Introduction To Law For CMA Foundation
Introduction To Law For CMA Foundation
Introduction To Law For CMA Foundation
NOTES
INTRODUCTION OF LAW
NEW SYLLABUS 2022
INDEX
NOTE – Video Lectures of This Notes are Available on “GYAANI ACADEMY” YouTube Channel.
NOTE – Video Lectures of This Notes are Available on “GYAANI ACADEMY” YouTube Channel.
CH – 1 SOURCES OF LAW
INTRODUCTION
Article 13.3 (a) of the Constitution of India, 1950 mentions law includes any Ordinance, order, bye-
law, rule, regulation, notification, custom or usage having in the territory of India the force of law.
Law, as a tool of governance, has been dynamic in nature, expanding its horizons to accommodate
the requirements of the society, over centuries. As we trace the sources, let us understand what law
is, in the simplest of terms.
“Law is a set of rules…” (for the society) – Concept of Law by H.L.A. Hart.
The Ancient Period of law and governance can be found in and around the geographical boundaries
of modern-day India, 1500 years before and after the beginning of approximately the first decade of
the Gregorian calendar. This era is mostly ruled and governed by kings having their own territories,
and having laws and regulations that were very localized and specific to their geographical
boundaries. So, with every passing territory, the set of laws differed. Therefore, bringing the
ancient period of law with reference to the geographical idea of modern-day India under the same
umbrella, is a subject matter of great debate in itself.
However, there were some underlying texts that have had their universal
presence, i.e. Vedas, Smritis (Manu-Smriti being one of the most popular
texts to have been in circulation), Upanishads and Arthasastra in the post
Mauryan Empire era. One of the salient features of the ancient Indian law
was that it was based on the principle of “dharma”, basing righteousness
and duty as its guiding principle, which was a collection of both legal and
religious duties.
The jurisdiction of each was determined by the importance of the dispute, the minor disputes being
decided by the lowest court and the most important by the king. The decision of each higher Court
superseded that of the court below.
Ancient Indian Courts can be divided into six categories based on their rank.
They are as follows:
✓ The Kula - Family Councils or groups
✓ The Shreni - Trade or Professional Councils
✓ The Gana - Village Assembly
✓ Adhikrita - Court appointed by the King
✓ Sasita - King’s Court
✓ Nripa – The King
But, as foreign invasions began to rise in numbers along-with the magnitude of these attacks, it
became inevitable that the Indian sub-continent continue in the model of governance, that it had
for centuries. Along with it, came changes to administration and subsequently to the legal system
concerned.
The Medieval Period begins around the 12th century majorly influenced
by foreign invasions and their idea of law and justice. In 12th century
when Mohammed Ghori defeated Prithviraj Chauhan at the Second
Battle of Tarain in 1192 AD, shortly after which Qutubuddin Aibak became
the first Sultan of Delhi, belonging to the Slave Dynasty. The medieval
period in India had major influence from Delhi Sultanate ruled by Slave
Dynasty to Lodhi Dynasty (1206-1526) after that Zahiruddin Babur
defeated Ibrahim Lodhi which started the rule of the Mughal Empire
effectively up to A.D. 1707 and then after the death of Bahadur Shah
Zafar, the Mughal rule and influence in India practically came to an end.
During the Sultanate period, there were several courts of Justice,
related to different branches of law. For example, Diwan-i-Mazlim deals
with disputes concerning with administration or bureaucracy.
During the Mughal period courts were categorized according to the subject and requirement in
debate, the central administration of justice was done by the central judicial system. The chief
judicial functionary of the state was the Qazi-ul-Quzat who was appointed by the emperor to hear
appeals and supervise the provincial courts. He was to be assisted by Mufti and Mir Ad’l: the
former was given the duty to explain the law on which the Qazi would deliver the verdict, whereas
the latter was associated with the functions of bringing the parties to the court and enforcing the
verdicts. Similarly, there was a Chief Qadi of the provincial court that dealt with all the cases which
were civil and criminal nature and served as the highest forum of appeal within the province. In
the capital, the military had its own judge, Qadi-e-Askar, who moved from place to place with the
troops and whose office corresponds to the present-day Court Martial.
With the decline of the of the Mughal Empire, prominence of the European Powers rose in the sub-
continent, and the introduction of modern legal system took place.
