Overview of Indian Banking Regulation and RBI Control Measures

The Indian banking sector is regulated by the Reserve Bank of India Act 1934 (RBI Act) and the Banking Regulation Act 1949 (BR Act). The Reserve Bank of India (RBI), India’s central bank, issues various guidelines, notifications and policies from time to time to regulate the banking sector. In addition, the Foreign Exchange Management Act 1999 (FEMA) regulates cross-border exchange transactions by Indian entities, including banks. Bank regulation is a complex process and generally consists of two components: licensing and supervision. Licensing sets certain requirements for starting a new bank while supervision ensures that the functioning of the bank complies with the regulatory guidelines and monitors for possible deviations from regulatory standards.  

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Session 21
RBI and Banking Regulation Act
The Indian banking sector is regulated by the Reserve Bank of India Act 1934 (RBI Act) and
the Banking Regulation Act 1949 (BR Act). The Reserve Bank of India (RBI), India’s central
bank, issues various guidelines, notifications and policies from time to time to regulate the
banking sector. In addition, the Foreign Exchange Management Act 1999 (FEMA) regulates
cross-border exchange transactions by Indian entities, including banks.
India has both private sector banks (which include branches and subsidiaries of foreign banks)
and public-sector banks (ie, banks in which the government directly or indirectly holds
ownership interest). Banks in India can primarily be classified as:
 scheduled commercial banks (ie, commercial banks performing all banking functions);
 cooperative banks (set up by cooperative societies for providing financing to small
borrowers); and
 regional rural banks (RRBs) (for providing credit to rural and agricultural areas)
 Recently, the RBI has also introduced specialised banks such as payments banks and small
finance banks that perform only some banking functions.
The objectives of bank regulation, and the emphasis, vary between jurisdictions. The most
common objectives are:
 Prudential - to reduce the level of risk to which bank creditors are exposed (i.e. to protect
depositors)
 Systemic risk reduction - to reduce the risk of disruption resulting from adverse trading
conditions for banks causing multiple or major bank failures
 To avoid misuse of banks - to reduce the risk of banks being used for criminal purposes,
e.g. laundering the proceeds of crime
 To protect banking confidentiality
 Credit allocation - to direct credit to favoured sectors
 It may also include rules about treating customers fairly and having corporate social
responsibility.
Bank regulation is a complex process and generally consists of two components:
 licensing, and
 supervision.
The first component, licensing, sets certain requirements for starting a new bank. Licensing
provides the licence holders the right to own and to operate a bank. Licensing involves an

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evaluation of the entity's intent and the ability to meet the regulatory guidelines governing the
bank's operations, financial soundness, and managerial actions. The regulator supervises
licensed banks for compliance with the requirements and responds to breaches of the
requirements by obtaining undertakings, giving directions, imposing penalties or (ultimately)
revoking the bank's license.
The second component, namely, supervision, is an extension of the licence-granting process
and consists of supervision of the bank's activities by a government regulatory body i e The
RBI. Supervision ensures that the functioning of the bank complies with the regulatory
guidelines and monitors for possible deviations from regulatory standards. Supervisory
activities involve on-site inspection of the bank's records, operations and processes or
evaluation of the reports submitted by the bank.
Actions by RBI to control functioning of Banks:
Credit control measures by RBI
Minimum requirements: A national bank regulator imposes requirements on banks in order
to promote the objectives of the regulator. Often, these requirements are closely tied to the level
of risk exposure for a certain sector of the bank. The most important minimum requirement in
banking regulation is maintaining minimum capital ratios, Reserve Requirements,
Market discipline: The regulator requires banks to publicly disclose financial and other
information and depositors and other creditors are able to use this information to assess the
level of risk and to make investment decisions. As a result of this, the bank is subject to market
discipline and the regulator can also use market pricing information as an indicator of the bank's
financial health.
Quantitative credit control
1. Reserve ratios CRR
/ SLR
2. Open Market Operations.
3. Repo and Reserve Repo Rate, LAF,
MSF, Bank rate
Qualitative credit control
1. Margin Requirement,
LTV requirements
2. Consumer credit
requirement
3. Credit rationing
4. Moral suation

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Corporate governance: Corporate governance requirements are intended to encourage the
bank to be well managed, and is an indirect way of achieving other objectives. As many banks
are relatively large, and with many divisions, it is important for management to maintain a
close watch on all operations. I
Financial reporting and disclosure requirements: Among the most important regulations
that are placed on banking institutions is the requirement for disclosure of the bank's finances
Credit rating requirement: Banks may be required to obtain and maintain a current credit
rating from an approved credit rating agency, and to disclose it to investors and prospective
investors. Also, banks may be required to maintain a minimum credit rating.
Further to the above:
 The RBI conducts periodic audits and also acts as a consumer disputes ombudsman for
retail banking.
 RBI also supervises the Indian banking system through various methods such as on-site
inspection, surveillance and reviewing regulatory filings made by the banks.
 The RBI also monitors compliance on an ongoing basis by requiring banks to submit
detailed information periodically under an off-site surveillance and monitoring system.
 The RBI can conduct compulsory amalgamations:
 in the public interest;
 in the interests of depositors of a bank;
 to secure proper management of a bank; or
 in the larger interests of the banking system.
 In addition, the RBI has wide powers in appropriate cases to:
 require banks to make changes in their management as the RBI considers necessary;
 remove any chairman, director, chief executive officer or other employee of a bank;
 appoint additional directors to the board of directors of a bank; and
 supersede the board of directors of a bank for a maximum period of 12 months and
instead appoint an administrator.
 The RBI has the power of winding-up of a banking company. An order for the winding-up
of a banking company can be passed by a High Court:
 if it is unable to pay its debts;
 if an application has been made by the RBI; or
 on request of the GOI.

