Assignment questions for both MBA-general & hospital management

Q.1. Contract laws-explain in detail

According to section 2(h) of the Indian Contract Act, 1872, “An agreement enforceable by law is a contract. “
A contract is a combination of the two elements:
a. There must be an agreement
b. Agreement must be enforceable by law (obligation)
Contract = Agreement + Enforcement by law
GENERAL PRINCIPLES
• Agreement
• Consideration
• Consensus ad idem
• free Consent
• Capacity
• Not declared to be void:
• Lawful object:
• Legality
• Certainty and possibility of performance

GENERAL PRINCIPLES
Agreement
a. There must be an offer and an acceptance with a definite agreement between the parties.
b. In simple terms, one party must make a clear offer, and the other party must accept it.
Agreement = offer + Acceptance

CONSENSUS AD IDEM:
 The parties to a contract must agree upon the subject matter of the contract in the same manner
and in the same sense.
 In other words, there must be identity of minds among the parties regarding the subject matter of
the contract. (Sec. 13).

CONSIDERATION
 Consideration is the exchange of promises by the parties to the contract or agreement.
 It can be the payment of money, the delivery of equipment, the promise to do or perform a service
or work, the promise not to take an action or not to take or enforce a right.
 A contract without consideration is not a contract at all.
 An agreement made of an unlawful consideration is void also.

GENERAL PRINCIPLES
Intention:
 Each person, on entering a contract, must intend to be bound by it.
 For a person to be bound to a contract, she/he must seriously intend to create legal obligations and
have intended the agreement to have legal consequences.
FREE CONSENT
 For the formation of a contract one person must give his consent to another person.
 The consent thus obtained is said to be free if it is not caused by coercion' undue influence, fraud,
misrepresentation or mistake (Sec. 14)
CAPACITY
 Both parties in a contract must have the necessary mental capacity to understand what they are
doing.
 Under common law, anyone has the right to enter into a contract but the following groups of people
are considered likely to lack the necessary capacity to a certain extent:
 young people (persons under the age of eighteen);
 people who have a mental impairment (including an intellectual disability); and
 people under the influence of drugs or alcohol

LAWFUL OBJECT:
 The object of an agreement must be lawful.
 It must not be illegal or immoral or opposed to public policy.
 When the object of a contract is not lawful, the contract is void

NOT DECLARED TO BE VOID:

 The agreement might not have been expressly declared void by any law in force in the country.
 In such cases the agreements cannot be enforced.
 For example: A agrees to supply liquor to B, subsequently prohibition Act comes into force. Thus all
agreements to supply liquor become void, thereafter. Therefore B cannot enforce the agreement
which is made before the act comes into force

CERTAINTY AND POSSIBILITY OF PERFORMANCE

 The term of the contract should be certain and precise.
 They should not be vague and they should not create any confusion in the minds of the parties.
Similarly the terms of agreement must be capable of performance.
 An agreement to do an act which is impossible in itself cannot be enforced

LEGALITY-
 There should be an intention between the parties to create a legal relationship. Otherwise there
cannot be binding agreement between them.
 The agreement should create a legal obligation.
 Mere informal promise are not to be enforced.
 Social agreements (like an agreement to have a dinner) are not to be enforced as they do not create
any legal obligation
 Q.2. Sale of goods act

The Sale of Goods Act is legislation that governs transactions for the sale of goods. Although the Australian
Consumer Law (ACL) is now primarily used in business to consumer transactions, the Sale of Goods Act continues to
apply in business to business transactions and in some business to consumer transactions. Therefore, it is important to
be aware of this Act if you are a supplier or a manufacturer for businesses. This article will discuss when and where
the Sale of Goods Act applies. Each state has its version of a Sale of Goods Act. While they are all very similar, this
article will focus on the New South Wales (NSW) Sale of Goods Act.

When the Sale of Goods Act Applies

The Sale of Goods Act applies in transactions where the seller agrees to transfer, or transfers, property in goods to the
buyer for a money consideration. So, for the Sale of Goods Act to apply, the following elements must be present:

1. a contract of sale;
2. transfer of property;
3. goods; and
4. Money consideration.

