A Hundi is a negotiable instrument written in an oriental (vernacular) language. The term ‘Hundi’ includes all indigenous negotiable instruments whether they are in the form of notes or bills. But they are mostly of the nature of bills of exchange. They are virtually inland bills of exchange and recognized by custom and law in India. The term comes from the Sanskrit word Hund which means to collect. It means that Hundis were used as means of collection of debts. Hundis are very popular among the Indian merchants and indigenous bankers from ancient times. The Negotiable Instruments act does not apply to Hundis. Hundis are governed by the custom and usages of the locality in which they are intended to be used. In case there is no customary rule known as to a certain point, the court can apply the rules of the Negotiable Instruments Act. It is also open Continue reading
Mercantile Law
Group Insurance
Under the Group Insurance Scheme, the principle involved is more or less same as in the case of Life Insurance but the scheme is taken for a group of persons employed in an undertaking. In this scheme, the contract of life insurance can be summed up as an undertaking to pay specified amounts of money on the happening of certain contingencies in exchange for a previously agreed series of payments called premiums. This contract is between an employer and the Insurance Company and the contingencies where the death of employee in service or on survival to the retirement date. In the latter event the employer would possibly want some pension to be given for the post retirement life time of the employee. To offer cover of death risk, the system is to cover risk year by year. The employer is asked to pay the premium in advance and if death Continue reading
Managing Director (MD) under Companies Act
Section 2(26) of the Companies Act, 1956 defines a managing director as, “a director who, by virtue of an agreement with the company, or of a resolution passed by the company in general meeting, or by its Board of Directors, or by virtue of its Memorandum or Articles of Association, is entrusted with substantial powers of management which would not otherwise be exercisable by him, and includes a director occupying the position of a managing director, by whatever name called.” From the above definition it is clear that a managing director is also a director, but he enjoys substantial powers to act as the chief executive under the control and supervision of the Board. Thus, he is both a director and manager. As a director he takes a seat in the Board meeting and participates in the policy-making function. As a manager or chief executive, he is responsible for the Continue reading
Nature and Extent of Partner’s Authority to Bind the Firm by His Acts
Sections 18 declares that from the point of view of the third parties a partner is an agent of the firm for the purposes of the business of the firm. Even if only one partner acts on behalf of the firm liable. One partner can make all the other partners liable only if he acts within his express or implied authority. Thus, it is the express and implied authority of the partners which decides the nature and extent of their authority to kind the firm. Express authority of a partner When a partner is expressly authorized by an agreement of all the partners to do certain acts on behalf of the firm, it is called the express authority of a partner. A partner can kind the firm by any such act which falls width the scope of his authority, even if it does not fall within the scope of business. Continue reading
Meaning of Proxy Battles
Proxy battles take place when the agenda items at the meeting are likely to be opposed by dissident equity shareholders. Management of the company collect proxies to face these opponents in the meetings of the Board of Directors as well as shareholders. Meaning of Proxy Proxy is defined as a vote in deciding corporate issues in meetings and determining elections. Section 176 of the Companies Act, 1956 deals with the meaning, use and disposition of proxy, Section 176 is reproduced below: “176. Proxies — (1) Any members of a company entitled to attend and vote at a meeting of the company shall be entitled to appoint another and vote instead of himself; but a proxy so appointed shall not any right to speak at the meeting: Provided that, unless the articles otherwise provide: (a) this subsection shall not apply in the case of a company not having Continue reading
Articles of Association of a Company
The rules and regulations which are framed for the internal management of a company are set out in a document known as the Articles of Association. The articles are framed to enable the company to carry out the aims and objects of the company set out in the Memorandum of Association. Contents of Articles of Association The regulations and bylaws laid down in the Articles relate to the following: Share capital and its subdivision into different classes of shares, rights of shareholders and their variation; The procedure for making allotment, calls on shares and transfer, transmission, forfeiture and surrender of shares, including lien on shares; Alteration and reduction of capital; Borrowing powers; Appointment of Manager, Managing Director, Secretary; Declaration of dividend; Procedure for convening, holding and conducting different kinds of meetings, voting rights and methods; Maintenance of books of account and their audit; Share Certificates and Share Warrants, conversion Continue reading