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Session 22
Insurance Laws and IRDA
The word insurance means an arrangement for protection against any likely loss or damage.
Insurance contracts are based on the contingency of an event which causes a loss. Such
contracts are legal agreements which are entered into between two parties wherein, the
company promises to make good the loss as and when it occurs, in return for a regular premium
to be paid by the party.
In India, several insurance laws have been enacted to save the interest of the various
policyholders. Health insurance, fire insurance, car insurance, marine insurance, life insurance,
etc are few examples of the insurance available in India.
There are two main categories of Insurance:
1. Life insurance - Life Insurance is a legal agreement wherein financial compensation is
provided in cases of death or disability. It can be availed by paying lumpsum amount or by
making periodic instalments so as to save the vested interest of your family in your absence.
The periodic instalments are termed as premium.
Depending upon its coverage:
Life insurance can be further classified into either whole life insurance, endowment policy,
life term etc.
2. General insurance- General insurance provides protection from any loss other than life
insurance.
It includes:
 Travel insurance
 Health insurance
 Home insurance
 Motor insurance
 Fire insurance
To regulate the insurance sector, several regulatory authorities have been formed:
 IRDA (Insurance Regulatory and Development Authority)
 Tariff Advisory Committee
 Insurance Association of India, councils and committees
 Ombudsman

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Every insurer seeking to carry on the insurance business in India is required to obtain the
certificate of registration from the IRDA prior to commencement of business. However,
conditions for applying have been envisaged in various Acts.
The Acts relating to general insurance business in India are:
I. Insurance Act 1938
II. Marine Insurance Act 1963
III. Motor Vehicles Act, 1939
IV. Motor Vehicles Act, 1988
V. Inland Steam Vessels Act, 1917
VI. General Insurance Business (Nationalisation) Act,1972
VII. Carriers Act,1865, etc
The Indian Government however after several years, implemented the changes recommended
by the Malhotra Committee and made changes in insurance act,1938 and General insurance
business act,1972.
IRDA- Insurance Regulatory and Development Authority: It is a regulatory body which
regulates and the general insurance and life insurance in India.
IRDA functions and ensures:
 To protect the interest of policyholders in all insurance contracts. It ensures smooth and
systematic transactions between the policy holders and the insurance companies. The
authority governs the conduct of the various insurance businesses.
 IRDA clarifies the code of conduct for all insurance companies, surveyors, and loss
assessors. It ensures that companies do not ignore the requests of the general public. It
ensures that no misdeed happen and for this it regulates through regular audits investigation
into the working of all the insurance companies or intermediaries. It regulates the rates and
terms offered by the insurance companies to bring equality for the customers.
 In cases of any dispute between the insurer and the policyholder, IRDA will ensure a
resolution.
Functions of IRDA:
1. Protecting interest of policyholders
2. Systematic growth of insurance sector
3. Amicable resolution of conflicts.

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4. Regular monitoring so as to check any discrepancies /frauds etc.
5. Fair dealings in the market.
For the systematic growth of the economy, it is imperative that government should establish
authorities who govern the working of the companies, ex- insurance companies. An
investor must be protected from any fraudulent activities and his money must be utilised
and put to judicious use. Like Banking sector, is governed by RBI and the later regulates
the entire functioning of the banks, similarly, IRDA regulates all insurance companies
managing different insurance operations.

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Session 23
SEBI as a regulator:
Securities and Exchange Board of India (SEBI) is a statutory regulatory body entrusted with
the responsibility to regulate the Indian capital markets. It monitors and regulates the securities
market and protects the interests of the investors by enforcing certain rules and regulations.
The SEBI is the regulatory authority in India established under Section 3 of SEBI Act to protect
the interests of the investors in securities and to promote the development of, and to regulate,
the securities market and for matters connected therewith and incidental thereto. Main
objectives of SEBI are as follows:
 Protecting the interests of investors in securities and promoting and regulating the
development of the securities market
 Regulating the business in stock exchanges
 Registering and regulating the working of stock brokers, sub–brokers, share transfer agent
etc.
 Registering and regulating the working of venture capital funds, collective investment
schemes (like mutual funds) etc
 Promoting investor’s education and training intermediaries
 Promoting and regulating self-regulatory organizations
 Prohibiting fraudulent and unfair trade practices
 Calling for information from, undertaking inspection, conducting inquiries and audits of
the stock exchanges, intermediaries, self – regulatory organizations, mutual funds and other
persons associated with the securities market
SEBI, just like any corporate firm has a hierarchical structure and consists of numerous
departments headed by their respective heads. Following is a list of some of the departments:
 Foreign Portfolio Investors and Custodians
 Human Resources Department
 Information Technology
 Investment Management Department
 Office of International Affairs
 Commodity and Derivative Market Regulation Department
 National Institute of Securities Market

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The functions and powers of SEBI have been listed in the SEBI Act,1992. SEBI caters to the
needs of three parties operating in the Indian Capital Market. These three participants are
mentioned below:
 Issuers of the Securities: Companies that issue securities are listed on the stock
exchange. They issue shares to raise funds. SEBI ensures that the issuance of Initial
Public Offerings (IPOs) and Follow-up Public Offers (FPOs) can take place in a healthy
and transparent way.
 Protects the Interests of Traders & Investors: It is a fact that the capital markets are
functioning just because the traders exist. SEBI is responsible for safeguarding their
interests and ensuring that the investors do not become victims of any stock market
fraud or manipulation.
 Financial Intermediaries: SEBI acts as a mediator in the stock market to ensure that
all the market transactions take place in a secure and smooth manner. It monitors every
activity of the financial intermediaries, such as broker, sub-broker, NBFCs, etc
Securities and Exchange Board of India has the following three powers:
 Quasi-Judicial: With this authority, SEBI can conduct hearings and pass ruling
judgements in cases of unethical and fraudulent trade practices. This ensures
transparency, fairness, accountability and reliability in the capital market. SEBI PACL
case is an example of this power.
 Quasi-Legislative: Powers under this segment allow SEBI to draft rules and
regulations for the protection of the interests of the investor. One such regulation is
SEBI LODR (Listing Obligation and Disclosure Requirements). It aims at
consolidating and streamlining the provisions of existing listing agreements for several
segments of the financial market like equity shares. This type of regulation formulated
by SEBI aims to keep any malpractice and fraudulent trading activates at bay.
 Quasi-Executive: SEBI is authorised to file a case against anyone who violates its rules
and regulation. It is empowered to inspect account books and other documents as well
if it finds traces of any suspicious activity

