

one of the examples. However, it is hard, in this particular example, to find out whether he did

official work in an improper manner in anticipation of undue advantage or that it was an honest

mistake.

For all the above offences, the concerned public officer shall be punishable with imprisonment for

a term which shall not be less than three years but which may extend to seven years and shall also

be liable to fine.

In all of the above 3 points, a public servant may either perform his public duty improperly by

himself or he may direct any other public servant to perform that way. Actually obtaining or just an

attempt to obtain any undue advantage by a public servant is an offence under this Act and it is

immaterial whether the work done by the public servant is improper/dishonest or not. Also, it shall

be immaterial whether such person being a public servant obtains or accepts, or attempts to

obtain the undue advantage directly or through a third party.

For instance, A public servant, ‘S’ asks a person, ‘P’ to give him an amount of Rs. 5000 to process

his routine ration card application on time. ‘S’ is guilty of an offence under this section.

INFLUENCING A PUBLIC SERVANT -

By any person – The Act in Section 7A makes it an offence when a person gets or even

attempts to get any undue advantage from another person, to influence the public servant,

in order to make him perform his official duty dishonestly or improperly. This usually

happens when a person has a relative, friend or any known person who is a public servant

and in order to earn some money or otherwise, the first person asks for money etc. from

any third person of whom some work is pending in the hands of that public servant.

So, in order to prevent such types of corruptions, this section came into being. Also, it is

irrelevant whether the public servant performed his official duty dishonestly or improperly

accordingly or not. Simply asking for or attempting to get favor, money or kind to influence

the public servant accordingly makes it a crime punishable with the 3 years sentence which

can go up to 7 years along with the fine.

By a commercial organization –Section 9 makes any commercial organization also liable for

any such influencing act. It says that when such an influence is intended by giving some

undue advantage or by attempting to give some undue advantage to the public servant by a

commercial organization, then in such a case, the commercial organization is liable to fine.

Section 10 - Where an offence under section 9 is committed by a commercial organization,

and such offence is proved in the court to have been committed with the consent or

connivance of any director, manager, secretary or other officer shall be of the commercial

organization, such director, manager, secretary or other officer shall be guilty of the offence

and shall be liable to be proceeded against and shall be punishable with imprisonment for

punishable with the 3 years sentence which can go up to 7 years along with the fine.

Basically this section allows for the personal liability of the person responsible, in contrast

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with the corporation’s liability as under section 9.

Bribery Giver Is Also Liable – This is a new provision included by the 2018 amendment wherein

giving bribe is also an offence now under section 8 of the Act.

Any person is made guilty of corruption when he, intentionally, gives or promises to give any

undue advantage to anyone in order to induce/influence the public servant to make him perform

his official duty improperly. In simple terms, a person who gives or tries to give bribery or undue

advantage to influence the public servant is also liable under this Act. The punishment here is

imprisonment up to 7 years, or fine, or both.

Intention of the bribe giver is necessary. For example, if a person gives a sweets box to a public

servant because he got gifted with a baby girl and the public servant considers such a sweets box

as an undue advantage to work in an improper way in favor of the sweets box giver, thenin such a

case, the giver should not be liable as he had no intention to induce the public servant to work

improperly.

It shall be immaterial whether the person to whom an undue advantage is given or promised to be

given is the same person as the person who is to perform, or has performed, the public duty

concerned, and, it shall also be immaterial whether such undue advantage is given or promised to

be given by the person directly or through a third party.

The term ‘anyone’ is also important to understand. Anyone can be any person who further

becomes the medium to influence or induce the public servant to perform improperly his official

duty. For e.g., 'A' gives money to 'B', to induce the public servant to perform his official duty

improperly, who further gives money to 'C' and 'C' to 'D' and so on. In such a case all persons from

'A' to 'D' and all thereafter shall be liable and it shall include to the public servant as well who has

been given or promised to be given such undue advantage. Such undue advantage may be for the

concerned work to be performed or already has been performed.

However, there is an exception to this rule which is that when a person is compelled to give undue

advantage. It means when a person is compelled to give undue advantage to get his work done

and when he gives that undue advantage then he shall not be liable under the Act but he has to

disclose the fact to the law enforcement authority or investigating agency within 7 days of giving

such undue advantage.

Abetment (section 12) - Abetting an offence punishable under this Act is also an offence. The

Abettor may be punished with a sentence of 3 years which may go up to 7 years along with the

fine. It is immaterial whether the offence is committed by such abetment or not. Once abetted,

it attracts punishment under the Act.