Contract of Sale
The contract of sale can either be a sale or an agreement to sell. Both types of contracts fall under the definition of
‘contract of sale’ under the Sale of Goods Act.
A sale occurs when ownership of the item passes immediately from the buyer to the seller. For example, when you
buy ice cream from a shop. You pay for the ice cream and it immediately becomes yours.
An agreement to sell occurs when ownership of the item is going to be transferred at a future time or is subject to
some condition. For example, if you agree you are going to buy a car but the sale is conditional on you obtaining a
loan for the vehicle. Because ownership of the vehicle has not transferred, this is an ‘agreement to sell’.

Transfer of Goods
For the Sale of Goods Act to apply, the consequence of the contract must be a transfer of goods. This means that
ownership of the goods must pass from the seller to the buyer. The Sale of Goods Act only applies when the buyer
gets the goods. That buyer must receive unrestricted ownership of whatever they purchase.
Therefore, contracts for leases or conditional ownership of goods do not fall under the Sale of Goods Act. In most
cases, ownership of the goods will transfer when the parties intend for it to transfer. The court looks at the terms of the
contract, the conduct of the parties and the circumstances of the case when deciding what the parties intended.

What is a ‘Good’?
The contract must be for the purchase of ‘goods’. ‘Goods’ are tangible objects. Under the Act, ‘goods’ are not:

 attached to the ground;

 part of the land;
 money;
 intangible property, such as intellectual property; or
 Contracts for service, such as a contract between an accountant and a business.

Money Consideration

In exchange for the goods, the buyer must pay a monetary price. The price is set by the contract or determined by the
parties. Where the parties do not set a price, the buyer must pay a reasonable price.
Q.3. Winding up of a company
Winding up of a company is defined as the condition when the life of the company is brought to an end. The properties
of the company are administered for the profit of its members and its creditors.

Steps of Winding Up

The following steps are followed in the case of a company winding up −

 An administrator, usually denoted as a liquidator, is appointed in the context of liquefaction or winding up of a
company.
 The liquidator takes control over the company, assembles its assets, pays debts of the company and finally
distributes any surplus amongst the members according to their rights and liabilities.
 The company has no assets or liabilities at the end of liquefaction or winding up.
 The dissolution of a company takes place when the assets and liabilities of a company are completely wound up.
 On the context of winding up, the name of the company is stuck off from the list of companies and its identity
as a separate legal person is lost.
 If a company is unable to pay its debts or the debts taken by the company is worth more than the assets it owns
and no agreements have been made with the creditors, then the company is considered insolvent and is subjected
to compulsory liquidation or compulsory winding up.
 If an insolvent owes money to a natural person, he may ask the court of law to make a compulsory winding up
order against the company.
 On the issuance of the order, the order is informed by the court to the official receiver, who eventually becomes
the liquidator.
 The official receiver informs the creditors and conducts interviews with the directors of the company on the
context of the winding up.
 If it is believed by the official receiver that the company has enough assets to pay its creditors, then the official
receiver will seek for the appointment of an insolvency practitioner as the liquidator.
 The appointment of the liquidator is done either by calling a creditors’ meeting for the creditors to elect a
liquidator by vote or by requesting the Secretary of the State to appoint one.
 If there are no assets left, then the official receiver will become the liquidator.
 A person must be owed a minimum amount of INR 750 without dispute before he can ask for a winding up.
 Other business corporations or individuals can request the order of winding up of a company.
 Insolvency Service, an agent of the government, is an investigating agency, which investigates the winding up
of a company.
 The Insolvency Service investigates financial failure and misconduct of individuals and companies.
 The official receiver works for the Insolvency Service.
 The official receiver finds out when and why an individual became bankrupt and finds out the primary cause
behind the liquidation of a company.
 The procedure of winding up differs according to the registration status of the company, i.e., if the company is
registered or if it is an unregistered company.
 If the winding up of a company is processed in the court of law, the liquidator is termed as official liquidator.
 The official liquidator acts through a recognized reporting system under the supervision of the court.

