Past Year Questions: Indian Regulatory Framework | Business Laws for CA Foundation PDF Download

1. Explain in brief the important functions played by the Ministry of Finance, the Ministry of Corporate Affairs and the Ministry of Law and Justice in enforcing the law in India. (6 Marks, May 2025)

Answer: The Ministry of Finance 

• The Ministry of Finance (Vitta Mantralaya) is a Ministry within the Government of India responsible for the country's economy, serving as the Treasury of India. 
• In particular, it concerns itself with taxation, financial legislation, financial institutions, capital markets, centre and state finances, and the Union Budget.
• One of the important functions of the Finance Ministry is the presentation of the Union Budget. This annual event is eagerly awaited by professionals and the common man as it provides for the rates of taxes and budget allocations for the ensuing year.

The Ministry of Corporate Affairs

• The Ministry of Corporate Affairs is an Indian Government Ministry.
• It is primarily concerned with administration of the Companies Act 2013, the Companies Act 1956, the Limited Liability Partnership Act, 2008, and the Insolvency and Bankruptcy Code, 2016.
• It is responsible mainly for the regulation of Indian enterprises in the industrial and services sector.

The Ministry of Law and Justice

• The Ministry of Law and Justice in the Government of India is a Cabinet Ministry 
• It deals with the 
  - Management of the legal affairs, through the Department of Legal Affairs 
  - Legislative activities through the Legislative Department 
  - Administration of justice in India through the Department of Justice 
• The Department of Legal Affairs is concerned with advising the various Ministries of the Central Government, while the Legislative Department is concerned with drafting of principal legislation for the Central Government. 

Q 2. Write in brief the content and model of the Articles of Association (AOA), according to which the director and other officers are required to perform their functions as regards the management of the company, its accounts and audit.
(7 Marks, Jan 2025)

Answer: The Articles of Association are in fact the Bye-Laws of the company according to which director and other officers are required to perform their functions as regards the management of the company, its accounts and audit. It is important therefore that the auditor should study them and, while doing so he should note the provisions therein in respect of relevant matters. 

Section 5 of the Companies Act, 2013 seeks to provide the contents and model of articles of association. The section lays the following law-
(1) Contains regulations: The articles of a company shall contain the regulations for the management of the company.
(2) Inclusion of matters: The articles shall also contain such matters as are prescribed under the rules.  However, a company may also include such additional matters in its articles as may be considered necessary for its management. 
(3) Contain provisions for entrenchment: The articles may contain provisions for entrenchment (to protect something) to the effect that specified provisions of the articles may be altered only if conditions or procedures as that are more restrictive than those applicable in the case of a special resolution are met or complied with.
(4) Manner of inclusion of the entrenchment provision: The provisions for entrenchment shall only be made either on formation of a company, or by an amendment in the articles agreed to by all the members of the company in the case of a private company and by a special resolution in the case of a public company.   
(5) Notice to the registrar of the entrenchment provision: Where the articles contain provisions for entrenchment, whether made on formation or by amendment, the company shall give notice to the Registrar of such provisions in such form and manner as may be prescribed.   
(6)  Forms of articles: The articles of a company shall be in the respective forms specified in Tables F, G, H, I and J in Schedule I as may apply to such company.   
(7) Model articles: A company may adopt all or any of the regulations contained in the model articles applicable to such company.   
(8) Company registered after the commencement of this Act: In case of any company, which is registered after the commencement of this Act, in so far as the registered articles of such company do not exclude or modify the regulations contained in the model articles applicable to such company, those regulations shall, so far as applicable, be the regulations of that company in the same manner and to the extent as if they were contained in the duly registered articles of the company. 