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Session 24
Environment laws
Government has been introducing various measure so as to preserve the environment. Various
environmental laws have been introduced to restore our natural resources and at the same time
and maintain a sustainable system with regard to the same. The ever-emerging growth of
consumerism has led to major environment issues. However, with the application of various
legislations, the govt is trying to strike a balance in the eco system. Companies have been given
moral, ethical and social responsibility to maintain the purity of the ecosystem and hence save
the environment. The Constitution of our country also contains special provisions on
environment protection. Directive principles and the fundamental duties expressly provide
measures to protect the environment.
However, there is a need for an integrated strategy at the national level, international
cooperation and plan for sustainable development for bringing out radical positive environment
change.
The various environment laws introduced in India are:
 The Environmental Protection Act 1986
 The Air (Prevention and Control of Pollution) Act 1981
 The Water (Prevention and Control of Pollution) Act 1974
 The Water (Prevention and Control of Pollution) Act 1977
 The Wild Life (Protection) Act, 1972
 The Public Liability Insurance Act, 1991
 The National Environmental Tribunal Act, 1995
 The National Environmental Appellate Authority Act, 1997
 The Mines and Minerals (Regulation and Development) Act, 1957
 The Indian Forest Act of 1927
 The Forest (Conservation) Act of 1980
 The Atomic Energy Act of 1948
 The National Green Tribunal Act-2010
National Environment Policy, 2006
 It the first initiative in strategy-formulation for environmental protection in a
comprehensive manner.
 It undertakes a diagnosis of the causative factors of land degradation with a view to flagging
the remedial measures required in this direction.

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 It recognizes that the relevant fiscal, tariffs and sectoral policies need to take explicit
account of their unintentional impacts on land degradation.
 The solutions offered to tackle the problem comprise adoption of both, science-based and
traditional land-use practices, pilot-scale demonstrations, large scale dissemination,
adoption of Multi-stakeholder partnerships, promotion of agro-forestry, organic farming,
environmentally sustainable cropping patterns and adoption of efficient irrigation
techniques
As the right to pure environment is an implied right, hence any violation of this fundamental
right, can be pleaded by filling a writ petition to the Supreme Court under Art.32 and the High
Court under Art.226.
The writs of Mandamus, Certiorari and Prohibition can be invoked for such environmental
matters. A writ of mandamus would lie against a municipality which fails to construct sewers
and drains, clean street and clear garbage.
Supreme Court by virtue of various judgments for example: Oleum gas leak case, Bhopal Gas
Leak case etc has laid the rule of absolute liability and following these judgments, even The
Public Liability Insurance Act was passed, following by many other legislations.
Though the Indian Judiciary has done remarkable contribution by enacting various
environment laws but still the responsibility is on each individual to preserve the natural
resources.

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Session 25
Property Law
Property has a wide meaning in its legal sense. It means something of value and includes both
tangible and intangible assets. When a man owns a property, it means he can not only possess
and enjoy the same with an absolute right but can also derive benefit from it without violating
the law of land.
The traditional principles related to property rights include:
1. Control over the use of the property
2. Right to take any benefit from the property
3. Right to transfer or sell the property
4. Right to exclude others from the property
All properties are classified as either personal property or real property. Personal property is
movable property, anything that can be subject to ownership, except land. Real property on
the other hand, is immovable property such as land and anything attached to the land.
Though the Transfer of Property Act, 1882 does not define the term ‘Property’ the
Interpretation of the Act, says Immovable property does not includes standing timber, growing
crops or grass". Section 3(26), The General Clauses Act, 1897, defines, " immovable property"
shall include land, benefits to arise out of the land, and things attached to the earth, or
permanently fastened to anything attached to the earth.
"Immovable property" includes land, buildings, hereditary allowances, rights to ways, lights,
ferries, fisheries or any other benefit to arise out of the land, and things attached to the earth or
permanently fastened to anything which is attached to the earth, but not standing timber,
growing crops nor grass.
Under THE Securitisation And Reconstruction Of Financial
Assets And Enforcement Of Security Interest Act, 2002 "property" means--
(i) immovable property;
(ii) movable property;
(iii) any debt or any right to receive payment of money, whether secured or unsecured;
(iv) receivables, whether existing or future;
(v) intangible assets, being know-how, patent, copyright, trade mark, license, franchise or any
other business or commercial right of similar nature.

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Movable Property
The definition of movable property is given differently under various Statutes. Some of the
definitions are as follows:
Section 3(36) of the General Clauses Act defines Movable Property as: “Movable Property
shall mean property of every description, except immovable property”.
Section 2(9) of the Registration Act, 1908 defines property as: “Moveable property’ includes
standing timber, growing crops and grass, fruit upon and juice in trees, and property of every
other description except immovable property”.
Section 22 of IPC defines property as - The words ‘Moveable property” is intended to include
corporeal property of every description except land and things attached to the earth. Things
attached to the land may become moveable property by severance from the Earth.
Tangible Property
Tangible Property refers to any type of property that can generally be moved (i.e., it is not
attached to real property or land), touched or felt.
Intangible Property
Intangible Property refers to personal property that cannot actually be moved, touched or felt
but instead represents something of value such as negotiable instruments, securities, service
(economics), and intangible assets.
Intellectual Property
Intellectual Property is a term referring to a number of distinct types of creations of the mind
for which property rights are recognized.
Under intellectual property law, owners are granted certain exclusive rights to a variety of
intangible assets, such as musical, literary and artistic works, discoveries and inventions; and
words, phrases, symbols and designs. Patents, trademarks, and copyrights, designs are the four
main categories of intellectual property.