Habitual Offender (section 14) - For the habitual offender, punishment is 5 to 10 years

sentence along with fine. If a person has been convicted for an offence punishable under this

Act and after such a conviction, if the same person is found guilty for an offence punishable

under this Act then he shall be punished as mentioned here.

CRIMINAL MISCONDUCT BY THE PUBLIC SERVANT – SECTION 13 - This provision is

probably the most important one. A public servant is said to have committed the offence of

criminal misconduct if-

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a public servant is entrusted with any property under his control in his official capacity of

being a public servant and if then he misappropriates that property for his own use either

dishonestly or fraudulently then such a conduct of his is known as criminal misconduct.

a public servant intentionally enriches himself illicitly during the period of his office is

another definition of criminal misconduct by the public servant.

It means if he or any person on his behalf, is in possession of or has, at any time during the

period of his office, been in possession of pecuniary resources or property which is

disproportionate to his known sources of income, and which the public servant cannot

satisfactorily account for.

This conduct is criminal and not civil because this conduct is against the public at large. The words

'fraudulently' and 'dishonestly' are important to consider because there may be circumstances

when, in good faith, or by an honest mistake, such conduct may take place, then in such a case, it

cannot be considered as criminal misconduct because criminality requires some mala fide

intention behind the action to make it of criminal nature.

Basically, when a public servant or any person on his behalf is or has been in possession of

pecuniary resources(money) or property, at any time during the period of his office, which is/are

disproportionate to his lawful source of income and such public servant cannot satisfactorily

account for such property or money is known as criminal misconduct by the public servant. This, in

layman terms, is known as Possession of Disproportionate Assets because one cannot

proportionate his assets with his legal source of income. It means he must have had some illegal

source of income which makes him chargeable under this provision of the Act.

For all such offences, punishment is minimum 4 years imprisonment which can be increased up to

10 years along with fine.

Bhalchandra Laxmishankar Davevs. State of Gujarat (February 2021)- The Supreme Court

said that offences under the Prevention of Corruption Act are acts against the society, as it set

aside a Gujarat High Court judgment acquitting an accused in a corruption case. The high court

had acquitted the accused for the offences under the provisions of the Prevention of Corruption

Act by setting aside the trial court verdict. The trial court had convicted the accused, who was

working as assistant director in ITI Gandhinagar, for the offence under the said Act and sentenced

him to 5 years of imprisonment and a fine of Rs.10,000.

N. Vijayakumar vs. State of Tamil Nadu –(February 2021) - The Supreme Court on Wednesday

has observed that mere recovery of currency notes is not sufficient to be considered as an offence

under section 7 of the Prevention of Corruption Act. The Court observed that to prove the charge,

it should be proved beyond a reasonable doubt that the accused has voluntarily accepted money

knowing it to be a bribe. Based on this observation the court has set aside a high court judgment

that convicted the accused in a corruption case. In this case, the accused is a sanitary inspector at

the municipal corporation of Madurai. He was charged for bribery under section 7 of the Act. He

was first acquitted by the trial court, after that the high court allowed an appeal by the state and

reversed the judgment, and convicted the accused.

‘SANCTION’MEANING UNDER THE ACT

Section 19 of the Act obligates previous sanction necessary from the competent authority for

prosecution of offences committed by public servants under this Act. Previous sanction is

mandatory only for prosecution and not for initiating investigation/inquiry. Also, it is restricted only

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to serving public servants. Retired servants with impeccable integrity and a fine track-record of

possessing robust decision -making abilities have suffered the brunt of lack of protection under the

law. There have been instances too where unsustainable inquiries/investigations have been

initiated against public servants–serving and post-retirement–on account of false

complaints/allegations. In such cases, previous sanction for prosecution does not really help in

that till such stage of seeking previous sanction for prosecution arrives, the damage has already

been done to the image and reputation of a public servant by the initiation of a preliminary enquiry

or regular case. This process also included unnecessary arrests in some cases of such public

servants.

The authority whose previous sanction is required in order to start and inquiry, is:

Central government, if the public servant is employed under the central government.

State government, if the public servant is employed under the state government.

Any other competent authority under which the public servant is employed.

Secion 19 of the Act creates a need for prior sanction to prosecute public servants on corruption

charges; i.e., prior government approval before judicial proceedings can begin. This provision has

a cousin in the general law on criminal procedure under Section 197 CrPC. There used to be two

points of difference between these provisions. –

First, Section 19 only applied to active public servants, while Section 197 CrPC covered

both active and retired public servants.

