Name: Deepak Singh Bohra

Roll No: MBE008

Centre for Management Studies

MBA-Executive
Semester-IV (2020)
End-Semester-IV Examinations, 2020
Online Assignment-2
Subject: Legal Environment of Business
Paper Code: MBA (Exec) CP- 402

Q1. Discuss the merits and demerits of Indian partnership act 1932 by
drawing complete analysis with the help of suitable cases/ illustrations.

Ans: The Indian Partnership Act, 1932, Section 4, defined partnership as “the relation between
persons who have agreed to share the profits of business carried on by all or any of them acting
for all”. A partnership firm is one of the popular types of legal entity wherein two persons join
together to undertake a business for profit. In this article, we look at the advantages and
disadvantages of a partnership firm.

Advantages of Partnership Firm

The following are some of the major advantages of a partnership firm:

Easy to Start
Partnership firms are one of the easiest to start. The only requirement for starting a partnership
firm in most cases is a partnership deed. Hence, a partnership can be started on the same day.
On the other hand, an LLP registration would take about 5 to 10 working days, as the digital
signatures, DIN, Name Approval and Incorporation must be obtained from the MCA.

Decision Making
Decision making is the crux of any organization. Decision making in a partnership firm could be
faster as there is no concept of the passing of resolutions. The partners in a partnership firm
enjoy a wide range of powers and in most cases can undertake any transaction on behalf of the
partnership firm without the consent of other partners.

Raising of Funds
When compared to a proprietorship firm, a partnership firm can easily raise funds. Multiple
partners make for more feasible contribution among the partners. Moreover, banks also view a
partnership more favorably while sanctioning credit facilities instead of a proprietorship firm.
Sense of Ownership
Every partner owns and manages the activities of their firm. Their tasks might be varied in
nature but people in a partnership firm are united for a common cause. Ownership creates a
higher sense of accountability, which paves the way for a diligent workforce.

Disadvantages of Partnership Firm

The disadvantages of a partnership firm are as follows:

Unlimited Liability
Every partner is liable personally for the losses of a partnership firm. The liability created by a
partner in the partnership firm will also make each of the partner personally liable. To limit the
liability of partners in a partnership firm, the LLP structure was created by the Government.

Number of Members
The maximum number of members a partnership firm can have is restricted to 20. In case of an
LLP, there is no restriction on the maximum number of partners.

Lack of a Central Figure

Leadership can both uplift and derail a firm. Combined ownership takes away the possibility of
leadership and lack of leadership leads to directionless operations. On the other hand, in a
partnership firm, certain partners can be given the position of designated partner with more
powers and responsibilities.

Trust of the General Public

A partnership firm is easy to start and does require any registration. A partnership firm can also
operates without much of a structure or regulations. Hence, it often leads to distrust amongst
the general public.

Abrupt Dissolution
A partnership firm would be dissolved due to the death or insolvency of a partner. Such an
abrupt dissolution will hamper a business. On the other hand, the death of a partner will not
automatically dissolve an LLP. Hence, continuity of business is maintained in a LLP.

In below pages, you will see the illustrations on

a) “Nature of Patnerships”
b) “Kind of Patnerships”
c) “Types of Partners”
 Q2. Discuss in detail the history and legal frame work of Indian consumer
protection act, 1986? and it’s amendment in the year 2019. Do you think
the same act is empowered to deal the consumer online? Explain?
Ans:
The Consumer Protection Act, 1986 (COPRA) is an Act of the Parliament of India enacted in
1986 to protect the interests of consumers in India. It is replaced by The Consumer Protection
Act 2019. It is made for the establishment of consumer councils and other authorities for the
settlement of consumer's grievances and matters connected therewith it. The act was passed in
Assembly in October 1986 and came into force on December 24, 1986.

STATEMENT OF OBJECTS AND REASONS

1. The Consumer Protection Bill, 1986 seeks to provide for better protection of the interests
of consumers and for the purpose, to make provision for the establishment of Consumer
councils and other authorities for the settlement of consumer disputes and for matter
connected therewith.
2. It seeks, inter alia, to promote and protect the rights of consumers such as-

(a) the right to be protected against marketing of goods which are hazardous to life
and property;
(b) the right to be informed about the quality, quantity, potency, purity, standard and
price of goods to protect the consumer against unfair trade practices;
(c) the right to be assured, wherever possible, access to an authority of goods at
competitive prices;
(d) the right to be heard and to be assured that consumers interests will receive due
consideration at appropriate forums;
(e) the right to seek redressal against unfair trade practices or unscrupulous
exploitation of consumers; and
(f) right to consumer education.