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Session 26
Hypothecation & Pledge
The term” Hypothecation” is not defined under the Indian contract Act, 1872, however, section
2(n) of Securitization and reconstruction of Financial assets & Enforcement of Securities
Interest Act, 2002 defines hypothecation as:
“’Hypothecation’ means a charge in or upon any moveable property, existing in future, created
by borrower in favour of a secured creditor, without delivery of possession of the moveable
property to such creditor, as a security for financial assistance and includes floating charge and
crystallization of such charge into fixed charge on moveable property”.
It means that the borrower, even after hypothecating the property with the lender/ creditor has
the possession of the said property and no beneficial interest is created in favour of the creditor.
Under a deed of hypothecation, the right of the creditor is limited to enforcing the charge
created under the deed of hypothecation in the manner specified in the deed. Hence under a
deed of hypothecation the creditor neither gets the title nor the possession of the goods or asset
so hypothecated. It merely means creating a charge over the asset in favour of the creditor.
Hypothecation is also defined as: “where property is charged with the amount of a debt, but
neither ownership nor possession is passed to the creditor, it is said to be hypothecated”.
Hence a deed of hypothecation signifies:
• Offering of an asset as collateral security to the lender or the creditor.
• While a charge is created in favour of the creditor, the borrower enjoys the possession
of the property so hypothecated.
• However, if the borrower defaults in repayment the lender can exercise his ownership
rights to seize the asset.
• Assets are of moveable nature.
• Purpose of a deed of hypothecation is to mitigate the creditor’s credit risk.
Pledge
Bailment of goods as security for payment of a debt or performance of a promise is called
pledge. It is a special kind of bailment. The bailor in this case is called the pledgor or pawnor
and the bailee is called the pledgee or pawnee. Any kind of moveable property may be pledged
but delivery of the said property is necessary to complete ‘Pledge’. The delivery may be actual
or constructive. If for some reason physical delivery is not possible, a symbolic delivery will
suffice.

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Difference between Hypothecation and Pledge:
1. In pledge the creditor takes actual possession of the assets. While in hypothecation a
charge is created against the security of moveable assets
2. In a pledge the pledgee retains the possession of the goods until the pledgor repays the
entire debt amount. In case of hypothecation the possession of the security remains with
the borrower itself.
3. Where the borrower defaults in repayment of the loan amount the pledgee has a right
to sell the goods in his possession and adjust the proceeds towards the amount due.
However in case of hypothecation the lender has to first take the possession of the asset
and then sell it.

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Session 27
Real Estate (Development & Regulation) Act, 2016
Enhancing transparency and accountability in real estate & housing transactions: -
Real estate sector is important for fulfilling the need for housing and infrastructure in the
country. Unfortunately, there is very less transparency and accountability in this sector. In view
of the above, the Parliament enacted the Real Estate (Regulation and Development) Act, 2016
which aims at protecting the rights and interests of consumers and promoters and establish
uniformity and standardization of business practices and transactions. Hence the interests of
consumers as well as the promoters are balanced by imposing certain responsibilities on both.
Boost domestic and foreign investment in real estate sector: -
The Indian urban population is increasing rapidly and is expected to be about 600 million in
2031. It has also been estimated that real estate contribution to India’s GDP is estimated to
increase to about 13 per cent by 2028. Increasing share of real estate in the GDP would be
supported by increasing industrial activity, improving income level, and urbanization. There is
an effort from the realtors and property analysts for the creation of "Special Residential Zones"
(SRZs), along the lines of SEZs. Hence FDI in real estate sector gains prominence. As per
the Department of Industrial Policy and Promotion (DIPP) which has been renamed as the
Department for Promotion of Industry and Internal Trade, the total FDI inflow in construction
development sector during 2000 to 2015 has been around US$ 24.16 billion which is about 9%
of total FDI inflows.
Provide uniform regulatory environment to ensure speedy adjudication of disputes: -
RERA strives to establish equilibrium between the promoter and purchaser, regarding
transparency of contractual conditions, set minimum standards of accountability and a fast-
track dispute resolution mechanism. Many developers across India follow a common practice
of pre-launching a project without securing requisite approvals for the project from the local
authorities, which is termed as “soft launch”, “pre-launch” etc. But if there is an unscrupulous
developer then there is a great risk. Hence, to plug this gap, registration of every project with
the regulatory authority has been made mandatory before it is launched for sale and for
registration.

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The relevant provisions for registration are as below:
 Prior Registration of Real Estate project with Real Estate Regulatory Authority.
 A promoter shall not advertise, market, book, sell or offer for sale, or invite persons to
purchase in any manner any plot, apartment or building, as the case may be, in any real
estate project or part of it, in any planning area, without registering the real estate
project with the Real Estate Regulatory Authority established .
 The projects those are ongoing on the date of commencement of this Act and for which
the completion certificate has not been issued, the promoter shall make an application
to the Authority for registration of the said project within a period of three months from
the date of commencement of this Act.
 For projects which are developed beyond the planning area but with the requisite
permission of the local authority, it may, by order, direct the promoter of such project
to register with the Authority, and the provisions of this Act or the rules and regulations
made there under, shall apply to such projects from that stage of registration.
 Where the real estate project is to be developed in phases, every such phase shall be
considered a standalone real estate project, and the promoter shall obtain registration
under this Act for each phase separately.
The following projects do not require to be registered under the Act:
 Area of land does not exceed 500 Sq. Meters
 Number of apartments does not exceed 8 inclusive of all phases;
 In case of Renovation/ Repair/Re-development
 where the promoter has received completion certificate for a real estate project
To bring in transparency and accountability, Real Estate Agents have also been covered under
the ambit of RERA and registration requirement has been mandatory for them as per section 9
of the Act. Without obtaining registration, real estate agent shall not facilitate the sale or
purchase of or act on behalf of any person to facilitate the sale or purchase of any plot,
apartment or building, as the case may be, in a real estate project or part of it, being the part of
the real estate project registered, being sold by the promoter in any planning area.

