Free Essay

Company Law

In:

Submitted By rajeevrv17
Words 8574
Pages 35
School of law, Christ university | Sedition: Analysis of Section 124A of the Indian Penal Code,1860 | Criminal Law-I CIA-III | | Rajeev Rambhatla | 1016272 |

[Type the abstract of the document here. The abstract is typically a short summary of the contents of the document. Type the abstract of the document here. The abstract is typically a short summary of the contents of the document.] |

TABLE OF CONTENTS
1.TABLE OF CONTENTS……………………………………………………………………… 1.
2. TABLES OF CASES AND STATUTES………………………………………… 2.
3. INTRODUCTION…………………………………………………………………………………… 3.
4. RESEARCH METHODOLOGY……………………………………………………………… 5.
5. MEANING AND INTERPRETATION OF SECTION 124A
THE LAW OF SEDITION IN INDIA BEFORE 1947………………… 7.
6. MEANING AND INTERPRETATION OF S. 124A
AFTER INDEPENDENCE……………………………………………………………………… 12.
7. LAWS OF SEDITION IN INDIA, ENGLAND, AND THE
UNITED STATES OF AMERICA – A COMPARATIVE STUDY…… 14.
8. CONCLUSION……………………………………………………………………………………………20.
9. BIBLIOGRAPHY ……………………………………………………………………………………………22.

INTRODUCTION
“It is enough to say that in this country and in this generation the time for prosecuting political libels has passed, and does not seem likely to return within any definable time”
- Stephen, History of Criminal Law[1]
This statement was made in the context of the United Kingdom by a well-known author on criminal law. More than 50 years after independence, it may well be said that the ‘time for prosecuting political libel’ has passed in India too. This may be particularly true of a particular species of libel know as ‘sedition’. Simplistically defined sedition is the defamation of the State and the government with certain peculiar characteristics[2].
In India the Sedition is defined as an offence under the Indian Penal Code in Section 124A. This Section was omitted from the original draft of the Code and was introduced ten years after the Code was enacted. It was further amended in 1898 and several explanations were added to the original section.
This project aims to elaborate on the changing interpretation of the meaning of Sedition under the Indian Penal Code. The meanings of the various terms of S. 124A have been the subject of judicial scrutiny over the years beginning in the 19th Century.
This project also looks at the interpretation of sedition as an offence in light of the historical context, keeping in mind that the section is an element of the criminal law introduced by the British, but with a long history in English Law before it came to India.
There are also certain aspects of constitutional law that are of importance in any discussion about Sedition. This is with particular reference to the right to free speech that is guaranteed under Article 19(1)(a) of the Indian Constitution and the relation to that right with sedition, which has not expressly been made a part of the restrictions on free speech enumerated in Article 19(2) of the Constitution.
The project aims to make a comparative study of Indian and English Laws of Sedition. Some of the difficulties in such a comparison may be highlighted during the course of the project. These difficulties may arise in the light of judicial interpretation and the differing scopes of the offence under both laws.
An attempt will be made to look at recent judicial decisions in the area of sedition. The main focus of the project will be the change of interpretation with a change in circumstances.
A short section will be dedicated to the possible ramifications of recent events and the heightened state of alarm due to the rise of terrorist activities around the globe.
Before completing this short introduction it would be appropriate to set out the provisions of S.124A, references to which will have to be made repeatedly through the course of this project.
S. 124A – Sedition. – Whoever by words, either spoken or written, or by signs, or by visible representations or otherwise, brings or attempts to bring into hatred or contempt, or excites or attempts to excite disaffection towards the Government established by law in India, shall be punished with imprisonment for life, to which fine may be added, or with imprisonment which may extend to three years, to which fine may be added, or with fine.
Explanation 1 – The expression ‘disaffection’ includes disloyalty and all feeling of enmity.
Explanation 2 – Comments expressing disapprobation of the measures of the government with a view to obtain by lawful means, without exciting or attempting excite hatred, contempt or disaffection, do not constitute an offence under the section.
Explanation 3 – Comments expressing disapprobation of the administrative or other action of the Government without exciting or attempting to excite hatred, contempt or disaffection, do not constitute an offence under the section.
RESEARCH METHODOLOGY * AIMS AND OBJECTIVES: -
The main aims and objectives of this project are to examine the law of sedition. This investigation has several aspects. The first is an examination of the meaning of sedition and the interpretation of S. 124A of the Indian Penal Code in the courts of law. In the light of these interpretations an attempt has been made to discern the various ingredients of the offence. There is also the broader aim of examining why sedition is an offence.
The other important objective is to make a comparative study of some aspects of the law of sedition in India, England and the USA. An attempt has been made to look at recent developments and case law. * SCOPE AND LIMITATIONS: -
The law of sedition is a vast area within the criminal law. Many of the seminal judicial decisions in the area are old English cases. The student/researcher has unfortunately not had access to these resources. Also, while examining English and American laws of sedition in America, greater attention has been paid to certain aspects of the law i.e. incitement of communal hatred in English Law, and sedition in the ‘Communist Era’ of the 1950s in the United States. * METHODOLOGY: -
The methodology used in this project includes the descriptive method and analysis through comparison. Examination of sample case law has been central to the project. * SOURCES: -
Secondary sources such as books, articles and legal digests and encyclopaedias have been extensively used. Cases as reported in case reporters have formed the bulk of the researcher’s sources. * FOOTNOTING AND STYLE: -
As far as possible a uniform mode of citation has been adopted. Quotations and sections of statutes along with case and statute names have been italicised. The following are the broad formats that have been adhered to: -
i. Books – <Name of Author, if available>, <Title> <Volume Number> (<Editor>, <edition>, <Place of Publication>:<Publishers>, <year of Publication>) at <page no.>. ii. Articles – < Name of Author>, < “Title of Article”>, in <Volume No.> <Name of Journal> <(Year)>, at <page no.>.
For legal digests and encyclopaedias as well as Case Reporters, the mode of citation specified therein have been adhered to. * RESEARCH QUESTIONS: -
The following research questions were raised in the course of research: - 1. Why is Sedition a crime? 2. What were the varying interpretations given to S. 124A in Indian courts? 3. What are the differences and similarities with respect to the English and Indian laws of Sedition? 4. What are the differences and similarities with respect to the American and Indian laws of Sedition? 5. To what extent do historical circumstances affect interpretation?

