BUSINESS LAW ASSIGNMENT

ANSWER 1

INTRODUCTION:
An agreement which is formed between two or more persons to agree upon the same thing and in
the same sense, then it is said to be Consent according to the Section 13 of the Indian Contract
Act, 1872. Consent is followed by a principle Consensus-ad-idem which means “meeting of the
minds” and when the parties do not agree on the same thing and in the same sense, then there
will be no existence of consent which ultimately leads to no formation of contract.

CONCEPT:
According to Section 14 of the Indian Contract Act, 1872, Consent is said to be free when two or
more parties came into contract and agree upon the same thing and in the same sense unaffected
of Fraud, Coercion, Undue Influence, Misrepresentation and Mistake. It must be free and follow
the principle consensus-ad-idem. If there is lack of free consent then the aggrieved party
determines the voidability of the contract. Free Consent is an essential element of a valid contract
as it ensures lawfulness and enforceability of an agreement, safeguards the parties from fraud,
undue influence, mistake, misrepresentation, and coercion.

FOR EXAMPLE OF FREE CONSENT:

Let’s say “A” and “B” are two parties. “A” who has 2 printers (inkjet printer and laser printer)
for his business purposes. Now, Party A wants to sell his laser printer as it was no use to him. So,
A asks B if he wants to purchase his laser printer for Rs10000 and B also needs a laser printer for
his online business and planning to buy from A. But, B puts a counter offer for Rs8000 in front
of A and the A accepts the offer for selling laser printer to B in Rs8000. There is no one who are
pressurizing A and B in selling and buying of printer. Thus, this is an example of pure Free
Consent as both the parties A and B are agreeing upon the same thing and in the same sense
unaffected of coercion, undue influence, misrepresentation etc.

FACTORS AFFECTING FREE CONSENT:

1. COERCION (Section 15)

Coercion refers to a criminal act of performing or threatening to execute an act prohibited
by the Indian Penal Code or threatening to another party with the motive to compel
someone to come into an agreement. It also defined as prohibiting or forcing someone to
do something against the law or imposing a restriction. Third party can also force the
 parties to come into a contract. When the contract is made out of coercion, both the
parties are exempted from their obligations in fulfilling their responsibilities and hence,
the contract gets terminated or rejected.

FOR EXAMPLE: When two parties A and B came into a contract. A asks B to release
him from all his obligations otherwise he would commit a suicide which is against the
Indian penal Code. Thus, this contract becomes void as A compels B to come into a
contract which is unlawful.
CASE LAW: Chikkam Ammiraju and Ors. vs. Chikkam Seshamma and Anr (1917)

2. UNDUE INFLUENCE (Section 16)

According to Section 16 of the Indian Contract Act 1872, the contract falls under Undue
Influence when the party is in position dominates the other party and imposes his
decisions on the other party and denies the other party wishes and desires. The Indian
Contract Act 1872 offers some instances where one party controls over the second party
and these instances are:
o When two parties have a relationship based on trust.
o When one party signs a contract with another party who is not of sound mind.
o When the party has explicitly control over the other party.
The contract becomes void when the party consent is received under undue influence.

FOR EXAMPLE: Doctor persuades the patient parents to submit Rs1 lakhs to the hospital if
they want their child to be treated. Here, patient’s parents are under undue influence of doctor.
Thus, the contract becomes voidable.
CASE LAW: Lingo Bhimrao Naik vs. Dattatrya Shripad Jamadagni

3. FRAUD (Section 17)

An act that includes making false claims about the truth, hiding the truth, and making
promises with the purpose to deceive them is defined as Fraud. It occurs when a party
enters into a contract with other party with the aim of misleading them. The contract is
made between both the parties or with any third party. Fraud is not implied by party’s
silence but it is implied when there is a responsibility of party to communicate with the
other party and silence is compared equivalent to expressing some claim. When the
contract is induced by Fraud then the aggrieved party has the right to cancel the contract
and liable to recover the loss suffered. Moreover, the contract becomes voidable.

