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CHAPTER - VI

LEGALITY OF OBJECT



IF IT IS FORBIDDEN BY LAW;

IF IT IS OF SUCH NATURE THAT, IF PERMITTED, IT WOULD DEFEAT THE PROVISIONS OF ANY LAW;

IS FRAUDULENT;

INVOLVES OR IMPLIES INJURY TO THE PERSON OR PROPERTY OF ANOTHER;

IS REGARDED AS IMMORAL BY A COURT OR OPPOSED TO PUBLIC POLICY.

When is an object unlawful

AGREEMENT OPPOSED TO PUBLIC POLICY

1. TRADING WITH AN ALIEN ENEMY;

2. INTERFERENCE WITH ADMINISTRATION OF JUSTICE;

3. MARRIAGE BROKERAGE AGREEMENTS;

4. TRAFFICKING IN PUBLIC OFFICES;

5. UNFAIR OR UNREASONABLE DEALINGS



EFFECT OF PARTIAL ILLEGALITY



CHAPTER VII

VOID AGREEMENT



DIFFERENCES

VOID AGREEMENT VERSUS VOID CONTRACT; AND

VOID AGREEMENT VERSUS ILLEGAL AGREEMENT

AGREEMENT EXPRESSLY DECLARED VOID

AGREEMENT BY OR WITH PERSONS INCAPABLE OF CONTRACTS;

AGREEMENT ENTERED INTO UNDER MUTUAL MISTAKE OF FACTS;

AGREEMENT OF WHICH CONSIDERATION AND OBJECTS ARE UNLAWFUL INFULL OR IN PART

AGREEMENT WITHOUT CONSIDERATION;



AGREEMENT IN RESTRAINT OF MARRIAGE;

AGREEMENT IN RESTRAINT OF TRADE;

Exceptions:1.) Statutory Exceptions;

2.) Judicially Interpretative Exceptions :-

a) Trade Combinations (FICCI, GIC, CIA)

b) Exclusive Dealing Agreement

c) Restraints Upon Employees

AGREEMENT IN RESTRAINT OF LEGAL PROCEEDING;

Exceptions:

a) Referring dispute to arbitration;

b) Referring question that have already arisen toarbitration

AGREEMENT THE MEANING OF WHICH IS UNCERTAIN;

AGREEMENT BY WAY OF WAGER;

AGREEMENT TO DO AN IMPOSSIBLE ACTS.



ESSENTIAL OF WAGERING AGREEMENT:

Uncertain Even; Mutuality;

Neither party to have control over the even;

No proprietary interest in the event.

EXCEPTIONS TO WAGERING AGREEMENT:

Horse Race;

Prize Competition;

Contracts of Insurance - (Insurable Interest).



CHAPTER VIII

CONTINGENT CONTRACTS



ESSENTIAL OF CONTINGENT CONTRACT

- SUBJECT TO HAPPENING OR NON HAPPENING OF AN UNCERTAIN EVEN,

COLLATERAL TO IT;- CONTINGENT EVENT IS OF UNCERTAIN NATURE;

- UNCERTAIN EVENT ON WHICH THE PERFORMANCE OF A CONTINGENT

CONTRACT DEPENDS IS COLLATERAL OR INCIDENTAL TO THE CONTRACT;

- CONTINGENCY SHOULD DEPEND ON THE WILL OF THE PROMISOR OR THE

PROMISEE.

DEFINITIONS: A contract, the performance of which depends on the

happening or non-happening of an uncertain even, incidental to such

contract.



ENFORCEMENT OF CONTINGENT CONTRACT

1. Contingent contract depends on uncertain future event contract

can not be enforced unless and until that event happen.

2. Contingent contract depends on uncertain future even contract

can be enforced only after happening of events become impossible.



DIFFERENCE BETWEEN CONTINGENT CONTRACT AND

WAGERING AGREEMENT

1.) Validity:

2.) Reciprocal Promises;

3.) Event collateral v/s. sole determinant factor;

4.) Real Interest.



CHAPTER XI

INDEMNITY AND GUARANTEE



SCOPE OF CONTRACT OF INDEMNITY:

AS PER SECTION 24 OF INDIAN CONTRACT ACT, 1872, THE SCOPE OF

INDEMNITY CONTRACT RESTRICT TO ONLY SUCH CASES WHERE THE

LOSS, PROMISED TO BE REIMBURSED, IS CAUSED BY THE CONDUCT OF

THE PROMISOR OR OF ANY OTHER PERSON. IT DOES NOT COVER THE

CASES OF LOSS ARISING FROM EVENTS OR ACCIDENTS SUCH AS FIRE,OR PERILS OF THE SEAS.