Second, Section 19 PC Act applied in almost all cases under that law, while Section 197

CrPC applied to all kinds of cases, but only if the allegations concerned acts / omissions of

the public servant in discharge/purported discharge of official duties.

The 2018 amendments to Section 19 PC Act have eliminated the first distinction; now sanction to

prosecute cases under the PC Act will also apply to public servants employed at the time of

commission of the alleged offence. Further, such protection is extended to former officials as well,

for offences done while in office i.e. this section is now also applicable on retired public servants

who may be alleged to have committed this offence while they were working.

Section 19 PC Act will now also carry different rules on sanction in cases that are not instituted by

law enforcement, giving public servants more opportunities to stop proceedings at the outset. By

the 2018 amendment, a new clause is added to this sections which says that only that police

officer or investigation agency or other authorized law enforcement authority who is investigating

the case can make a request for previous sanction of the competent government\authority. In case

any other person wants to apply for the government sanction, he must fulfill these conditions:

He must file a complaint in a competent court about the alleged offences for which the

public servant is sought to be prosecuted; and

court must not dismiss the complaint i.e. court must allow his complaint, and direct the

complainant to obtain the sanction for prosecution against the public servant for further

proceeding.

After the order of the court, the competent government must provide an opportunity of being

heard to the concerned public servant, before giving its prior sanction.

The Amendment Act of 2018 extends this protection of requirement of prior approval to

investigation stage as well prior to prosecution. Government may prescribe guidelines for grant of

sanction for prosecution.

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It has been held in P.V. Narasimha Rao Case, that in case of MPs and MLAs, there is no authority

who can remove them from office and therefore, no sanction under Section 19 is required.

However considering the scheme of provisions, in order to avoid misuse, the Supreme Court has

directed taking the permission of the Speaker of the concerned Legislative Assembly, before filing

of the charge sheet.

Vinod Kumar Garg vs. State (November 2019) - A mere error, omission or irregularity in sanction

in corruption cases is not considered to be fatal unless it has resulted in a failure of justice or has

been occasioned thereby, the Supreme Court has reiterated. In this case the appellant contended

that the investigation was not carried out by a police officer of rank and status of Deputy

Superintendent and Police or equal. The bench addressing this contention stated that while such a

lapse is an irregularity, it would not vitiate a conviction unless prejudicial; and that the conviction

would not be considered bad in law.

Subramaniam swami vs. Union of India(2014)- the court held provision for sanction for prosecution

in a corruption case is not unconstitutional as mere possibility of abuse cannot be a ground to

declare a provision unconstitutional. However, the court has fixed a four month deadline for the

sanctioning authority to take a decision on a plea for grant of sanction to prosecute a public

servant, failing which the sanction would be deemed to have been given.

SANTHANAM COMMITTEE REPORT

A Committee on Prevention of Corruption was appointed by the Government of India in 1960

under the Chairmanship of K. Santhanam. This Committee gave its report in 1962. The

recommendations pertained to various aspects of corruption. It was on the basis of the

recommendations of this Committee that the Central Vigilance Commission was set up in 1964 for

looking into the cases of corruption against the central government and other employees.

Vigilance means to ensure clean and prompt administrative action towards achieving efficiency

and effectiveness of the employees in particular and the organization in general, as lack of

vigilance leads to waste, losses and economic decline.

Central Vigilance Commission (CVC) is the apex vigilance institution, free of control from any

executive authority, monitoring all vigilance activity under the Central Government and advising

various authorities in Central Government organizations in planning, executing, reviewing and

reforming their vigilance work. The CVC was set up by the Government in February, 1964 on the

recommendations of the Santhanam Committee. In 2003, the Parliament had enacted the CVC

Act, thereby conferring a statutory status on the CVC body. The CVC is not controlled by any

Ministry/Department. It is an independent body which is only responsible to the Parliament.

The CVC is mainly an advisory body and has no adjudicatory functions. It mainly considers the

complaints relating to corruption, misconduct, lack of integrity or some other kinds of malpractice

or misdemeanor on the part of the public servants. It cannot extend sanction for criminal

prosecution for offences committed by public servants. The commission consists of one

Chairperson and two officers. It has no machinery to investigate or inquire into complaints of

corruption except to a limited extent. The commission is not authorized to investigate the

complaint itself, it has to refer them to the Central Bureau of Investigation (CBI) or Ministry or

Department for investigation. The commission is required to submit an annual report to the

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ministry of Home Affairs, stating the cases in which its recommendation were accepted and acted

upon by the competent authorities.

