CHAPTER 1 LAW AND ITS SOURCES

Introduction
Man is by nature a social being. He comes into contact with other individuals in different capacities. These contacts or associations are the inevitable consequence of modern civilization. In all these associations, he is expected to observe a Code of Conduct or a set of rules. The object of these set of rules is to make human associations possible; and ensure that members of the society may live ; and work together in an orderly and peaceful manner.

1.1

WHAT IS LAW

(i) (ii) (iii) (iv) (v) (vi)

The word `law` is a general term and over a period of time attained different connotations to signify varied purposes. Persons carrying different vocations prefer to identify `law` as to the purpose the prescribed set of rules are intended to achieve: A Citizen may think of law as a set of rules, which he must obey. A Lawyer who `practices law` may think of law as a vocation. A Legislator may look at law something created by him. A Judge thinks of law as a guide and principles to be applied to making decisions. A Social Scientist may think of law as a means of social control. A Legal Philosopher may consider law as `dictate of reason` or `right reasoning. It is often preceded by an adjective to give it a more precise meaning e.g. Commercial/ Mercantile law, Civil law, Criminal law, Industrial law, International law. In the legal sense with which we are concerned in our study of Commercial Laws, the definition of `law`

includes all the rules and principles which regulate our relations with other individuals and the State and which are enforced by the State. DEFINITON OF `LAW` - ARTICLE 13 (3) OF CONSITTUTION OF INDIA
Clause 3 of Article 13 of the Constitution of India defines `law` as under `law` includes any Ordinance, order, bye-law, rule, regulation, notification, custom or usage having the force of law; An amendment to an existing law is also law. `Law` in the context of the provisions of the Constitution of India may also be defined as It is an Act passed by the legislature and assented to by the President of India or Governor of a State. [Arts 111 and 200 of the Constitution of India].

(a)

1.2

`LAW` AND `STATUTE`

The Constitution of India does not use the term 'Statute' but it uses the term 'law'. Statute has been defined as `the written will of the legislature'. Thus, Statute or law generally means the laws and regulations of every sort without considering the source from which they emanate. It is because of this the term `law` and `statute` are some times used interchangeably. `Ignorntia juris non excusat` is a familiar maxim. This means `ignorance of law is no excuse`. Although it is not possible for a layman to be aware of every branch lf law, yet he must acquaint himself with the general principals of the law of the country.

1.3

NEED FOR KNOWLEDGE OF `LAW`

1.4

FUNCTIONS AND PURPOSE OF `LAW `

1 2

Justice Continuity and uniformity

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3 Impartiality

1.5 1.6

LAW IS NOT STATIC

Although origins of law in any society may be traced in antiquity, yet law is not static. As circumstances and conditions in a society change, laws are changed to fit the requirements of the society.

CLASSIFICATION OF LAW

1. PUBLIC LAW It is that law which determines and regulates the organization and functioning of the State. It also determines the relation of the State with its subjects. The following laws form part of the public law: a) Constitutional law It is the basic and fundamental law of the land, which determines the nature of the State and the structure of the Government. It may be written (as in India, USA and most other countries) or unwritten (as in England). b) Administrative law It is the law, which deals with the structure, functions and powers of the organs of the Government. c) Criminal law It deals with various offences, and has for its object their prevention by providing for and prescribing certain punishments for them. 2. PRIVATE LAW - It is the law, which regulates relations of the citizens with one another, which are of public importance. In this sense, the State through its judicial organs adjudicates the matters in dispute between them. Private law comprises the following fields. a) Personal laws - It is a special law applicable to a class of people. b) Law of property It is law relating to transfer of (immovable) property. c) Law of obligations It is law relating to Contract; Quasi contract and Torts

1.7

SOURCES OF LAW

`Source` means `origin` which something is ultimately derived and often refers to the causes operating before the thing itself comes into being. Jurists (legal expert) differ widely s to the origin of law. One of the legal commentator traces its origin in general awareness of the people at any point of time.

CLASSIFICATION OF SOURCES

1. 2.

Formal sources These are the sources from which the law derives its force and validity. Of course, the only authority from which laws can spring and derive force and validity is State. Material sources `Material sources of law` refer to the various processes, which result in the evolution of the materials, which are the constituents of law. Material sources may be divided into: a) Legal sources - These are the sources, which are recognized by the law itself as authoritative e.g. i. Statute law - having its force in legislations; ii. Case law - having its source in precedents; and iii. Customary law - having its source in customs. b) Historical sources - The sources, which have no binding, force and which are nor recognized by law are referred to as historical sources e.g. (i) Juristic writings; (ii) Literary works; and (iii) Foreign decisions.

