INTRODUCTION TO LAW
NATURE OF LAW
Law is not static. As circumstances and conditions in a society change, laws also have to adapt to fit the requirement of the society. This is because laws are expected to provide socio-economic justice and remove the existing imbalances in the socio-economic structure.
The nature and meaning of law has been described by various jurists. There is no unanimity of opinion regarding the true nature and meaning of law.
The reason is that the subject has been viewed and dealt with by different jurists at different times and from different point of views.
The definitions of law can be classified under five broad heads:
Natural
Positivistic
Historical
Sociological
Realistic
MEANING OF LAW
Article 13(3) of the Indian Constitution says:
(a) “Law” includes any ordinance, order, bye-law, rule, regulation, notification, custom or usage having in the territory of India the force of law;
(
b) “Laws in force” includes laws passed or made by a Legislature or other competent authority in the territory of India before the commencement of this constitution and not previously repealed, notwithstanding that any such law or any part thereof may not be then in operation either at all or in particular areas.
LAW IS A “NORMATIVE SCIENCE”
Kelsen gave a ‘pure theory of law’. According to him, law is a ‘normative science’. The legal norms are ‘Ought’ norms as distinct from ‘Is’ norms of physical and natural sciences.
PART A: BUSINESS LAWS
Law does not attempt to describe what actually occurs but only prescribes certain rules. The science of law to Kelsen is the knowledge of hierarchy of normative relations.
All norms derive their power from the ultimate norm called Grundnorm.
“LAW
IS THE COMMAND OF SOVEREIGN THAT IS BACKED BY SANCTION”
According to Austin, law is the ‘command of sovereign’ that is backed by ‘sanction’.
Austin has propagated that law is a command which imposes a duty and the failure to fulfil the duty is met with sanctions (punishment). Thus, law has four main features:
Command
Sanction
Duty
Sovereignty
SOURCES OF INDIAN LAW
The general meaning of source is origin. Austin contends that law originates from the sovereign. Savigny traces the origin in volkgeist (general consciousness of the people) and for Theologians, laws originates from God. The modern law as is administered in the courts is derived from various sources and these sources fall under two heads:
1. Primary sources of Indian law
2. Secondary sources of Indian law
PRINCIPAL SOURCES OF INDIAN LAW
The principal sources of Indian law are:
Customs or customary law
Judicial decisions or precedents
Statutes or legislation
JUDICIAL DECISION OR PRECEDENTS
Precedent literally means a rule followed or a principle applied previously by a competent authority under similar facts and circumstances. If a previous decision by a Court is taken as a basis or source for deciding the case under similar facts and circumstances, it is called judicial precedent. Judicial precedents are an important source of law. They have enjoyed high authority at all times and in all countries.
The principles of law expressed for the first time in court decisions become precedents to be followed as law in deciding problems and cases identical with them in future.
The rule that a court decision becomes a precedent to be followed in similar cases is known as doctrine of stare decisis [Stare Decisis, means “to stand by decided matters”].
The reason why a precedent is recognised is that a judicial decision is presumed to be correct.
The practice of following precedents creates confidence in the minds of the litigants. Precedents may be classified as:
Declaratory and Original Precedents
Persuasive Precedents
Absolutely Authoritative Precedents
Conditionally Authoritative Precedents
These are explained briefly below:
1. Original Precedents: An original precedent is one which creates and applies a new rule.
2. Declaratory Precedents: A declaratory precedent is one which is merely the application of an already existing rule of law.
The legal authority of both declaratory and original precedents is exactly the same.
3. Persuasive Precedents: A persuasive precedent is one which the judges are not obliged to follow but which they will take into consideration and to which they will attach great weight as it seems to them to deserve.
The rulings of the English and American Courts are persuasive precedents only. Obiter dicta also have only persuasive value.
4. Absolutely Authoritative Precedents: An authoritative precedent is one which judges must follow whether they approve of it or not.
Thus, decisions of Supreme Court are binding force on High Courts and District Courts.
Unlike a persuasive precedent which is merely historical, an authoritative precedent is a legal source of law.
5. Conditionally Authoritative Precedents: A conditionally authoritative precedent is one which, though ordinarily binding on the Court before which it is cited, is liable to be disregarded in certain circumstances.
STATUTES
OR LEGISLATION
Legislation is that source of law which consists in the declaration or promulgation of legal rules by an authority duly empowered by the Constitution in that behalf. It is sometimes called Jus scriptum (written law) as contrasted with the customary law or jus non-scriptum (unwritten law).