Powers of a Liquidator

An administrator, usually denoted as a liquidator, is appointed in the context of liquefaction or winding up of a company.
The liquidator takes control over the company, assembles its assets, pays debts of the company and finally distributes
any surplus amongst the members according to their rights and liabilities.
The following are the general powers of a liquidator −
 Illustrating or defending any action, suit, prosecution or any legal proceedings on behalf of the company
 Carrying out the business of the company as far as it is beneficial for the company
 Paying the creditors
 Making any compromise or arrangements with the creditors
 Compromising all the calls, debts and liabilities, which may result in further debts on the company
 Selling all the mobile and immobile assets of the company by conducting public auctions or by private contracts,
with power to transfer the assets to a single person or to various persons in parcels
 Performing all the acts and deeds needed for the winding up with receipts and documents using the company’s
seal and name
  Drawing, accepting, making and endorsing any bill of exchange or promissory note in the name and on behalf
of the company
 Raising the security of the properties and money of the company

Compulsory Winding Up

Compulsory winding up takes place when a creditor of an insolvent company asks the court for a wind up. If the company
goes into liquidation, the court of law appoints a liquidator for the liquidation.
 The primary objective of the liquidator is to raise as much funds as needed to pay the creditors.
 The company will then be dissolved and its name will be struck off from the list of companies in the registrar’s
office.
 Any surplus money left will be distributed amongst the shareholders of the company.
 This legal process ends with the company’s name struck off from the list of companies in the registrar’s office.
 After the name is struck off, the company ceases to exist anymore.
Winding up involves the following −
 Every contract of the company, including individual contracts are completed, transferred or ended. The company
is no more able to do business.
 Any outstanding legal disputes are settled.
 All the assets of the company are sold.
 Money owed to the company, if any, is collected.
 Funds raised are distributed to the creditors.
 Surplus funds left after all the transactions are distributed amongst shareholders.

Consequences of Winding Up

The most important consequences of the winding up of a company are as follows −

As Regards the Company Itself
 Winding up doesn’t take away the existence of the company completely.
 The company continues to exist as a corporate entity till its dissolution.
 All the ongoing business of the company is administered by the liquidator during the phase of liquidation.
As Regards the Shareholders
 Contributors − a new statutory liability comes into existence.
 Every transaction of share during the liquefaction done without the approval of the liquidator is termed void.
As Regards the Creditors
 The creditors cannot file a case against the company except with the consent of the court.
 If the creditors already have decrees, they cannot proceed with the execution.
 They must explain their claims and justify their claims to the liquidator.
As Regards the Management
 With the appointment of the liquidator, all the powers of the directors, chief executives and other officers tend
to cease.
 Only the powers to give notice of resolution and the power of appointment of the liquidator upon winding up of
the company are given to the members.
As Regards the Disposition of the Company’s Property
All the dispositions of the company’s properties are void if the dispositions are not approved by the court or the
liquidator.

Circumstances in which a Company May Be Wound Up

A company may be wound up by a tribunal where the petition has been filed under the following circumstances −

 A special resolution is passed by the company that the company shall be wound up by the tribunal.
 Failure of the company in reporting a statutory report at the registrar’s office.
  Non-commencement of the company in business within one year of incorporation.
 Number of members has reduced below 7 for a public company or 2 for a private company respectively.
 The debts of the company are unpayable by the company.
 The tribunal is just equitable to wound up the company.
 The company is unable to file its balance sheet or annual return for five financial years consecutively.
 The company has acted against the sovereignty and integrity of the country.
Application of Winding Up
An application of winding up must be filed with the petition of winding up by the following entities −

 The company
 Any creditor or creditors of the company
 Any of the contributory company
 Any person authorized by the central government
 The state government or the central government
According to the procedures mentioned in section 439-481 of the Companies Act, the tribunal will move on upon the
receipt of the petition.