CHIEF VIGILANCE COMMISSIONERAND CHIEF VIGILANCE OFFICERS–

CVC has no investigation wing of its own as it depends on the CBI and the Chief Vigilance Officers

(CVO) of central organizations, while CBI has its own investigation wing drawing its powers

from Delhi Special Police Establishment Act.

The CVC is headed by a person who is the Chief Vigilance Commissioner. He is aided by two

Chief Vigilance Officers.

The Chief Vigilance Officer (CVO) heads the vigilance division of the organization concerned and

acts as a special assistant/advisor to the chief executive in all matters pertaining to vigilance. He

also provides a link between his organization and the Central Vigilance Commission (CVC).

Complaints received in the Commission are scrutinized thoroughly and wherever specific and

verifiable allegations of vigilance nature are noticed, the complaints are forwarded to the CVO to

conduct inquiry/investigation into the matter and report to the Commission expeditiously.

FUNCTIONS –

Preventive functions

The Vigilance Officers and Chief Vigilance Commissioner undertake the following measures:

To examine in detail the existing Rules and procedures of the Organization with a view to

eliminate or minimize the scope for corruption or malpractices.

To plan and enforce surprise inspections and regular inspections to detect the systems, its

failures and existence of corruption or malpractices.

To maintain proper surveillance on officers of doubtful integrity.

To ensure prompt observance of Conduct Rules relating to integrity of the Officers like

o The Annual Property Returns

o Gifts accepted by the official

o Benami transactions

o Regarding relatives employed in private firms or doing private business etc.

Punitive functions

These functions include:

To ensure speedy processing of vigilance cases at all stages.

To ensure that charge-sheet, statement of imputations, lists of witness and documents etc.

are carefully prepared and copies of all the documents relied upon and the statements of

witnesses cited on behalf of the disciplinary authority are supplied wherever possible to the

accused officer along with the charge-sheet.

To scrutinize final orders passed by the Disciplinary Authorities subordinate to

Ministry/Department, with a view to see whether a case for review is made out or not.

To see that proper assistance is given to the CBI in the investigation of cases entrusted to

them or started by them on their own source of information.

To take proper and adequate action with regard to writ petitions filed by accused officers.

To ensure that the Central Vigilance Commission is consulted at all stages when it is to be

consulted and as far as possible; the time limits prescribed in the Vigilance Manual for

various stages are adhered to.

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To ensure prompt submission of returns to the Commission.

To ensure that the competent disciplinary authorities do not adopt a dilatory or negative

attitude in processing vigilance cases, thus knowingly otherwise helping the subject public

servants, particularly in cases of officers due to retire.

To ensure that cases against the public servants on the verge of retirement do not lapse due

to time-limit for reasons such as misplacement of files etc. and that the orders passed in the

cases of retiring officers are implemented in time.

HUMAN RIGHTS ACT, 1993 (WITH AMENDMENT ACT, 2006)

NHRC INDIA; INFORMATION TECHNOLOGY ACT, 2000

-The above two topics will be provided later on in the class.

COMPETITION ACT, 2002

When a seller tries to attain the funds of the buyer so that market share or profits can be achieved

by the seller, it is known as competition. Various theories of economics have suggested that the

quantities and prices help in maintaining the equilibrium in the market in order to produce efficient

results. Also, competition helps not only to maintain transparency and accountability but also to

reduce lobbying and corruption in the market. It is important to promote healthy competition as it

provides an increase in the supply of products with high quality at a lower rate. Instead of putting a

full stop on competition, Competition policies and laws help in encouraging competition by

classifying anti-competitive practices as offences and providing punishments for the same.

Competition and liberalization, together unleash the entrepreneurial forces in the economy.

Competition offers wide array of choices to consumers at reasonable prices, stimulates innovation

and productivity, and leads to optimum allocation of resources. In the wake of liberalization and

privatization that was triggered in India in early nineties, a realization gathered momentum that the

existing Monopolistic and Restrictive Trade Practices Act, 1969 ("MRTP Act") was not equipped

adequately enough to tackle the competition aspect of the Indian economy. In line with the

international trend and to cope up with the changing realities India, consequently, enacted

the Competition Act, 2002 (hereinafter referred to as "the Act"). Designed as an omnibus code to

deal with matters relating to the existence and regulation of competition and monopolies, the Act is

intended to supersede and replace the MRTP Act. It is procedure intensive and is structured in an

uncomplicated manner that renders it more flexible and compliance-oriented. Though the Act is

not exclusivist and operates in tandem with other laws, the provisions shall have effect

notwithstanding anything inconsistent contained in any other law.