FOR EXAMPLE: Anant sells his printer to Vijay. Anant has the knowledge that the
printer is not working properly and he also not informed to Vijay. Vijay asked Anant
about the printer, its working condition and it’s all relevant details. But Anant deny the
fact and remained silent during the contract. In this case, Anant silence is treated as a
 fraudulent act. Thus, Vijay has the right to cancel the contract and liable to recover the
loss from Anant.
CASE LAW: Rajagopala Iyer vs. South India Rubber Works (1942) MLJ 228

4. MISTAKE (Section 20)

Mistake is defined as when one of the parties entered into a contract due to
misunderstanding. Mistake can be done in two ways:
o Mistake by Law: When one party does not understand the legal rules and
obligations.
o Mistake by Fact: Miscommunication between parties about the purpose and
details of the agreement. It can be done unilateral mistake as well as bilateral
mistake.

FOR EXAMPLE: Vidhi purchases a newly launched smart phone from a store sales person,
Aakash. But the sales person does not know the fact that stock of specific smartphone gets
vanished due to high demand. Thus, the contract become void as the smartphone is not available
with the store.
CASE LAW: Galloway vs. Galloway (1914)

5. MISREPRESENTATION ( Section 18)

Misrepresentation is defined as when one party makes a factual statement incorrect but it
is taken to be true and correct, or when the party who is making false claim violates the
obligation and enjoys benefits which are not the intended goal of the party. Moreover, it
also occurs when one of the parties acts genuine but induces other party to make mistakes
in the contract. The aggrieved party can rescind the contract due to misrepresentation in
the agreement.

FOR EXAMPLE: Riya sells her horse to Simran and told her that horse is of sound mind.
Moreover, Simran believes that horse is of sound mind and buys the horse from Riya at a
certain price. After that, Simran got to know that he is of unsound mind. Here, in this
case, Riya misrepresented Simran and falls under Misrepresentation.
CASE LAW: Bisset vs. Willkinson (1927)

CONCLUSION:
However, Free Consent is crucial element in the agreement to make a valid contract. Both the
parties must give their consent freely without any factors affecting it. To maintain contract’s
validity, every party must state all the details with a true and view. The contract becomes void at
the option of the harming party if the consent of the agreement is received under fraud, coercion,
mistake, misrepresentation, undue influence.
ANSWER 2

INTRODUCTION:
Environment Protection is very crucial for our country as our mother Earth is degrading day by
day due to the human beings. Human beings are harming the environment in order to fulfill their
needs and wants and if they continue to degrade it, it would be very difficult for future
generations to survive in this polluted environment. So, it becomes essential to protect it from
individuals, groups and governments. After the emergence of Indian Environment in 1972,
National Council for Environment Policy and Planning (NCEPP) was formed under Department
of Science and Technology. NCEPP is a governing entity that addresses the issues related to the
environment. Later on, the Ministry of Environment, Forest and Climate Change (MOEFCC)
was formed which is a supreme body that supervises safeguarding the environment and enforces
regulations. Many environment legislations have been established in India to protect and
conserve the environment and some of these are: National Green Tribunal Act (2010), The
Environment Protection Act (1986), The Air (Prevention and Control of Pollution) Act (1981),
The Water (Prevention and Control of Pollution) Act (1974) etc.

CONCEPT:
Real life cases where Courts of India have intervened to protect the environment and prevent
environment from degrading and pollution. There are many cases where Indian courts interfere
in conserving and safeguarding the environment. For Example: Vellore Citizens Welfare Forum
vs. Union of India, Ganga River Pollution Case, Shri Ram Food and Fertilizers Case, Indian
Council for Enviro-Legal Action vs. Union of India, Goa Foundation vs. Konkan Railways
Corporation Etc.