Winding Up of the Company by Tribunal

When a resolution for the winding up of a company is passed inside the company, the court may make an order for the
voluntary winding up to continue.
 However, the court remains in supervision of the winding up.
 The freedom and liberty of the creditors, contributors or others to apply to the court at such times is limited by
the court.
 A petition for the winding up must be filed at the court for the supervision of the court over the winding up.
 The winding up of a company by the order of the court is also regarded as a compulsory wind up.
Section 305 of the ordinances justifies the following circumstances where the court may wind up the company based
upon a petition submitted to a court.
 If the company decides by a special resolution that the company should be wound up by the court.
 If the company is found to be a defaulter in delivering statutory reports at the registrar’s office or holding
statutory meetings or holding two annual general meetings for two consecutive years.
 If the company does not start its business for one year of incorporation or its business in suspended for one year.
 If the number of members is reduced below 2, 3 and 7 for private, public and listed company respectively.
 If the company is found no more able to pay its debts.
 If the company is −
o Carrying out or complying unlawful and fraudulent activities
o Carrying out business activities not authorized by its memorandum of association
o Carrying out business in an oppressive manner towards its members concerned with the promotion of
the company
o Running and is managed by the hands of persons who are in a default in maintaining proper accounts or
are involved in fraudulent and dishonest activities
o Managed by persons who fail to work in sync with the memorandum of association of the company or
fail to comply with the registrar and the court of law.
 If the company, being a listed company, does not stand out to act like one.
 If the court’s opinion is to wind up the company or
o Complete deadlock in the management of the company
o Failure of company’s main objective
o Recurring losses
o Oppressive or aggressive policies of the majority of shareholders
o Incorporation of a company with intent to fraudulent or illegal purpose
o Public interest
 If the company ceases to have a member.
Procedure for Winding Up of a Company

 A special resolution must be passed in the company in the context of winding up and the consent of 3/4th of its
members is required for the winding up to be carried out by the court.
 A list of the total assets must be prepared in order to confirm that the company is no more able to pay its debts.
 A list of the creditors must be prepared.
 In the context of any defaults in payments, the creditors of a company are required to make a decision for filing
a petition in the court of law.
 Advocates must be engaged to prepare and file the petition.

Voluntary Winding Up

A company may be wound up voluntarily under the following circumstances −

 An ordinary resolution is passed in the general meeting of the company on the context of winding up −
o If the period pre-fixed by the articles of association of the company has been expired.
o In case of an event according to the articles of association of the company, under which the company
needs to be dissolved.
 If a special resolution is passed by the members of the company for the voluntary liquidation of the company.
 A minimum notice of 21 clear days must be given in order to convene a general meeting.
 However, with the consent of the members, a general meeting can be convened with a shorter notice.
 A voluntary winding up is commenced just after the above mentioned resolution has been passed.
 The notice for the beginning of the winding up of a company must be made in an official gazette, i.e., by applying
to the registrar of companies within 14 days of commencement of the liquidation.
 Again, the notice of the winding up of the company must be published in a newspaper in the place where the
registered office of the company is situated.
 The company becomes unable to conduct any commercial business activities after the commencement of the
winding up.
 However, business can be conducted for the benefit of the company’s winding up process, i.e., paying debts to
the company’s creditors, etc.
 The corporate state and its corporate power continue to remain in existence until the company is finally
dissolved.
 Further, there two kinds of voluntary winding up −
o Members voluntary winding up
o Creditors voluntary winding up
 The rules for both kinds of winding up are the same.
 The Companies Act however provides some specific criteria for these two types of winding up.