OBJECTS TO BE ACHIEVED -

I. To check anti-competitive practices

II. To prohibit abuse of dominance

III. Regulation of combinations.

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IV. To provide for the establishment of Competition Commission of India (CCI), a quasi-judicial

body to perform below mentioned duties:

Prevent practices having adverse impact on competition

Promote and sustain competition in the market

Protect consumer interests at large

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

Look into matters connected therewith or incidental thereto.

The Competition Commission of India is a statutory authority with the mandate to enforce

competition Act 0f 2002. The objective of the CCI is to create and sustain fair competition in the

economy which will provide a ‘level playing field’ to the producers, while making the markets work

for the welfare of the consumers.

The CCI comprises of a Chairperson and six Members, who are appointed by the Government of

India. The term of office of all the members of CCI is 5 years or till the attainment of age pf 65

years (whichever is early). The members are eligible for re-appointment.

The Chairperson and other members of CCI cannot hold any further employment for a period of

two years from the date they cease to hold office in the Commission. But this restriction does not

applies to any employment in the Union and State Government authority.

ANTI-COMPETITIVE AGREEMENTS

In simple words, Anti-Competitive agreements are agreements that are made by two or more

companies competing in the same market to fix prices or reduce stocks etc., so as to manipulate

the market favourably for them. This has the effect of the companies reducing the competition in

the market which adversely affects the end consumer.

The Competition Act, 2002 defines anti-competitive agreements as such in Section 3 where it

states, "No enterprise or association of enterprises or individuals or association of individuals may

enter into an agreement regarding production, supply, distribution, storage, acquisition or control

of goods or provision of services which may adversely affect the competition in the Indian

market”.

Such agreements are termed as AAEC agreement, which means the appreciable adverse effect

on competition agreements. The Act expressly states that such an agreement shall be void.

In simple words, an AAEC agreement is classified as any agreements that result in:

Directly affects purchase or sale prices

Indirectly affects purchase or sale prices

Limits production

Limits supply

Limits technical development

Leads to the rigging of bids

When a person comes into an agreement with another person that deals with a business

transaction which is of the nature that can result into negative competition in a certain market, or

which provides an undue benefit that causes benefit to a particular person or market while causing

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loss to others, such agreements fall under the scope of anti-competitive agreements, which are

done away by the Act of 2002.

The term ‘agreement’ is also defined by the Act as it is not required by the parties to execute a

formal document to form an agreement amongst themselves. The parties are free to come into

either an oral agreement or a written agreement. The scope of the definition is very wide and is of

inclusive nature instead of being an exhaustive definition.

The idea behind adopting such a wide ambit of the term ‘agreement’ in the Competition Act is also

explained. The reason for doing so is that there can be a situation where the persons having their

hands in cuffs for any sort of anti-competitive practice may not come into any formal written

agreements. For instance, cartels are normally formed in secrecy (cartel is defined as an

association of service providers, traders, distributors, sellers or producers who went to form an

agreement among themselves to control, limit or attempt to control the trade, price, sale,

distribution or production of goods or provisions of services)

Further, the Act also tries to put a full stop on any other agreement relating to the acquisition,

storage, distribution, supply, production, provisions of services or control of goods which is likely to

cause or causes a substantial effect on the competition in the Indian market. Any agreement that

has been formed to contravene the provisions contained in the Act shall be considered as void.

ABUSE OF DOMINANCE

It is deemed that an enterprise or a person holds a dominant position in the market when any such

entity is in possession of a position of strength and with the help of such a position, that entity can

operate independently from any of the competitive forces that are capable to produce an effect on

consumers or competitors or any other force that is available in the market.

The Competition Act, 2002 provides an explanation of the dominant position and states that it is

directly proportional to the relevant market. Hence, in order to figure out the presence of any

dominant position in the market, the very first task is to figure out whether the enterprise in

question has occupied a dominant position in reference to a particular kind of product market, as

well as the demarcation of the market geographically for the purpose of that particular product.