MEANING AND INTERPRETATION OF SECTION 124A -
THE LAW OF SEDITION IN INDIA BEFORE 1947
As has already been stated sedition is a type of defamation. It has the peculiar characteristic of being an act against the state. It is considered to be an offence because it undermines the authority of the State. It is usually committed by a member of private society, because he dislikes something that is done, and insults the Sovereign, the Government, or the State and defies the authority of the majority. The important factor is its tendency to produce or incite public mischief.
We may now look at some of the main ingredients of the offence of Sedition as defined in the Indian Penal Code.
1.1 Ingredients of Sedition: -
In India, Sedition is expressly defined under S. 124A of the Indian Penal Code. It must be kept in mind that the definition of Sedition in India is narrower than it is in England.
From the definition given under the Code, the following ingredients of the offence of Sedition may be extracted[3]: -
a. Bringing into hatred or contempt, or attempting to bring into hatred or contempt the Government established by law in India,
b. Excites, or attempts to excite disaffection against the Government established by law in India,
c. By words, either spoken or written, or by signs, or by visible representations or otherwise.
The explanations appended to the section throw more light on some of the terms given in the section, and what does or does not constitute sedition.
For instance the word ‘disaffection’ is broadly defined with an inclusive definition. It includes disloyalty and all feelings of enmity against the Government/State. Explanations 2 and 3 draw distinctions between what might be loosely termed as ‘fair comment’ or warranted criticism or opinion of a person against either the measures or administrative actions of the Government, and sedition.
The explanations appended to S. 124A suggest that incitement or attempting to incite hatred contempt or ‘disaffection’ are essential elements of the offence of sedition.
1.2 Interpretation of S. 124A in Case Law: -
The interpretation of S. 124A has by no accounts been ‘uniform’ in any sense of the word before and after India gained independence. These varying interpretations have arisen out of the historical circumstances of the time.
1.2.1 Early Interpretation of S.124A: The Tilak Case: -
If one were to broadly differentiate the various interpretations of S.124A on the basis of the scope of the section under each interpretation of the words of the section, it could possibly be classified into two broad types.
The first type would be the ‘broad’ or the ‘wide’ interpretation of the words of the section. It is ‘wide/broad’ in so far as it brought more acts within the scope of the offence of the section. It is this type interpretation that this section deals with.
Perhaps the most famous case in this area is Queen-Empress v. Bal Gangadhar Tilak[4]. Mr Tilak, a famous figure in India’s struggle for freedom was the editor of two journals. He published a column narrating the killing of a Mughal General, Afzul Khan by the maratha hero Shivaji and a poem entitled ‘Shivaji’s Utterances’, among other works on the occasion of a commemorative festival. The relevant portion of the publication reads as follows –
“What a desolation is this! Foreigners are dragging our Lakshmi violently by the hand by means of persecution; along with her plenty has fled and after that health also. This wicked misfortune personified stalks with famine through the whole country; relentless dearth moves about spreading the epidemics of disease…
…do not circumscribe your vision like a frog in a well. Get out of the Penal Code, enter into the high atmosphere of the Shrimat Bhagawatgita and then consider the actions of great men.”[5]
Strachey, J. in his direction to the jury in this case said that that in order to satisfy the ingredient of disaffection the person must excite or attempt to excite and must make other people feel enmity of any kind against the Government. The amount of disaffection was to be absolutely immaterial in the decision, nor was it important whether any actual feelings of disaffection were created amongst the audience or not.
The learned judge rejected the contention of the accused that there can be no offence against the section unless the accused counselled or suggested rebellion or forcible resistance to the government. This, according to Strachey, J was a complete misreading of the relevant section[6].
The accused appealed thereafter to the Judicial Committee of the Privy Council by special leave[7]. The main grounds for appeal was whether the direction of the jury that ‘disaffection’ meant ‘absence of affection’ in any degree towards British Rule or its administrators or representatives was correct.
The council held the direction of the judge to be correct and added that ‘disaffection’ did not mean ‘absence of affection’ in the literal sense.
Thus the court interpreted the words of the section more or less literally. The courts of India adopted this literal interpretation of S. 124A, and this was the prevailing view for the first part of the 20thCentury.
The decision of the court in Tilak’s Case was subsequently followed in another famous decision – Annie Besant v. Advocate General of Madras[8]. This case dealt with S. 4(1) of the Indian Press Act that was framed similar to S. 124A. The relevant provision said that any press used for publishing/printing newspaper, books, or other documents containing words, signs or other visible representations that had a tendency to bring into hatred or contempt His Majesty’s government…or any class of subjects (either indirectly or directly, by way of inference, suggestion, metaphor, etc.), would be liable to have its deposit forfeited.
In this case an attack was levelled against the English bureaucracy. The Privy Council followed the earlier interpretation given by the Judicial Committee and the Bombay High Court in Gangadhar Tilak v. Queen Empress[9]and affirmed the decision of the lower court confiscating the deposit of Besant’s printing press.
1.2.2 A New Interpretation of S. 124A: Niharendu Dutt’s Case: -
The so-called ‘broad interpretation’ of the meaning of sedition in the Indian Penal Code was, as has been stated earlier the prevailing view in Indian Courts. This trend continued till the landmark judgement of the Federal Court of India in 1942 in Niharendu Dutt Majumdar v. Emperor[10].
The case was decided in appeal from the Calcutta High Court. The accused (a member of the legislature) had made a certain speech against the Ministry and the Governor of Bengal against their acts and omissions in riots that had taken place in Dhaka. The speech upbraided the government for the alleged misuse of police forces and the governor for not fulfilling his responsibilities. The audience was made to believe that the government was encouraging communal disturbances and it was suggested that the ministry and the government should be made personally liable for the suffering of the victims. The accused was tried for the violation of Rules 34(6)(e) and (k) under the Defence of India Act, 1939[11].
The opinion of the court of whether the speech was seditious or not[12] is best summed up in the words of Gwyer, CJ – “It is true that in the course of his observations the appellant indulged in a good deal of violent language and had worked himself up to such a state of excitement… The speech was, we feel bound to observe, a frothy and irresponsible performance, such as one would not have expected from a member of the Bengal Legislature; but in our opinion to describe an act of sedition is to do it too great an honour.”
Indeed the learned Chief Justice of the Federal Court opined that violent words by themselves did not make a speech or written document seditious. According to the Court, the gist of the offence was public disorder, or the reasonable anticipation, or likelihood of public disorder, or must be of such intensity as to satisfy a reasonable man that that was the intention or tendency.
The learned Chief Justice however did not refer to any of the decisions of the Privy Council while allowing the appeal of the accused. He justified his decision on the grounds that the interpretation of the words of the code must be in light of the changing circumstances and what was once seditious may not be considered to be seditious now[13].
1.2.3 The Privy Council ‘corrects’ the Niharendu Dutt judgement: King-Emperor v. Sadashiv Narayan: -
Following the judgement of the Federal Court in Niharandu Dutt Majumdar’s Case[14] another case with similar provisions in question went up in appeal to the Judicial Committee of the Privy Council. The Defence of India Act was again at issue in King-Emperor v. Sadashiv Narayan Bhalerao[15]. The subject matter of the charge was a document published and distributed by the accused in Jalgaon on January 23rd, 1943. The statements pertained to the widespread poverty and hunger of the people, who had been allegedly been the subject of several collective fines. The trial judge held himself bound by the decision in Niharendu Dutt Majumdar and pointed out that nowhere in the leaflet was it stated that an alternative government should be formed and be set up by use of violent means, and the audience was rather exhorted to achieve national unity[16]. Therefore, in the absence of any incitement to violence or disorder, the trial court acquitted the accused.
Lord Thankerton, who delivered the judgement of the Privy Council, however disagreed with the lower courts’ reliance on the conclusions of Gwyer, CJ in Niharendu Dutt’s Case. According to the Committee the Federal Court had proceeded on a mistaken construction of the section and had disregarded previous decisions of the Privy Council by which it was bound. The judgement of Strachey, J in Bal Gangadhar Tilak was cited with approval and it was re-iterated that incitement to violence was not a necessary ingredient of the offence of sedition.
1.3 Interpretation before Independence: Ramifications and Significance: -
The discussion above clearly shows the dual opinions that were held by the courts of India and the Privy Council. The opinions diverged on the meaning of certain terms[17] and what quality of intention[18] is required to establish a speech as seditious.
On the one hand was the interpretation of the Federal Court in Niharendu Dutt Majumdar v. Emperor[19], and on the other a great weight of precedent in case law built up over more than half a century.
However it would be hasty to condemn any one interpretation as ‘wrong’, for both proceeded on fairly logical grounds and in a particular historical environment. However the conflict of opinions had certain far-reaching consequences even after India gained Independence. The consequences are reflected in the framing of the provisions of the constitution of a then newly independent India.
The next section deals with certain constitutional aspects of sedition, and the position preferred by the Supreme Court of India as far as the interpretation of S. 124A was concerned.
MEANING AND INTERPRETATION OF S. 124A AFTER INDEPENDENCE
At the time of framing a new constitution for India there was not enough clarity as to the scope of S. 124A of the Indian Penal Code. The basic confusion arising out of two conflicting decisions was reflected in the constitution. The decision in the case of King-Emperor v. Sadashiv Narayan[20] had overruled the interpretation of the Federal Court in Niharendu Dutt’s Case. The latter had significantly narrowed down the scope of the offence of sedition and had made the intention to incite disorder on the part of the accused a key ingredient of sedition.