The Indian (post-Independence) legal history, begins with the Abolition of Privy Council Jurisdiction
Act, 1949 (earlier Privy Council seated in England acted as the Highest Court of Appeal, since 1726)
which was passed by the Indian Government. This Act accordingly abolished the jurisdiction of Privy
Council to entertain new appeals and petitions as well as to dispose of any pending appeals and
petitions. It also provided for transfer of all cases filed.
The Drafting Committee for the Constitution was formed and appointed with
Mr. B.R. Ambedkar as its Chairman on 29th August 1947. On 26 November
1949, the Constitution of India was passed and adopted by the Constituent
Assembly (celebrated as Law Day). On 26th January 1950, the Constitution
of India was adopted.
With this, India gained its autonomy in Independent judicial system and
infrastructure under the Constitution of India, 1950 and over the years been
empowered with the same, to have a sovereign entity, with segregation of
powers at all levels and all branches of administration.
With this, the Supreme Court of India was established on 26th January 1950, established under
Article 124 (1) of the Constitution of India, 1950 with a strength of 8 (1 + 7) judges. Currently it has
a strength of 34 judges (33 judges of the Supreme Court of India and 1 Chief Justice of India).
The statutes are enacted by the Parliament and State Legislatures according to their domain,
mentioned in the 7th Schedule of the Constitution of India (the Union List, The State List and the
Concurrent List). There are laws known as delegated legislation in the form of rules, and regulations,
as well as bye-laws made by Central Government, State Governments and local authorities under
the authority conferred or delegated by Parliament or the concerned State Legislature. Laws made
by Parliament may extend throughout, or in any part of the territory of India and those by State
Legislatures may generally apply only within the territory of the State concerned. This is also
inclusive of all the statutes which have already been enacted before the adoption of the Constitution
of India, 1950 unless repealed in part or in whole.
Personal Laws are defined as a law that applies to a certain class or group
of people or a particular person, based on the religions, faith, practices and
culture. Example – Hindu Marriage Act, 1955; The Indian Christian Marriage
Act,1872; The Kazis Act, 1880; The Parsi Marriage and Divorce Act, 1936 etc.
Ordinance is a law issued by the President of India when the Indian Parliament is not in session.
These ordinances have the same power and effect as a Parliamentary Act, but they are only
temporary legislation. They enable the Indian Government to take immediate legislative action
(Article 123). A total of 679 ordinances have been issued from 1950 – 2014. For Example – National
Tax Tribunal Ordinance, 2003; Manipur University Ordinance, 2005; Central Universities Ordinance,
2009 etc.
Similar powers have been provided to the Governor of a State, under Article 213 of the
Constitution of India, 1950, in territorial limit of the concerned state.
The authorities (Panchayati Raj), are notified under Article 243 of the Constitution of India, 1950,
have the power delegated, to frame the required regulations for governance as local rural
administration along with various institutions / organizations empowered to legislate rules /
regulations.
GYAANI’S ONE LINERS
✓ Article 13.3 (a) of the Constitution of India, 1950 mentions law includes any Ordinance, order,
bye-law, rule, regulation, notification, custom or usage having in the territory of India the force of
law.
✓ According to H.L.A. Hart. Law is a set of rules for the society.
✓ The study of Indian legal history can primarily be divided into four periods namely: The Ancient
Period, The Medieval Period, The British Administrative Period and The Indian Legal Period.
✓ The Ancient Period was mostly ruled and governed by kings having their own territories, with
every passing territory, the set of laws differed.
✓ The ancient Indian law was that it was based on the principle of “dharma”, basing righteousness
and duty as its guiding principle, which was a collection of both legal and religious duties.
✓ The minor disputes during the ancient period were decided by the lowest court and the most
important by the king.
✓ Ancient Indian Courts can be divided into six categories based on their rank. They are as follows:
Kula, Shreni, Gana, Adhikrita, Sasita and Nripa.
✓ The Medieval Period begins around the 12th century majorly influenced by foreign invasions and
their idea of law and justice.
✓ During the Sultanate period, there were several courts of Justice, related to different branches of
law. For example, Diwan-i-Mazlim deals with disputes concerning with administration or
bureaucracy.
✓ The chief judicial functionary of the state was the Qazi-ul-Quzat who was appointed by the
emperor to hear appeals and supervise the provincial courts. He was to be assisted by Mufti and
Mir Ad’l.