CONTRACT OF INDEMNITY:

A contract, by which one party promise to save other from loss caused

to him by the conduct of the promisor himself, or by the conduct of any

other person, is called a contract of indemnity.



RIGHTS OF INDEMNITY HOLDER:THE INDEMINITY HOLDER IS ENTITLED TO RECOVER FROM THE

INDEMNIFIER THE FOLLOWING AMOUNTS:

1.] ALL DAMAGES WHICH HE/SHE MAY BE COMPELLED TO PAY;

2.] ALL COST WHICH HE/SHE MAY BE COMPELLED TO PAY;3.] ALL SUMS WHICH HE/SHE MAY HAVE PAID UNDER THE TERMS OF ANY

COMPROMISE OF ANY SUCH SUIT.

ESSENTIALS OF VALID CONTRACT OF INDEMNTY:

1.] PROMISE BY INDEMNIFIER TO MAKE GOOD THE LOSS;2.] CONTRACT OF INDEMNITY IS PRIMARILY CONTINGENT CONTRACT;

3.] LIABILITY OF INDEMNIFIER COMMENCES AS SOON AS THE LIABILITY

OF THE INDEMNITY HOLDER CLEAR AND CERTAIN;



CONTRACT OF GUARANTEE:

A CONTRACT OF GUARANTEE IS A CONTRACT TO PERFORM THEPROMISE, OR DISCHARGE THE LIABILITY, OF A THIRD PERSON IN CASE OF

HIS DEFAULT.

A CONTRACT OF GUARANTEE IS ENTERED INTO WITH AN OBJECTIVE TO

ENABLE



Sr.

No.

Points of

Difference

Contract of Indemnity Contract of Guarantee

1 Parties Indemnifier & Indemnity

Holder

Debtor, Creditor and

Surety2 Object To make good the loss To enable a person to

obtain Loan or Goods on

credit or even

employment

3 Nature of

Contract

Contract is for Re-

imbursement of loss.

Contract is for the security

of the creditor.

4 Nature of Liability Liability of Indemnifier is

Primary and Independent

Liability of Surety is

Collateral

5 Independence of

promisor

Indemnifier acts

independently without

any request of the debtor

Surety gives guarantee

only at the request of

debtor

6 Right to sue third

parties

Indemnifier can not sue

third parties in his own

name unless there be

assignment in favor of

indemnifier.

Surety can step into shoes

of creditor after

satisfaction of debt.



KINDS OF GUARANTEE:

1. SPECIFIC GUARANTEE

2. CONTINUING GUARANTEE

- REVOCATION OF CONTINUING GUARANTEE

- BY NOTICE OF REVOCATION

- BY DEATH OF SURETY

- IN CASE OF DISCHARGE OF SURETY

EXTENT OF SURETTYS LIABILITY



RIGHTS OF SURETY:

1. Rights against the principal debtor:

- Right of subrogation

- Right of Indemnity

2. Right against the creditor

- Right to security

- Right of set-off

3. Rights against the Co sureties

- Right against the co-sureties

- Where sureties become liable to contribute equally



DISCHARGE OF SURETY:

1. By notice of Revocation;

2. By death of surety;

3. By novation;

4. By variance in terms of contracts;

5. By release or discharge of principal debtor;6. By impairing surety remedy;

7. By loss of security;

8. By Invalidation of contract



CHAPTER XII

BAILMENT AND PLEDGE



BAILMNT:

A bailment is a situation wherein the owner of goods entrusts theirpossession into the care of an other person for some purpose.

A bailment is the delivery of goods by one person to another for some

purpose, upon a contract that they shall, when the purpose is

accomplished, be returned or otherwise disposed of according to the

directions of the person delivering them.