2.1 Sedition, Framing of the Constitution, and Fundamental Rights: -
The new constitution of India envisaged a parliamentary system of government. Criticism of the government by members of the opposition, public and the press was to be an important part of the system[21]. In such a situation the final interpretation of S. 124A given by the Privy Council would impose an unreasonably harsh restriction on the new fundamental right to the freedom of speech and expression. The interpretation given by the Federal Court would clearly have been preferred, but for the fact that it had been overruled by the Privy Council[22].
With this in mind it was felt to be appropriate that sedition be left out of Article 19(2), which laid down the restrictions on the right to freedom and expression guaranteed in Article 19(1)(a). However, this did not mean that seditious speech was within the ambit of the free speech right. Due to the ambiguity in the meaning of sedition in the Code, the word itself was omitted from the draft articles. Instead, certain terms such as ‘security of the state’, ‘public order’, and ‘incitement to offence’ were used to cover the same subject matter without the actual use of the word ‘sedition’.
2.2 Constitutionality of S. 124A: -
It was only in 1962 that the Supreme Court of India finally decided on the interpretation S. 124A. However, due to the interpretation to S. 124A given by the Privy Council, the courts of India were put in a difficult position. On the one hand there was the interest of the security of the state and the broad number of activities that came within the purview of sedition due to the interpretation of the Privy Council. On the other hand there was the interest of free speech enshrined in Article 19(1)(a). Sedition had been omitted from the restriction on free speech enumerated in Article 19(2). With these competing interests in mind, courts in India had to answer the question of constitutionality of S. 124A.
The issue of constitutionality came up in the Punjab High Court in Tara Singh Gopi Chand v. The State[23].
In this case the accused had made certain speeches in 1950 at Shahabad and Ludhiana, in connection with which he was charged with sedition. Essentially, the court accepted the wide ambit given to S. 124A in Sadashiv Narayan[24]and used it to hold S. 124A ultra vires the constitution.
The court felt that a law of sedition that was thought necessary during a period of foreign rule had become inappropriate by the very nature of the changes that had come about. Unfortunately the court failed to take advantage the its power under the Adaptation of Laws Order to construe the section so as to make it constitutional.
2.3 Kedar Nath’s Case: The Law As It Stands Today: -
In 1962, the Supreme Court of India decided on the ambit and scope of S. 124A of the IPC. In the facts of Kedar Nath Singh v. State of Bihar[25], the accused in the main of the 4 appeals was a member of the Forward Communist Party and made a harsh speech against the government in power of the containing a good deal of violent language. Though it was not contended by the accused that his speech did not fall under the ambit of S. 124A as construed by the Supreme Court, it became necessary to decide on the constitutionality of S. 124A particularly and on the construction of the section generally, in order to dispose of the other three appeals.
Sinha, C.J. who delivered the judgement of the court examined the entire history of interpretation of S. 124A. There was no doubt that the provisions of S. 124A were violative of the right enshrined in 19 (1)(a) S. 124A. The question was primarily whether the section would be saved by bringing it under the ambit of the restrictions enumerated in Article 19(2). The court weighed the conflicting meanings given to S. 124A given by the Federal Court and the Privy Council.
Sinha, CJ accepted the necessity of having the offence of sedition. He favoured the presumption of constitutionality that was created by accepting the view of the Federal Court. The court decided that S. 124A should make penal only those matters that had the intention or tendency to incite public disorder or violence. Therefore S. 124A was held to be constitutional. The restrictions imposed on freedom of speech could be said to be in the interest of public order.
Kedar Nath Singh v. State of Bihar[26] has been followed subsequently in cases such as Bilal Ahmad Kaloo v. State of Andhra Pradesh[27] and Raghubir Singh v. State of Bihar[28]. In the latter case a jeep containing 5 persons was intercepted at the Indo-Nepal border. The vehicle contained certain pamphlets of Sikh separatist propaganda and a history of Amritsar that portrayed India as the enemy. The accused raised the contention that they were not liable for sedition as they were not the authors of the seditious materials. While not expressing any opinion on the issue of sedition that was raised before it, the Supreme Court said that authorship of seditious materials was not the gist of the offence. Distribution and circulation of seditious materials could in the particular circumstances of the case be enough to constitute sedition.
LAWS OF SEDITION IN INDIA, ENGLAND, AND THE UNITED STATES OF AMERICA – A COMPARATIVE STUDY
In previous sections, the evolution of the law of sedition in India and the conflicting opinions surrounding it has been examined. However it cannot be assumed that S. 124A embodies the common law as it stands in England or even elsewhere. What constitutes sedition differs not only in time but also in terms of place, in each case depending on particular circumstances that influence their development.
In this section we look at the laws relating to sedition in two other nations, namely the United States of America and England. The laws of both the USA and India have their roots in English common law. It is therefore appropriate the meaning of sedition in England.
3.1 Meaning and Scope of Sedition in England: -
Sedition in the common law consists of any act done, or words spoken or written and published, which has or have a seditious tendency and is done or are spoken and written and published with a seditious intention.
A person may be said to have a seditious tendency if they have any of the following tendencies[29]: -
a. To bring into hatred or contempt or excite disaffection against the sovereign or the government and constitution of the United Kingdom or either House of Parliament,
b. Excite sovereign’s subjects to attempt otherwise than by lawful means the alteration of any mater in church or state by law established,
c. To incite persons to commit any crime in the disturbance of the peace,
d. To raise discontent or disaffection amongst the sovereign’s subjects, or
e. To promote feelings of ill-will and hostility between different classes of those subjects.
In the case of seditious libel and seditious words, there must be an incitement to disorder and violence. However distinctions are drawn between free comment, criticism and censure, and sedition[30].
At least as far as publications against the government and the constitution are concerned, incitement to insurrection or disorder has been accepted as an essential ingredient of sedition[31]. Earlier, the Privy Council held on an appeal[32] from the Gold Coast (now Ghana) that rules of English law would not be applicable if the Criminal Code of the colony of the country itself gave a definition of the offence of sedition. The committee held that the Gold Coast statute did not require any requirement of incitement to violence to constitute sedition, and refused to apply the English rule that required intention to incite violence or tumult.
It can be easily discerned that the law of sedition in England is clearly wider in scope than the law of Sedition in India. The Indian Penal Code contains various provisions that correspond to the 5 heads in English law that constitute a ‘seditious tendency’. However they do not attract similar punishment as the offence of sedition[33]. For instance, ‘inciting persons to commit crime in disturbance of the public peace’ corresponds broadly to S. 505 of the Indian Penal Code entitled “Statements conducing to Public Mischief”. ‘Promotion of feelings of ill will and hostility between different classes of subjects’ corresponds even more closely to sub-clause (c) of S. 505(1) and S. 505(2)[34].
Unlike in England, in India, only seditious words have been brought under the purview of sedition. Also, only a particular species of sedition in the common law is sedition in India, namely exciting disaffection, hatred or contempt or attempting to do so. The same status is not accorded to other common law heads of sedition such as inciting communal hatred as in England.
In R. v. Edwards[35] the accused was the author of a comic strip that spread hatred for certain sections of society including Jews, and persons of African and Asian origin. The comic strips were exceedingly offensive and portrayed these sections in a cruel and violent light. It was held that the magazine was intended to prejudice the minds of young children against these sections of society and could potentially incite riots.
However, deciding on cases of this nature depend greatly on the facts of each case. In R. v. Caunt[36], the accused was the editor of a local newspaper. He published an article in the paper (authored by him), which was intended to be an attack on the Jews living in Britain. Towards the end of the 900-word article was the line – “Violence may be the only way to bring them (British Jews) to the sense of responsibility to the country where they live”.
The jury however upheld the right of the press to free discussion, despite the unrestrained language used in the article in question. The jury accepted the contention that the accused was not threatening violence but only issuing a ‘warning’.
In R. v. Chief Metropolitan Stipendiary Magistrate, ex p Choudhury[37], the seditious writing in question was Salman Rushdie’s controversial work The Satanic Verses. In the facts of this case, one Abdul Hussain Choudhury applied for judicial review of the order of the chief metropolitan magistrate refusing to issue summonses to the author, and charged the author with blasphemy and seditious libel. The book vilified the prophet Mohammad, calling him a ‘conjurer’, a ‘magician’, and a ‘false prophet’, his wives and his companions. The book also ridiculed and vilified the teachings of Islam. The court had no doubt that such passages would deeply offend the Muslims of the United Kingdom. The court relying on Boucher v. R., a Canadian case held that the proof of an intention to promote feelings of ill-will between classes of subjects does not by itself establish seditious intention. The court held that there must not only be this ingredient but also the element of public mischief or the intention to incite violence, particularly against ‘constituted authority’.
Given the above cases from England it may be surmised that Indian cases relating to incitement of communal hatred, which would not be sedition in India would come under the purview of that offence in England. An example of this is Bilal Ahmad Kaloo v. State of Andhra Pradesh[38], a Kashmiri youth living in Hyderabad was alleged to have been spreading communal hatred amongst Muslim youth there by distributing documentation that stated that the Indian armed forces were perpetrating atrocities on Muslims living in Kashmir. He was acquitted on the charge of sedition as the court held that sedition could not be proved, as the appellant did not do anything against the government of India or the state government[39].
It is quite possible that if such a case were tried under English law the court may have arrived at a different conclusion, as the spreading of hatred amongst classes of subjects is a species of sedition when coupled with incitement to public mischief.