✓ Mufti was given the duty to explain the law on which the Qazi would deliver the verdict, whereas
Mir Ad’l was associated with the functions of bringing the parties to the court and enforcing the
verdicts.
✓ The Chief Qadi of the provincial court that dealt with all the cases which were civil and criminal
nature and served as the highest forum of appeal within the province.
✓ The military had its own judge, Qadi-e-Askar, who moved from place to place with the troops and
whose office corresponds to the present-day Court Martial.
✓ British legal system was implemented in territories under British occupancy. To name a few
reforms that are still prevalent till date: Establishment of Mayor’s Court – 1726, Warren Hastings
with his Judicial Plan of 1772 which is known as The Adalat System now, Establishment of High
Courts and The Government of India Act, 1935.
✓ On 26 November 1949, the Constitution of India was passed and adopted by the Constituent
Assembly (celebrated as Law Day). On 26th January 1950, the Constitution of India was adopted.
✓ The Supreme Court of India was established on 26th January 1950, established under Article 124
(1) of the Constitution of India, 1950 with a strength of 8 (1 + 7) judges. Currently it has a strength
of 34 judges (33 judges of the Supreme Court of India and 1 Chief Justice of India).
✓ The statutes are enacted by the Parliament and State Legislatures according to their domain,
mentioned in the 7th Schedule of the Constitution of India
✓ A judicial precedent is a decision by a competent court of justice upon a disputed point of law,
becomes not merely a guide but an authority to be followed by all courts of inferior jurisdiction,
administering the same system, until it has been overruled by Superior Court of justice or by
statute.
✓ Personal Laws are defined as a law that applies to a certain class or group of people or a particular
person, based on the religions, faith, practices and culture. For ex, Hindu Marriage Act, 1955.
✓ Ordinance is a law issued by the President of India when the Indian Parliament is not in session.
✓ The ordinances have the same power and effect as a Parliamentary Act, but they are only
temporary legislation.
✓ Article 213 of the Constitution of India, 1950, empowers the Governor of a State, to promulgate
ordinance under in territorial limit of the concerned state.
NOTE – Video Lectures of This Notes are Available on “GYAANI ACADEMY” YouTube Channel.
NOTE – Video Lectures of This Notes are Available on “GYAANI ACADEMY” YouTube Channel.
CH – 2 LEGISLATIVE PROCESS IN INDIA
INTRODUCTION
The statutes enacted by the Parliament of India and/or the State Legislature is one of the most
important sources of law, in the present day. Therefore, it becomes important to understand the
process of distribution of power to legislate and structure of legislature in the Indian democracy.
The legislative process in India derives its authority from the Constitution of India, 1950. The
structure of the Indian polity is that of federal (two tier structure - Central and State Government)
in nature (S.R. Bommai vs Union of India, Supreme Court of India judgment - (1994 SCC (3) 1).
However, India is a federation with a unitary bias and is referred as a quasi-federal state because
of its strong central machinery. The Indian legislative process has two major law-making bodies,
The Parliament of India and the State Legislature.
Article 79 of the Constitution of India states that The Parliament for the Union which shall consist
of the President and two Houses to be known respectively as the Council of States (Rajya Sabha) and
the House of the People (Lok Sabha).
Article 168 of The Constitution illustrates that for every State there shall be a Legislature which
shall consist of the Governor and one House (Legislative Assembly). In some states, there are two
houses, Article 168 (2) of the Constitution of India, where there are two Houses of the Legislature
of a State:
1) Legislative Council 2) Legislative Assembly.
The legislative bodies in India, i.e., at the Central Level (the Parliament) and State Level (Legislative
Assembly) derive its power to frame laws from Article 245 of the Constitution of India.
In order to formulate a law, all legislative proposals have to be brought in the form of bills. The
process of law making begins with the introduction of a Bill in either House of Parliament. A bill
can be introduced either by a Minister or a member other than a Minister. In the former case, it is
called a Government Bill and in the latter case, it is known as a Private Member’s Bill.
Article 107 specifies the provisions as to introduction and passing of Bills Subject to the provisions
of Articles 109 and 117 with respect to Money Bills and other financial Bills, a Bill may originate in
either House of Parliament. (a money bill is not introduced in the Council of States/Rajya Sabha –
Article 109 of The Constitution of India, 1950).