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Promote orderly growth through efficient project execution and standardization: -
While the Real Estate sector has grown significantly in recent years, it has been largely
unregulated, with absence of professionalism and standardization and lack of adequate
consumer protection.
The most important duty of the promoter which has been mandated by the Act is to provide
complete details of the project so that a layman who does not even know the legal requirements
is able to check the legal sanctity of the project. The promoter has also been debarred from
advertising and selling his project until he has procured the requisite approvals from the
authorities and got his project registered with RERA. On successful registration, the promoter
of the project will be provided with a registration number, a login id and password to track the
status of the project and showing the approvals/ permissions in place to execute the project.
Offer single window system of clearance for real estate project: -
A single window clearance is a system awaited by the developers and promoters as the
implementation of single window system for clearance will save a lot of time and cost of the
developers in the process encourage greater investments in the realty sector. As this sector is
dependent on various core sectors such as steel, cement etc. an easily approachable and
transparent market must be created by the government for inviting investment in this sector.
A single window system would ensure time bound project approvals and clearances for timely
completion of the project; creation of a transparent and robust grievance redressal mechanism
against acts of omission and commission of competent authorities and their officials; The
Authority shall take suitable measures for the promotion of advocacy, creating awareness and
imparting training about laws relating to real estate sector and policies.
Empower and protect the right of home buyers:
Promoters will be responsible for all obligations, responsibilities and functions under the
provisions of the Act or the rules and regulations made thereunder or to the allottees as per the
agreement for sale, or to the association of allottees, as the case may be, till the conveyance of
all the apartments, plots or buildings, as the case may be, to the allottees, or the common areas
to the association of allottees or the competent authority, as the case may be. Provided that the
responsibility of the promoter, with respect to the structural defect or any other defect for such
period as is referred to in sub-section (3) of section 14, shall continue even after the conveyance
deed of all the apartments plots or buildings, as the case may be, to the allottees are executed.

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Session 28
Intellectual Property
Intellectual Property is a term referring to a number of distinct types of creations of the mind
for which property rights are recognized.
Under intellectual property law, owners are granted certain exclusive rights to a variety of
intangible assets, such as musical, literary and artistic works, discoveries and inventions; and
words, phrases, symbols and designs. Patents, trademarks, and copyrights, designs are the four
main categories of intellectual property.
Dimensions of the Act
 It assures protection to authors and inventors to commercially exploit their ideas for a
limited period
 On other side it is enforced against all others engaged in same art, preventing them from
infringing the holders’ right.
 This leads to new inventions and healthy competition
Patents
Patents are used to protect new product, process, apparatus, and uses provided the inventions
are not obvious in the light of what has been done before, is not in the public domain, and has
not been disclosed anywhere in the world at the time of the application. The invention must
have a practical purpose. Patents can be registered.
Importance of Patents Gives a competitive edge Protects one’s efforts and knowledge Avoids duplication of research and acts as a stepping stone for scientific research Identifies emerging technologies, research areas and business opportunities
What can be patented:
Important features of a patent claim: Novelty: It should not be published / manufactured / used / sold anywhere around the world Non-obviousness to a person skilled in the art: means something that is known or
anticipated by prior use; that is a product of nature, and not a product of human creativity Industrial Application: Utility of patented technology or prod

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Trade Marks
A symbol (logo, words, shapes, a celebrity name, jingles) used to provide a product or service
with a recognizable identity to distinguish It from competing products. Trademarks protect the
distinctive components which make up the marketing identity of a brand, including
pharmaceuticals. They can be registered nationally or internationally, enabling the use of the
symbol.
A mark can include a device, brand, heading, label, ticket, name, signature, word, letter,
numeral, shape of goods, packaging or combination of colors or any such combinations.
Copyright
Copyright is used to protect original creative works, published editions, sound recordings, films
and broadcasts. It exists independently of the recording medium, so buying a copy does not
confer the right to copy. Limited copying (photocopying, scanning, downloading) without
permission is possible, e.g. for research, publication of excerpts or quotes needs
acknowledgment. However, an idea cannot be copyrighted.
In the case of original literary, dramatic, musical and artistic works, the duration of copyright
is the lifetime of the author or artist, and 60 years counted from the year following the death
of the author.
Design Registration
Design registrations are used to protect products distinguished by their novel shape or pattern.
They are available for one-off items. The design itself must be new, although a 1-year grace
period is allowed for test-marketing. Registration is not possible where the new form is dictated
by function. The design is registrable either nationally or under an EU-wide single right. It can
also be protected by copyright.
Legislative Framework of IP Administration:
Department of IP covers
 The Patents Act, 1970 (as amended in 2005) and The Patents Rules, 2003 (as amended in
2006)
 The Designs Act, 2000 and Rules 2001 (as amended in 2008)
 The Trade Marks Act 1999 and Rules 2002
 The Geographical Indications of Goods (Registration & Protection) Act, 1999 and Rules,
2002
 Department of Education covers The Copyrights Act 1957 (amended in 1999)

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Session 29 & 30
Cyber Law and The Information Technology Act, 2000
IT Act was formed to provide legal recognition for transactions carried out by means of
electronic data interchange and other means of electronic communication, commonly referred
to as "electronic commerce", which involve the use of alternatives to paper-based methods of
communication and storage of information, to facilitate electronic filing of documents with the
Government agencies
Objectives of Information Technology Act
i. Grant legal recognition to all transactions done via electronic exchange of data or other
electronic means of communication or e-commerce, in place of the earlier paper-based
method of communication
ii. Give legal recognition to digital signatures for the authentication of any information or
matters requiring legal authentication
iii. Facilitate the electronic filing of documents with Government agencies and also
departments
iv. Facilitate the electronic storage of data
v. Give legal sanction and also facilitate the electronic transfer of funds between banks and
financial institutions
vi. Grant legal recognition to bankers under the Evidence Act, 1891 and the Reserve Bank of
India Act, 1934, for keeping the books of accounts in electronic form.
Digital Signature
Digital signature is a mathematical scheme to verify the authenticity of digital documents or
messages. Also, a valid digital signature allows the recipient to trust the fact that a known
sender has sent the message and it was not altered in transit. Like written signatures, digital
signatures provide authentication of the messages.
Further, digital signatures authenticate the source of messages like an electronic mail or a
contract in electronic form.
The three important features of digital features are:
• Authentication – They authenticate the source of messages. Since the ownership of a digital
certificate is bound to a specific user, the signature shows that the user has sent it.
• Integrity – Sometimes, the sender and receiver of a message need an assurance that the
message was not altered during transmission. A digital certificate provides this feature.