Members’ Voluntary Winding Up

This type of winding up is carried out when the company is solvent and is able to pay its liabilities totally. The important
aspects of members’ voluntary winding up are as follows −
Declaration of Solvency
 For the winding up of a company, it is needed for the directors to conduct a meeting, where the majority of the
directors make a declaration approved by an affidavit that they have made a full assessment of the company and
the company is able to pay all its debts within three years of the winding up of the company.
 It is necessary for such a declaration to be made at least 5 weeks before the resolution to become effective.
 It should be necessarily delivered to the registrar’s office.
Appointment and Remuneration of Liquidators
The company, in a general meeting, must exercise the following things &minsu;
 Appointment of liquidators for the purpose of winding up of the company as and when the company is about to
be wound up and for the distribution of the assets of the company
 Fixing an adequate remuneration to be paid to the liquidators. This fixed remuneration cannot be changed in any
circumstances. The liquidator does not take charge of his office unless the remuneration is fixed.
Board’s Power to Cease
 During the course of liquidation, all the powers of the directors and managers are ceased.
 However, the power to give notices and the power to make appointments to the registrar is not ceased.
  However, the powers of the directors may continue to exist upon the sanction of their powers by the shareholders
or the liquidator.
Notice of Appointment of the Liquidator Is Given to the Registrar
Power of Liquidator to Accept Shares as Consideration as Sale of Property of the Company −
 The liquidator can accept shares, policies or take interests to consider the sale of the company’s belongings to
another company.
 He may do so with an aim to distribute the same amount of members of the transferor company, provided −
o A special resolution is passed in the company for this act to be effective.
o He buys the interest of any dissenting member at a price to be determined by an agreement or arbitrarily.s
Duty of Liquidator to Call Creditors’ Meeting in Case of Insolvency
If the liquidator, for any reason, realizes that the company is on the verge of insolvency, i.e., thinks that the company
will be unable to pay its debts and liabilities within the limited time as specified by the declaration of insolvency, he
must summon a meeting of the creditors where the statement of all the assets and liabilities is laid before them.
Duty of the Liquidator to Inform the Income Tax Officer
 Upon the appointment of a liquidator, the income tax office must be informed of the appointment of the
liquidator.
 This must be done within 30 days of the appointment of the liquidator.
 The tax assessment of the company is to be carried out.
Duty of the Liquidator to Call General Meeting at the End of Each Year
 In case the process of winding up takes more than one year, the liquidator must call for general meetings at the
end of each year.
 The meetings should be held within three months from the end of each year or as specified by the central
government of India.
 The liquidator must present a brief account of his actions and the matters he is dealing with and the progress of
the winding up at the general meeting before all the other members of the company.
Final Meeting and Dissolution
When the affairs of the company are fully finished, the liquidator must do the following things −
 Make a report on how the process of winding up progressed, ensuring all the property of the company has been
disposed.
 Conduct a general meeting of the company for laying the report before the company and provide justification of
the steps he has taken for the successful winding up of the company.
 Send a copy of the report to the registrar’s office and meet the registrar to return the report within one week and
make a report to the tribunal about the conduct of the winding up to ensure that that the liquidation went as per
the members of the company’s interest.
Dissolution of the Company
 Bringing an end to the life of a company is termed as dissolution.
 No property can be held by a dissolved company.
 The company cannot be sued by the court after liquidation.
 If any property of the company still remains after the dissolution of the company, the property will be taken over
by the government immediately.