A bill undergoes readings in each House, i.e., the Lok Sabha and the Rajya Sabha, before it is
submitted to the President for assent. Therefore, as every bill goes through several rounds of
debates and scrutiny before it becomes a law, therefore the time frame for the same too is one that
takes time, weeks or sometimes months.
Under Article 123 in times of these emergencies (if the President is satisfied) that circumstances
exist which render it necessary for him to take immediate action, he may promulgate such
Ordinances as the circumstances appear to him to require. (The tenure of an ordinance can vary
from six weeks to six months, depending upon the circumstance). Similar powers have been
provided to the Governor of a State, under Article 213 in territorial limit of the concerned state.
The Article 243 illustrates how the power sharing has gone a step down further w.r.t rural India in
order to incorporate local governance and required adequate support for the same.
Along with all the power to formulate the laws, what becomes a necessity is to amend the same over
time. Article 368 states that notwithstanding anything in this Constitution, Parliament may in
exercise of its constituent power amend by way of addition, variation or repeal any provision of
this Constitution in accordance with the procedure laid down in this article.
However, with all these powers conferred there remains a risk of introduction/deletion of certain
laws, which are in contravention of the rights that are fundamental to human survival with a
dignified life and enhancement of the same. The Supreme Court of India, in Keshavananda Bharati
vs State of Kerala (AIR 1973 SC 1461), mentioned any amendment which is in contravention of the
Fundamental Rights of an individual, will be unconstitutional. However, despite all such checks and
balances, powers are transgressed, and disputes arise. In order to seek the correct understanding
and validity of the law/bye law concerned, we approach the Court to address the merit in the
situation, and decide accordingly.
NOTE – Video Lectures of This Notes are Available on “GYAANI ACADEMY” YouTube Channel.
NOTE – Video Lectures of This Notes are Available on “GYAANI ACADEMY” YouTube Channel.
GYAANI’S ONE LINERS
✓ The legislative process in India derives its authority from the Constitution of India, 1950.
✓ The structure of the Indian polity is federal in nature i.e., two tier structure - Central and State
Government.
✓ India is a federation with a unitary bias and is referred as a quasi-federal state because of its strong
central machinery.
✓ The Indian legislative process has two major law-making bodies, The Parliament of India and the
State Legislature.
✓ Article 79 of the Constitution states that The Parliament for the Union which shall consist of the
President and two Houses to be known as the Council of States (Rajya Sabha) and the House of
the People (Lok Sabha).
✓ Article 168 of The Constitution illustrates that for every State there shall be a Legislature which
shall consist of the Governor and one House (Legislative Assembly).
✓ In some states, there are two houses, Article 168 (2) of the Constitution of India, where there are
two Houses of the Legislature of a State: Legislative Council and Legislative Assembly.
✓ Article 245 of the Constitution of India empowers the legislative bodies in India, i.e., the
Parliament and the Legislative Assembly to frame laws.
✓ Parliament may make laws for the whole or any part of the territory of India, and the Legislature
of a State may make laws for the whole or any part of the State.
✓ The Parliament has exclusive power to make laws with respect to any of the matters mentioned
in List I.
✓ The Legislature of any State has exclusive power to make laws for such State or any part thereof
with respect to any of the matters given in List II.
✓ The Parliament and the Legislature of any State have power to make laws with respect to any of
the matters enumerated in List III.
✓ Article 254 of the Indian Constitution illustrates that any inconsistency between laws made by
Parliament and laws made by the Legislatures of States with respect to one of the matters listed
in the Concurrent List, the Law made by Parliament, shall prevail.
✓ In order to formulate a law, all legislative proposals have to be brought in the form of bills. The
process of law making begins with the introduction of a Bill in either House of Parliament.
✓ A bill can be introduced either by a Minister or a member other than a Minister. In the former
case, it is called a Government Bill and in the latter case, it is known as a Private Member’s Bill.
✓ Article 107 specifies the provisions as to introduction and passing of Bills.
✓ Article 368 states that notwithstanding anything in this Constitution, Parliament may in exercise
of its constituent power amend by way of addition, variation or repeal any provision of this
Constitution in accordance with the procedure laid down in this article.
✓ The Supreme Court of India mentioned any amendment which is in contravention of the
Fundamental Rights of an individual, will be unconstitutional.
