Business Law

June 2023 Examination

Q1. Free Consent is an important essential element of a valid contract. Explain what is
Free Consent and the instances under which Free Consent in an agreement would be
affected. Please provide examples for each of such instance. (10 Marks)

Ans 1.

Introduction

Free consent may be defined as a settlement when each party willingly and knowingly enters
right into a territory of their own will. This entails agreeing to all of its conditions and terms
and a mutual stage of understanding of the problem matter in an agreement or a contract.

For an agreement to be sound and enforceable, the consensus must have been received free of
coercion, cheating, fraud, influence, or stress. Moreover, the settlement must be free of
misinterpretations or mistakes through both events. If consent is added by any means, the
warranty is void and unforced able by regulation.

In the case of insurance agreements, even if a policyholder sees eye to eye on things inside
the same feel, the assurance continues to be void if they did now not lose consent during the
making up of a settlement.

Forming an excellent agreement or association is most straightforward when there may be

unfastened consent from each party involved, irrespective of the motives or understanding.
For instance- If an individual was pressured to signal health insurance by way of a member of
the family named beneficiary of the settlement, the policy could be null and void because
they did not enter right into a contract with their consent. In this case, the agreement is not
considered valid.

Concepts and applications

Now as we have discussed the free consent above. Below are the factors that affect free
approval-
a) Coercion- Coercion can be defined as the use of force to manipulate and compel a person
to enter into an agreement or an agreement. So, threats or intimidation are used to obtain the
party's consent under coercion, which is not free consent. Phase 15 of the free license states
that-

They were threatening to devote or commit any act forbidden through the law in IPC.

They are threatening to detain or unlawfully detain any property with the cause of causing
any individual to agree.

For example- X threatens to hurt Y if he does now not promote his keep to X for 10 lakh
rupees. Even though Y sells the house to X, it'll be a void contract because Y's consent was
received by coercion.

b) Undue influence (section 16) - section 16 of the contracts act states the definition of
undue effects. It says that when the family members among events are such that one party is
in a position to dominate some other party and makes use of such dominance to gain an
unfair advantage over the other party, it will be undue to have an effect.

The section also, in addition, depicts how a man or woman can abuse his authority within the
following approaches-

When a person holds an apparent or absolute control over another person. Or he is in a

fiduciary relationship with the alternative character.

He contracts with a man or woman whose mental ability is affected by illness, age, or
distress. The unsoundness of the thoughts may be everlasting or temporary.

For example- A sold his solver watch well for Rs 200/- to his teacher B after his instructor
guaranteed him proper trades. Here the consent of A is not freely given. He turned beneath
the impact of his instructor.

c) Fraud (section 17) - Fraud can be described as deceit by one of the parties when one of
the events willingly makes false statements. It undoubtedly impacts unfastened consent. So,
the misinterpretation is executed with the complete understanding that it is handiest
legitimate or recklessly to check for Authentify.

So according to section 17, fraud can be defined as when a party convinces every other to
enter into a settlement by making statements that are
Suggesting a false fact, and he does not believe it to be authentic.

The active concealment of facts

Any promise made with no reason for acting it

Any other such act fitted to fraud

For example- X bought a dog from Y. Y claims that the dog can be used for guarding
purposes. The dog is lame, and X cannot use it for safeguarding purposes. Here Y willingly
deceived X, and this can amount to fraud.

d) Misrepresentation (phase 18) - Misrepresentation can be described as when a party

makes a representation that is inaccurate, false, incorrect, etc. The difference here is that the
misrepresentation is sincere but only sometimes intentional. The party making the declaration
believes it to be true. Misrepresentation may be of 3 kinds-

An individual makes a positive statement thinking it to be true

Any failure of obligation blessings the individual committing it by misleading every other.
However, the loss of duty is without any will deception.

When one party reasons the other party to make a mistake thinking about the subject,
remember the settlement. But that is accomplished now, not intentionally and innocently.

For example, X agreed with Y to promote the goods, and the contract was made. X changed
into ignorant of the fact that the goods perished because of some motive. In this case, the
contract could no longer be valid because the agreement's basis does not exist.