3.2 Law of Sedition in the United States: -
In the United States of America, sedition has been defined as “a commotion, or raising a commotion in the State not amounting to insurrection, or excitement of discontent against the government or of resistance to lawful authority”[40].
Speech that criticises or associating with others for the purpose of criticising the government is a constitutionally guaranteed right. In this situation there is a difficult balance that courts and the legislature have to maintain between the right to speak and the necessity of national security. Naturally, in America as elsewhere this balance has been affected by history.
Like in India, the laws of sedition have been used for the purpose of crushing unwanted dissent. For instance the Aliens and Sedition Acts of 1798 were intended to silence critics of the administration of President Adams. During the First World War the Sedition Act of 1918 amended Espionage Act, 1917. The amendments made criminal almost any reproach or criticism of the government. As time passed these acts were allowed to expire or were repealed when they outlived their purpose (as was the case with the amended portions of the Espionage Act)[41].
Before and after the Second World War the United States was in the grip of the fear of communism and socialism. Legislations such as the Smith Act, the Communist Control Act and the Emergency Detention Act imposed restrictions on speech. Many of these were repealed later on.
One of the prominent laws that deal with sedition proper in the United States is the Smith Act. This Act makes it a crime to knowingly or wilfully advocate the desirability or propriety of overthrowing the government of the United States or any political sub-division of the United States[42]. It is aimed at advocacy and teaching of concrete action for forcible overthrow. Moreover, membership to certain organizations that may be deemed to advocate such activities is also illegalised.
In Scales v. United States[43] the supreme court of the United States examined and upheld the constitutionality of the Act for violation of First Amendment (free speech) rights. Moreover the membership clause of the Act was challenged on the grounds of being violative of the Right to Association. The court observed that the Act did not make mere membership a crime. “Specific Intent to bring about the overthrow of the Government as speedily as circumstances would permit” was required.
In the facts of this case the accused was a member of the Communist party in the United States. He was alleged to have said that conditions were ripe in the United States to bring about revolution in the USA, even more in fact then they had been in Russia. The accused was also alleged to have said, “Communists in this country (the United States) would have to start the revolution and would have to continue fighting for it”[44].
In the companion case of John Francis Noto v. United States[45], the majority of the court held that there was not enough evidence to show that the Communist Party, of which the defendant was the member, engaged in advocacy, not of an abstract doctrine of forcible overthrow, but of action to that end[46]. The case was distinguished from Scales v. United States[47]. It was held that in Noto the showing of illegal party advocacy lacked the compelling quality of the utterances and conduct of the petitioner in Scales. In Noto v. United States the petitioner had distributed certain pamphlets and materials on the basic doctrines of revolution under Communism. He had also made certain off-hand violent remarks about persons who were hostile to the communist ideology. It was held that such remarks represented nothing more than the spiteful nature of the party towards its enemies. The court also said that present advocacy of acts of sabotage and violence were elements of the crime, and not intent to advocate such acts in the future.
3.3 Recent Developments: -
In the light of recent developments, particularly since the attacks on the World Trade Centre on September 11th, 2001 there has been growing concern around the world regarding the spread of terrorism. Many countries have enacted special laws that amend or redefine terrorist activities.
In India, the Prevention of Terrorism Ordinance, and subsequently the Prevention of Terrorism Act has been passed. S. 3(3) of the Ordinance and the corresponding sections in the act make it illegal to advocate, incite or advise acts of terrorism[48].
In the United States as well similar legislation has been passed. The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT) Act, 2001 has attracted much controversy and debate. Section 802 of the USA PATRIOT Act creates a federal crime of “domestic terrorism” that broadly extends to “acts dangerous to human life that are a violation of the criminal laws” if they “appear to be intended…to influence the policy of a government by intimidation or coercion,” and if they “occur primarily within the territorial jurisdiction of the United States”. It has been suggested that due to the wide wording of this statute vigorous protest activities, by their very nature, could be construed as acts that “appear to be intended…to influence the policy of a government by intimidation or coercion”. Further, clashes between demonstrators and police officers and acts of civil disobedience – even those that do not result in injuries and are entirely non-violent-could be construed as “dangerous to human life” and in “violation of the criminal laws”. Environmental activists, anti-globalisation activists, and anti-abortion activists who use direct action to further their political agendas are particularly vulnerable to prosecution as “domestic terrorists”.
CONCLUSION
The power of words can never be underestimated. Indeed, words and language may be the only thing that separates man from beast. It is the importance of words in the continuing development of civilization and humanity and for the spread of ideas and knowledge that causes most States around the world to protect words. This is done through various means, the most important of which is the guarantee of the right to free speech.
However words can be a double-edged sword. They can be used to undermine the authority of the very state that protects them. They can be used to incite violence and disorder against he state and its citizens. In order to protect itself and its citizens the state makes sedition an offence.
In Reg. v. Alexander Sullivan[49], Fitzgerald, J described the sedition in the following terms – “Sedition is a crime against society nearly allied to that of treason, and it frequently precedes treason by a short interval… the objects of sedition are to induce discontent and stir up opposition to government… the very tendency is to incite the people into insurrection and rebellion”.
This definition clearly lays down the main ingredient of sedition as the incitement of violence amongst the people, encouraging them to wage war against the State or its manifestation, the government. However, before independence the law of sedition as interpreted for India excluded this vital trait. This meant that a broad range of speeches and commentaries that criticised the government of the day came under the purview of sedition, thus severely restricting free speech. A long line of judicial decisions in India and on appeal to the Privy Council in England held that incitement to violence was not an ingredient of the offence of sedition, despite the fact that incitement to violence had long been part of the offence of sedition under the common law.
All of this changed in 1942 when the Federal Court of India held that incitement to violence and disorder or an intention to incite violence was an essential element of the offence of sedition. The decision was later overruled, but it formed the basis of the narrowing down of the scope of S. 124A by the Supreme Court in Kedar Nath v. State of Bihar[50].
The law of sedition in other countries is by and large wider in scope than the law of Sedition in India as embodied in S. 124A. In India the scope of the offence is restricted to seditious words and representations, whereas in a country like India includes seditious acts as well. Only certain types of words are construed as seditious in India. The category of seditious words is wider in England. For instance, inciting communal tensions coupled with an incitement to violence amounts to the offence of sedition in England whereas in India it is given the status of a lower offence. There may be a need to adopt the English law and practice in this regard given the danger posed to the ideals of secularism enshrined in the constitution by various religious fundamentalist groups of late.
In the United States, the law of Sedition grew in response to particular challenges posed to the State. In addition to words and seditious libel, membership to organizations that incite violence or the overthrow of the State also raises the presumption of sedition. However active participation in seditious activities has been held to be an ingredient of the offence by the American Supreme Court.
The development of the law of sedition in America is a good illustration of how historical circumstances affect the development of offences against the State. The Smith Act, an act that deals with sedition came into existence primarily to combat the communist ‘threat’ to the United States. As the threat of Communism receded, such acts restricting the freedom of speech and expression lost the reason for their existence and were repealed.
This thesis is borne out in other countries. S. 124A of the Indian Penal Code was not part of the original Code and was introduced only later. It was enacted primarily to reign in the press and vernacular newspapers that were adding fuel to the fire of nationalism in the country. After independence, there was a dramatic change in the interpretation of the section.
In recent times, most states have come face to face with the very real threat of global terrorism. They have done this by enacting laws to combat terrorism. In India this has taken the form of the Prevention of Terrorism Act and in the United States it has taken the form of the USA PATRIOT Act. In both countries several doubts have been raised about restrictions imposed on the freedoms of speech by these Acts. History may well illustrate that such restrictions are necessary in the changing circumstances.
Finally, it would be interesting to see what the Law Commission has had to say about S. 124A and the offence of sedition. The 41st Law Commission Report made the following recommendations as to the possible changes that could be brought about in the law of sedition in India: -
a. In view of the controversy that has surrounded the role of intention in S. 124A an amendment should be made that makes the causal link between the words and the security and safety of the State. The mens rea should be expressed as “intending or knowing it (the words or representations in question) to endanger the integrity or security of India or of any State or to cause public disorder”.
b. The Law Commission was also in favour of he English rule where a verbal attack on the Constitution, Legislature and the administration of justice are brought under the purview of this section. A new section was also proposed to make desecration of the national flag and anthem and the Constitution an offence.
c. The punishment section that provides for either imprisonment for life or for imprisonment up to 3 years and nothing in between was thought to be odd by the Law Commission. It recommended a maximum punishment of up to 7 years with the option of imposing a fine.