Salmond prefers to call it as “enacted law”.
Statute law or statutory law is what is created by legislation, for example, Acts of Parliament or of State Legislature.
PART A: BUSINESS LAWS
Legislation is either supreme or subordinate (delegated).
Supreme Legislation is that which proceeds from the sovereign power in the State or which derives its power directly from the Constitution.
Subordinate Legislation is that which proceeds from any authority other than the sovereign power. It is dependent for its continued existence and validity on some superior authority.
The Parliament of India possesses the power of supreme legislation. The executive, whose main function is to enforce the law, is given in some cases the power to make rules. Such subordinate legislation is known as executive or delegated legislation.
PERSONAL LAWS/CUSTOMS
A custom is a rule which in a particular family or district or particular sect, class or tribe has from long usage obtained force of law.
Custom is the most ancient of all the sources of law and has held the most important place in the past, though its importance is now diminishing with the growth of legislation and precedent.
Requisites of a valid custom: A custom will be valid at law and will have a binding force only if it fulfils the following essential conditions, namely:
1. Immemorial (Antiquity): A custom to be valid must be proved to be immemorial; it must be ancient.
2. Certainty: The custom must be certain and definite, and must not be vague and ambiguous.
3. Reasonableness: A custom must be reasonable. It must be useful and convenient to the society. A custom is unreasonable if it is opposed to the principles of justice, equity and good conscience.
4. Compulsory observance: A custom to be valid must have been continuously observed without any interruption from times immemorial.
5. Conformity with law and public morality: A custom must not be opposed to morality or public policy nor must it conflict with statute law.
6. Unanimity of opinion: The custom must be general or universal.
7. Peaceable enjoyment: The custom must have been enjoyed peaceably without any dispute in a law Court or otherwise.
8. Consistency: There must be consistency in the customs. Custom must not come into conflict with the other established customs.
SECONDARY SOURCES OF INDIAN LAW
JUSTICE, EQUITY & GOOD CONSCIENCE
The concept of “justice, equity and good conscience” was introduced by Impey’s Regulations of 1781. In personal law disputes, the courts are required to apply the personal law of the defendant if the point at issue is not covered by any statute or custom.
In the absence of any rule of a statutory law or custom or personal law, the Indian courts apply to the decision of a case what is known as “justice, equity and good conscience”, which may mean the rules of English Law in so far as they are applicable to Indian society and circumstances.
ENGLISH LAW
The chief sources of English law are:
Common Law
Law Merchant
Principle of Equity
Statute Law
DOCTRINE OF STARE DECISIS
Stare Decisis means ‘to stand by decided cases’.
The Doctrine of Stare Decisis means, “adhere to the decision and do not unsettle things which are established”.
In simple words, the principle means that like cases should be decided alike. Doctrine of Stare Decisis is based on public policy and expediency. Doctrine of Stare Decisis should be strictly adhered to by the Courts, but it is not universally applicable. Certain exceptions do exist for the doctrine. For example, Supreme Court may change its earlier decision.
RATIO DECIDENDI
The ratio decidendi of a case is the principle of law on which a decision is based.
When a Judge delivers judgment in a case he outlines the facts which he finds have been proved on the evidence, then he applies the law to those facts and arrives at a decision, for which he gives the reason (ratio decidendi). Thus the underlying principle of a judicial decision, which is only authoritative is called ‘ratio decidendi’.
OBITER DICTA
The literal meaning of this Latin expression is “said by the way”. The expression is used especially to denote those judicial utterances in the course of delivering a judgement which taken by themselves, were not strictly necessary for the decision of the particular issue raised. These statements thus go beyond the requirement of the particular case and have the force of persuasive precedents only.
INDIAN LEGAL SYSTEM, LEGISLATIVE AND EXECUTIVE FUNCTIONS
The Government of India is mainly composed of the executive, legislative, and judicial branches in which all powers are vested by the Constitution in the Parliament, the Prime Minister and the Supreme Court.
PART A: BUSINESS LAWS
The President of India is the Head of State and the Supreme Commander of the Indian Armed Forces while the people elected Prime Minister acts as the chief executive (of the executive branch) and is responsible for running the Government.
In India, there is a bicameral Parliament with the Lok Sabha as a Lower house and the Rajya Sabha as an Upper house.
Legislative branch in India is exercised by the Parliament and a bicameral legislature consisting of the Rajya Sabha and the Lok Sabha.
Of the two houses of Parliament, the former is considered to be the upper house or the Council of States and consists of members appointed by the President and elected by the state and territorial legislatures.