1.8

SOURCES OF INDIAN LAW

The main sources of the Indian law may be summarized as follows: (A) PRINCIPAL SOURCES OF INDIAN LAW

I.

CUSTOMS OR CUSTOMARY LAW

Requisites of a valid custom

Custom is the most ancient of all the sources of law and has held the most important place in the past though it is importance is now diminishing with the growth of legislation and precedent. Custom is a habitual course of conduct observed uniformly and voluntarily by the people concerned. No custom shall have the force of law if it in manner violates the Fundamental Rights. In order to be valid and have a binding force as a law, a custom must have the following requisites: (i) Antiquity (ii) Reasonableness (iii) Continuous observance (iv) Conformity with Statute law and public policy (v) Consistency (vi) Obligatory force.

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(vii) Peaceable enjoyment

Doctrine of `stare decisis`

II. JUDICIAL PRECEDENTS

Why precedents are recognized Hierarchy of Courts

This doctrine means adherence to the earlier decision and not unsettling things, which are already decided. This doctrine is based on expediency and public policy. The practice of following precedents is necessary to secure the certainty of and predictability of decisions. This creates confidence in the minds of the litigants and the administration of justice becomes fair. The general rule of doctrine of precedent as regards hierarchy of Courts is that each Court is absolutely bound by the decisions of the Courts superior to it. As regards higher Courts, they are, to a certain extent bound by their own decisions. Supreme Court This is the highest Court in India. Its decisions are binding on all Courts within the territory of India (Article 141 of the Constitution). The decisions of the Full Bench are binding on the smaller Benches of the Court. CASE EXAMPLE In Golaknath Vs. State AIR (1967) SC 1643, the Supreme Court by a 6-Judge Bench gave a decision that Fundamental Rights are not amendable. Six years later, the Supreme Court in Kesavananda Bharti Vs. State of Kerala (1973) SCC 225 by a 13-Judge Bench overruled the Golaknath Case. High Courts the decisions of a High Court are binding on all the Courts below it, within its jurisdiction (District Courts/Court of Sessions). Subordinate or District Courts These Courts are in districts. They are bound to follow the decisions of the higher Courts.

SOME IMPORTANT JUDICIAL DOCTRINES

ratio decidendi (reasoning behind the decision) A decision of a Court can be seen from two aspects viz 1. What does the case decide between the parties? and 2. What principle or rule of law does it lay down? In delivering judgment the judge gives reasons for his decisions, and it is these reasons which may be important as precedents in future cases. No two cases, which come before the courts, are exactly alike, and to discover whether there is a binding precedent it is necessary to establish the ratio decidendi, that is, the exact reason or reasons for the decision. obiter dictum (an incidental or collateral opinion by a judge) It means an incidental or collateral opinion which is uttered by a judge while delivering a judgment and which is not binding. These are peripheral statements that may be found in the main decision but which do not deal with the central issue. Obiter dicta are not binding, but they may be treated as of "persuasive authority" CASE EXAMPLE obiter dicta In D Cowasji & Co. Vs. State of Mysore (AIR 1975 813), the petitioner claimed refund of a huge amount of Excise duty paid by it several years after the duty was paid. The Court rejected the claim for refund pointing out that it would be unjust to require its refund after such lapse of time because the Government would have, spent the amount for governmental purposes. By this decision the dispute was settled. But the Court went a step further and added a sentence in judgement as obiter dicta that nor is there any provision under which the court could deny refund of tax even if the person who paid it has collected it from his customers and has no subsisting liability or intention to refund it to them or for any reason it is impracticable to do so. This observation of the Court contained an implication. Excise duty is collected by the manufacturer from a large number of customers and paid it to the Government. The manufacturer does not pay a pie from his pocket. If the duty paid by him is ordered to be refunded the beneficiary of refund would be the manufacturer because he may not be in a position to pay back the Excise duty collected by it to the customers. It would be impossible for the manufacturer to trace out the customers who were in thousands or perhaps lakhs. Though the manufacturer had claimed refund of that amount to himself no opportunity had been given by the Court to the Government to argue on the tenability of the claim. What obviously weighed with the judge in ordering the refund was the the dharma of the situation. He assumed that since the excess duty was paid by the manufacturer belonged to him. While in fact it did not belong to him. It only unjustly enriches him.

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This observation of the Supreme Court i.e. obiter dicta was noticed by many High Courts. Taking the view that since this expression of opinion was of the highest court of the land and should receive respect, they treated this as ratio and started giving refund orders to a number of manufacturers. In course of time the refund amounted to hundreds of crores of rupees. Later on, the legislature had to rectify the situation by bringing amendments to the stature.