ESSENTIAL OF BAILMENT

- Contract;

- Subject Matter;

- Delivery of Goods;

- Delivery may be actual or constructive;

- No change in Ownership;

- Purpose;

- Return of Goods;



RIGHTS OF THE BAILOR

1. Right to enforce bailee performance;

2. Right to claim damages;

3. Right to claim compensation against unauthorized use of goods;

4. Right to terminate the contracts;

5. Right to demand return of goods along with accretion thereto, if any.

DUTIES OF BAILEE1. Duty to take reasonable care of goods whilst they are in possession;

2. Duty not to make any unauthorized use of the goods bailed;

3. Duty not to set up jus terti (adverse title);

4. Duty not to mix the goods bailed with his own goods;

5. Duty to return the goods in accordance with the contract;

6. Duty to return any accretion to the goods.



RIGHTS OF THE BAILEE

Because of reciprocity of relationships, most of the duties of the

bailor are the rights of bailee. Accordingly, bailee enjoys the

following rights.

Right to enforce bailor duties:

1.] To Claim damages from the bailor if any loss suffered due to

non disclosure of defects in the goods.

2.] To claim all necessary expenses from bailor in case of non

gratuitous bailment.

3.] To be indemnified against any loss or damages caused due to

defect in title of the bailor.



Right of Lien:

Right to sell the goods:

Right to return the goods to any of the joint bailor

TERMINATION OF A BAILMENT:

Unauthorized use of goods bailed.

Expiry of term bailment.

Accomplishment of purpose.

Death of either party.

Destruction of subject matter.



LIEN

IT REFERES TO THE RIGHT OF BAILEE TO RETAIN THE POSSESSION OF

BAILED GOODS TILL HE IS NOT PAID HIS DUES

TYPES OF LIENPARTICULAR LIEN: it is available only against the goods in

respect of which the bailee has rendered

any service.

GENERAL LIEN : It is the right to hold the goods for any

lawful dues.



PARTIES ENTITLED TO GENERAL

LIEN

Bankers

Attorney of high court

Wharfingers

Policy Broker



FINDERS OF LOST GOODSA person who finds an article belonging to another is called

the finder of lost goods. In the eyes of the law, the position

of a finder of lost goods is exactly that of bailee.

Duties and Rights of Finder of Lost Goods

1) To exercise reasonable care in preserving the goods found.2) To find the actual owner and restore the goods to him.

3) Not to make any personal use of the Goods found.

4) Not to mix the goods found with his own goods.

5) Not to set up any adverse title to the goods found. To Retain the goods.

To sue the owner for rewards

To sell the found goods



PLEDGEA pledge or pawn is a kind of bailment. It is the bailment of

moveable thing as security for the repayment of a debt or

performance of a promise.

Difference between Pledge and Bailment

Purpose: Pledge is for some specific purpose. While bailee use the

goods if the terms of bailment so provide.

Use of Goods: Pawnee has no right to make any use of the goodspledged. While the bailee uses the goods if the terms of bailment so

provide.



THE CONSUMER PROTECTION

ACT, 1986



IMPORTANT DEFINITIONS

COMPLAINANT:

a) A Consumer;

b) Any voluntary consumer association registered under section 25 of the

Companies Act, 1956 or under any other law for the law for the timebeing in force;

c) The Central Government or state Government;

d) One or more consumers where there are numerous consumers having

same interest;

e) In case of death of consumer, his heir or legal representative.



CONSUMER: means any person who:-

a) Buys any goods for a consideration which has been paid or promised or

partly paid and partly promised or under any system of deferred

payment and includes any user of such goods other than the personwho buys such goods for consideration paid or promised or partly paid

or partly promised, or under any system of deferred payment when

such use is made with the approval of such person, but does not

include a person who obtains such goods for resale or for commercial

purpose.b) Hires or avails of any services for a consideration which has been paid

or promised or partly paid and partly promised or under any system of

deferred payment, and includes any beneficiaries of such services other

than the person who hires or avails of the services for consideration

paid or promised, or partly paid and partly promised, or under any

system of deferred payment when such services are availed of with the

approval of the first mentioned person.



DEFECTS: means ay fault, imperfection or shortcoming in the

quality, quantity, potency, purity or standard which is required to

be maintained by or under any law for the time being in force or

under any contract, express or implied, or as is claimed by the

trader in any manner whatsoever in relation to any goods.

DEFICIENCY: means nay fault, imperfection, shortcoming or

inadequacy in the quality, nature, and manner of performancewhich is required to be maintained by or under any law for the

time being in force, or has been undertaken to be performed by

a person in pursuance of a contract or otherwise in relation to

any service.