The latter is considered the lower house or the House of the people.
The executive power is vested mainly in the President of India, as per Article 53(1) of the constitution.
The President is to act in accordance with aid and advice tendered by the Prime Minister, who leads the Council of Ministers as described in Article 74 of the Constitution of India.
JURISPRUDENCE
The word Jurisprudence is derived from the word ‘juris’ meaning law and ‘prudence’ meaning knowledge.
Jurisprudence is the study of the science of law.
The study of law in jurisprudence is not about any particular statute or a rule but of law in general, its concepts, its principles and the philosophies underpinning it.
CONSTITUTION OF INDIA
BROAD FRAMEWORK OF THE CONSTITUTION
The Constitution of the country reflects the basic principles and laws of a nation, state, or social group that determine the powers and duties of the government and guarantee certain rights to the people in it. It reflects the ideology and system of the Nation.
The Constitution of India came into force on January 26, 1950. It is a comprehensive document containing 395 Articles (divided into 22 Parts) and 12 Schedules.
The Constitution makes detailed provisions for the rights of citizens and other persons in a number of entrenched provisions and for the principles to be followed by the State in the governance of the country, labelled as “Directive Principles of State Policy”.
All public authorities – legislative, administrative and judicial derive their powers directly or indirectly from it and the Constitution derives its authority from the people.
EMERGING LEGISLATIONS
Emerging Legislations are reshaping governance, commerce, and individual rights in India. The laws mentioned below are few of the important emerging legislations in India.
Securities Laws
Information Technology Law
Arbitration and Conciliation Law
Mediation Law
Digital Personal Data Protection Law
Competition Law
Criminal and Evidence Law
Intellectual Property Rights Law
Real Estate Regulation Law (RERA)
Telecommunication Law
Goods and Services Tax
Income Tax Act
Insolvency Laws
Labour Code etc
MULTIPLE CHOICE QUESTIONS
1. The term “legislation” is derived from the Latin word “legis” which means:
(a) To set
(b) Law
(c) Court
(d) None of the above
[Scoring Question]
2. Which of these are true about law?
(a) Law pre-supposes a State
(b) The State makes or authorizes, or recognizes or sanctions rules which are called law
(c) Rules (called laws) are made to serve some purpose social purpose or some personal ends of a despot
(d) All of the above
[Scoring Question]
3. Which of the following is not a feature of Law ?
(a) Law is static
(b) Law is framed to regulate human behaviour
(c) The meaning of law may differ from person to person
(d) Law differentiates between what is permissible and not permissible
[Scoring Question]
4. Who said “Law is the command of the sovereign that is backed by sanction”?
(a) Kelson
(b) Austin
(c) Bentham
(d) Roscoe
[Scoring Question]
PART A: BUSINESS LAWS
5.“To understand law, one should know its purpose and in order to ascertain the true nature of law, one should go to the courts.”
Which school of law provides the said thought?
(a) Social
(b) Positivistic
(c) Natural
(d) Realist [Scoring Question]
6.As per the Positivistic definition of law, which of the following are the elements of law:
(a) Command
(b) Duty
(
c) Sanction
(d) All of the above [Scoring Question]
7.Law is a statement of the circumstances in which public force will be brought to bear upon through courts. This is the understanding of which school of law?
(a) Historical
(b) Sociological
(c) Realist
(d) None of the above [Scoring Question]
8.Law may be defined as “the art or science of what is equitable and good.” This definition of law was given by:
(a) Ulpine
(b) Cicero
(c) Justin
(d) Salmond
[Scoring Question], [CS Foundation 2012]
9.“Certain rights are inherent by virtue of human nature and can
be understood universally through human reason.” Which school of law proclaims this statement?
(a) Natural school of law
(b) Positivistic
(c) Historical
(d) Sociological [Scoring Question]
10.As per Roscoe for any legal order to be successful in structuring an efficient society, there has to be:
(a) A recognition of interests of individual, public and society
(b) A definition of the limits within which such interest will be legally recognized and given effect to
(c) Securing of those interests within the limits as defined
(d) All of the above [Scoring Question]
11.__________ school of law is a synthesis of philosophy, psychology, history, social science etc. with law.
(a) Natural school of law
(b) Positivistic
(c) Historical
(d) Sociological [Scoring Question]
12. Law, in order to command respect in society must have an element of ethical value and ethical purpose. Which school of thought provides this?