3. These objects are sought to be promoted and protected by the Consumer Protection
Council to be established at the Central and State level.
4. To provide speedy and simple redressal to consumer disputes, a quasi-judicial
machinery is sought to be setup at the district, State and Central levels. These quasi-
judicial bodies will observe the principles of natural justice and have been empowered to
give relief of a specific nature and to award, wherever appropriate, compensation to
consumers. Penalties for noncompliance of the orders given by the quasi-judicial bodies
have also been provided.
5. The Bill seeks to achieve the above objects.
The Act has several other outstanding features which are carefully incorporated after an in-
depth study of consumer protection laws of a number of countries and in consultation with the
representatives of consumers, trade and Industry and after extensive discussion within the
government. AH the provisions of the Act came into force with effect from 1st July, 1987. The
Act was amended in 1991 & 1993. Due to these amendments the scope of the Act got
expanded.
Application:
a) It applies to all the goods and services unless specifically exempted by the Central
Government.
b) It covers all the sectors whether private/cooperative.
c) It provides the above mentioned rights to the consumers.
d) The act has provision regarding creation of consumer protection council at Central And
State levels to protect the rights of consumers.
e) To provide speedy and inexpensive redressal of a consumer grievance, the Act has a 3
tier quasi Judicial machinery at District, State and National levels.
I. District consumer disputes redressal forum known as District Forum.
II. State Consumer disputes redressal commissions known as State Commission.
III. National consumer dispute redressal commission known as National
Commission.
These three levels of consumer grievance redressal are provided over and above the regular
judiciary services.
Advisory bodies under consumer protection Act 1986.
The Act has instituted Advisory Bodies at two levels.
I. Central Consumer Protection council is instituted at the Central Government level and
II. State consumer protection council is instituted at the state levels.
These councils are under the Chairmanship of the Honorable Minister of Food, Civil Supplies
and Consumer Affairs, State Government Ministry of representatives from consumer interest
groups representatives of farmers trade and industry, employees unions representatives of
Government Lok-sabha and Raj-sabha (Parliament) members representatives of the women,
other members who can contribute for the cause of consumers secretaries of the Department of
Food, Civil Supplies and Consumer Affairs members of the Bureau of Indian Standards (BIS).
The Central consumer protection council when it was implemented, the council had 150
members.
Gradually state consumer protection councils also formed at respective state levels.

The benefits of C.P. Act 1986 to Consumers

This Act has provided several benefits to the consumers of the country.
It has provided efficient and economical judiciary system at various levels, namely District
levels, i.e. District Consumer Grievance Redressal Forum at State level State Consumer
Grievance Redressal Commission and at National level National Consumer Grievance
Redressal Commission are in existence.
Over and above the aforementioned three tier quasi judicial system it has a provision of two
level advisory bodies under the Consumer Protection Rules 1987 i.e. within the Consumer
Protection Act 1986 namely at state level i.e. State Consumer Protection Council and at
National Level Central Consumer protection council which has given representation to various
communities influencing consumer protection. These two advisory bodies consider not only
problems of consumer but these bodies also thinks, plans implements and monitory measures
for preventing consumer exploitation. These bodies communicate and coordinate with other
ministries, departments and public sector units of the centre and state. The state commissions
are also of the view that such committee may also be appointed at district taluka and village
levels which may be more meaningful in the direction of consumer protection and consumer
well-being.
The Consumer Protection Bill, 2019
The Consumer Protection Bill, 2019 was introduced in Lok Sabha by the Minister of Consumer
Affairs, Food and Public Distribution, on July 8, 2019. The Bill replaces the Consumer Protection
Act, 1986. The new Act proposes a slew of measures and tightens the existing rules to further
safeguard consumer rights. Introduction of a central regulator, strict penalties for misleading
advertisements and guidelines for e-commerce and electronic service providers
Key features of the Bill include:
 Definition of consumer: A consumer is defined as a person who buys any good or
avails a service for a consideration. It does not include a person who obtains a good for
resale or a good or service for commercial purpose. It covers transactions through all
modes including offline, and online through electronic means, teleshopping, multi-level
marketing or direct selling.