III.

STATUTE LAW OR LEGISLATION

It is a law that is created by legislation Parliament or State Assembly. Legislation is that source of law, which consists in the declaration, or promulgation (transmission) of legal rules by an authority duly empowered by the Constitution in that behalf. It is some times called jus scriptum (written law). Some prefer to call it as `enacted law`. In modern times, `legislation` is the most important source of law in all the countries. Types of Legislation

1) Supreme Legislation
A legislation is said to be supreme when it proceed from the supreme or sovereign power in the State Parliament or the State Legislature- and is incapable of being repealed, annulled or controlled by any other legislative authority. However - any law which takes away or abridges the Fundamental Rights conferred by Part III and any law made in contravention of this clause shall, to the extent of the contravention, be void [Article 13(2) of Constitution of India].

2) Subordinate Legislation
Legislation is said to be subordinate when it proceed from any authority other than the supreme or sovereign authority in the Sate. It is made under the powers delegated to it by the supreme authority. There are 5 forms of subordinate legislation: (i) Executive The rule making power under of the Statues is conferred on the executive (i.e. the branch of the government that executes the laws or runs the administration). (ii) Judicial - The judiciary has powers to frame rules for the regulation of their procedures and administration. (iii) Municipal Municipal bodies are delegated powers by the Act, which brings them into existence to frame rules, and by-laws for the area under their jurisdiction for carrying on various activities entrusted to them. (iv) Autonomous The autonomous bodies, like Universities, are given power by the State to make rules and by-laws for their administration. (v) Colonial The laws of the countries which are not independent or which are the control of some other State, are subject to the supreme legislation of the State under who control they are.

IV. PERSONAL LAW

Sources of Hindu law (a) the `Shruti` (what is heard). This includes the four Vedas (Rig Veda, Yajur Veda, Sama Veda and Atharva Veda); (b) the `Smriti` (what is remembered ). The main three smritis are: the codes of Manu, Yajnanavalkya and Narada. The Statutes codifying the Hindu law enacted post independence era include (a) The Hindu Marriage Act 1955 (b) The Hindu Succession Act 1956 (c) The Hindu Minority and Guardianship Act 1956 and (d) The Hindu Adoptions and Maintenance Act 1956. Sources of Mohammedan Law (a) The Koran (voice of God; paramount authority) (b) The Hadis (actions and sayings of the Prophet) (c ) ijma (opinions of companions of Prophets) (d) Qaiiyas (reasoning by analogy) (e) Digests and commentaries on Mohammedan Law (compiled by command of Aurangzeb, the Mughal Emperor). The Statutes enacted post independence include (a) the Wakf Act 1954 (b) The Muslim Women (Protection of Rights on Divorce) Act 1986.

(B) SECONDARY SOURCES OF INDIAN LAW (1) JUSTICE, EQUITY AND GOOD CONSCIENCE
In the absence of any rule of specific law, usage or custom or personal law on a particular point arising before the Courts, the Courts apply the doctrine of justice, equity and good conscience which means in substance and in circumstances the rule of English law as applicable to Indian society and circumstances.

(2) ENGLISH LAW

a) Common Law (of England) The chief source of the English Law is Common law as supplemented by Equity and Statute Law.

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The expression` Common Law (of England) conveys those unwritten legal doctrines embodying English customs and English traditions which have been developed over centuries by the English Courts. b) Equity (synonymous with `justice`) The term `equity` has its origin in the Latin word `Aequitas` means - `fair` or `justice according to natural law` or `right` or simply `natural justice`. (Example Doctrine of Natural Justice, Equitable set-off). c) Statute Law It refers to Acts of Parliament.

1.9 LEGISLATIVE MECHANISM IN INDIA

Two levels of government

The Constitution of is basically Federal in structure with striking Unitary features. The Indian Constitution has created a new norm of federalism and that is the `Cooperative Federalism`.

(1) The Central Government - It is also called the Union of India, which comprises of (a) the territories of the States; (b) the Union Territories (specified in the First Schedule): and (c) such other territories as may be acquired. (2) The State Governments - Every State has its own separate Government. It owes its existence to the Constitution and its powers are defined by the Constitution itself. The First Schedule to the Constitution contains the List of the States (Part I) and the Union Territories (Part II).

EXTENT OF LAWS MADE BY LEGISLATIVE BODIES

Article 245 of the Constitution of India empowers the Parliament and the Legislature of a State to make laws for the country and the State respectively. Article 245, inter alia, stipulates as under: Article 245 Extent of laws made by Parliament and by the Legislatures of States The 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 law made by Parliament may have extra-territorial operation. The Constitution of India has put certain limitations on the legislative powers of the Parliament as well the State Assembly.