(a) Philosophical school of law
(b) Positivistic
(c) Historical
(d) Sociological [Scoring Question]
13.Law is the knowledge of hierarchy of normative relations. This “Grundnorm” was propounded by:
(a) Salmond
(b) Kelsen
(c) Austin
(d) None of the above
[Scoring Question]
14.Which of the following is a true statement?
(a) Superior norms are followed by the Grundnorms followed by subordinate laws
(b) Grundnorms are followed by the Superior Norms followed by subordinate laws
(c) Subordinate laws are preceded by Grundnorms preceded by Superior laws
(d) None of the above
[Scoring Question]
15.Laws are made effective by:
(a) By requiring damages to be paid
(b) By requiring one to complete an obligation he has failed to perform
(c) By preventing disobedience
(d) All of the above
[Scoring Question]
16.An expression of wish or desire of an intelligent person, directing another person to do or to forbear from doing some act is called:
(a) Command
(b) Duty
(c) Sanction
(d) All of the above
[Scoring Question], [CS Foundation 2002]
17.Ihering defines law as “the form of the guarantee of the conditions of life of society, assured by State’s power of constraint”.
Which of the following are the essentials of this definition?
(a) Law is treated as only one means of social control
(b) Law is to serve a social purpose
(c) It is coercive in character
(d) All of the above
[Scoring Question]
18.Under the Constitution of India, the inclusive definition of the term “Law” and “Laws in force” has been provided:
(
a) In Article 14
(b) In Article 13
(c) In Article 30
(d) None of the above
[Scoring Question], [CS Foundation 2000, 2011]
19.Which of these is not a principal source of Indian law:
(a) Customs or Customary Law
(b) Judicial Decisions or Precedents
(c) Statutes or Legislation
(d) Academic journals
[Scoring Question]
20.What are the sources of law?
(a) Constitution of India
(b) Constitution of India, judicial precedents, customary laws, statutes and ordinance
(c) Statutes enacted by the Parliament of India and State Legislatures, Religion
(d) None of the above
[Scoring Question]
[CS Foundation 2004, 2009, 2011]
21.Customs which are binding due to an agreement between the parties, and not due to any legal authority are called:
(a) Local customs
(b) Legal customs
TAXMANN ®
1.12
(c) Conventional customs
(d) None of the above
PART A: BUSINESS LAWS
[Scoring Question]
[CS Foundation 2010]
22.Which of these are not the requisites of a valid custom which is valid at law?
(a) Immemorial (Antiquity)
(b) Uncertainty
(c) Reasonableness
(d) Compulsory Observance
[Scoring Question]
23. Customs which are non-obligatory and are observed due to the pressure of public opinion are called :
(a) Customs without sanction
(b) Customs having sanction
(c) Legal customs
(d) None of the above
[Scoring Question]
24.In India, the decisions of one High Court are _________ Precedents in the other High Courts.
(a) Declaratory
(b) Persuasive
(c) Absolutely authoritative
(d) Conditionally authoritative
[Scoring Question]
25.A precedent which judges must follow whether they approve of it or not and its binding force is absolute is called:
(a) Declaratory
(b) Persuasive
(c) Absolutely authoritative
(d) Conditionally authoritative
[Scoring Question]
26. __________ precedent is one which is merely the application of an already existing rule of law.
(a) Original
(b) Persuasive
(c) Declaratory
(d) None of the above
[Scoring Question]
27. _________ precedent is one which creates and applies a new rule of law:
(a) Original
(b) Persuasive
(
c) Declaratory
(d) None of the above [Scoring Question]
28.Which of these is not true about Persuasive precedents:
(a) They are a legal sources of law
(b) They are regarded as a historical source of law
(c) They are the one which the judges are not obliged to follow but which they will take into consideration
(d) All of the above
[Scoring Question]
29.The decision of a single judge of the High Court is _________ when cited before a Division Bench of the same High Court.
(a) Declaratory
(b) Persuasive
(c) Absolutely authoritative
(d) Conditionally authoritative
[Scoring Question]
30.A single judge of a High Court is bound by the decision of a bench of two or more judges. All courts are absolutely bound by decisions of the Supreme Court. This is an example of:
(a) A persuasive precedent
(b) Absolutely authoritative precedents
(c) Conditionally Authoritative Precedents
(d) None of the above
[Scoring Question]
31.“Like cases should be decided alike” is the application of which doctrine?
(a) Obiter Dicta
(b) Stare Decisis
(c) Ratio Decidendi
(d) None of the above
[Scoring Question]
32. Which of the following doctrines imply “adhere to the decision and do not unsettle things which are established.”
(a) Obiter Dicta
(b) Stare Decisis
(
c) Ratio Decidendi
(d) None of the above
[Scoring Question], [CS Foundation 2009]
33.The underlying principle of a judicial decision, which is only authoritative, is termed as __________.