BIBLIOGRAPHY * ARTICLES: - 1. H.C. Trapnell, “The Indian Press Prosecutions”, in 14 Law Quarterly Review (1898). 2. “Seditious Libel and the Press”, in 64 Law Quarterly Review (1948). * BOOKS: - 1. Ratanlal and Dhirajlal’s Law of Crime, 1 (C.K. Thakker ed., New Delhi: Bharat Law House, 1997). 2. W.O. Russel, Crime, 1 (12th ed., London: Stevens and Sons, 1964). * MISCELLANEOUS: - 1. 41st Law Commission Report. 2. 70 American Jurisprudence 2d. 3. Halsbury’s Laws of England, 11(1) (London: Butterworths, 1994).

TABLE OF CASES 1. Annie Besant v. Advocate General of Madras, (1919) 46 IA 176. 2. Bilal Ahmad Kaloo v. State of Andhra Pradesh, (1997) 7 SCC 431. 3. John Francis Noto v. United States, 367 US 290, 6 L. Ed. 836. 4. Kedar Nath Singh v. State of Bihar, AIR 1962 SC 955. 5. King-Emperor v. Sadashiv Narayan, (1947) 74 IA 89. 6. Niharendu Dutt Majumdar v. Emperor, AIR 1942 FC 1. 7. Queen Empress v. Jogendra Chunder Bose, ILR 19 Cal 35. 8. Queen-Empress v. Bal Gangadhar Tilak, ILR 22 Bom 112. 9. R. v. Caunt (unreported). 10. R. v. Chief Metropolitan Stipendiary Magistrate, ex p Choudhury, [1991] 1 All ER 306. 11. R. v. Collins, (1839) 9 C&P 456. 12. R. v. Edwards, [1983] Crim LR 539. 13. Raghubir Singh v. State of Bihar, AIR 1987 SC 149. 14. Ram Chandra v. Emperor, AIR 1930 Lah 371. 15. Reg. v. Alexander Sullivan, (1868) 11 Cox CC 44. 16. Scales v. United States, 367 US 203, 6 L. Ed. 782. 17. Tara Singh Gopi Chand v. The State, AIR 1951 Punj 27. 18. Wallace-Johnson v. R, [1940] 1 All ER 241. 19. Yates v. United States, 354 US 298, 1 L. Ed. 1356.

TABLE OF STATUTES 1. Indian Penal Code, 1860. (India) 2. Prevention of Terrorism Act, 2002. (India) 3. Smith Act. (United States) 4. Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT) Act, 2001. (United States)

