JUDICIARY IN NEPAL

JUDICIARY IN NEPAL

Article 100 (1) of the Interim Constitution of Nepal, 2007 provides that the judicial power of Nepal shall be exercised by the courts and judicial authorities pursuant to the constitution and other laws and recognized principles of justice. Article 101 of the constitution has expressed the provision of Supreme Court, Appellate Court and District Court along with the provision for establishing other courts, judicial authorities or tribunals for the settlement of special nature of cases.

Supreme Court, as the most superior court of Nepal, is recognized as a court of record. At present, 16 Appellate Courts, 75 District Courts and other judicial authorities like Debt Recovery Tribunal, Revenue Tribunal, Administrative Court, Labour Court, Foreign Employment Tribunal and Special Court are discharging the duties of justice dispensation in Nepal.

The administration of justice of the country has been guided through the various statutes and regulations related with the court, including Interim Constitution of Nepal, 2007, Administration of Justice Act, 1991, Supreme Court Act, 1991, Supreme Court Regulations, 1992, Appellate Court Regulations, 1991 and District Court Regulations, 1994.

Jurisdiction of District Court: Except as otherwise provided in the prevailing law, the District Court shall have powers to try and settle, in original jurisdiction, all the cases within its jurisdiction.
Jurisdiction of Court of Appeal: (1) The Court of Appeal shall have powers to hear appeals against the original judgments or final orders and to review over the reference judgments according to the law, on cases or proceedings tried and decided by the District Courts under it and, except as otherwise provided in the prevailing law, by any other bodies or authorities under its territorial jurisdiction.
 (2) The Court of Appeal shall have powers to issue orders of habeas corpus, mandamus or injunction, as required, for the enforcement of legal rights of any person infringed by anybody or authority under its territorial jurisdiction. (3) In addition to the powers as referred to in Sub-sections (1) and (2), the Court of Appeal shall have powers to try, under its original jurisdiction, and settle the following cases:
The cases which the Court of Appeal is empowered by law to try and settle under its original jurisdiction, (b) The cases in which the Supreme Court has considered appropriate and issued an order requiring the Court of Appeal to try in original jurisdiction and settle the case on grounds of hardship to the parties to the case due to the excessive prolongation of proceedings in the case or due to some serious or complicated legal issues involved in the case.
 Appeal to the Supreme Court: (1) An appeal may lie in the Supreme Court against the judgments or final orders made by the Court of Appeals on the following cases: (a) Cases tried and settled by the Court of Appeals under original jurisdiction;
 (b) Cases in which punishment of imprisonment for Ten years or more has been imposed; Cases in which reversal of decisions made by the original Court, body or authority has been made by the Court of Appeal made on appeal against such decisions.
Review: (1) The Supreme Court may review its judgment or final order in the following circumstance:
(a) If it appears that the concerned party has come to know any fact likely to materially affect the justice done in the case only after the settlement of the case, or (b) If it appears that the decision is contrary to the precedent or legal principle enunciated by the Supreme Court.
Notwithstanding anything contained in Sub-section (1), the Supreme Court shall not review its judgment or final order in the following circumstance: (a) If the judgment or final order has already been reviewed earlier, (b) If the questions raised on the petition made for review were also raised in the Division Bench of the Supreme Court and they were heard by the Full Bench because the judges divided in their opinions thereon, decision was already made by settling those questions,
(c) If the case has already been settled by way of revision pursuant to the prevailing law prior to the commencement of this Act, or
 (d) If the judgment of the Court of Appeal has been confirmed in the case reviewed pursuant to Section 12(3) A petition for review may be made within Sixty days of the date of judgment in the case by the Supreme Court. ………………………..
Revision: (1) The Supreme Court may, in the following circumstances, revise the judgment or final order made by the Court of Appeal in the cases which are not appealable to the Supreme Court pursuant to this Act or the prevailing laws:
 (a) If the judgment or final order of the Court of Appeal involves serious legal error in interpretation of the Constitution or law;
 (b) If the principle or precedent established by the Supreme Court has not been followed or has been applied with false interpretation;
 (c) If any public property has been misappropriated or loss caused in such property due to lack of proper evaluation of the evidence contained in the case file in a case involving dispute vis-à-vis public property; or
(d) If the justice is substantially affected due to lack of proper representation of a child, woman, aged, disabled or mentally retarded person.
(2) A case once heard and adjudged in revision by the Supreme Court shall not be revised again.
(3) A petition for revision to be filed under this Section may be filled in the Supreme Court or the Court of Appeal having made such decision within Thirty Five days, excluding the time required for journey, from the date of decision by the Court of Appeal.
In making review or revision: During the review of a case pursuant to Section 11 or revision of a case pursuant to Section 12, the Supreme Court shall decide the case keeping itself limited within the grounds on which the order for review or revision has been granted and to the matters relevant thereto.
The Constitution of Nepal, 2015
PART-11
Judiciary
126. Courts to exercise powers related to justice: (1) Powers relating to justice in Nepal shall be exercised by courts and other judicial institutions in accordance with the provisions of this Constitution, other laws and recognized principles of justice.
(2) All must adhere to the order or verdict given by the court in relation to the court cases.
127. Courts: (1) There shall be the following courts in Nepal:
(a) Supreme Court,
(b) High Court, and
(c) District Court
(2) In addition to the courts referred to in Clause (1), other institutions may be established according to the need to adopt other means of alternatives of dispute resolution or judicial bodies to adjudicate cases at the local level according to the law.
128. Supreme Court (1) There shall be a Supreme Court in Nepal.
(2) The Supreme Court shall be the Court of Record. The Supreme Court shall have the final power to interpret the Constitution and law.
(3) The Supreme Court may inspect, supervise and give necessary directives to courts and other judicial institutions falling under its jurisdiction on matters relating to judicial administration or management.
(4) The interpretation of constitution and law or the legal principles propounded by the Supreme Court in relation to court cases must be followed by all. The Supreme Court can initiate a contempt of court case and punish according to the law against anyone obstructing its or its subordinate court’s act of judicial execution or not abiding by its order or verdict.
 133. Jurisdiction of the Supreme Court: (1) Any Nepali citizen may file a petition in the Supreme Court to have any law or any part thereof declared void on the ground of inconsistency with this Constitution because it imposes an unreasonable restriction on the enjoyment of the fundamental rights conferred by this Constitution or on any other ground, and extra-ordinary power shall rest with the Supreme Court to declare that law void either ab initio or from the date of its decision if it appears that the law in question is inconsistent with the Constitution.