OBJECTS OF CONSUMER PROTECTION COUNCIL

a) The right to be protected against the marketing of goods (and

services) which are hazardous to life and property;

b) The right to be informed about the quality, quantity, potency,

purity, standard and price of goods or services so as to protect

the consumer against unfair trade practice;

c) The right to be assured, wherever possible, access to a variety

of goods and services at competitive prices;

d) The right to be heard and to be assured that consumers

interest will receive due consideration at appropriate forums;e) The right to seek redressal against unfair trade practice or

restrictive trade practices or unscrupulous exploitation of

consumers; and

f) The right to consumer education.



ORGANISATIONAL SET UP

ADVISORY BODIES[Consumer Protection Council]

ADJUDICATIVE BODIES

[Consumer Disputes Redressal

Agencies ]

Central

Council

State

Council

District

Council

District

Forum

State

Commission

National

Commission



JURISDICTION

FORUM JURISDICTION

District Forum

Claim up to Rs. 20 lakhs;

Complainant resides within the local limits of

District Forum;

Opposite party resides or actually carry on businessor branch office;

Cause of action, wholly or in part, arises.

State Commission

Claim between Rs. 20 Lakhs to Rs. 1 Crore.

Appellate Jurisdiction;

Revisionary Power

National Commission

Claim above Rs. 1 Crore.

Appellate Jurisdiction;

Revisionary Power



PROCEDURE ON ADMISSION OF

COMPLAINT

Complainant files

complaint before

Consumer Forum

C. F. forward

complaint to

opposite party

within 21 days

Opposite party reply

within 15 days admit

the defect or allege

the defect

On denial of defects

by opposite party, C.

F. proceed to settle

the dispute

Take sample of goods

and submit them to

Specified Lab. For

analysis.

Lab. Test the sample

and gives its report.

Each Party receive

one copy of report

and place their

opinion before C . F.

C. F on hearing the parties and on

the basis of evidence & documents

presented, gives its decision.



FINDINGS OF CONSUMER

FORUMS To remove the defect pointed out by the appropriate laboratory from the

goods in question;

To replace the goods with new goods of similar description which shall be

free from any defects;To return to the complainant the price, or, as the case may be, the charges

paid by the complainants;

To pay such amounts as may be awarded by it as compensation to the

consumer for any loss or injury suffered by the consumer, due to the

negligence of the opposite party;To remove the defects in goods or deficiency in the services in question;

To discontinue the unfair trade practice or the restrictive trade practice or not

to repeat them;

Not to offer hazardous goods for sale;



To withdraw the hazardous goods from being offered for sale;

To cease manufacture of hazardous goods and to desist from offering services

which are hazardous in nature;

To pay such sum as may be determined by it if it is of the opinion that loss or

injury has been suffered by a large number of consumer who are not

identifiable conveniently;

To issue corrective advertisement to neutralize the effect of misleading

advertisement at the cost of the opposite party responsible for issuing suchmisleading advertisement;

To provide for adequate costs to parties.

LIMITATION PERIOD FOR MAKING COMPLAINT WITH CONSUMERFORUMS (2 YEARS).



COMPANIES ACT, 1956



DEFINITION: As per section 3 of Companies Act,1956, a company means a company formed and

registered under this act or an existing company .

A Company is an association of person come together to incorporate themselves

into Distinct Legal Entity to do some common business activities and to share

profit arises there from.

A company is an artificial person created by law, having separate entity , with a

perpetual succession and common seal.



SALIENT FEATURES OF COMPANY:

1) Independent Legal Entity;

2) Limited Liability;

3) Separate property;

4) Flexibility of Investment;

5) Capacity to sue and being sued;

6) Separation of ownership and management;

ILLEGAL ASSOCIATION:

In following cases, a Partnership Firm can be called Illegal Association

In case partnership firm carrying on banking business, having more than 10 partners;

In case partnership firm carrying any other business, having more than 20 partners.

In case any association carrying on business of chit fund.



TYPES OF COMPANY:

1] Private Company: A Company can be defined as private company if it meets

following conditions :

Restrict the number of its members to Fifty;

Restrict the transferability of its shares;

Prohibits any invitation to public to subscribe for any shares or

debentures; Prohibits any invitation or acceptance of deposits from persons other

than its members, directors or their relatives;

Have minimum paid up share capital of Rs. 1 lakhs.

2] Public Company: A company can be defined as public company if it meets the

following conditions: If it is not private Company;

It has minimum paid up capital of Rs. 5 lakhs;

It is private company if it is subsidiary of company which is not private

company.