Creditors’ Voluntary Winding Up

Creditors’ voluntary liquidation is a procedure in which the company's directors choose to voluntarily bring the business
to an end by appointing a liquidator (who must be a licensed insolvency practitioner) to liquidate all its assets. The
important provisions of the creditors’ voluntary winding up are as follows −
Meeting of the Creditors
 A creditors’ meeting must be called up within two days of the day when the resolution for winding up of the
company, as proposed by the creditors, is passed.
 A notice of the creditors’ meeting along with the notice of the general meeting of the company must be delivered
to all the creditors of the company.
 A full-fledged report on the company’s affairs, the list of the creditors of the company and the estimated amount
of claims made by the creditors should be presented by the directors before the creditors of the company.
Notice of Resolution to Be Given to the Registrar −
When a resolution of winding up of a company, as proposed by the creditors, is passed, a notice of the resolution must
be delivered at the registrar’s office within 10 days from the day when the resolution is passed.
Appointment of the Liquidator
 A liquidator for the purpose of the winding up of the company may be nominated by the creditors of a company
at the creditors’ meeting.
 However, if there are different persons nominated at the general meetings of the company and the creditors
meeting of the company, then the person nominated by the creditors is appointed as the liquidator of the
company.
Appointment of the Inspection Committee
If the creditors wish, they may appoint an inspection committee for watching over the entire process of winding up of
the company.
Remuneration of the Liquidator
 The creditors fix the remuneration of the liquidator.
 If the creditors fail to fix the remuneration of the liquidator, the remuneration shall be fixed by the tribunal.
 No liquidator shall join unless a respectable remuneration is fixed.
 Once fixed, the remuneration cannot be changed.
Power of the Liquidator
 The liquidator enjoys all the powers as vested on a director.
 Further the liquidator enjoys all the powers as vested on a liquidator in case of members’ voluntary winding up
according to section 494 of the Companies Act, 1956.
Duty of the Liquidator to Call General Meeting at the End of Each Year
 In case the process of winding up takes more than a year, the liquidator must call for general meetings and
creditors’ meetings at the end of each year.
 The meetings should be held within three months from the end of each year or as specified by the Central
Government of India.
 The liquidator must present a brief account of his actions and the matters he is dealing with and the progress of
the winding up at the general meeting before all the other members of the company.
Final Meeting and Dissolution
When the affairs of the company are fully finished, the liquidator must do the following things −
 Make a report on how the process of winding up went, ensuring all the property of the company has been
disposed.
 Conduct a general meeting of the company for laying the report before the company and give certain explanation
about the justification of the steps he has taken for the successful winding up of the company.
 Send a copy of the report to the registrar’s office and meet the registrar to make a return of the report within one
week and make a report to the tribunal about the conduct of the winding up to ensure that the liquidation went
as per the members of the company’s interest.
Dissolution of the Company
 Bringing an end to the life of a company is termed as dissolution.
 No property can be held by a dissolved company.
 The company cannot be sued by the court after liquidation.
 If any property of the company still remains after the dissolution of the company, the property will be taken over
by the government immediately.
Q.3. Consumer protection act
The Consumer Protection Act is created to implement safety for buyers in case of any threat to their health or
general well-being.

This act helps consumers explore the market safely in search of their wants and needs.

Consumer Product Quality and Safety

This is a policy to ensure the development of safety and quality standards provided for consumers which
includes codes of practice and methods of tests and protect the public against risks that may arise from
products.

Consumer Rights

 Right to basic needs

 Right to safety
 Right to information
 Right to choose
 Right to representation) Right to redress
 Right to consumer education
 Right to Healthy environment

Consumer Responsibilities

 Ask Yourself;
 Be Critically Aware;
 Be Involved;
 Be Organized;
 Practice Sustainable Consumpton;
 Be Responsible to the Environment.

Special packaging of Consumer Products for the Protection of Children - The concerned department may
establish standards for the special packaging of any consumer product if it finds that:

i. The degree or nature of the hazard to children in the availability of such product, by reason of its
packaging, is such that special packaging is required to protect children from serious personal injury
or serious illness resulting from handling and use of such product; and
ii. The special packaging to be required by such standard is technically feasible, practicable and
appropriate for such product. In establishing a standard under this

Article, the concerned department shall consider:

a. The reasonableness of such a standard;

b. Available scientific, medical and engineering data concerning special packaging and
concerning accidental ingestions, illnesses and injuries caused by consumer product
c. The manufacturing practices of industries affected by this Article; and
d. The nature and use of consumer products.

Consumer Products and Service Warranties

 Implementing Agency - The Department of Trade and Industry, shall strictly enforce the provision of this
Chapter and its implementing rules and regulations.
 Applicable Law on Warranties - The provisions of the Civil Code on conditions and warranties shall govern all
contracts of sale with conditions and warranties.
 Additional Provisions on Warranties - In addition to the Civil Code provisions on sale with warranties, the
following provisions shall govern the sale of consumer products with warranty.
Q.5. Company laws

Company Law is a wider concept based on commercial law. It states about all legal rights, relation,
and conduct of a persons, companies, organizations & businesses and its formation, funding,
governance & death of a corporation.

History of Company Law

 The concept of company act taken from English Companies Act, 1844.The first company
legislation in India was passed in 1850 known as a Joint Stock Companies Act. This Act was
replaced by the Joint Stock Companies Act, 1857 which introduced the principle of limited
liability for the first in India.
 This act again as a Joint Stock Companies Act, 1860 modified by addition the principle to
banking companies.
 In 1866 the first comprehensive Act provided for the incorporation, regulation and winding up of
companies. The 1866 Act was recast in 1882 and remained in force till 1913.
 Later on the Indian Companies Act, 1913 was passed followed by the English Companies Act,
1908. After that this act was amended and recasted several times almost every year.
 Finally the Companies Act, 1956 was passed and came into force 1st April 1956 based on the
English Companies Act, 1943. It consists of 658 sections and 13 schedules. After 25 amendments
the Companies Act, 2013 passed by Parliament by introducing a new Company Bill. It came into
force on the 29th of August 2013.