I. M.C. MEHTA VS. UNION OF INDIA (GAS LEAKAGE IN SHRI RAM

FACTORY)
Shri Ram factory is situated in Delhi and belongs to Delhi Textiles Mills Ltd. There was
a leakage of oleum gas from sulphuric acid plant on 4th December 1985 which leads to
death of an advocate and many injuries to other individuals. Another leakage of gas
occurred within 2 days’ time span i.e. 6th December 1985 in the same industry. This
leakage made everyone tensed. Then, the legal practitioner M.C. Mehta filed a “Public
Interest Litigation” under Article 32 of the constitution. The petition was filed against the
leakage occurred and appealed to court in order to instruct the government to take
mandatory measures to stop these leakages due to the utilization of hazardous and
harmful substances in the factory. The petitioner also reminded the case of Bhopal Gas
Tragedy to the Court and asked for shift the industries away.
The issues raised to Supreme Court were: Firstly, whether the factory was allowed to
continue its operations or not? Secondly, if it was allowed then what are the safety
 measures are required to take specific actions regarding prevention of leakages and
explosions? And lastly, any safety equipment is installed in factory or not.
However, Supreme Court of India granted the permission to Shri Ram Factory to
continue its operations as such type of industries are important for the economic benefit
of the country but on the other hand they are very risky and dangerous to people living
nearby the factory.
The court released a rule of “Absolute Liability” to provide compensation to all the
victims suffered during this cause. In order to secure the compensation of victims which
they suffered, the Shri Ram Factory management committee was ordered to submit Rs20
lakhs as a security. Moreover, the factory has to be surrounded with a green belt of 1 to 5
km width. In addition to this, the Supreme Court urged the Central Government to
establish an Environment Court with one judge and two members who are specialists in
Ecological Science Research Experts in taking the decisions related to environment
disagreements. The National Tribunal Act in 1995 was enacted by the Central
Government TO handle the issues related to environmental damage.

II. VELLORE CITIZENS WELFARE FORUM VS. UNION OF INDIA

In this popular case law, the Supreme Court examined the relationship between the
development of River Palar and the environment. River Palar was polluted at a large
scale due to the flowing of harmful emissions and substances into the river by the
tanneries and other industries located nearby. Drinking and bathing of people living in
state Tamil Nadu done from the river Palar. Vellore Citizens Welfare Forum signed a
petition under Article 32 of the constitution regarding the river pollution happened in
Tamil Nadu. Approximately 35000 hectare of land was determined unsuitable for
agriculture or cultivation according to the Tamil Nadu Agriculture University Research
Centre.
The issue raised to Supreme Court of India was: at the cost of many lives of individuals
living there, the court should permit the tanneries or other industries to operate their
operations there or not?
After analyzing and reviewing the report of land, the Supreme Court took all possible
measures to ensure the balance between environment and economic growth of the
country. The court granted the permission to industries to continue with its operations but
with proper disposal of effluents generated from harmful substances. Moreover, the court
accepted that these tanneries and other industries provides employment to many
individuals and are the country’s top source of foreign earnings.
In judgment, the court gave decision in favor of petitioners and ordered tanneries to pay
Rs10000 as fine to Collector. Furthermore, the court asked the state to reward petitioner
with Rs50000 as a compensation for his initiatives to safeguard the environment. To
handle the issues relating environment protection and quick and efficient remedy to
 environmental concerns, the court appealed to create Green Benches in the State Tamil
Nadu.

CONCLUSION:
However, Government of India takes every important step to conserve and protect the
environment from any degradation or pollution. There are many real life cases where
government intervened and took decisions in the benefit of environment and the country’s
growth.

ANSWER 3 (A)

INTRODUCTION:
As a new joinee in an organization, Gaurav must know about what is Employee Provident Fund.
Employee Provident Fund (EPF) is one of the largest retirement savings scheme. EPF is
governed by the government and Employee Provident Fund Organization (EPFO). It is
applicable to whole of India. In accordance with this scheme, each employer and employee has
to contribute in this scheme from their salary. This contribution would help the company to pay
the lump-sum amount inclusive of employer and employee contribution with interest on both to
the employee at the time of retirement.

CONCEPT:
Employees Provident Fund Scheme is applicable to all the organizations that have more than 20
numbers of employees and their basic pay is up to Rs.15000 per month. Moreover, the
employees who have more than Rs.15000 per month salary can also register it for the same
voluntarily. The company that has less than 20 employees can also register for EPF Scheme
voluntarily. All employees are eligible to be a part of EPF India since the Employee Provident
Fund is open to both public and private sectors. Employees have the right to enjoy the numerous
EPF advantages such as insurance and pension benefits. Under the EPF Act 1952, three schemes
have been provided to enact the social security to the employees.
Calculation of Employees Provident Fund and Apportionment of The Fund Against Three
Schemes:

❖ EMPLOYEES PROVIDENT FUND SCHEME,1952:

In this scheme, employees have to contribute towards this fund up to 12% of basic salary
and dearness allowance (DA). Employer would contribute to 3.67% of the basic salary
and dearness allowance. The company would refund this lump-sum amount with interest
 to the employees at the time of voluntarily retirement or migration from India or the
disability.
Thus, Employees Contribution: 12% of Basic salary + DA
Employers Contribution: 3.67% of Basic Salary + DA

❖ EMPLOYEES PENSION SCHEME,1955:

This scheme is made for the employees who get retired or complete 58 years of age or
died while giving service to the organization. There is no employee contribution towards
this scheme but the employer contributes 8.67% of the basic salary and dearness
allowance. The entire amount collected from this scheme will be paid to the employees
after they get retired. The monthly pension is determined by the pensionable salary which
is the average of the monthly salary of the last 12 months prior to the date of leaving
membership of EPF.
Thus, Employees Contribution: Nil
Employer Contribution: 8.67% of Basic salary + DA

❖ EMPLOYEES DEPOSIT LINKED INSURANCE SCHEME,1976:

It is a social security programme which is designed for the EPF members in order to
provide them insurance benefits, assist the relatives and family of the dead employee and
provide them financial support to his or her family. There is no employee contribution
but the employer contributes to the 1% of the total pay of the employee.
Thus, Employee Contribution: Nil
Employer Contribution: 1% of the total pay of the employee

CONCLUSION:
In conclusion, Gaurav would have to contribute towards the provident fund from his salary in
order to gain benefits in future. He would receive that contributed amount along with the
accumulated interest at the time of retirement or superannuation, permanent disability or at the
time of death.

ANSWER 3 (B)

INTRODUCTION:
Gratuity is a monetary benefit that is payable to employees under The Payment Gratuity Act,
1972. Gratuity is a financial reward which is given to employees by their employer in
appreciation for the services that the employee has provided to the company. It is given to
employees at the time of retirement, superannuation or death or disablement due to accident or
disease.
CONCEPT:
Gratuity is a financial support given to employees by the employer for the genuine and constant
work performance for the period of 5 years or more. The payment of gratuity act became
operative in 1972. The Payment of Gratuity Act, 1972 is applicable to whole of India. All
workers who work under mines, businesses, ports or plantations or in similar organizations with
more than 10 employees are bound by the laws in force. In this scheme, all the contribution is
given by the employer and no contribution from employee side unlike Employee Provident Fund
Scheme. The amount of gratuity paid under the PGA, 1972 is minimum of Rs10 lakhs and
maximum of Rs20 Lakhs which is exempted from taxation.
According to Section 4(6), the gratuity can be forfeited if the employer does not complete his
tenure of 5 years or any careless action that results in loss or harm to the employer. The
forfeiture amount will be deducted from the payable gratuity.
According to section of 2A, those employees are eligible for gratuity that have rendered
continuous service of 5 years or more and interrupted only on account of sickness, layoff, strike,
leave, accident or any other incident in which there is no fault from the concerned employee.

CALCULATION OF GRATUITY:
There is a formula for calculating payable gratuity and i.e.

GRATUITY = Last Drawn Salary * 15/26 * Number of Years of Service

Where, Last Drawn Salary = Basic Salary + Dearness Allowance

15/26 = 15 days out of 26 working days
In case of Piece Rated Employees, Gratuity amount would be:

GRATUITY = Average of Total Wages Received By Employee for A Period of Three Months
Prior To Termination of Employee

For Example:
Gaurav had joined an organization on May 4, 2023 and his job is terminated on July 25, 2035.
His last drawn basic salary is Rs50000 and dearness allowance is Rs15000. So, the payable
gratuity would be:

Gratuity = last drawn salary * 15/26 * number of years

= (50000 + 15000) * 15/26 * 12
= 75000 * 15/26 * 12
= Rs519230
However, the entitled gratuity to Gaurav at the time of retirement is Rs519230.
CONCLUSION:
Thus, Gratuity is a monetary benefit that is given to employees for his or her rendered service for
the period of 5 years or more. Gaurav as a new joinee must know about all the benefits which are
being provided to him at the time of retirement so that he can perform his job with honesty and
sincerity.