India follows the common law system that incorporates essential characteristics of common law jurisdictions, for example:

  • Indian courts follow previous decisions on the same legal issue, and
  • decisions of the appellate court, i.e., the higher court which hears the appeals against the lower courts’ judgments, are binding on lower courts.

Constitution of India

The Constitution of India (the “Constitution”) has both federal and unitary features. It can be both unitary and federal according to requirements of time and circumstances.

  • Unitary Government is a system of government in which all governmental authority is vested in a central government.
  • A federal government is a system that divides up power between a strong national government and smaller state governments.

The federal features of the Indian Constitution include the distribution of powers between the central (or federal or national) government and government of the various constituent states.

The unitary features of the Indian Constitution include unified judiciary with Supreme Court at the apex, appointments of key positions such as governors of states, the Chief Election Commissioner, and the Comptroller and Auditor General by the central government.

The Indian Constitution identifies and allocates legislative powers between the central and state legislatures through 3 distinct lists:

  1. The Union List contains 100 entries that are exclusively reserved for the central parliament and covers topics like, national defence, incorporation of companies, banking, and the RBI, etc.
  2. The State List contains 61 entries that are exclusively reserved for various state legislatures and covers topics like, agriculture, land and trade and commerce within the state’s territories.
  3. The Concurrent List contains 52 entries and covers topics such as contracts, bankruptcy, and insolvency, trust and trustees, etc., on which both the central and states legislature may legislate. However, in case of a conflict, the central law shall prevail.

The Indian Constitution recognises ‘delegated legislation’ which includes the exercise of legislative power by the Government of India, which is subordinate to the legislature. Delegated legislation enables the Government to make a law without having to wait for a new Act of Parliament to be passed. Further, the Government gets the authority to modify or alter sanctions under a given statute or make technical changes relating to law.

At times, a business-related law may be incomplete unless it is read along with the related delegated legislation, i.e., the rules / circulars / press notes / guidelines issued by the Government of India.

Hence, it is essential to consider the delegated legislation which includes rules and regulations and, may at times, vary between the two states.

Courts of India

There is a three-tier system of courts in India:

#1 Supreme Court

The Supreme Court of India is the highest court and pass judgment on appeals from the state High Courts.

#2 High Court

The High Courts in each of the states (or union territory) are the principal civil courts of their respective states (or union territory) and can try all offences including those punishable with death. The High Courts pass judgments on appeals from lowers courts and writ petitions. There are 24 High Courts in India.

#3 District Courts and Session Courts

The District and Session Courts at the district level administer justice at the district level. These courts are under administrative and judicial control of the High Court of the respective state. These courts are the principal court of civil jurisdiction, and has the power to impose any sentence including capital punishment.

There are many other courts subordinate to the court of District and Sessions Judge as follows:

  1. On the civil side, at the lowest level is the court of Civil Judge (Junior Division). Civil Judge (Junior Division) decides civil cases related to small monetary interest or award.
  2. On the criminal side, the lowest court is that of the Judicial Magistrate Second Class. Judicial Magistrates decide criminal cases which are punishable with imprisonment of up to 5 years.

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