Business Laws and the Parliament

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This Article is written by Aditi Kaushik , 2^nd year student at Unity PG Law College, Lucknow

ABSTRACT

Business laws and the Parliament of India are intricately intertwined, as the Parliament of India is responsible for enacting and amending laws that govern various aspects of business activities in the country. India has a rich legal history , and the country’s Constitution and laws reflect its commitment to protecting businesses, promoting entrepreneurship, and ensuring a level playing field for all market participants.

The Parliament of India is responsible for enacting and amending these laws , as well as many others that impact businesses in the country. The process of enacting and amending laws involves multiple stages , including the introduction of a bill, debate and discussion, committee review, and ultimately, a vote. The Parliament of India also plays an important role in overseeing the implementation and enforcement of business laws in India. The Lok Sabha and the Rajya Sabha have the power to hold hearings, conduct investigations, and review the actions of government agencies responsible for enforcing business laws.

INTRODUCTON

Business laws and the Parliament of India are vital to the country’s economic growth and development. The Indian Parliament has a significant role in enacting laws that regulate various aspects of businesses, ensuring a level playing field for all market participants, and promoting entrepreneurship. The country has a rich legal history and its constitution and laws reflect its commitment to protecting businesses, promoting entrepreneurship, and ensuring a fair market.

In recent years , the Parliament of India has taken several steps to promote entrepreneurship and support the growth of small and medium-sized businesses in the country. For example- The Start up India initiative launched in 2016 aims to foster a culture of innovation and entrepreneurship in India by providing funding , mentorship, and other support to start-ups.

The Parliament is the legislative branch of the Indian government and consists of two houses – The Lok Sabha (house of the people) and The Rajya Sabha (the council of states). Together , these houses are responsible for enacting laws that govern all aspects of Indian society, including business activities. In this article, we will explore the various business laws in India and the role of the Indian Parliament in enacting and amending them.

BUSINESS LAWS IN INDIA

India has a complex legal system with multiple laws that govern businesses. The business laws in India are aimed at regulating the activities of businesses and ensuring that they operate in a fair and transparent manner. The laws cover a wide range of areas, including company law, labor law, intellectual property law, taxation law and environmental law. Business laws in India have undergone significant changes over the years, with the country’s parliament playing a crucial role in shaping these laws. These laws in India have evolved over the years, responding to the changing needs of the country’s growing economy.

The important business laws passed by the parliament of India and their impact on the business community:

The Companies Act ,2013:

The Companies Act, 2013 is one of the most important business laws passed by the parliament of India. This law replaced the earlier Companies Act, 1956 and brought about significant changes in the way companies operate in India. The new act made it mandatory for all the companies to register with the Registrar of Companies (ROC) and introduced stricter compliance requirements. The act also provided for the establishment of the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT) to resolve disputes related to companies .This act regulates the incorporation, functioning and management of companies in India.

Under the Companies Act, 2013 companies in India are classified in two categories- private and public. The act sets out various rules and regulations for both categories of companies, including their formation, management and winding up procedures.

The impact of Companies Act, 2013 has been significant. It has improved corporate governance, increased transparency, and reduced the incidence of corporate fraud. The act has also provided greater protection to minority shareholders and strengthened the regulatory framework for mergers and acquisitions. However, some companies have faced challenges in complying with the new requirements, and there have been calls for simplifying the compliance process.

The Insolvency and Bankruptcy Code, 2016:

The Insolvency and Bankruptcy Code, 2016 is another important business law passed by the parliament of India. This law provides a comprehensive framework for the resolution of insolvency and bankruptcy cases. The code establishes the Insolvency and Bankruptcy Board of India (IBBI) and provides for the appointment of insolvency professionals and the creation of insolvency resolution plan.

The impact of the Insolvency and Bankruptcy Code, 2016 has been significant. It has made it easier for businesses to exit unviable operations and has provided a mechanism for the resolution of distressed assets. The code has also improved the ease of doing business in India and has attracted greater foreign investment. However, there have been concerns about the implementation of the code, and there have been calls for improving the efficiency of the resolution process.

The Consumer Protection Act, 2019:

The Consumer Protection Act, 2019 is a recent business law passed by the parliament of India. This law provides greater protection to consumers and also strengthens the regulatory framework for consumer disputes. The act establishes the Central Consumer Protection Authority (CCPA) and provides for the creation of consumer protection councils at the national, state, and district levels. The act also provides for the establishment of a consumer dispute redressal commission at the district, state, and national levels.

The impact of the Consumer Protection Act, 2019 has been significant. It has strengthened consumer right and provided greater protection to consumers against unfair practices by businesses. The act has also improved the quality of goods and services which are offered by businesses and has promoted greater accountability among businesses. However, there have been concerns about the implementation of the act and there have been calls for improving the efficiency of the redressal process.

The Competition Act, 2002:

The Competition Act, 2002 is a business law passed by the parliament of India to regulate and promote competition in the Indian market by preventing monopolies and promoting fair competition. The act establishes the Competition Commission of India (CCI) and provides for the regulation of anti-competitive practices such as fixing, collusion, and abuse of dominant market positions. The act also provides for the regulation of mergers and acquisitions that may have an adverse effect on competition in the market.