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• Non-Repudiation (denial of the validity) – A sender cannot deny sending a message which
has a digital signature.
Electronic Signature
Electronic Signature has been defined under Section 2(1)(ta) of the Information Technology
Act, 2000. Electronic Signature means the authentication of any electronic record by a
subscriber by means of the electronic technique as specified under the Second Schedule and
also includes a digital signature. An electronic signature is described as any electronic symbol,
process or sound that is associated with a record or contract where there is intention to sign the
document by the party involved. The major feature of an electronic signature is thus the
intention to sign the document or the contract.
Difference between Electronic and Digital Signatures;
Electronic signature and digital signature are often used interchangeably but the truth is that
these two concepts are different.
a) The main difference between the two is that digital signature is mainly used to secure
documents and is authorized by certification authorities while electronic signature is often
associated with a contract where the signer has got the intention to do so.
b) The other notable aspect that makes an electronic signature different from a digital
signature is that an electronic signature can be verbal, a simple click of the box or any
electronically signed authorization.
c) The main purpose of a digital signature is to secure a document so that it is not tampered
with by people without authorization. An electronic signature is mainly used to verify a
document. The source of the document and the authors are identified.
d) Digital signature is authorized and regulated by certification authorities. These are trusted
third parties entrusted with the duty to perform such task. Electronic signatures are not
regulated and this is the reason why they are less favorable in different states since their
authenticity is questionable. They can be easily tampered with.
e) A digital signature is comprised of more security features that are meant to protect the
document. An electronic signature is less secure since it is not comprised of viable security
features that can be used to secure it from being tampered with by other people without
permission
f) A digital signature can be verified to see if the document has not been tempered with. A
digital certificate can be used to track the original author of the document. It may be
difficult to verify the real owner of the signature since it is not certified. This compromises
the authenticity as well as integrity of the document.

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E-Commerce:
In a broad sense Electronic Commerce (E-Commerce) includes not only Internet commerce
but also transactions through other electronic medium. In other words, it can be described as-
(1) Transaction between a company and its customers i.e. buying and selling of goods, services
and information (including after-sale service and support);
(2) Exchange of structured business information between two or more companies, e.g.
Electronic Data Interchange (EDI); and
(3) Internal commerce involving work flow reengineering, product and service customization,
Supply Chain Management (SCM) etc. by using electronic devices.
Electronic devices used for E-Commerce are – (I) Bar Code Machines, (II) Vending Machines,
(III) Telephone & Telegraphs (IV) Fax (V) Television (VI) Stand-alone Computers (VII)
Computer Network (VIII) Internet, WWW & E-mail.
Cyber Laws
The growth of Electronic Commerce has propelled the need for vibrant and effective regulatory
mechanisms which would further strengthen the legal infrastructure, so crucial to the success
of Electronic Commerce. All these governing mechanisms and legal structures come within the
domain of Cyber law.
Cyber law is important because it touches almost all aspects of transactions and activities and
on involving the internet, World Wide Web and cyberspace. Every action and reaction in
cyberspace has some legal and cyber legal angles Cyber law encompasses laws relating to:
· Cyber-crimes
· Electronic and digital signatures
· Intellectual property
· Data protection and privacy
Cybercrimes: is not defined in Information Technology Act 2000 nor in the I.T. Amendment
Act 2008 nor in any other legislation in India. Cybercrimes can be defined as: "Offences that
are committed against individuals or groups of individuals with a criminal motive to
intentionally harm the reputation of the victim or cause physical or mental harm, or loss, to the
victim directly or indirectly, using modern telecommunication networks such as Internet
(networks including chat rooms, emails, notice boards and groups) and mobile phones
(Bluetooth/SMS/MMS)".
To put it in simple terms ‘any offence or crime in which a computer is used is a ‘cyber-crime’.
Interestingly even a petty offence like stealing or pick-pocket can be brought within the broader

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purview of cyber-crime if the basic data or aid to such an offence is a computer or an
information stored in a computer used (or misused) by the fraudster. The I.T. Act defines a
computer, computer network, data, information and all other necessary ingredients that form
part of a cyber-crime. In a cyber-crime, computer or the data itself is the target or the object of
offence or a tool in committing some other offence, providing the necessary inputs for that
offence. All such acts of crime will come under the broader definition of cyber-crime.
Cybercrime may threaten a person or a nation's security and financial health. Issues
surrounding these types of crimes have become high-profile, particularly those
regarding hacking, copyright infringement, unwarranted mass-surveillance, sextortion, child
pornography, and child grooming.
Cybercrime usually includes:
(a) Unauthorized access of the computers (b) Data diddling (c) Virus/worms attack (d) Theft
of computer system (e) Hacking (f) Denial of attacks (g) Logic bombs (h) Trojan attacks (i)
Internet time theft (j) Web jacking (k) Email bombing, etc.