[1] As cited in H.C. Trapnell, “The Indian Press Prosecutions”, in 14 Law Quarterly Review (1898) at 72.
[2] For instance truth is no defence for sedition. Ram Chandra v. Emperor, AIR 1930 Lah 371.
[3] See generally, Ratanlal and Dhirajlal’s Law of Crime, 1 (C.K. Thakker ed., New Delhi: Bharat Law House, 1997).
[4] ILR 22 Bom 112. This case was decided in the Bombay High Court. Unfortunately, the researcher did not have access to this reporter and details of the case are obtained from other sources.
[5] H.C. Trapnell, “The Indian Press Prosecutions”, in 14 Law Quarterly Review (1898) at 82.
[6] The decision followed earlier decisions of the courts of British India such as Queen Empress v.Jogendra Chunder Bose, ILR 19 Cal 35.
[7] Gangadhar Tilak v. Queen-Empress, (1898) 25 IA 1.
[8] (1919) 46 IA 176.
[9] Supra note 7.
[10] AIR 1942 FC 22.
[11] These provisions were framed almost identical to S. 124A of the IPC.
[12] The issue of sedition though the most important in the case was not the only one. There were also two other issues relating to constitutional law and the law of evidence.
[13] The historical context of the decision make this decision all the more courageous and forward looking. Gwyer, CJ clearly was aware of the precarious position of British Rule in India. This is made all the more evident by the following statement – “Nor, we hope are we exceeding our functions, if we observe in grave times like the present , with the enemy at the gate, language which might not attract attention at other times may to-day or to-morrow bear a very different significance”
[14] Supra note 10.
[15] (1947) 74 IA 89.
[16] Ibid at 91.“If we blindly carry on sabotage activities simply because the Imperialists are not transferring power to us the Japanese Imperialism may dominate over us… we must achieve this great task of bringing about national unity… and must take over the control of national defence.”
[17] The most important of these being the term ‘disaffection’.
[18] Namely whether the intention should be to incite violence.
[19] Supra note 10.
[20] Supra note 15.
[21] “… the essence of democracy is Criticism of Government. The party system which necessarily involves an advocacy of replacement of one government by another is its only bulwark;” K.M. Munshi on 1st December 1948, Constitutional Assembly Debates.
[22] The general confusion about the meaning of the infamous section was expressed by at least one member at the time of framing the constitution. The dilemma created by the overruling of Niharendu Dutt and consequent need to exclude ‘sedition’ from 19(2) is illustrated by the following statement of Mr. K.M. Munshi – “… the equivocal word ‘sedition’ only is sought to be deleted from the article. Otherwise, an erroneous impression would be created that we want to perpetuate 124A of IPC or it’s meaning which was considered good law in earlier days.” 1st December 1948, Constitutional Assembly Debates.
[23] AIR 1951 Punj 27.
[24] Supra note 15.
[25] AIR 1962 SC 955.
[26] Id.
[27] (1997) 7 SCC 431.
[28] AIR 1987 SC 149.
[29] Halsbury’s Laws of England, 11(1) (London: Butterworths, 1994) para 89.
[30] Ibid para 90. An English judgement of relevance is that of Littledale, J in R. v. Collins, (1839) 9 C&P 456, at 460-461. “Every man has a right to give every public matter a candid, full and free discussion. Something, must be allowed for a feeling in men’s minds and for some warmth of expression, but an intention t incite the people to take power into their own hands and to provoke them to tumult and sdisorder is seditious intention.”
[31] W.O. Russel, Crime, 1 (12th ed., London: Stevens and Sons, 1964) at 219-220.
[32] Wallace-Johnson v. R, [1940] 1 All ER 241.
[33] S. 124A prescribes life imprisonment as the maximum punishment for the offence of sedition.
[34] S. 505(2) Statements creating or promoting enmity, hatred or ill-will between classes – Whoever makes, publishes or circulates, or any statement or report containing rumour or alarming news with intent to create or promote, or which is likely to create or promote, on grounds of religion, race, place of birth, residence, language, caste or community, or any other grounds whatsoever, feelings of enmity, hatred or ill-will between different religious, racial, language, or regional groups, or castes and communities shall be punished with imprisonment which may extend to three years, or fine, or both.
[35] [1983] Crim LR 539.
[36] Unreported, as cited in “Seditious Libel and the Press” in 64 Law Quarterly Review (1948) at 203.
[37] [1991] 1 All ER 306.
[38] (1997) 7 SCC 431.
[39] The courts conclusion is a little difficult to understand as the accused was found possessing arms and the spreading of communal hatred could eventually lead to violence.
[40] “Sedition”, 70 (Ss .2) American Jurisprudence 2d.
[41] Ibid at Ss. 10.
[42] Ibid at Ss. 32.
[43] 367 US 203, 6 L. Ed. 782. Harlan, J and 4 others formed the majority. 4 judges dissented.
[44] Ibid at 810.
[45] 367 US 290, 6 L. Ed. 836.
[46] The court relied on the case of Yates v. United States, 354 US 298, 1 L. Ed. 1356. The court in this case held that the Smith Act does not prohibit advocacy or teaching a doctrine of forcible overthrow, even though the advocacy and teaching is engaged in with an evil intent.
[47] Supra note 43.
[48] S. 3(3) – Whoever conspires or attempts to commit, or advocates, abets, advises or incites or knowingly facilitates the commission of, a terrorist act or any act preparatory to a terrorist act, shall be punishable with imprisonment for a term which shall not be less than five years but which may extend to imprisonment for life and shall also be liable to fine.
[49] (1868) 11 Cox CC 44 as cited in the 41st Law Commission Report.
[50] AIR 1962 SC 944.

Similar Documents

Premium Essay

Company Law

...INTRODUCTION Company law has now put on a broad scope as a result of global economic and technological advancement in this era thus touching on a number of disciplines. Issues pertaining to the company and its administration has been clearly spelled out in the Companies Act 1963 (Act 179) of Ghana. Company law (or the law of business associations) is the field of law concerning companies and other business organizations. This includes corporations, partnerships and other associations which usually carry on some form of economic or charitable activity. The most prominent kind of company, usually referred to as a "corporation", is a "juristic person", i.e. it has separate legal personality, and those who invest money into the business have limited liability for any losses the company makes, governed by corporate law. The largest companies are usually publicly listed on stock exchanges around the world. Even single individuals, also known as sole traders may incorporate themselves and limit their liability in order to carry on a business. All different forms of companies depend on the particular law of the particular country in which they reside. MEMBERS MEETINGS AND RESOLUTIONS Members of a company are, according to section 30 of the Companies Act are; (1) The subscribers to the Regulations shall be deemed to be members of the company and on its registration shall be entered as members in the register of members referred to in section 32 of this Code (Section 30 (1)). ...

Words: 1080 - Pages: 5

Premium Essay

Company Law

...Discuss the procedure to incorporate a public company in Malaysia. The law relating to incorporation of a company in Malaysia is governed by the Malaysian Companies Act, 1965. As per the act any company doing business or wishing to do business in Malaysia must register with the Companies Commission of Malaysia (CCM) under the Companies Act 1965. To incorporate a company, a person must apply the application of search name. A name search must be conducted to determine whether the proposed name of the company is available. Refer to Government Gazette No. 716 dated 30 January 1997, Gazette (Amendment) dated 11 October 2001, Guidelines For Naming A Company and Guidelines For Application Of A Company Name. The steps involved are completion and submission of Form 13A CA (Request For Availability Of Name) to SSM and Payment of a RM30.00 fee for each name applied. Where the proposed company’s name is approved by SSM, it shall be reserved for three months from the date of approval. A person must lodgment of incorporation documents. Incorporation Documents must be submitted to SSM within 3 months from the date of approval of the company’s name by SSM, failure of which a fresh application for a name search must be done. An original of the Memorandum and Article of association shall each be stamped at RM100.00. Stamps are affixed at the Inland Revenue Board’s stamp office. The first directors and secretaries shall be named in the Memorandum and...