The impact of the Competition Act, 2002 has been significant. It has promoted healthy competition in the Indian market and has protected consumers from anti-competitive practices. Under the Competition Act, 2002 the CCI is responsible for enforcing the provisions of the act. The CCI has the power to investigate and penalize businesses that engage in anti-competitive practices.

Additionally, other important acts related to business laws in India include:

The Indian Contract Act, 1872
The Sales of Goods Act, 1930
The Partnership Act, 1932
The Limited Liability Partnership Act, 2008

ROLE OF THE INDIAN PARLIAMENT

The Indian Parliament has a crucial role in enacting and amending business laws in India. The parliament consists of the Lok Sabha and the Rajya Sabha , which together are responsible for enacting laws that that govern all aspects of Indian society, including business activities.

The parliament plays a significant role in ensuring a level playing field for all the market participants and promoting entrepreneurship in the country . It is responsible for enacting laws that regulate various aspects of businesses, such as corporate governance, competition, foreign investments, and consumer protection.

The parliament has also introduced several measures to promote ease of doing business in India. The introduction of the Goods and Service Tax (GST) in 2017 is a significant step in this direction, as it has simplified the tax system and made it easier for businesses to comply with tax regulations by replacing multiple indirect taxes with a single unified tax. The passage of the Insolvency and Bankruptcy Code, 2016, is a significant step in this direction as it aims to streamline the insolvency resolution process and make it more efficient and easier for business to exit the market.

In addition to enacting and amending business laws, the Indian Parliament plays a vital role in ensuring the accountability and transparency of businesses. It conducts regular inquiries and investigations into the activities of businesses to ensure that they comply with the law and adhere to ethical standards.

ROLE OF THE PARLIAMENT IN SHAPING BUSINESS LAWS

The parliament of India plays a very important role in shaping the business laws in the country. As the legislative body, it is responsible for enacting laws that affect businesses and the economy as a whole. In this section, we will explore some of the key cases enacted by the parliament of India that have had a significant impact on businesses in the country.

Foreign Exchange Management Act (FEMA), 1999:

The Foreign Exchange Management Act (FEMA), 1999 replaced the Foreign Exchange Regulation Act (FERA), 1973, which had become outdated and inefficient in regulating foreign exchange transactions. FEMA aimed to regulate foreign exchange transactions, promote orderly development and maintenance of foreign exchange market in India, and facilitate external trade and payments.

FEMA has had a significant impact on businesses in India, particularly those engaged in international trade and investments , it has streamlined the process of foreign investment in India and eased restrictions on foreign investors, which has contributed to the growth of the country’s economy.

Insolvency and Bankruptcy Code (IBC), 2016:

The IBC, 2016 is a comprehensive law that provides for the insolvency resolution of corporate persons, partnership firms, and individuals. It replaces several laws that dealt with insolvency, and has had a significant impact on businesses in India, particularly in the areas of debt recovery and insolvency resolution. It has streamlined the process of insolvency resolution and made it more efficient, which has led to faster recovery of debt and reduced losses for creditors.

Goods and Service Tax (GST), 2017:

The Goods and Service Tax (GST), 2017 is a comprehensive indirect tax that replaced several indirect taxes, including the central excise duty, service tax, and the state-level value added tax and aims to streamline the taxation system in the country. The GST aims to create a unified market for goods and services in India by removing the cascading effect of taxes and ensuring that businesses pay taxes only on the value they add. The GST has had a significant impact on businesses in India, particularly in the areas of tax compliance and ease of doing business, thereby, reducing the overall tax burden on businesses.

The Companies (Amendment) Bill, 2020:

The Companies (Amendment) Bill, 2020 was introduced in the Lok Sabha in March 2020 and was passed by both houses of the parliament in September 2020. The Bill introduced several amendments to the Companies Act, 2013, aimed at promoting ease of doing business and reducing the compliance burden on the companies.

Vodafone Tax Case:

The Vodafone Tax Case is a high-profile legal battle between the Indian government and the Vodafone Group Plc. The case pertains to a tax demand of over Rs. 20,000crore (approximately US $3 billion) n Vodafone’s acquisition of a stake in Hutchison Essar in 2007. The case has raised several important legal and policy questions around taxation and investment in India.

Satyam Scandal:

The Satyam Scandal, also known as India’s Enron, is one of the biggest corporate frauds in India’s history. The scandal involved the manipulation of accounts at Satyam Computer Services, a leading IT company in India, and led to the collapse of the company. The scandal highlighted the need for stronger corporate governance and transparency in India’s business environment.

Companies Act, 1956 vs. Companies Act, 2013:

The Companies Act, 1956 which was the primary legislation governing companies in India before the Companies Act, 2013 was enacted, had several shortcomings and loopholes that made it difficult to enforce. The Companies Act, 2013, introduced several new provisions aimed at addressing these issues and strengthening corporate governance in India. The Act has had a significant impact on the way companies operate in the country.

CONCLUSION

The Parliament of India plays a crucial role in formulating and passing business laws that regulate various aspects of trade and commerce in the country. From the Companies Act to the GST Act, there are several key legislations that businesses in India must comply with to operate legally and ethically. These laws not only protect the interests of businesses but also safeguard the rights of consumers and promote fair competition in the marketplace. It is important for businesses to stay updated with the latest changes in the legal framework and work towards complying with the relevant laws and regulations. As India continues to evolve as a major player in the global economy, the role of business laws and the Parliament in shaping its business landscape will only become more critical.

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