 Rights of consumers: Six consumer rights have been defined in the Bill, including the
right to: (i) be protected against marketing of goods and services which are hazardous to
life and property; (ii) be informed of the quality, quantity, potency, purity, standard and
price of goods or services; (iii) be assured of access to a variety of goods or services at
competitive prices; and (iv) seek redressal against unfair or restrictive trade practices.

 Central Consumer Protection Authority: The central government will set up a Central
Consumer Protection Authority (COPRA) to promote, protect and enforce the rights of
consumers. It will regulate matters related to violation of consumer rights, unfair trade
practices, and misleading advertisements. The COPRA will have an investigation wing,
headed by a Director-General, which may conduct inquiry or investigation into such
violations.
 E-commerce under the radar: E-commerce will now be governed by all the laws that
apply to direct selling. The guidelines propose that platforms like Amazon, Flipkart,
Snapdeal, etc will have to disclose sellers’ details, such as their address, website, email,
etc and other conditions related to refund, exchange, terms of contract and warranty on
their website to increase transparency.

 COPRA will carry out the following functions, including:

(i) Inquiring into violations of consumer rights, investigating and launching
prosecution at the appropriate forum
 (ii) Passing orders to recall goods or withdraw services that are hazardous,
reimbursement of the price paid, and discontinuation of the unfair trade practices,
as defined in the Bill
(iii) Issuing directions to the concerned trader/ manufacturer/ endorser/ advertiser/
publisher to either discontinue a false or misleading advertisement, or modify it
(iv) Imposing penalties, and
(v) Issuing safety notices to consumers against unsafe goods and services.

 Penalties for misleading advertisement: The COPRA may impose a penalty on a

manufacturer or an endorser of up to Rs 10 lakh and imprisonment for up to two years
for a false or misleading advertisement. In case of a subsequent offence, the fine may
extend to Rs 50 lakh and imprisonment of up to five years.

 COPRA can also prohibit the endorser of a misleading advertisement from endorsing
that particular product or service for a period of up to one year. For every subsequent
offence, the period of prohibition may extend to three years. However, there are certain
exceptions when an endorser will not be held liable for such a penalty.

 Consumer Disputes Redressal Commission: Consumer Disputes Redressal

Commissions (CDRCs) will be set up at the district, state, and national levels. A
consumer can file a complaint with CDRCs in relation to: (i) unfair or restrictive trade
practices; (ii) defective goods or services; (iii) overcharging or deceptive charging; and
(iv) the offering of goods or services for sale which may be hazardous to life and safety.
Complaints against an unfair contract can be filed with only the State and National
Appeals from a District CDRC will be heard by the State CDRC. Appeals from the State
CDRC will be heard by the National CDRC. Final appeal will lie before the Supreme
Court.

 Jurisdiction of CDRCs: The District CDRC will entertain complaints where value of
goods and services does not exceed Rs one crore. The State CDRC will entertain
complaints when the value is more than Rs one crore but does not exceed Rs 10 crore.
Complaints with value of goods and services over Rs 10 crore will be entertained by the
National CDRC.

 Product liability: Product liability means the liability of a product manufacturer, service
provider or seller to compensate a consumer for any harm or injury caused by a
defective good or deficient service. To claim compensation, a consumer has to prove
any one of the conditions for defect or deficiency, as given in the Bill.

As mentioned in the above amendment under the new COPRA, the Central Government
introduced rules/ notifications to prevent unfair trade practices in ‘e-commerce’ space, i.e.
retaining flexibility to issue “bespoke” rules in future aimed at e-commerce platforms/
aggregators (covering both goods and services) from a consumer protection standpoint.

Though the new consumer law in India is a positive step and in line with the needs of the “digital
consumer”, certain aspects there open the Government to allegations of over-legislating,
especially in the tech/ e-commerce space, and retaining “broad-brush” powers for issuing
delegated legislation (i.e. rules/ notifications) in future in the name of “consumer protection” and
it would be interesting to see how the new law is applied in the digital and emerging-tech space.