7] Foreign Company: A company can be called Foreign Company if a company is

incorporated outside India and having established place of business in India.

8] Chapter IX Company: A company can be called as Chapter IX company if it isincorporated as per the provisions contained under Chapter IX of Companies

act, 1956, i.e. when a partnership firm converted into company.

CORPORATE VEIL:

LIFTING OF CORPROATE VEIL:



PROCEDURES FOR INCORPORATION OF COMPANY:

1. Applying for Director Identification Number.

2. Get the Digital Signature of any one Promoter.

3. Application for Name Availability.

4. Draft Memorandum and Articles of Association.

5. File Memorandum and Articles of Association and other documents on MCA

portal, www.mca.gov.in.

6. Certificate of Incorporation by ROC.

7. Certificate of Commencement of Business.

COMPANY MANAGEMENT



COMPANY MANAGEMENT:

DIRECTOR:

As per section 2(13) of the Companies Act, 1956, director including any personoccupying the position of director by whatever name called.

Who Can be a Director Any Individual.

Q ualification Shares (Section 270)

No Other criteria for appointment of director except as provided underSchedule XIII to the Act for appointment of Managing Director and section

274 & 283.

TYPES OF DIRECTOR:

Inside Director (In full time employment of company)

Outside Director (Not in full time employment of company)

Professional Director (Specialist in Some Field)

Nominee Director (director appointed by bIanks, FI, Etc.)

Independent Director (Clause 49 of Listing Agreement / Corporate

Governance).



Whole Time Director:

Managing Director: As per section 2 (26) of the act, a director who, by

virtue of an agreement with the company or of a resolution passed by the

company in general meeting or by its board of directors or by virtue of itsmemorandum or articles of association, is entrusted with substantial

powers of management which would not otherwise be exercisable by him

and includes a director occupying the position of a Managing Director, by

whatever name called.

LEGAL POSITION OF DIRECTOR:

Agent ;

Trustee.

APPOINTMENT OF DIRECTOR:

Appointment of First Director:

Appointment by the Company;

Re-appointment of Retiring Director;



Re appointment of Retiring Directors:

A retiring director will not be deemed to be re-appointed under any of

the following conditions.

A resolution for his re-appointment has been lost.

The director express his inability to continue as director.

He is not qualified for appointment (Section 274 & 283).

A specific resolution is required for appointment of that director.

Appointment by Board of Directors:

Additional Director (sec. 260);

Casual Director (Section 262);

Alternate Director (Section 313).

Appointment by the Central Government (section 408).

Appointment by Third Parties.

Appointment by proportional representation:



Minimum and Maximum Number of Directors:

Minimum: Private Company 2

Public Company 3

Maximum: No Limit, provided in case the maximum number of

director exceed 12, a company has to pass an ordinary resolution the

approval of central government must be taken.

Ceiling on Directorships:

An individual can not hold office of director in more than 15 companies

simultaneously. However in counting the number of companies, the

directorship in following companies should be excluded.

A private Company;

An unlimited Company;

Section 25 company;

A company in which he is only an alternate director.



MANAGING DIRECTOR:

Appointment of Managing Director:

Every public company having a paid up share capital of Rs. 5 Crore

or more must have a managing or whole time director (Section

269).

Mode of Appointment:

An agreement with the company; or

A resolution passed by company in general meeting;

A resolution passed by board of directors; or the memorandum and articles of association.



MANAGING DIRECTOR:

PROVISIONS RELATING TO APPROVAL OF CENTRAL GOVERNMENT

TO THE APPOINTMENT.:

The appointment of Managing Director or whole time director or manager requires

approval of central government unless the appointment is in accordance with the

conditions specified in schedule XIII of the Companies Act, 1956 and Form 25C is

filed within 30 days of appointment.

DISQUALIFICATION OF MANAGING DIRECTOR:

As per section 267, following persons can not be appointed as Managing Director:

is an undischarged insolvent or has at any time been adjudged insolvent;

suspends r has at any time suspended, payment to his creditors or makes, or has atany time made, a composition with them.

Is, or has at any time been, convicted by a court in India of an offence involving

moral turpitude;



MANAGER:

Manager as per section 2(24), means an individual who subject to the superintendence,

control and direction of the Board of directors, has the management of the whole, or substantially the whole, of the affairs of a company, and includes a director or any other

person occupying the position of a manager, by whatever name called, and whether

under a contract of service or not.