Meaning & Definition of Company Law

 The word “company” is derived from two Latin words that are “com” & “panis” which means
“together” & “bread” respectively. So it literally means that a company is an association of a
person who took their meals together.
 Company simply means an incorporated association of a person. Here, person means there are
two types of person;
 Natural Person – It is created by nature for example; human beings.
 Artificial or Legal Person – It is created by law for example; firms, companies, trusts, LLP etc.

Definitions

Section 2(20) Of The Companies Act 2013 defines a Company as “a means association of a person
formed or registered under either present company laws, that is Companies Act, 2013 or previous
company laws, that is Indian Companies Act, 1956/1913/1882 etc.“

Lord Justice Lindley defines a company “as an association of many people who contribute money or
monies worth to a common stock and employed in some trade or business and who share the profit and
loss arising from the common stock so contributed. The people who contribute to it or to whom it
pertains are members. The shares are always transferable although the right to transfer is often more or
less restricted”.

Prof Haney defines a company “as an artificial person created by law, having separate entities, with a
perpetual succession and common seal”.

Salient Features of a company under Company Law

Incorporated Association means it must be registered under present Companies Act, 2013 or previous
Indian Companies Act, 1956 and others.
  Separate Legal Entity: It means an independent person who acquires such rights and powers as
a human being. Every company, whether private limited or public limited, must be registered and
get its own legal identity. And there are veils between the company & its members.
 Perpetual Succession: Perpetual means ‘forever’. So that once a company is created by process
of law it can be ended only by the process of law. Members of a company may transfer their
shares, and the name of the transferee is entered in the register a member may die, then his
successor occupies his place, same in the case of Insolvency. This character of the company is
called perpetual succession.
 Common Seal: It is nothing but an official signature of a company just like a stamp. Company
seal is affixed on the document of the company. It can be used as evidence to sue in court.
 Limited Liability: Liabilities of members in a company are always limited upto their shares in
the company. Here liability means a legal responsibility or obligation to do a thing or to refrain
from doing something.
 Separate Property: A company can hold property, acquire, sell, lease, mortgage, gift or
otherwise transfer a property in its own name because of its legal identity. It simply means that a
company can be transferor or a transferee of the property.
 Company can sue or can be sued: A company is a legal person who can file a suit against
another and against whom a suit can be filed in his name. Anyone can sue the company and the
company can also sue others.

Kinds of Companies

There are a variety of companies in the Indian market which may contribute to economic growth and
development towards the nation. According to section 2 of the Companies Act, 2013 defines the various
kinds of Company and their classification based on factors such as incorporation, liabilities, number of
members, control, transferability of shares etc.

On the basis of incorporation; there are three different kinds of company such as follows;

 Royal Charter Company

 Statutory Companies
 Registered Companies

On the basis of liabilities; there are three different kinds of company such as follows;

 Companies Limited by Shares

 Companies Limited by Guarantee
 Unlimited Liability Companies

On the basis of number of members; there are three different kinds of company such as follows;

 Public Company
 Private Company
 One Person Company

On the basis of domicile; there are two different kinds of company such as follows;

 Foreign Company
 Indian Company
On the basis of other new kinds of company; there are eight different kinds of company such as follows;

 Government Company
 Small Company
 Subsidiary Company
 Holding Company
 Associate Company
 Producer Company
 Dormant Company
 Conclusion

Thus the Companies Act, 1956 was enacted with the purpose to amend and consolidate the law relating
to companies. This Act provided the legal framework for corporate entities in India and was mammoth
legislation. As the Corporate Sector grew in numbers and size of operations, the necessity of this Act
was felt and as many as 24 amendments had taken place since then.