(a) Obiter Dicta
(b) Stare Decisis
(c) Ratio Decidendi
(d) None of the above
[Scoring Question],
34.The literal meaning of which of these expressions is “said by the way”.
(a) Obiter Dicta
(b) Stare Decisis
(c) Ratio Decidendi
(d) None of the above
[Scoring Question], [CS Foundation 2006, 2008]
35.Legislation is that source of law which consists in the declaration or promulgation of legal rules by an authority and is also called:
(a) Jus non-scriptum (unwritten law)
(b) Jus scriptum (written law)
(c) Customary law
(d) None of the above [Scoring Question]
36.The portion of law which is derived from the legislation or enactment of Parliament is called:
(a) Law merchant
(b) Common Law
(c) Principle of Equity
(d) Statute Law
[Scoring Question]
37.The legislation which proceeds from the sovereign power in the State or which derives its power directly from the Constitution is called:
(a) Subordinate legislation
(b) Supreme legislation
(c) Either (a) or (b)
(d) None of the above [Scoring Question]
38.Which is the highest Court in India?
(a) High Court
(b) Supreme Court of India
(c) International Court of Justice
(d) Sessions Court
39.What are Personal Laws?
(a) Laws relating to inter personal behaviour
(b) Customs (religious beliefs) that have now been codified
(c) Laws that a person makes
(d) Laws based on opinion [Scoring Question]
BUSINESS LAWS & MANAGEMENT (PAPER 4) | CRACKER
AUTHOR : Shruti Soni
PUBLISHER : Taxmann
DATE OF PUBLICATION : April 2026
EDITION : 2026 Edition
ISBN NO : 9789375614074
NO. OF PAGES : 632
BINDING TYPE : Paperback
DESCRIPTION
Business Laws & Management – CRACKER is an exam-focused companion volume for CSEET Paper 4, applicable for the June 2026 and October 2026 sittings. It consolidates the entire revised syllabus into fourteen chapters across two parts—Business Laws (six chapters on the principal commercial statutes) and Business Management (eight chapters on functions, principles and modern approaches, closing with management knowledge for Company Secretaries).
The CRACKER format enables rapid topic-wise revision through concise statutory and conceptual summaries followed by an extensive bank of MCQs calibrated to the OMR-based pattern of the actual examination. Every chapter is mapped to the corresponding chapter in the ICSI Study Material, and the volume closes with a full-length Mock Test Paper.
The Present Publication is the May 2026 Edition, authored by CS Shruti Soni, with the following noteworthy features:
• [Strictly Aligned with the Latest CSEET Syllabus] Every chapter, section reference and question set is mapped to the most recently revised CSEET syllabus issued by ICSI for Paper 4, ensuring full coverage of the June and October 2026 examinations
• [Topic-wise Coverage of Past Exam Questions with Additional Questions] Past CSEET questions are classified topic-wise within each chapter, allowing students to attempt questions immediately after revising the corresponding theory; additional practice questions in the same MCQ format are supplied wherever past coverage of a topic has been thin
• [Chapter-wise Mapping with the ICSI Study Material] A dedicated comparison table at the front of the book links each CRACKER chapter to the corresponding chapter of the ICSI Study Material, enabling seamless parallel use without losing alignment with the institute's prescribed reading
• [OMR-based Assessment Format] Every question is structured in the OMR/MCQ format used in the live computer-based CSEET, with four answer choices and a single correct option, mirroring the actual examination interface
• [Concise Topical Summaries before each Question Set] Each topic opens with a short, exam-oriented summary of statutory provisions, definitions, section references and conceptual frameworks, allowing the CRACKER to function as a self-contained revision volume
• [End-of-chapter Answer Keys] Every MCQ block is followed by a tabulated answer key for immediate self-assessment and per-topic score tracking
• [Full-length Mock Test Paper] A complete Mock Test Paper at the end of the volume is drawn proportionately from both Parts in line with syllabus weightage, calibrated for use as a final-week diagnostic and timed-attempt rehearsal
• [Tabular Treatment of Comparative Provisions] Side-by-side tables are used wherever concepts intersect or contrast—partnership vs LLP, sale vs agreement to sell, conditions vs warranties, holder vs holder in due course, void vs voidable agreements, AGM vs EGM and similar examiner-favoured distinctions