Words: 599 - Pages: 3

Premium Essay

Company Law Issues

...(a) Facts: Due to the global financial crisis, the business of Bling Bling Pty Ltd has declined and the company is in the process of insolvent and under the care of a liquidator. The liquidator has rejected Sue’s claim to the securities, which includes a substantial block of shares that were fully paid, and debentures for further substantial sum secured by charge over all company’s assets. Issue: Whether Sue can enforce her charge [security interest] against Bling Bling Pty Ltd ? Relevant case: 
Under corporate law, there is a rule of separate legal entity explained in the case of Salomon v Salomon & Co Ltd. Once a company is incorporated, there will be a distinction between private and company’s debts and assets, a company can contract with its members and a company can be liable in tort to a member. As seen in the final decision in the famous case of Salomon v Salomon & Co Ltd, “…once the company is legally incorporated it must be treated like any other independent person with rights and liabilities appropriate to itself…” Application: In this case, because of there is no fraud so the company is a separate legal entity. The debenture given by the company is valid, thus, Ms. Sue should succeed in her claim against the company in her capacity as a secured creditor with priority payment for company’s debt owed to her. (b) Fact: Ms. Sue sold her company and took out an insurance policy in her name to cover the goods against fire and theft. After burglars broke...

Words: 1530 - Pages: 7

Premium Essay

Company Law

...Questions B.Com. (III) Company Law Session 2012-13 (Short Answer Type Questions) (i) What do you mean by ‘Lifting of Corporate veil’? (ii) What is the difference between a Private company and Public company? (iii) Explain the procedure for converting a Private Ltd. company into a Public Ltd. company. (iv)Distinguish between transfer and transmission of shares. (v) What do you mean by the term ‘Charge’? (vi) Define Minutes. (vii) Explain the statutory provisions relating to quorum for different kinds of company meetings. (Long Answer Type Questions) Unit-I 1. Define the term ‘Company’. What are its characteristics? 2. Who is a Promoter? Discuss his legal position in relation to a company which he promotes. Also discuss the rights and liabilities of promoters. 3. What is Memorandum of Assoiation ? Set out various clauses which must be incorporated in the company’s memorandum. Also discuss the procedure for changing the object clause. 4. What is Prospectus? What are its contents? Also discuss the consequences of mis-statement in prospectus. Unit-II 5. What is a Share? Describe the various types of shares that can be issued by a company. 6. Define a Member. How can membership be acquired? Discuss the rights and liabilities of a member. 7. How are the Shares in a company transferred? Can the board of directors refuse to register transfer of shares? Whar is the remedy open to the transferee in such a case? 8. The Companies Act has prescribed limitation...

Words: 381 - Pages: 2

Free Essay

Company Law

... |Suggested evidence to be retained | |. | | | |1. |Each candidate should write a report that|A written report that can be used by Charles Prospect to| | |can be used by Charles Prospect to |give the required presentation to the client | | |deliver his presentation to Bean & Co. |It should clearly describe the personality of a company | | |The report will be assessed for the |separate from its owners and board | | |demonstrated knowledge of the legal |It should also describe the process by which a company | | |formation of a company, forms of |can be formed and registered | | |corporate body and procedures for company|The different forms of corporate body that can be formed| | |formation. Case Study 1 provides |should be clearly described | | |background information for this. | | | | | | | | | | | ...

Words: 3692 - Pages: 15

Premium Essay

Company Law

...corporate governance practice as well as other perspectives of corporate governance. We also hope to introduce to students some of the more pertinent issues and trends in this field. As part of our ‘E-learning week’, there will be online lectures for students to view. Students will also be expected to do some independent study and research into the topic, which will form the base for the mid-term written assignment. At the end of the e-learning sessions, students should have a working understanding of: • What is meant by ‘corporate governance’; • Key milestones in the development of corporate governance in Singapore; • The regulatory framework for corporate governance in Singapore; • The interaction between Company Law and corporate governance; • Key regulatory mechanisms for Corporate Governance in Singapore; and • The provisions and operation of the Singapore Code of Corporate Governance 2012 Readings Many articles have been posted to help you along with writing the essay but you are required to be discerning and make your own selection of which articles to read. You may also do your own research to supplement the articles. Matters for study and independent research / discussion 1. What do you understand by the term ‘Corporate Governance’ and what are its...

Words: 398 - Pages: 2

Premium Essay

Company Law

...in Public Law: Challenges and Perspectives, Faculty of Law, Universiti Teknologi MARA (UiTM), 13th to 14 December 2011, Shah Alam, Malaysia. ABSTRACT In Newton v Birmingham Small Arms Co (1906), the English court made it clear that the rights of auditors cannot be abridged nor restricted by any regulations of the company. This is to ensure that the auditors’ rights are secured. The rights are unqualified and this will enable auditors to discharge their role and duties effectively. Additionally, the Companies Act 1965 (CA) gives substantive powers to enable auditors to carry out their duties effectively. This is because if their hands are tied, they will not be able to uncover any wrongdoings by the company’s management. In fact, any one who obstructs their duties, is in breach of the CA. Auditors have a right of access at all reasonable times to the accounting records and other records, including registers of the company. Moreover, the CA provides that auditors enjoy qualified privilege in certain circumstances. Thus, this study investigates imperative issues on the office of auditors concerning rights, powers and privilege. This is to strengthen the role and duties of auditors to bring about a more meaningful existence of auditors. In doing so, this study will explore the necessary reforms that should be made on the issues concerning the office of auditors. Auditors’ office and powers should not be taken lightly. Nevertheless, the provisions in ‘the Companies Act’, Banking...

Words: 5159 - Pages: 21

Premium Essay

Company Law

...MEANING, CHARACTERISTICS AND TYPES OF A COMPANY STRUCTURE 1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 1.0 Objective Introduction Meaning of Company Characteristics of a Company Distinction between Company and Partnership Types of Company Summary Keywords Self Assessment Questions Suggested Readings OBJECTIVE After reading this lesson, you should be able to: (a) (b) (c) 1.1 Define a company and explain its features. Make a distribution between company and partnership firm. Explain the various types of companies. INTRODUCTION Industrial has revolution led to the emergence of large scale business organizations. These organization require big investments and the risk involved is very high. Limited resources and unlimited liability of partners are two important limitations of partnerships of partnerships in undertaking big business. Joint Stock Company form of business organization has become extremely popular as it provides a solution to (1) overcome the limitations of partnership business. The Multinational companies like Coca-Cola and, General Motors have their investors and customers spread throughout the world. The giant Indian Companies may include the names like Reliance, Talco Bajaj Auto, Infosys Technologies, Hindustan Lever Ltd., Ranbaxy Laboratories Ltd., and Larsen and Tubro etc. 1.2 MEANING OF COMPANY Section 3 (1) (i) of the Companies Act, 1956 defines a company as “a company formed and registered under this Act or an existing company”. Section 3(1) (ii) Of the act states...

Words: 114302 - Pages: 458

Premium Essay

Company Law

...person; and ❖ the sole purpose of the company was to obtain the benefit of limited liability. Macaura v Northern Assurance: Where a member transfers property to his company, he loses any proprietary interest in the property. [A company owns property distinct from the property of its members.] LIFTING the corporate veil Incorporation for a fraudulent/improper purpose ❖ Gilford Motor v Horne: If the company was formed for the primary purpose of avoiding existing contractual obligations, the corporate veil is lifted. ➢ *H resigned from his position as managing director of GM. ➢ *H started a business under his name which competed with GM. ➢ *H discovered that the former service agreement provided that he would not, at any time, solicit customers of GM. ➢ *A company was incorporated in the name of H’s wife, which then conducted the business. ➢ *Although H was not a shareholder of the company, he conducted its affairs. ➢ *The company sent circulars to GM’s customers, seeking their business. ➢ The company was formed for the purpose of avoiding existing contractual obligations ( it was a “mere cloak or sham” used as a device ( corporate veil was lifted. Agency relationship of holding company & subsidiary ❖ Adams v Cape Industries: Subsidiary companies will be treated as separate legal entities. ➢ *C, holding company, set up subsidiaries in US specifically to evade US product liability laws. ➢ Holding company was not present in the US even though...