NOTE – Video Lectures of This Notes are Available on “GYAANI ACADEMY” YouTube Channel.
NOTE – Video Lectures of This Notes are Available on “GYAANI ACADEMY” YouTube Channel.
CH – 3 LEGAL METHOD AND COURT SYSTEM IN INDIA
INTRODUCTION
The judiciary has been established under the Constitution of India, 1950 as an institution of last
resort, for common public, as well as all legal entities under law, inclusive of the State Governments
and the Government of India. The Supreme Court of India is the apex institution, in its hierarchy,
followed by the High Courts in respective States, followed by the Sub-Ordinate Courts.
NOTE – Video Lectures of This Notes are Available on “GYAANI ACADEMY” YouTube Channel.
NOTE – Video Lectures of This Notes are Available on “GYAANI ACADEMY” YouTube Channel.
High Courts are the second highest courts in the hierarchy dealt
in Chapter V of Part VI of the Constitution. Currently, India has 25
High Courts in different states of the country where Calcutta High
Court Being the Oldest; Andhra Pradesh & Telangana High Court
Being the Newest and Chhattisgarh High Court being the Biggest
High Court of India (also Asia). Judges in High Court are appointed by the President of India in
consultation with the Chief Justice of India and the Governor of State under Article 217 of the
Constitution.
Powers of The High Court
1. Original Jurisdiction: The Court has original jurisdiction and can decide disputes related to
enforcement of fundamental rights, settlement of disputes relating to election to the Union and
State Legislatures and jurisdiction over revenue matters.
2. Writ Jurisdiction: Any person has the right to approach the Court against violation of his
fundamental rights as well as legal rights under Article 226. Thus, it has a wider scope than that
with the Supreme Court.
3. Appellate Jurisdiction: An appeal against orders of subordinate courts in both civil and criminal
matters lie with the High Court.
4. Power of Superintendence: Article 227 of Constitution empowers all High Courts to practice
superintendence over all the courts or tribunals within its territorial jurisdiction. Moreover, under
Article 228, the High Court can transfer any case pending before a subordinate court to itself if
it involves a substantial question of law.
5. Punishment for Contempt: Like the Supreme Court, the High Court is also declared as a Court of
record with the power to punish for contempt of itself.
Chapter VI of Part VI of the Indian Constitution incorporates provisions related to the subordinate
courts. These courts are established and controlled by the High Court taking into account various
factors. The Lower/Subordinate court structure can be divided into the following two branches of the
legal system-
Criminal Court Structure
Section 6 of the Criminal Procedure Code, 1973 prescribes for the constitution of following four
classes of criminal courts:
1. Court of Session: Every State has session divisions with each of them having a Court of Sessions
to be presided over by the Sessions Judge who is appointed by the High Court. The court has
power to try any criminal matter and pass any punishment authorized by law, but punishment of
death penalty has to be confirmed by the High Court.
2. Court of Metropolitan Magistrate: This is a special court established by the State Government in
consultation with the High Court in metropolitan areas, i.e., areas with population of more than
a million. These Courts are subordinate to the Sessions Court. Chief Metropolitan Magistrate can
pass any punishment authorized by law, except death penalty, penalty of life imprisonment or
imprisonment for a term of more than seven years.
3. Court of Chief Judicial Magistrate: The State Government in consultation with the High Court
establishes number of Courts of the Judicial Magistrate- Judicial Magistrate of First Class (JMFC)
and second class headed by the Chief Judicial Magistrate (CJM). These Courts can pass any
punishment authorized by law, except death penalty, penalty of life imprisonment or
imprisonment for a term of more than seven years.
4. Executive Magistrates: The functions and powers of an Executive Magistrate are more or less
administrative in nature and are for maintaining law and order. They are appointed by the
respective State Government. Their essential job is not as a judicial officer.
Supreme Court
High Court
Thus, judiciary comprising of the court system is one of the most vital organs of the state that not
only acts as a watchdog of democracy but also as the guardian of the Constitution. It is evident from
the strong base and the proven efficiency of the structure of the Indian judiciary being independent
and impartial that the existing system is ideal for a big country like India to ensure proper
administration of justice at all levels starting from the grass root.
