Guideline Answers

GUIDELINE ANSWERS EXECUTIVE PROGRAMME (New Syllabus) DECEMBER 2020 MODULE 1 ICSI House, 22, Institutional Area, Lodi Road, New Delhi 110 003 Phones : 41504444, 45341000; Fax : 011-24626727 E-mail : [email protected]; Website : www.icsi.edu These answers have been written by competent persons and the Institute hope that the GUIDELINE ANSWERS will assist the students in preparing for the Institute's examinations. It is, however, to be noted that the answers are to be treated as model answers and not as exhaustive and the Institute is not in any way responsible for the correctness or otherwise of the answers compiled and published herein. The Guideline Answers contain the information based on the Laws/Rules applicable at the time of preparation. However, students are expected to be well versed with the amendments in the Laws/Rules made upto six months prior to the date of examination. C O N T E N T S Page MODULE 1 1. Jurisprudence, Interpretation & General Laws ... 1 2. Company Law ... 17 3. Setting up of Business Entities and Closure ... 39 4. Tax Laws ... 59 1 EP–JI&GL–December 2020 EXECUTIVE PROGRAMME EXAMINATION DECEMBER 2020 JURISPRUDENCE, INTERPRETATION & GENERAL LAWS Time allowed : 3 hours Maximum marks : 100 NOTE : Answer ALL Questions. Question 1 (a) ‘Justice, Equity and Good Conscience’ is the main Secondary Source of Indian Law. Explain it. (b) Discuss the ‘Doctrine of Eclipse’ under the Constitution of India. (c) Section 41 of the Criminal Procedure Code, 1973 enumerates the different categories of cases in which a police officer may arrest a person without an order from a Magistrate and without a warrant. Explain any five Categories of such cases. (d) Explain the ‘Purposive Rule’ of Interpretation, under the General Clauses Act, 1897. (5 marks each) Answer 1(a) The concept of “justice, equity and good conscience” was introduced by Impey’s Regulations of 1781. In personal law disputes, the courts are required to apply the personal law of the defendant if the point at issue is not covered by any statute or custom. In the absence of any rule of a statutory law or custom or personal law, the Indian courts apply to the decision of a case what is known as “justice, equity and good conscience”, which may mean the rules of English Law in so far as they are applicable to Indian society and circumstances. The Ancient Hindu Law had its own versions of the doctrine of justice, equity and good conscience. In its modern version, justice, equity and good conscience as a source of law, owes its origin to the beginning of the British administration of justice in India. The Charters of the several High Courts established by the British Government directed that when the law was silent on a matter, they should decide the cases in accordance with justice, equity and good conscience. Justice, equity and good conscience have been generally interpreted to mean rules of English law on an analogous matter as modified to suit the Indian conditions and circumstances. The Supreme Court has stated that it is now well established that in the absence of any rule of Hindu Law, the courts have authority to decide cases on the principles of justice, equity and good conscience unless in doing so the decision would be repugnant to, or inconsistent with, any doctrine or theory of Hindu Law. Answer 1(b) According to Article 13 of the Constitution of India an existing law inconsistent with a fundamental right became in-operative from the date of the commencement of the 1 EP–JI&GL–December 2020 2 Constitution, yet it is not dead altogether. A law made before the commencement of the Constitution remains eclipsed or dormant to the extent it comes under the shadow of the fundamental rights, i.e. is inconsistent with it, but the eclipsed or dormant parts become active and effective again if the prohibition brought about by the fundamental rights is removed by the amendment of the Constitution. This is known as the doctrine of eclipse. The doctrine was first evolved in Bhikaji Narain Dhakras v. State of M.P., A.I.R. 1955 S.C. 781. In this case, the validity of C.P. and Berar Motor Vehicles Amendment Act, 1947, empowering the Government to regulate, control and to take up the entire motor transport business was challenged. The Act was perfectly a valid piece of legislation at the time of its enactment. But on the commencement of the Constitution, the existing law became inconsistent under Article 13(1), as it contravened the freedom to carry on trade and business under Article 19(1)(g). To remove the infirmity the Constitution (First Amendment) Act, 1951 was passed which permitted creation by law of State monopoly in respect of motor transport business. The Court held that the Article by reason of its language could not be read as having obliterated the entire operation of the inconsistent law or having wiped it altogether from the statute book. In case of a pre-Constitution law or statute, it was held, that the doctrine of eclipse would apply. The relevant part of the judgement is: “The true position is that the impugned law became as it were, eclipsed, for the time being, by the fundamental right. The effect of the Constitution (First Amendment) Act, 1951 was to remove the shadow and to make the impugned Act free from all blemish or infirmity.” Answer 1(c) Section 41 of the Criminal Procedure Code 1973, enumerates different categories of cases in which a police officer may arrest a person without an order from a Magistrate and without a warrant. Any police officer may without an order from a Magistrate and without a warrant, arrest any person– (a) who commits, in the presence of a police officer, a cognizable offence; (b) against whom a reasonable complaint has been made, or credible information has been received, or a reasonable suspicion exists that he has committed a cognizable offence punishable with imprisonment for a term which may be less than seven years or which may extend to seven years whether with or without fine, if the following conditions are satisfied, namely:– (i) the police officer has reason to believe on the basis of such complaint, information, or suspicion that such person has committed the said offence; (ii) the police officer is satisfied that such arrest is necessary– a. to prevent such person from committing any further offence; or b. for proper investigation of the offence; or c. to prevent such person from causing the evidence of the offence to disappear or tampering with such evidence in any manner; or d. to prevent such person from making any inducement, threat or promise to any person acquainted with the facts of the case so as to dissuade him from disclosing such facts to the Court or to the police officer; or 3 EP–JI&GL–December 2020 e. as unless such person is arrested, his presence in the Court whenever required cannot be ensured, and the police officer shall record while making such arrest, his reasons in writing: Provided that a police officer shall, in all cases where the arrest of a person is not required under the provisions of this sub-section, record the reasons in writing for not making the arrest. (ba) against whom credible information has been received that he has committed a cognizable offence punishable with imprisonment for a term which may extend to more than seven years whether with or without fine or with death sentence and the police officer has reason to believe on the basis of that information that such person has committed the said offence; (c) who has been proclaimed as an offender either under this Code or by order of the State Government; or (d) in whose possession anything is found which may reasonably be suspected to be stolen property and who may reasonably be suspected of having committed an offence with reference to such thing; or (e) who obstructs a police officer while in the execution of his duty, or who has escaped, or attempts to escape, from lawful custody; or (f) who is reasonably suspected of being a deserter from any of the Armed Forces of the Union; or (g) who has been concerned in, or against whom a reasonable complaint has been made, or credible information has been received, or a reasonable suspicion exists, of his having been concerned in, any act committed at any place out of India which, if committed in India, would have been punishable as an offence, and for which he is, under any law relating to extradition, or otherwise, liable to be apprehended or detained in custody in India; or (h) who being a released convict, commits a breach of any rule made under sub- section (5) of section 356; or (i) for whose arrest any requisition, whether written or oral, has been received from another police officer, provided that the requisition specifies the person to be arrested and the offence or other causes for which the arrest is to be made and it appears therefrom that the person might lawfully be arrested without a warrant by the officer who issues the requisition. Answer 1(d) In Halsbury’s Laws of England, it is stated: Parliament intends that an enactment shall remedy a particular mischief and it is therefore presumed that Parliament intends that the court, when considering, in relation to the facts of the instant case, which of the opposing constructions of the enactment corresponds to its legal meaning, should find a construction which applies the remedy provided by it in such a way as to suppress that mischief.

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