 (3) For this purpose, the Supreme Court may, with a view to imparting full justice and providing the appropriate remedy, issue appropriate orders and writs including the writs of habeas corpus, mandamus, certiorari, prohibition and quo warranto. Provided that, except on the ground of absence of jurisdiction, the Supreme Court shall not, under this Clause, interfere with the internal affairs of the Federal Parliament and, the proceedings and decisions of the Federal Parliament concerning violation of its privileges and any penalties imposed thereof.


The Supreme Court shall have jurisdiction to hear original and appellate cases, to review its own judgments or interim order, to examine decision referred for confirmation, review cases or hear petitions. Such review shall be done by judge other than the one involved in original verdict.
(5) Notwithstanding the clause (4), after the completion of 10 years of the commencement of this constitution, Supreme Court shall have the right to initial hearing and passing judgment on issues under Article 137 (3). [3) The jurisdiction of the Constitutional Court shall be as follows:
(a) To resolve the dispute over the jurisdiction between the Federation and Province, among Provinces, between a Province and local level and among the local levels (of government),
(b) To resolve the dispute concerning the election of the Federal Parliament or Provincial Assembly, and the question of ineligibility of the member of the Federal Parliament or the member of the Provincial Assembly.]
(6) The Supreme Court shall hear appeal of cases that have been initiated and executed by the High Court, a subject of public interest litigation including a question related to the interpretation of the constitution and law or a case referred by the High Court along with its opinion that it would be appropriate for the Supreme Court to decide on it.
(7) Other rights and procedural of the Supreme Court shall be as per the Federal Law
134. Transfer of cases: (1) If a case including the same question in substantial terms are under consideration of the Supreme Court and High Courts and if the Supreme Court considers that the question is of public importance or if it is seen so in the petition of the Attorney General or the petitioner of the case, the Supreme Court shall have the right to invite the case and decide it together.
(2) If special circumstances arise whereby question could be raised on the judicial impartiality over the hearing of a case in any High Court, the Supreme Court may order according to the law by clarifying the reason and basis to transfer the hearing of the case from one High Court to another High Court.


