CMA Foundation Study Material Business Laws Paper 1 Lesson 1.1

Prepare for your CMA Foundation Paper 1 Business Laws and Business Communication. using our CMA Foundation Study Materials. Here is Lesson 1.1 : Sources of Law.

The first lesson in the CMA Foundation Paper 1 gives you a basic introduction about law in India and its evolution over time.

Sources of Law

Learning Objectives: By the end of this lesson, you will:

• Understand what “law” means in simple terms.
• Learn the different sources of law in India.
• Get an overview of legal development in India – Ancient, Medieval, British & Modern period.

What is Law?

Law is simply a set of rules that society follows to maintain order, justice, and fairness.

H.L.A. Hart defined law as “a set of rules for society.”

In India, the Constitution of India (1950) is the supreme source of law. But apart from the Constitution, laws also come from:

• Statutes (Acts of Parliament & State Legislatures)
• Judicial Precedents (Case laws & judgments)
• Customary & Personal Laws (religious/customary practices)
• Ordinances & Regulations (rules by President, Governors, local bodies, etc.)

1. Statutes (Acts & Legislations)

Statutes are made by the Parliament (Union List) or State Legislatures (State List). It also includes delegated legislation (rules, regulations, bye-laws).

Example: Companies Act, 2013; Income Tax Act, 1961.

2. Judicial Precedents (Case Law)

Article 141: Supreme Court decisions are binding on all courts in India.

High Courts also interpret laws, setting legal precedents.

Example: Kesavananda Bharati vs State of Kerala (1973) – Basic Structure Doctrine.

3. Personal Laws & Customs

This is based on religion or traditions, later codified.

Example: Hindu Marriage Act, 1955; Indian Christian Marriage Act, 1872.

4. Ordinances & Regulations

Article 123: President can issue ordinances when Parliament is not in session.

Article 213: Governor has similar powers in states.

Local bodies like Panchayati Raj institutions can issue rules under Article 243.

Evolution of Law in India (Legal History)

We can divide India’s legal history into 4 periods.

• The Ancient Period
• The Medevial Period
• The British Administrative Period
• Indian Legal Period

Ancient Hindu Period (Up to 1191 A.D.)

• Law was closely linked with religion. Main sources were the Vedas, Smritis, and Dharmashastras.
• The guiding principle was Dharma (duty, morality, righteousness).
• The King was seen as the highest authority but had to rule according to sacred law.
• Customs and local traditions were also accepted as law.
• Society was organised around family and caste, and justice often came from village assemblies or elders.

In this period, law was basically religion + customs + king’s authority.

The Ancient Indian Courts were divided into 6 categories based on their rank:

They were:

• The Kula – Family council or groups
• The Shreni – Trade or Professional Councils
• The Gana – Village assembly
• Adhikrita – Court appointed by the king
• Sasita – King’s court
• Nripa – The King

Medieval Period (12th – 18th Century)

This period began after the Muslim rulers established their rule in India, starting with the Delhi Sultanate and later the Mughal Empire.

Law was mainly based on Islamic principles (Shariat), which came from the Quran, Hadith, Ijma, and Qiyas.

Qazis (judges) were appointed to administer justice according to Shariat law.

The King (Sultan or Mughal Emperor) was considered the highest authority in law and justice, and he appointed qazis for different regions.

Matters of criminal law, taxation, land revenue, and administration were dealt with under Muslim law.

At the same time, Hindus and other non-Muslims were generally allowed to follow their own personal laws (family, marriage, inheritance, religion).

Justice was not uniform everywhere; sometimes, customs and local practices were also considered along with Islamic law.

In short: During the Muslim (Mughal) period, Islamic law was the main legal system, but Hindu personal law continued in private matters. The Emperor and his appointed qazis controlled justice.

British Administrative Period (1774 – 1947 A.D.)

The arrival of the British marked a big change in Indian legal history. The British brought in new institutions, courts, and codified laws that slowly replaced the old religious/custom-based system.

Early Phase – Company’s Rule

The East India Company started as a trading body but gained political control after the Battle of Plassey (1757) and later expanded across India.

In the beginning, the Company followed dual legal systems:

• Personal laws (Hindu Law, Muslim Law) were applied in family matters.
• In other matters, courts often followed Company regulations.

This caused confusion and injustice, as laws were not uniform and judges often lacked proper legal knowledge.

Establishment of Courts

1774 – Supreme Court of Calcutta was set up under the Regulating Act of 1773.

• This was the first real English-style court in India.
• It applied English law to British subjects but also sometimes to Indians, leading to conflicts.

Later, Supreme Courts were set up in Madras and Bombay.

1861 – High Courts Act established High Courts in Calcutta, Bombay, and Madras, replacing earlier Supreme Courts and Sadar Courts.

A proper hierarchy of courts was created, bringing more uniformity.

Introduction of Codified Laws

• The British realised India needed a clear, written legal system to replace scattered religious/customary laws.
• They started codifying laws (writing them systematically in Acts). The important ones include:
  • Indian Penal Code (1860) – defined crimes and punishments.
  • Indian Contract Act (1872) – rules about agreements and contracts.
  • Indian Evidence Act (1872) – rules about proof and evidence in court.
  • Civil Procedure Code (1859, revised 1908) – process for civil cases.
  • Criminal Procedure Code (1861, revised 1898) – process for criminal cases.
• These laws were mostly based on English law but adapted to Indian conditions.
• Uniformity: For the first time, the same set of written laws applied across most of India.

Features of the British Legal System in India

1. Codification of laws – systematic, written, uniform rules.
2. Modern courts – with appeals, hierarchy, and trained judges.
3. Separation of powers – courts independent from administration to some extent.
4. Professional legal training – lawyers (barristers) and legal education started.
5. Reduced role of religion/customs – law became more secular and formal.

Towards Independence

• By the 20th century, India had a modern legal system, though controlled by the British.
• Laws made by the British often favoured their rule and were criticised as being unjust to Indians.
• Still, the foundation of today’s Indian legal system (IPC, Contract Act, Evidence Act, courts) comes from this period.

In short: The British period transformed Indian law from a religion-based system into a codified, modern, uniform legal system. Most of our important laws and court structures today are a legacy of this period.

Indian Legal Period (1950-Present Day)

The Indian legal history, started with the Abolition of Privy Council Jurisdiction Act, 1949. The Constitution of India came into effect on 26 January 1950. And with it, the Supreme Court of India (Article 124) was established with 8 judges.

Currently there are 34 judges (33 judges of the Supreme Court of India and 1 Chief Justice of India).

Thus, India became a sovereign, democratic republic with an independent judiciary.

Question and Answers for Revision

Click the question to reveal the answers.

Fill in the Blanks

Click the question to reveal the answers.

True or False

Click the question to reveal the answers.

Conclusion

This completes the study material for Lesson 1.1 of Paper 1: Fundamentals of Business Laws & Business Communication. You can test your knowledge and understanding of the lesson by taking advantage of our MCQ Practice Questions (MCQs).

Now that you are familiar with lesson 1.1, let’s move on to Lesson 1.2, where you will learn about the legislative process in India.

Let us know if you have any questions or doubts in the comments section.