SUBJECT MATTER OF LAWS MADE BY LEGISLATIVE BODIES

Residuary Legislative Powers

Article 246 of the Constitution, inter alia, provides for the subject matter of laws to be made by Parliament and by the Legislatures of States. The subject matters have been specified in the Seventh Schedule to the Constitution. Parliament - Exclusive power relating to any of the matters enumerated in List I. ("Union List"- contains 97 Entries). The State Legislature - Exclusive power relating any of the matters enumerated in List II. ('State List'contains 66 Entries). Parliament besides the State Legislature Empowered to make laws relating to matters enumerated in List III ("Concurrent List" contains 47 Entries). Parliament has power to make laws with respect to any matter for any part of the territory of India not included in a State notwithstanding that such matter is a matter enumerated in the State List. List I Union List. It has 97 entries. It contains those subjects which are of national interest or importance or which need national control and uniformity of policy throughout the country. Example: - Defence, Air Force, Atomic Energy, Foreign Affairs, Income Tax, CBI, Banking, Insurance, Reserve Bank of India, Incorporation, regulation and winding of up of corporations, Stock Exchange, Bills of exchange, Patents, Railways, Judges of Supreme Court and High Courts etc. List II State List. It has 66 entries. It contains such subjects, which are of local (State) interest and on which the local control is more expedient. Example: - Public Order, Police, local Government, public health and sanitation, trade and commerce within the State, fairs, betting and gambling etc. List III Concurrent List. It has 47 entries. It contains such subject, which though are of local importance yet need uniformity on national level or at least some parts of the country i.e. with respect to more than one State. Example: - Criminal Law, Education, Marriage and divorce, Transfer of Property, Contracts, Social Security etc.

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Article 248 of the Constitution further empowers the Parliament with the residuary powers of legislation to make any law with respect to any matter not enumerated in the Concurrent List or State List. Such power shall include the power of making any law imposing a tax not mentioned in either of those Lists.

CIRCUMSTANCES WHEN PARLIAMENT MAY LEGISLATE ON MATTERS RELATING TO STATE LIST

The Parliament has been empowered to legislative on matters relating to the State List in the following three circumstances: -

(A) In the National interest (Article 249)

Circumstances of enactment There shall be a declaration by the Council of State(s) by resolution supported by not less than two-thirds of the members present and voting. The law made by Parliament shall be operational till the resolution remains in force. Consideration for enactment It is resolved by the concerned Council of State (s) that it is necessary or expedient in national interest that Parliament should make laws with respect to any matter enumerated in the State List specified in the resolution. Period of operation of State Assembly resolution A resolution passed by the State Assembly shall remain in force for such period not exceeding one year. This may be extended by a further period of one year by passing a fresh resolution by the concerned State Assembly.

(B) While proclamation of Emergency is in operation (Article 250)

During such period, the Parliament shall have power to make laws for the whole or any part of the territory of India. The Constitution contemplates three types of emergency Security of India or part thereof is threatened by external aggression or armed rebellion (Article 352) Failure of Constitution machinery in State(s). (Article 356) Financial stability or credit of India or any part thereof is threatened (Article 360). Period of operation A law made by Parliament cease to have effect on the expiration of a period of six months after the Proclamation has ceased to operate.

(C) Legislate for two or more States by consent and adoption of such legislation by any other State (Article 252)
Circumstances of enactment If it appears to the Legislatures of two or more States to be desirable that law with regard to any of the matters of the State list be made by the Parliament. Resolutions to that effect are passed by both the Houses of the Legislatures of concerned States. The law thus made by the Parliament may also apply to such other State(s), which afterwards adopt the said law by resolution passed by each of the Houses of the Legislature of that State. The Act so passed by Parliament may be amended by the Parliament and not by the concerned State(s).

ORDINANCE MAKING POWER OF PRESIDENT

Article 123 of the Constitution empowers the President to promulgate Ordinances during recess of the Parliament. Circumstances when President may promulgate Ordinance When the Parliament is in recess and 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. An Ordinance shall have the same force and effect as an Act of Parliament. Validity period of Ordinance Every such Ordinance (a) shall be laid before both Houses of Parliament and shall cease to operate at the expiration of six weeks from the reassembly of Parliament, or, if before the expiration of that period resolutions disapproving it are passed by both Houses, upon the passing of the second of those resolutions;' and (b) may be withdrawn at any time by the President.

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