Hierarchy of Civil Judicial System
Supreme Court
High Court
Subordinate
Tribunals
Court
Composition of Tribunals
The Supreme Court has noted that the members of a tribunal may be selected from departments
of the central government as well as from various other fields of expertise. The presence of expert
members (technical members) along with judicial members is a key feature of tribunals which
distinguishes them from traditional courts. Only persons with a judicial background (such as Judges
of the High Court and lawyers with the prescribed experience) may be considered for appointment
as Judicial Members.
Appeals from tribunals usually lie with the concerned High Court. However, some laws specify that
appeals will be heard by the Supreme Court. Table illustrates some tribunals and the court with
appellate jurisdiction over them.
Name of Tribunal Act Establishing the Tribunal Appellate Court
Industrial Tribunal The Industrial Disputes Act, 1947 High Court
Income-Tax Appellate Tribunal The Income-tax Act, 1961 High Court
Railway Claims Tribunal The Railway Claims Tribunal Act, 1987 High Court
Appellate Tribunal for Electricity The Electricity Act, 2003 Supreme Court
National Green Tribunal The National Green Tribunal Act, 2010 Supreme Court
Armed Forces Tribunal The Armed Forces Tribunal Act, 2007 Supreme Court
Along with Courts, Tribunals and other forums in India, we have various regulatory bodies in India,
which are the part and parcel of governance in their respective sectors, a watchdog and also a
guardian in case of any irregularity. Listed below, are few of the most important one’s affecting on
our day-to-day life.
Securities and Exchange Board of India (SEBI)
SEBI is a statutory body established under the SEBI act of 1992, as a response to
prevent malpractices in the capital markets that were negatively impacting
people’s confidence in the market. Its primary objective is to protect the interest
of the investors, prevent malpractices, and ensuring the proper and fair
functioning of the markets.
Functions of SEBI
1. Protective Functions: To protect the interests of the investors and other market participants. It
includes –
✓ Preventing Insider Trading,
✓ Spreading Investor Education and Awareness,
✓ Checking for Price Rigging, etc.
2. Regulatory Functions: These are performed to ensure the proper functioning of various activities
in the markets. It includes –
✓ Formulating and implementing code of conduct and guidelines for all types of market
participants, conducting an audit of the exchanges,
✓ Registration of intermediaries like brokers, investment bankers,
✓ Levying fees, and fines against misconduct.
3. Development Functions: These are performed to promote the growth and development of the
capital markets. It includes –
✓ Imparting training to various intermediaries,
✓ Conducting research, promoting self-regulation of organizations,
✓ Facilitating innovation, etc.
Powers of SEBI
✓ To access records and financial statements of the exchanges.
✓ To regulate various intermediaries and middlemen like brokers.
✓ To change laws relating to the functioning of the stock exchange.
✓ To approve the listing and force delisting of companies from any exchanges.
✓ To conduct hearing and give judgments on cases of malpractices in the markets.
✓ To take disciplinary actions like fines and penalties against participants who involve in
malpractice.
Reserve Bank of India (RBI)
The Reserve Bank of India (RBI) is India’s central bank and was established
under the Reserve Bank of India Act in 1935. The primary purpose of RBI is
to conduct the monetary policy and regulate and supervise the financial
sector, most importantly the commercial banks and the non-banking
financial companies. It is responsible to maintain price stability and the flow
of credit to different sectors of the economy.
Functions of RBI
✓ It prints, issues and circulates the currency throughout the country.
✓ It regulates the payment and settlement systems and infrastructure.
✓ It issues the license for opening banks and authorizes bank branches.
✓ It oversees the liquidation, amalgamation or reconstruction on financial companies.
✓ It formulates, implements, and reviews the prudential norms like the Basel framework.
✓ It maintains and regulates the reserves of the banking sector by stipulating reserve requirement
ratios.
✓ It inspects the financial accounts of the banks and keeps a track of the overall stress in the
banking sector.
The RBI is the banker to the government and manages its debt issuances, and is also responsible to
maintain orderly conditions in the government securities markets (G-Sec). RBI manages the foreign
exchange under the Foreign Exchange Management Act, 1999.
Insurance Regulatory and Development Authority of India (IRDAI)
IRDAI is an independent statutory body that was set up under the IRDA Act, 1999.
Its purpose is to protect the interests of the insurance policy holders and to develop
and regulates the insurance industry. It issues advisories regularly to insurance
companies regarding the changes in rules and regulations. It promotes the insurance
industry but also controls the various charges and rates related to insurance.