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Session 31
The Consumer Protection Act
The Consumer Protection Act, 1986 (CPA) is an Act that provides for effective protection of
interests of consumers by prescribing specific remedies to make good the loss or damage
caused to consumers as a result of unfair trade practices. It makes provision for the
establishment of consumer councils and other authorities that help in settlement of consumer
disputes and matters connected therewith.
The main objectives of the consumer protection programme are: -
i) To create suitable administrative and legal mechanisms which would be within the easy
reach of consumers and to interact with both Government and non-Governmental
Organizations to promote and protect the welfare of the consumers.
ii) To generate awareness among consumers about their rights and responsibilities, motivate
them to assert their rights so not to compromise on the quality and standards of goods and
services and to seek redressal of their disputes in consumer forum, if required.
iii) To educate the consumers as to be aware of their rights & social responsibilities
CPA aims to protect the following rights of a Consumer:
a. Right to safety of life and property from hazardous goods.
b. Right to information about the quality, quantity, potency, purity, standard and price of
goods and services so as to protect consumers against unfair trade practices.
c. Right to choice as to variety of goods and services.
d. Right to be heard and representation and to be assured that consumer interests will receive
due consideration at appropriated platform.
e. Right to seek redressal against unfair trade practices or restrictive trade practices or
unscrupulous exploitation of consumers.
f. Right to consumer education
The Salient Features of the Act are as under:
(i) The Act provides for establishing three-tier consumer dispute redressal machinery at the
national, state and district levels.
(ii) It applies to all goods and services.
(iii) It covers all sectors, whether private, public or any person.

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(iv) The Act provides for relief of a specific nature and also for compensation to the consumer
as appropriate.
(v) The provisions of the Act are in addition to and not in derogation of the provisions of any
other law for the time being in force
Redressal Forums: Consumer Protection Act, 1986 enables the ordinary consumers to secure
less expensive and often speedy redressal of their grievances. Under the Consumer Protection,
it provides for a three-tier structure of the National and State Commissions and District Forums
for speedy resolution of consumer disputes. Any individual consumer or association of
consumers can lodge a complaint with the district, state or national level forum, depending on
the value of goods and claim for compensation. At present there are 632 District Forums, 35
State Commissions with the National Consumer Disputes Redressal Commission (NCDRC) at
the apex.
The provisions of this Act cover, ‘goods as well as services.’ The goods are those which are
manufactured or produced or sold to consumers through whole sellers and retailers. The
services are in the nature of transport, telephone, electricity, housing, banking, insurance,
medical treatment etc. The Act provides a mechanism for redressal of complaints regarding
defect in goods and deficiency in services.
The CPA categorises the following four types of persons to be the complainants. These are
as follows: (i) a consumer; or (ii) any voluntary consumer association registered under the
Companies Act, 1956, or under any other law for the time being in force; or (iii) the central
government or any state government who or which makes a complaint; or (iv) one or more
consumers, where there are numerous consumers having the same interest; who or which
makes a complaint.
Consumer" means any person who—
 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 person who 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 any commercial purpose; or
 (ii) hires or avails of any service 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

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beneficiary of such service 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, but does not include a person who avails of such service for any
commercial purpose.
How to File a Complaint?
 Within two years of purchasing the product or services, the complaint should be filled.
 In the complaint, the consumer should mention the details of the problem. This can be an
exchange or replacement of the product, compensation for mental or physical torture.
However, the declaration needs to be reasonable.
 All the relevant receipts, bills should be kept and attached to the complaint letter.
 A written complaint should be then sent to the consumer forum via email, registered post,
fax or hand-delivered. Acknowledgement is important and should not be forgotten to
receive.
 The complaint can be in any preferred language.
 The hiring of a lawyer not required.
 All the documents sent and received should be kept.
Consumer Protection Bill of 2018 replaces the Consumer Protection Act, 1986. The Bill
sets up a Central Consumer Protection Authority to promote, protect and enforce consumer
rights as a class. It can issue safety notices for goods and services, order refunds, recall goods
and rule against misleading advertisements. If a consumer suffers an injury from a defect in a
good or a deficiency in service, he may file a claim of product liability against the manufacturer,
the seller, or the service provider.
The Bill empowers the central government to appoint, remove and prescribe conditions of
service for members of the District, State and National Consumer Disputes Redressal
Commissions. The Bill leaves the composition of the Commissions to the central government.

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Session 32
Competition Law
Competition law is the regulation that promotes and maintains market competition. It regulates
the market scenario for a healthy market environment. However, the said law is enforced
through public and private enforcement.
The major objectives of the law are:
1. To prohibit and check prevalence of any unfair agreements in the market scenario
2. To promote market efficiency
3. To prohibit the abuse of dominance in the market
The Competition Act 2002 was amended in the year 2007 and 2009. Under the Act, a
Commission is appointed which protects the interests of the parties and ensure fairness in the
market environment. The Act replaced the old Monopolistic and Restrictive Trade Practices
Act.1969.
The Commission appointed under the Act performs three major functions:
 To check unfair agreements
Anti-competitive agreements include all those agreements which are entered so as to
hamper the market conditions in India. Commission holds a power to check upon such
agreements, the decisions of such persons/companies and to oversee their conduct also.
Examples of such agreements are:
Limiting or controlling the production market
Limiting or controlling the technical market
Engaging in any manner in bid rigging or collusive bidding
Entering into exclusive distribution or supply arrangement. Etc
 To check dominance in agreements
The Act defines dominant position as a position of strength, enjoyed by an enterprise,
in the relevant market in India , which enables it to:
i. Operate independently of competitive forces prevailing in the relevant manner.
ii. Affect its competitors or consumers or the relevant market in its favour.
Ex- engaging in predatory pricing, etc
 To check unhealthy combinations/mergers and amalgamations outside India so as to
hamper conditions in India. Such combinations/ mergers happen when the main motive
is to limit the number of players in the market. Herein, the companies become one entity
so as to deceive the market environment and to gain unjust benefit.

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The Act ensures through the commission that all such unhealthy practices must not exist and
hence give wide powers to the appointed commission. To handle the cross-border issues, the
Commission is empowered to enter into MOU with any foreign agency of any foreign country,
with the prior approval of the central government. With the rapid growth of our economy, it
has become imperative to check and regulate the competition happening within India and from
outside the international borders.
Competition Commission of India is a quasi-judicial body , which entails the task of ensuring
compliance under the Act in India. It can give orders of:
 Cease and desist
 Imposition of penalty
 Order for changes or modification in the agreements, etc.
The main aim of the legislation to promote healthy competition in the market, to eradicate
unfair trade practices, thus boosting the economy of the country. It ensures clear, fair and
transparent conduct of all the players in the market scenario. It is a check on the companies,
while conducting their day to day activities, to maintain fairness in all dealings.