Conclusion

Free consent may be defined as an essential detail of an agreement to be accurate. Without

free consent, a settlement becomes voidable at the choice of one party. This means if the
consent acquired by any parties for a payment isn't free and is due to coercion, fraud, undue
influence, or misrepresentation, then the party has a right to make the agreement voidable at
their wish.
2. Please highlight two (2) instances where the courts in India have intervened to protect
environment or prevent degradation/pollution of environment. Kindly note that the
instances should be real life cases. (10 Marks)

Ans 2.

Introduction

The custodian of the Indian charter, the judiciary, has been given a beacon light for protecting
the environment while positively decoding the alliance. The judicial chronology consists of
landmark selections, which forced upon that proper to live far exceeds mere strolling and
breathing and fashioned environment jurisprudence. Judiciary performs an essential role in
the protection of the environment. Here are some of the instances in which the governments
have intervened to protect the environment-

a) Rural litigation and entitlement Kendra & Ors. Vs. State of Uttar Pradesh & Supreme
Court docket of India- Judgment- this example is called the Dehradun valley litigation. In the
Mussoorie hill range of the Himalayas, the challenge of quarrying turned into being taken
out. Limestone was extracted by blasting out the mountains with dynamite. Due to a lack of
trees and vegetation, many landslides perished villagers and destroyed their homes,
agricultural land, and cattle. This practice has also led to slumping and cave-ins because the
mines dug deep into hillsides, which isn't a legal practice consistent with se. It became
contended by the mining regulators that the case should be rejected by using the court, and
the problem ought to be left to the authorities under environmental protection. Still, the court
rejected the miners' arguments because the litigation had already been implemented, and the
court issued more than one order earlier than adopting the environment protection act.

Later a monitoring committee was formed. The tracking committee directed the firm in a
specific way; however, the lessee continued to quarry limestone in a non-scientific manner
and disregarded the monitoring committee's order. In the utility submitted via the committee,
the court decided that the mining pastime secretly carried on by Vijay Shree mines had ended
in immense damage to the area and directed the organization to pay Rs- 3 lakhs to the
account of the tracking committee. After years, the country's highest court has held that
pollution because of quarries adversely affects the protection and fitness of the people.
Consequently, the same need to be positioned to a complete prevent. The right to an entire
environment is a part of personal liberty, and the right to existence is promised beneath
Article 21 of the constitution. The case needs the ideal courtroom to balance ecological and
environmental integrity towards business demands on forest sources. The court issued the
following course-

Orders that mine Lessees whose workings and the court stopped operations would accept
priority for leases in new areas.

b) Municipal council, Ratlam Vs. Shri Vardhichand& perfect court- Judgment- Ratlam is a
city in Madhya Pradesh. Several of the municipality's residents issued a complaint before the
sub-divisional magistrate alleging that the city is not creating suitable drains and there is a
stink and stench due to the exertion utilizing close-by slum dwellers, and that there was no
impact on the petitioners. The sub-divisional magistrate of Ratlam district ordered the
municipality to put together an effective development plan within 12 months of the complaint
being submitted through the residents of Ratlam city (accepted by way of the high
courtroom). Afterward, the municipality appealed to the United States of America's top court
docket. It stated that they no longer have ok financial support or a sizeable price range to
conform to the path given through the sub-divisional magistrate of Ratlam city.

Respondents argued that the organization of Ratnam city had failed to meet its obligations
and responsibilities ordered by using the sub-divisional Justice of the Peace to provide for
public fitness utilizing, failing to bog down pollutants and various dangerous wastes from
affecting their homes. Respondents desired to stop pollutants caused by a runoff from a
nearby alcohol factory resting inside the form of malaria.

The great court ordered that the Municipal Corporation of Ratlam town guard the region
against the factory pollutants from the alcohol manufacturing facility flowing into the
residential location. Perfect courtroom informed the municipal to take wanted steps to fulfill
their obligation by supplying a good enough number of public laterals for certain women and
men separately, along with offering scavenging service and water supply in the morning and
in the dawn to ensure adequate sanitation.

Conclusion

The court also instructed that those responsibilities be fulfilled within a half year of the court
order. The problems have been because of haphazard city planning and private polluters; the
preferred court held that a pollution-free environment is essential to the good life under
Article 21. The court then held that if the case municipality feels the requirement for
resources, then it will enhance its call for from state authorities through elitist projects and
request loans from the state authorities from the savings account of public health expenses to
fulfill the resource want for the execution of the court's order.