Objectives of IRDA
✓ To formulate standards and regulations so that there is no ambiguity.
✓ To ensure fair treatment and protect the interests of the policyholder.
✓ To regulate the insurance companies and ensure the industry’s financial soundness.
Functions of IRDA
✓ Levying charges and fees as per the IRDA act.
✓ Provides a grievance redressal forum and protect the interests of the policyholder.
✓ Granting, renewing, canceling or modifying the registration of insurance companies.
✓ Regulating and controlling the insurance premium rates, terms and conditions and other
benefits offered by insurers.
✓ Specifying the code of conduct and providing qualifications and training to intermediaries,
insurance agents etc.
✓ Conducting investigation, inspection, audit, etc. of insurance companies and other organizations
in the insurance industry.
Pension Funds Regulatory and Development Authority (PFRDA)
The Pension Fund Regulatory and Development Authority (PFRDA) is a
statutory body, which was established under the PFRDA act, 2013. It is the sole
regulator of the pension industry in India. PFRDA now covers not only
employees in the government sector but all citizens of India including NRI’s.
The National Pension System (NPS) of the government is managed by the
PFRDA. It is also responsible for regulating custodians and trustee banks. The
Central Record Keeping Agency (CRA’s) of the PFRDA performs record keeping, accounting and
provides administration and customer services to subscribers of the pension fund.
Objectives of PFRDA
✓ To protect the interest of subscribers to pension schemes.
✓ To provide income security to the old aged by regulating & developing pension funds;
Functions of PFRDA
✓ Registering and regulating intermediaries.
✓ Protecting the interest of pension fund users.
✓ Stipulating guidelines for investment of pension funds.
✓ Conducting enquiries and investigations on intermediaries and other participants.
✓ Settlements of disputes between intermediaries and subscribers of pension funds.
✓ Formulating code of conduct, standards of practice, terms and norms for the pension industry.
✓ Increasing public awareness and training intermediaries about retirement savings, pension
schemes etc.
Association of Mutual Funds in India (AMFI)
The Association of Mutual Funds in India (AMFI) was set up in 1995. It is a non-profit
organization that is self-regulatory and works for the development of mutual fund
industry by improving professional and ethical standards, thus aiming to make the
mutual funds more accessible and transparent to the public. It provides spreads
awareness vital information about mutual funds to Indian investors.
The Association of Mutual Funds in India is the regulatory body for mutual funds sector in India. It is
a division of the Securities and Exchange Board of India, Ministry of Finance, Government of India.
Most mutual funds firms in India are its members.
AMFI ensures smooth functioning of the mutual fund industry by implementing high ethical
standard and protects the interests of both the fund houses and investors. Most asset
management companies, brokers, fund houses, intermediaries etc in India are members of the AMFI.
Registered AMCs are required to follow the code of ethics set by the AMFI. These codes of ethics are
– integrity, due diligence, disclosures, professional selling and investment practice.
The AMFI updates the Net Asset Value of funds on a daily basis on its website for investors and
potential investors. It has also streamlined the process of searching mutual fund distributors.
NOTE – Video Lectures of This Notes are Available on “GYAANI ACADEMY” YouTube Channel.
NOTE – Video Lectures of This Notes are Available on “GYAANI ACADEMY” YouTube Channel.
Ministry of Corporate Affairs (MCA)
The Ministry of Corporate Affairs (MCA) is a ministry within the
government of India. It regulates the corporate sector and is
primarily concerned with the administration of the Companies
Act, 1956, the Companies Act, 2013 and other legislations. It
frames the rules and regulations to ensure the functioning of
the corporate sector according to the law.
The objective of MCA is to protect the interest of all stakeholders, maintain a competitive and fair
environment and facilitate the growth and development of companies. The Registrar of Companies
(RoC), is a body under the MCA that has the authority to register companies and ensure their
functioning as per the provisions of the law. The issuance of securities by the companies also comes
under the purview of the Companies Act.
National Housing Bank (NHB)
National Housing Bank, is the apex regulatory body for overall regulation and
licensing of housing finance companies in India. It is under the jurisdiction of
Ministry of Finance, Government of India. It was set up on 9 July 1988 under the
National Housing Bank Act, 1987.
The primary function of NHB is to “operate as a principal agency to promote
housing finance institutions both at local and regional levels and to provide financial and other
support to such institutions and for matters connected therewith or incidental thereto”.