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30
Session 33
Alternate Dispute Resolution
The alternative Dispute Resolution (ADR) mechanism is used all over the world which is more
effective, faster and less expensive.
Under ADR mechanism, there are basically four methods:
(a) Negotiation
(b) Mediation
(c) Conciliation
(d) Arbitration
While the first two methods are not recognized by law, the methods of conciliation and
arbitration are quasi-judicial methods to resolve a dispute with minimum court intervention.
The same is now recognized by the Arbitration and Conciliation Act, 1996 (Act 26 of 1996).
The courts have always assisted in proper conduct of the arbitration proceedings and
enforcement of arbitration awards.
Quick decision of any commercial dispute is necessary for smooth functioning of business and
industry. In today’s world of shrinking boundaries, free trade and international commerce have
become global necessities. Increasing competitiveness often leads to conflicts between
entrepreneurs, resulting in commercial disputes.
Arbitration is chosen as a means of effective consensual and speedy dispute resolution. The
growing strength and role of India and the Indian industry in the Asian and global economy
has seen the country's emergence as a force to be contended with. Increasing foreign direct
investment and other forms of collaboration by foreign companies have witnessed disputes
between Indian and foreign parties. This has raised the need for an act that will address
commercial disputes quickly and efficiently.
Arbitration:
"Arbitration is the reference of dispute between not less than two parties, for determination,
after hearing both sides in a judicial manner, by a person or persons other than a court of
competent jurisdiction.”
What disputes can be referred to arbitration
Generally speaking, all disputes of a civil nature or quasi-civil nature which can be decided by
a civil court can be referred to arbitration. Thus, disputes relating to property, right to hold an
office, compensation for non-fulfillment of a clause in a contract, disputes in a partnership etc.
can be referred to arbitration. Even the disputes between an insolvent and his creditors can be
referred to arbitration by the official receiver or the official assignee with the leave of the court.

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Disputes excluded from Arbitration:
The law has given jurisdiction to determine certain matters to specified tribunal only; these
cannot be referred to arbitration: Relating to appointment of a guardian. Pertaining to criminal proceedings Relating to Charitable Trusts Winding up of a company Matters of divorce or restitution of conjugal rights Disputes arising from an illegal contract Insolvency matters, such as adjudication of a person as an insolvent. Matters falling within the purview of the Competition Act.
Appointment and termination of arbitrators
Though any person can be appointed as an arbitrator, generally impartial and independent
persons in whom parties repose confidence are to be selected and appointed as arbitrators.
Parties are free to determine the number of arbitrators, provided that such number shall not be
an even number. If the Arbitration Agreement is silent in this respect, the arbitral Tribunal shall
consist of a sole arbitrator. In cases, where three arbitrators are to be appointed, each party will
appoint one arbitrator and the two appointed arbitrators will jointly appoint a third arbitrator,
who will be the presiding arbitrator. In certain cases of failure to appoint the arbitrators, the
Chief Justice of the High Court or his designate has been given power to appoint the arbitrator
u/s. 11(6) of the Arbitration and Conciliation Act, 1996.
The mandate of an arbitrator shall terminate if--- he becomes de jure or de facto unable to perform his functions or for other reasons fails to
act without undue delay; and he withdraws from his office or the parties agree to the termination of his mandate. where he withdraws from office for any reason; or by or pursuant to agreement of the parties
Cost of arbitration: means reasonable cost relating to fees and expenses of arbitrators and
witnesses, legal fees and expenses, administration fees of the institution supervising the
arbitration and other expenses in connection with arbitral proceedings. The tribunal can decide
the cost and share of each party. If the parties refuse to pay the costs, the Arbitral Tribunal may
refuse to deliver its award. In such case, any party can approach Court. The Court will ask for
deposit from the parties and on such deposit, the award will be delivered by the Tribunal. Then
Court will decide the costs of arbitration and shall pay the same to Arbitrators. Balance, if any,
will be refunded to the party.

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Award of Arbitration Tribunal
The award shall be in writing and the reasons on the basis of which award was passed, shall be
recorded unless the parties agree otherwise. The award shall be drawn on a Rs. 100/- stamp
paper. It shall be dated and signed by the arbitrators. The sum awarded may include the interest
which the claimant is entitled. It shall also provide for the costs and it shall mention the party
liable to pay the costs. A signed copy of the award shall be delivered to each party.
The Act also empowers the arbitrator to make an interim arbitral award on any matter with
respect to which he may make a final award.
The parties are free to settle the matter any time during the arbitration proceedings. The
arbitrator, if satisfied about the impartiality of the settlement, has to make the award in term of
the settlement arrived at by the parties
Conciliation –
Part III of the Act makes provision for conciliation proceedings. In conciliation proceedings,
there is no agreement for arbitration. In fact, conciliation can be done even if there is arbitration
agreement. The conciliator only brings parties together and tries to solve the dispute using his
good offices. The conciliator has no authority to give any award. He only helps parties in
arriving at a mutually accepted settlement. After such agreement they may draw and sign a
written settlement agreement. It will be signed by the conciliator.
However after the settlement agreement is signed by both the parties and the conciliator, it has
the same status and effect as if it is an arbitral award. Conciliation is the amicable settlement
of disputes between the parties, with the help of a conciliator. All matters of a civil nature or
breach of contract or disputes of movable or immovable property can be referred to
conciliation. Matters of criminal nature, illegal transactions, matrimonial matters like divorce
suit etc. cannot be referred to conciliation.
The conciliation proceedings can start when one of the parties makes a written request to other
to conciliate, briefly identifying the dispute. The conciliation can start only if other party
accepts in writing the invitation to conciliate. Unless there is written acceptance, conciliation
cannot commence. If the other party does not reply within 30 days, the offer for conciliation
can be treated as rejected.

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