Words: 752 - Pages: 4

Premium Essay

Company Law

...partner, so Mr. Salomon business into a limited company. Then according to the company law, set up a company to be at least 7 shareholders holding at further 1 share each. So, Mr. Salomon gave himself a shares, also gave him a share of his wife and five children. Mr. Salomon company 20007 shares, but he holds 20001 shares, and his family members each have a share. With the passage of time, Mr. Salomon's company faces the difficulty. In order to raise funds, and also the company, Mr. Salomon sold its own debt to Benedick. To raise the money but can't let company to prevent more problems, because the money is used for business. Creditors discovered the money just can be used to repay the debt creditors holding it, it's considered a secured creditor. This event will be brought to the court or the Supreme Court. They all think that creditors cannot recover their entire debt contract with the company, so not with Mr. Salomon. After a series of the appeals, it is considered by Salomon v Salomon & Co Ltd is a company, with separate legal personality qualification, so also can’t say Mr. Salomon owned by the company. The company and Mr. Salomon have two legal persons in the law. So it is has the right to enter into a contract. The principle in Salomon are a company must be an independent legal person, but from other members or shareholders. The principle of Salomon must also know the veil of incorporation of the company. If a company will formally merge, courts usually don’t see the...

Words: 1005 - Pages: 5

Free Essay

Company Law

...Umunna represent the law in Singapore? To determine whether the decision in Island Export Finance Ltd (IEF Ltd) v Umunna represent the law in Singapore, the application of the common and statutory law will be used. Upon applying the right principles, the decision will represent Singapore law. Resignation to take up a corporate opportunity Singapore law states that the court held a director breached of his duty by taking up the opportunity if he resigns from a company to take up a corporate opportunity without the company’s permission where (i) the resignation was prompted or influenced by a desire to acquire the opportunity sought by the company or (ii) it was the director’s position with the company rather than a new initiative that led the director to the opportunity which the director later acquired. Intention for resignation A director will be held in breach of duty if his main intention of resignation is to take up the opportunity. Based on the facts, Umunna resigned due to his dissatisfaction with IEF. Hence, U was held not in breach of his fiduciary duty. This aligned with Singapore law as seen from Personal Automation Mart [PAM] v Tan Swe Sang where Tan resigns to take advantage of the contract sought by PAM and the court held that Tan had breached her fiduciary duties. Definition of corporate opportunity and source of information Singapore law defines a corporate opportunity as a business opportunity which the company is considering or...

Words: 1718 - Pages: 7

Premium Essay

Company Law

...Law: For companies registered after 1 July 1998, there are two choices; do not register a corporate constitution and allow the replaceable rules to automatically apply; or create a specific corporate constitution which will automatically displace the replaceable rules in their entirety or in part (if so stated expressly) . If both the contract and constitution are dependent on each other, then even if the constitution is amended so as to permit dismissal of the director, he can still claim damages arising out of breach of the contract this is evident in the case Carrier Australasia Ltd v Hunt (1939) 61 CLR 534. Hunt sued Carrier for wrongful dismissal and the Supreme Court held that although the company had power to alter its articles it was liable for damages for breach of contract. The constitution does not create a legal relationship between the company and outsiders, and therefore cannot be enforced by an outsider against the company, evidence of this is shown in Eley v Positive Government Security Life Assurance Co (1875) 1 Ex D 20. The corporate constitution could only be enforced by a member if it affected their member status. As the constitution status as company solicitor did not affect him as a member of the company, he could not take action to enforce the constitution to allow him to continue as the company solicitor. Application: Even though a special resolution conforming to all the requirements of the Corporations Act 2001 was passed by shareholders removing...

Words: 440 - Pages: 2

Free Essay

Company Law

...1. Easy Groceries Pty Ltd: the Company Issue The issue here is Easy Groceries Pty Ltd is liable for the debts incurred as a separate legal entity to its directors and shareholders? Or will its directors be personally liable for its debts? Law Upon incorporation, a company becomes a separate legal entity from its directors and members (s119). It can sue and be sued, acquire assets and debts, and enter into contracts in its own name. Its existence can lasts a lifetime as well. The Doctrine of Separate Legal Entity also known as “corporate veil” entails that the Directors of a Company have no personal liability while its Shareholders are only liable up to the amount they paid for their shares. In Salomon v Salomon & Co Ltd Case, Mr. Salomon was the majority shareholder and a secured creditor of the company. Upon winding up, the liquidators argued that Mr. Salomon must not be considered as a secured creditor since he was in control of the company itself. But the Court’s decision recognized Mr. Salomon as a secured creditor since the company has a separate legal personality from the directors and shareholder upon its registration and it has nothing to do with Mr. Salomon being a secured creditor. Application Applying s119 corporations act, Easy Groceries Pty Ltd is a separate legal entity from its directors and shareholders, meaning that Easy Groceries Pty Ltd as a company itself is liable for the debts that occurred. Conclusion As an own legal entity...

Words: 2658 - Pages: 11

Premium Essay

Company Law

...‘Directors duties occupy a strange position in company law. They must be sufficiently strong so as to keep directors in line but sufficiently weak to allow directors to take risks. It is no wonder the courts can’t enforce them properly.’ Do you agree with the above statement? By any measure the 2006 Act is a momentous and monumental piece of legislation. The largest statute ever enacted by the Westminster Parliament, it has engineered the modernisation, consolidation and codification of the vast panoply of UK company law. The Act subsumed the compendious 1985 Companies Act, and the Companies Act 1989.The modernisation of UK company law necessitated reform, redrafting and reorganisation in many fields. The law relating to directors’ duties received particular attention. Indeed, it is submitted that the reforms made in the context of the law on directors’ duties constitute some of the most important and valuable innovations incorporated in the new Act. Under s.171 CA 2006 a director must act in accordance with the company’s constitution and only exercise powers for the purposes for which they are conferred. This was formerly known in the case law as the proper purpose rule. In the case of Hogg v Cramphorn Ltd the principle found was that it was not enough that the directors issued the shares in the honest belief that it was in the best interest of the company. Hence the power must have been exercised for its proper purpose. In Howard Smith Ltd v Ampol Petroleum Ltd the Supreme...

Words: 1754 - Pages: 8

Free Essay

Company Law

...they have been the victim of wrongdoing by those in a ‘majority’……….…………………...Pg 7 & 8 References………………………………………………………………………………………………………………….Pg 9 & 10 Introduction of the Case of Foss v. Harbottle The Victoria Park Company is a company had been established during September 1835. This company is to establish a residential area for the prosperous business and professional families to stay. This estate will be established to the east of Wilmslow Road. Richard Foss and Edward Starkie are the minority shareholders. A bill was lodged by 2 shareholders of the company that incorporated by Art of Parliament, on their own and the other shareholders’ behalf. In the case they claim that fraudulent transactions misapplying the company’s assets did by 3 bankruptcy directors, a solicitor, proprietor and architect, and take some unqualified people to put in board of director to make it full and a company without clerk or office, in this situation the proprietors has no rights to take out the property from the hand of defendant directors. Observations were made on this point of case is that the trust between the company and company promoters had arises. Void transaction is not necessarily to be created by the possible of avoiding a transaction. A company can select to apply the transaction later and hold the directors bound by them. If the act is given the power that authorized the transaction on mortgage then they can be confirmed. Although this act is the act beyond the power...

Words: 3041 - Pages: 13