Q 3. Explain the types of laws in the Indian Legal System, considering the Indian Regulatory Framework. (6 Marks, Sep 2024)

Answer: The laws in the Indian legal system could be broadly classified as follows: 

Criminal Law 
Criminal law is concerned with laws pertaining to violations of the rule of law or public wrongs and punishment of the same. Criminal Law is governed under the Indian Penal Code, 1860, and the Code of Criminal Procedure, 1973 (CrPC). The Indian Penal Code, 1860, defines the crime, its nature, and punishments whereas the Criminal Procedure Code, 1973, defines exhaustive procedure for executing the punishments of the crimes. Murder, rape, theft, fraud, cheating and assault are some examples of criminal offences under the law. 

Civil Law
Matters of disputes between individuals or organisations are dealt with under Civil Law. Civil courts enforce the violation of certain rights and obligations through the institution of a civil suit. Civil law primarily focuses on dispute resolution rather than punishment. The act of process and the administration of civil law are governed by the Code of Civil Procedure, 1908 (CPC). Civil law can be further classified into Law of Contract, Family Law, Property Law, and Law of Tort. Some examples of civil offences are breach of contract, non-delivery of goods, non-payment of dues to lender or seller defamation, breach of contract, and disputes between landlord and tenant. 

Common Law 
A judicial precedent or a case law is common law. A judgment delivered by the Supreme Court will be binding upon the courts within the territory of India under Article 141 of the Indian Constitution. The doctrine of Stare Decisis is the principle supporting common law. It is a Latin phrase that means “to stand by that which is decided.” The doctrine of Stare Decisis reinforces the obligation of courts to follow the same principle or judgement established by previous decisions while ruling a case where the facts are similar or “on all four legs” with the earlier decision.

Principles of Natural Justice 
Natural justice, often known as Jus Natural deals with certain fundamental principles of justice going beyond written law. Nemo judex in causa sua (Literally meaning “No one should be made a judge in his cause, and it’s a Rule against Prejudice), audi alteram partem (Literally meaning “hear the other party or give the other party a fair hearing), and reasoned decision are the rules of Natural Justice. A judgment can override or alter a common law, but it cannot override or change the statute.

Q 4. Describe briefly the following Regulatory bodies of the Government of India:
(i) Securities Exchange Board of India
(ii) Reserve Bank of India
(iii) Insolvency & Bankruptcy Board of India
(6 Marks, Jun 2024)  

Answer : (i) The Securities and Exchange Board of India (SEBI):  

• It is the regulatory body 
• for securities and commodity market in India
• under the ownership of Ministry of Finance within the Government of India. 
• It was established on 12 April 1988 as an executive body and was given statutory powers on 30 January, 1992 through the SEBI Act, 1992. 

(ii) Reserve Bank of India (RBI): 

• It is India's Central Bank and regulatory body responsible for the regulation of the Indian banking system. 
• It is under the ownership of the Ministry of Finance, Government of India. 
• It is responsible for the control, issue and maintaining supply of the Indian rupee. 
• It also manages the country's main payment systems and works to promote its economic development.
• Bharatiya Reserve Bank Note Mudran (BRBNM) is a specialised division of RBI through which it prints and mints Indian currency notes (INR) in two of its currency printing presses located in Nashik (Western India) and Dewas (Central India). 
• RBI established the National Payments Corporation of India as one of its specialised division to regulate the payment and settlement systems in India. 
• Deposit Insurance and Credit Guarantee Corporation was established by RBI as one of its specialised division to provide insurance of deposits and guarantee of credit facilities to all Indian banks. 

(iii) Insolvency and Bankruptcy Board of India (IBBI)- 

• It is the regulator for overseeing insolvency proceedings and entities like Insolvency Professional Agencies (IPA), Insolvency Professionals (IP) and Information Utilities (IU) in India.
• It was established on 1 October 2016 and given statutory powers through the Insolvency and Bankruptcy Code, which was passed by Lok Sabha on 5th May 2016.
• It covers Individuals, Companies, Limited Liability, Partnerships and Partnership firms. The new code will speed up the resolution process for stressed assets in the country.
• It attempts to simplify the process of insolvency and bankruptcy proceedings.
• It handles the cases using two tribunals like NCLT (National Company Law Tribunal) and Debt Recovery Tribunal.