3. Gaurav is a new joinee in an organization and he has certain queries with respect to
employee related laws. He has been directed to reach out to you with the queries. Kindly
advise him:

a. As the organization deducts Provident Fund from the salary, can you please explain
applicability of the schemes under Provident Fund and how is the calculation and
apportionment of the Provident Fund done against various schemes? (5 Marks)

Ans 3a.

Introduction

An employee provident fund may be defined as a retirement benefits scheme created to

ensure that we have enough money saved to get us through our retirement. The provident
fund is a total contribution from our company and us. It is deducted from our monthly salary
and positioned away in a PF account where it increases in price and size that we will avail
and experience after retirement. All corporate businesses with 20 employees should sign up
for the employee provident fund. 

Concepts and applications 

Schemes under provident fund- 

a) Employees provident fund act, 1952- The EPF scheme was created by using the action to
support a collection of employees or an employee, or their criminal heirs, the occasion of
death, who worked for a company that this act applies to after they retire. 

b) Personnel pension scheme, 1995- The personnel pension scheme was formed by the act
to provide pensions to the workers or employees of any status quo to which the act applies if
the worker retires, becomes fully and permanently incapacitated, or beds. 
c) Employees' deposit-related coverage scheme, 1976- The act created for the employees of
a formation or magnificence of institutions to which the act applies. The employees' deposit-
linked coverage scheme will provide coverage benefits should they die even as employed.
This act was exceeded in 1976. 
Applicability of the schemes.
 
The employees' provident fund was formed in 1952 by the miscellaneous provisions act and
employees' provident fund, a piece of regulation implied throughout the country. The act
applies to every industry or factory indexed in schedule 1 of the action that employs 20 or
greater humans, 

Calculation of EPF 

There are two contributions for each worker of their employee provident fund- 
Worker contribution to the EPF- The employee contributes 12 percent of his actual
remuneration and the monthly dearness allowance to the EPF account. 

Corporation contribution to EPF: Out of 12 percent, the employer must contribute 8.33

percent to the worker pension scheme, while the remaining 3.67 percent needs to be donated
to the employee provident fund. Thus 3.67 percent of Rs 150000 is Rs 5500/-.
 
Conclusion 

EPF benefits employees as it helps them save considerable money for their retirement.

b. Who is entitled for Gratuity and how is the payout of gratuity calculated? (5 Marks)

Ans 3b.

Introduction

Gratuity may be defined as a benefit this is payable under the fee of gratuity act 1972. A
gratuity is the sum of money an employer will pay an employee for services rendered in the
firm. However, gratuity is paid to personnel who have completed over five years in a
company.

Concepts and applications

Employees who are entitled to gratuity-

An employee must be eligible or entitled to superannuation

A retired employee

An employee who resigns after working for more than five years with a single employer

How does an employee who dies or suffers incapacity because of an accident or infection

Calculate gratuity?

For instance- Jatin has worked with a company for ten years and has Rs.50, 000 as his last
drawn simple plus DA amount, then,

Gratuity amount for Jatin- 10*50000*15/26 = Rs.2, 88,461.54

However, an employer can select to pay more gratuities to a worker. Also, for the number of
months in the final 12 months of employment, something above 150 days in the last year is
rounded off to the previous lower number.

Calculating gratuity for the employees no longer covered below the gratuity act- even if the
company is not part of it, they could pay compensation. This salary entails commissions,
basic wages, and a dearness allowance. However, the calculation or determination of gratuity
is primarily based on a person's half month's profits for each year that has been completed.

The following system calculates the gratuity quantity for employees or employees who are
not covered under the gratuity act.

Gratuity amount = (15 * last drawn salary amount * period of service) / 30

Conclusion

A worker's tenure is counted as 12 months for purposes of calculation. The previous variety
of completed years is considered if the range of months labored within the latest years is less
than 180 days. However, the year is regarded as a full year because of the calculation of the
number of months completed inside the full current year. Of service is extra than 180 years.
Hence, 11 years have been set to be the working length. The number of years of service
would have been ten years best if the service duration were ten years and four months (or
anything less than six months).