The abuse of dominant position is prohibited by Section 4 of the Competition Act. Abuse of

dominant position is defined under the second part of the same Section. According to the act,

dominant position means any enterprise that enjoys the position and power in the Indian market

which enables it to:

Operate independently of competitive forces in the relevant market

Affect its competition, consumer or the relevant market in its favour.

For example, predatory pricing (the pricing of goods or services at such a low level that other firms

cannot compete and are forced to leave the market) is a practice that is seen to be an abuse of

dominant position.

In simple words when a dominant enterprise engages in AAEC acts (i.e. anti-competitive act), then

it is considered as an abuse of dominant position.

The difference between definition of anti-competitive agreements and abuse of dominant position

is that in anti-competitive agreements there have to be two or more parties and it can be between

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any enterprise or firm and doesn’t require there to be a dominant firm involved. In abuse of

dominant position, it can be done by a single party but the party has to be in a dominant position in

the relevant market.

REGULATION OF COMBINATIONS

The world as we know it thrives on Competition, and of course competitions aren’t always

constructive and beneficial in the wider scheme of expansion. It is for this cause the Indian

Constitution relies upon the Regulation of Combinations in Competition Law.

The provision dealing with the regulation of combinations has been looked into by Section 6 of the

Act. Any person/enterprise shall not enter into a combination which is likely to have an adverse

effect on the competition. Any such combination will be void.

But we should first see what is meant by ‘combination, under the Act. The term combination has a

broad definition under the Act and is given under Section 5. It says ‘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’.

So a combination it includes:

any acquisition of shares,

voting rights,

control of assets

party to merger or amalgamation of enterprises

Basically, a Combination within the Competition Law is the merger between two or more

enterprises or firms, or the business sector acquisitions (such as companies or firms) by other

business enterprises. The Government controls combinations or mergers and acquisitions within

the country to promote competition and thereby seeing to that small scale establishments are not

overshadowed and swallowed by more reputed industries. This is because the merger of big shot

companies not only reduce competition but also make it difficult and almost impossible for smaller

firms to grow or profit from their business. The accumulation of wealth in certain sectors of

business and the consumer concerns can lead to major economic and social discrepancies within

the nation.

Now, Section 6 of the Act provides the law related to regulation of such combinations. Let us see

what it says:

It prescribes that all transactions qualifying as a Combination should be notified to the

Competition Commission of India in the form as prescribed. It is mandatory, and is done for the

purpose of determining whether a combination would have the effect of or is likely to have an

appreciable adverse effect on competition in the relevant market while regarding factors like

the actual and potential level of competition through imports in the market; extent of barriers to

entry into the market; level of combination in the market; degree of countervailing power in the

market etc.

The CCI is then to scrutinize the notice for defects or incompleteness on the on the basis of the

Rules and Regulations prescribed for the same. After the process the parties to the merger are

asked to remove the defects, if any.

Further, it says that a Combination shall not be given effect to until approved by the CCI or until

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210 days have passed from the date of notifying to the Commission, whichever is earlier.

Then the CCI passes its final order, as per section 31 of the Act. If the commission has

concluded after careful scrutiny that the combination at hand will not have harmful effects on

the competition market, then the Commission shall approve of the transaction under section

31(1) of the Act. On the other hand if the Commission has concluded negative on the

transaction due to its adverse effect on the market, it shall hold the transaction null under

Section 31(2) of the Act. In a third scenario the Commission can provide the parties with

modifications to be made in the transaction to rinse out the provisions likely to be inharmonious

to the competition market [Section 31(3)].

The CCI may either approve the Combination completely, or may approve subject to some

modifications in the structure of the Combination, or not approve the Combination. Over the

past few years CCI has suggested ‘modifications’ i.e., a change prior to approving a

Combination only in three out of the 500 odd notifications received by the Commission till date.

The Central Government has powers to exempt certain transactions from the applicability of

Section 5 and Section 6 and pursuant to that the Central Government has notified certain

exemptions from time-to-time by way of notifications.

Certain exemptions are also provided by the Competition Commission in schedule I of the

Competition Commission of India (Procedure in regard to The Transaction of Business

Relating to Combinations) Regulations, 2011 (“Combination Regulations”).

Therefore, the regulation of combinations is a major function of the CCI, starting off from the point

of notifying the Commission and proceeding to the dispensation of the final order. A number of

factors come and go while assessing combinations but the overall guiding notion is a barter

between the anti-competitive effects and the pro-competitive effects.

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