NOTE – Video Lectures of This Notes are Available on “GYAANI ACADEMY” YouTube Channel.
NOTE – Video Lectures of This Notes are Available on “GYAANI ACADEMY” YouTube Channel.
CH – 4 PRIMARY AND SUBORDINATE LEGISLATION
INTRODUCTION
In modern day world, government activity influences almost every field of human behavior, thus
necessitating laws in regulating this ever-widening sphere of activity. Therefore, there is constant
need to legislate, at a rapid pace, with a localized understanding, which however is bulky and
impractical to perform, for the Union and State Legislature. As we move towards a more dynamic
society, therefore the governance of the same extends to various levels of government bodies, as
according to the complexity, furthermore delegated power (subordinate legislation) to authorities
and officials.
Primary Legislation is the law that derives its source from the enactments passed by the
Parliament or the State Legislatures, the bodies empowered by the Constitution of India, 1950 by
its provisions. In addition to these the President and the Governor have limited powers to issue
ordinances when the Parliament or the State Legislature are not in session.
Secondary Legislation/Sub-Ordinate Legislation arises from the need for empowering authorities
(to legislate) working at the grass-root level to counter the daily challenges to the existing laws
becomes a necessity. The provision for secondary legislation (in the form of regulations/bye laws)
has been ingrained in the Constitution of India, 1950.
The Constitution of India, 1950 in its provisions illustrates of power delegation (if need be), Article
312- All India Services (1) Notwithstanding anything in Chapter VI of Part VI or Part XI, if the Council
of States (Rajya Sabha) has declared by resolution supported by not less than two thirds of the
members present and voting that it is necessary or expedient in the national interest so to do,
Parliament may by law provide for the creation of one or more all India services (including an all
India judicial service) common to the Union and the States, and, subject to the other provisions of
this Chapter, regulate the recruitment, and the conditions of service of persons appointed, to any
such service. (The Indian Administrative Service and the Indian Police Service shall be deemed to be
services created by Parliament under this article)
Supreme Court of India in the Gwalior Rayon Mills Mfg. (Wing.) Co. Ltd. V Asstt. Commissioner of
Sales Tax and Others (All India Reporter1974 SC 1660 (1667)), The legislatures because of limitations
imposed upon by the time factor hardly go into matters of detail. Provision is, therefore, made for
delegated legislation to obtain flexibility, elasticity, expedition and opportunity for experimentation.
The practice of empowering the executive to make subordinate legislation within a prescribed
sphere has evolved out of practical necessity and pragmatic needs of a modern welfare state.
Subordinate legislation is the legislation made by an authority subordinate to the legislature.
Subordinate legislation is that which proceeds from any authority other than the sovereign power
and is, therefore, dependent for its continued existence and validity on some superior or supreme
authority. Most of the enactments provide for the powers for making rules, regulations, bye-laws or
other statutory instruments which are exercised by the specified subordinate authorities. Such
legislation is to be made within the framework of the powers so delegated by the legislature and is,
therefore, known as delegated or subordinate legislation. The sub-ordinate legislation cannot go
beyond the act or the objective of the act, or the same would be held invalid.
There are instances where pieces of subordinate legislation which tended to replace or modify the
provisions of the basic law or attempted to lay down new law by themselves had been struck down
as ultra vires either because of disobeying the domain of the Act or the Act itself is inconsistent with
the provisions of the Constitution of India.
The Constitution of India, 1950 itself provides provisions for decentralization of governance, for
effective and adequate authority over a territory to look after the requirements. Part IX (Panchayat
System) and Part IXA (Municipalities) of the Constitution of India, 1950 give them adequate
powers and autonomy over their jurisdiction. These two bodies are one of the largest sources of
sub-ordinate legislation, as regulations in these territories need to be revised very rapidly.
As, we have observed in the Covid-19 pandemic, how frequently, guidelines and regulations have
been required to cater to the unprecedented circumstances we have been through. This would have
been a bulky task for the Parliament or the State legislature to be able to analyses and react to the
situation in a localized manner, taking adequate measures for the general wellbeing and
requirements of the population.
NOTE – Video Lectures of This Notes are Available on “GYAANI ACADEMY” YouTube Channel.
NOTE – Video Lectures of This Notes are Available on “GYAANI ACADEMY” YouTube Channel.