WHO CAN BE MANAGER?

As per section 384, following persons can not be appointed as Managing Director:

is an undischarged insolvent or has at any time within the preceding five years,

been adjudged insolvent;

suspends or has at any time within the preceding five years suspended, payment tohis creditors or makes, or has at any time made, a composition with them.

Is, or has at any time been within the preceding five years, convicted by a court in

India of an offence involving moral turpitude;



MANAGERIAL REMINERATION

Managerial Remuneration refers to the remuneration payable to the Managerial Personnel

of a company , who generally comprise a managing director, directors and a statutorymanager, if any.

PRIVATE LIMITEDCOMPANY:

Companies Act, 1956 does not restrict, limit private limited company from

payment of remuneration to its managerial personnel.

PUBLIC LIMITEDCOMPANY:

Section 198, 309 and Schedule XIII to the Companies Act, 1956 restrict /limit

public limited company from payment of managerial remuneration to its

managerial personnel.FORM OF MANAGERIAL REMUNERATION:

Managerial Remuneration may take the form of salary, dearness allowance, perquisites,

fees for attending each meeting of the board or any committee thereof, commission,

allowance, sharing in profit of company or partly by one way and partly by other.




PROVISIONS OF COMPANIES ACT GOVERNING THE MANAGERIAL

REMUNERATION:

Section 198 : Overall maximum managerial remuneration;

Section 309 : Remuneration to Professional Director, Sitting Fees, Remuneration

to non executive director;

Schedule XIII : Remuneration to managerial personnel in case of inadequacy of

profit.

SECTION 198 : OVERALLMAXIMUM MANAGERIAL REMUNERATION:

For Single Managerial Personnel: 5 % of net profit of company calculated as per

provisions of section 349 and 350 of the companies act, 1956.

For more than one Managerial Personnel: 10 % of net profit of company calculated as

per provisions of section 349 and 350 of the companies act, 1956.

Overall Limit: 11 % of the net profit of company calculated as per provisions of section

349 and 350 of the companies act, 1956.




SECTION 309 : REMUNERATION TO PROFESSIONAL DIRECTOR, SITTING

FEES, REMUNERATION TO NON EXECUTIVED

IRECTOR:

Remuneration to Director having professional qualification:

In case any director of company holds any professional qualification, then the company can

pay remuneration to such director without any limitation / restriction as prescribed under

section 198 of the companies act, 1956 provided the central government is of the opinion

that the director holds professional qualification.

Sitting Fees:

The payment of sitting fees to the directors of company is not considered for the purpose of

calculating the limit prescribed under section 198 of the companies act, 1956.

A company can pay sitting fees to its director to the such amount as prescribed under its

Articles of Association of Company provided the such amount in no case can exceed Rs.

20,000.




SECTION 309 : REMUNERATION TO PROFESSIONAL DIRECTOR, SITTING

FEES, REMUNERATION TO NON EXECUTIVED

IRECTOR:

Remuneration to Non Executive Director of Company:

A company may pay remuneration to its non executive director in any form subject to the following.

In case company pays remuneration to its NED by way of monthly / quarterly / annual payment, prior

approval of the central government should be taken.

The remuneration paid to such director, or where there is mote than one such director, to all of them

together, shall not exceed : -

One Percent of the net profit of the company, if the company has a managing or whole-time director or

a manager;

Three percent of the net profit of the company, in any other cases.

REFUND OF EXCESS REMUNERATION: If any director earns remuneration from a company in excess

of the stipulated limit without prior approval of the Central Government, he shall refund the excess to the

company and until such payment, holds the money in trust with him.



POWERS OR RIGHTS OFDIRECTORS

1] GENERALPOW

ERS (Section 291):

The Board of Directors of a company shall be entitled to exercise all such powers and do all

such acts and things, as the company is authorized to exercise and do.

2] POWERS TO BE EXERCISEDAT BOAR MEETING (Section 292):

To make call

To buy back shares

To borrow monies otherwise than on debentures;

To invest funds of company;

To make loans.



DUTIES & OBLIGATIONS OFDIRECTORS

1] STATUTORYD

UTIES:

Under the Companies Act, 1956;

Under the Income Tax Act, 1961;

Under the State Laws;

Under other acts.

2] OTHER DUTIES:

Duty of good faith;

Duty of care;

Duty not to delegate.



LIABILITIES OFDIRECTORS

1] Liability to the Company;

2] Liability to the third Parties;

3] Liability for breach of statutory duties;

4] Criminal Liabilites.



COMPANY MEETING

1] Meeting of Members:

Statutory Meeting;

Annual General Meeting;

Extra Ordinary General Meeting;

Class Meeting.

2] Board Meeting:

3] Other Meeting:

Meeting of Debenture Holder; Meeting of Creditors.



WINDING UP OF COMPANY

Winding Up is the process of bringing to an end the legal personality of company as corporate body.

MEANING OFWINDING UP :

Process of putting an end to the life of company;

In the course of winding up, assets are collected and debts are paid off;

Winding up is the prior stage and dissolution if the next step.




MODES OF WINDING UP [Sec. 433]:

A High Court may order for winding up in the following cases:

S pecial Resolution passed by shareholders of company;

Default in filing statutory report or holding statutory meeting ; Failure to commence business within time prescribed u/s. 433 (c);

Reduction of membership;

Inability to pay debts;

Just and equitable.




PERSONS ELIGIBLE TO FILE PETITION:

The Company;

The Creditors of Company;

Contributories;

All or any of the parties jointly together or separately; The Registrar of Companies;

Any person authorized by Central Government u/s. 243.




OFFICIAL LIQUIDATOR:

Only an Individual can be appointed as Liquidator;

There shall be attached to every high court an offical liquidator appointed by

the Central Government;

Statement of affairs to be prepared by BOD and handover to the OL , thestatement of affairs should contain the following and verified by an affidavit:

Assets of Company;

Debts and Liabilities;

Names, residencies and occupancies of creditors;

Debts due to the company and details of persons entitles to such debts;

Further information as prescribed or as required by OL.




DUTIES OF OFFICIAL LIQUIDATOR:

To submit preliminary report;

To takeover assets of company;

To convene an meeting of creditors and contributories;

To keep books of account;

To submit accounts;

To submit information in pending liquidation.




POWERS OF OFFICIAL LIQUIDATOR:

To be exercises by sanction of court:

Institute and defend suits, prosecution in the name and on behalf of the

company;

Carry on the business for beneficial winding up; Sell property of company;

Raise money on security of the company;

Do all other acts necessary to wind up and to distribute assets.

To be exercise without the sanction of the court:

Do all acts & execute in the name of company all deeds, receipts anddocuments;

Inspect records & returns on the files of the registrar;

Do all other necessary acts.

PROCEDURE FOR VOLUNTARY WINDING UP OF COMPANY



PROCEDURE FOR VOLUNTARY WINDING UP OF COMPANY

Declaration of Solvency is made and file with the ROC;

Company shall appoint Liquidator for the purpose of winding up affairs of company; On appointment of liquidator, all powers of BOD ceases and vested with the

liquidator;

Company to give notice of appointment of liquidator to the ROC;

Liquidator has to start winding up procedure and also to obtain necessary approvals;

In case the winding up continues for more than on year, general meeting of company

should be convened and placed thereat accounts of his all dealings, acts and conduct of

winding up.

As soon as the affairs of company are fully wound up, the liquidator has to make an

accounts of the winding up and required to summon general meeting. Within a week of

holding meeting, the liquidator must send to the Registrar and the OL a copy of the

account; The Registrar shall register the accounts. While the OL, based on the accounts and

returns received from the liquidator, scrutinize them, prepare a report and submit the

same to the high court;

On receiving report and on further investigation, the high court make an order.

PROCEDURE FOR COMPUSORY WINDING UP



PROCEDURE FOR COMPUSORY WINDING UP

Where a declaration of solvency is not filed, it become winding up by creditor.

The meeting of creditor has to be convened. At the meeting, statement of affairs

of company, name of each creditor should be present before the meeting;

The Creditor may appoint Committee of inspection.

DIFFERENCE BETWEEN VOLUNTARY AND COMPULSORY



DIFFERENCE BETWEEN VOLUNTARY AND COMPULSORY

WIND UP OF COMPAMY

VOLUNTARY WIND UP COMPULSORY WIND UP

It is possible in case of solvent company. It is assumed that company is insolvent.

Member appoint liquidator.

In case members and creditors nominate

difference liquidator, then liquidator

nominated by creditor shall be appointed.

No provision for Committee of inspection Creditors may appoint committee of inspection.

Only meeting of member is necessary.Meeting of both member and creditors is

necessary.

Mba Iii_t n Rao_lab

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