137. Constitutional Court (1) There shall be a Constitutional Court in Nepal.
The jurisdiction of the Constitutional Court shall be as follows:
(a) To resolve the dispute over the jurisdiction between the Federation and Province, among Provinces, between a Province and local level and among the local levels (of government),
(b) To resolve the dispute concerning the election of the Federal Parliament or Provincial Assembly, and the question of ineligibility of the member of the Federal Parliament or the member of the Provincial Assembly.
(3) The decision of the Constitutional Court shall be final decision.
(4) The Constitutional Court shall continue to exist for ten years from the commencement of this Constitution. Following the period, the cases and records under consideration at the Constitutional Court shall be transferred to the Supreme Court.
139. High Court: (1) There shall be a High Court in every province.
(2) The High Court can initiate a contempt of court case and punish according to the law against anyone obstructing its or its subordinate court?s act of judicial execution or not abiding by its order or verdict.
(3) In addition to the Chief Judge, every High Court shall have judges in the number as provided in the Federal Law.
144. Jurisdiction of the High Court: (1) Any Nepalese citizen can petition in the High Court to annul any local law or part thereof formulated by Village Assembly or Municipal Assembly as per this constitution, if such law is inconsistent with provincial law formulated by provincial assembly. The High Court shall have the extraordinary right to annul such law from its commencement or from the date of the court order.
(2) The High Court shall, for the enforcement of the fundamental rights conferred by this Constitution, for the enforcement of any other legal right for which no other remedy has been provided or for which the remedy even though provided appears to be inadequate or ineffective, or for the settlement of any legal question involved in any dispute of public interest or concern, have the right to issue necessary and appropriate orders in the name of governments, office-bearers, institutions or individuals within its provincial jurisdiction.
(3) For the purpose of Clause (1), the High Court may issue appropriate orders and writs including the writs of habeas corpus, mandamus, certiorari, prohibition and quo warranto.
 (4) The High Court shall have jurisdiction to hear original and appellate cases and to examine decisions referred for confirmation, as provided for in law.
(5) Other powers and working procedures of the High Court shall be according to the federal law.
145. Transfer of cases: (1) If the High Court feels that any case under consideration at courts under its jurisdiction involved a question of provincial law and that the question needs to be resolved in order to decide the case, then the Court may invite such cases from the subordinate courts and give full decision on the case or decide on such questions and send it back to the original court.
(2) If a special circumstance of questions likely to be raised on the judicial impartiality appears, then the High Court may, by clearing the reasons and ground according to the law, order such cases to be transferred and heard from one district court to another district under its jurisdiction.
148. District Court: (1) There shall be a district court in every district.
(2) The local level judicial institutions established according to the provincial law shall remain under the District Court. The District Court may inspect, supervise and issue necessary instructions to its subordinate judicial institutions.
151. Jurisdiction of the District Court: (1) The District Court shall, unless provided otherwise in the law, have jurisdiction to hear original cases and execute all cases within its jurisdiction, hear petitions of habeas corpus, prohibitory order and other petitions according to the law, hear appeal over the decisions taken by the quasi-judicial bodies, hear appeal over the decision of the local level judicial institutions established according to the law of the province and initiate action and punish in contempt of court against those obstructing its or its subordinate courts acts of judicial execution or not abiding by the order or verdict.
(2) The jurisdiction of the district court and other provisions relating to its working procedure shall be as provided for in the law.
152. Specialized court: (1) In addition to the courts referred to in Article 130, the law may establish and constitute other specialized courts, judicial institutions or tribunal, for the purpose of hearing cases of special types and nature.
Provided that no specialized court, judicial institution or tribunal shall be constituted for the purpose of hearing a particular case.
(2) Cases related to criminal offense leading to prison sentence of more than 6 months shall not fall under the jurisdiction of any other institution other than a court or specialized court or military court or judicial body.

EMERGING BUSINESS ENVIRONMENT IN NEPAL

 Nepal is included in the list of the least developed countries. The responsible causes for the Nepal to be least developed countries are;
• Not to appear in the world arena till 1950,
o Not to develop basic infrastructure,
o To be geographically landlocked,
• Not to be dedicated in development etc.
But Nepal has been marching towards industrialization in a planed way for the last some years. It has entered in the 10Th plan. Nepal has adopted mixed economy. It has adopted the policy of free market and economy liberalization after 80s. It has already privatized some of the state owned public corporation. Nepal government has also adopted the policy to hand over state owned enterprises to private sectors expect those related to defense and other basic needs. The government has made no policy to nationalize any private company.
Provision in Constitution in relation to business
17. Right to Freedom: (1) Except as provided for by law no person shall be deprived of her/his personal liberty.

(2) Every citizen shall have the following freedoms:
(a) freedom of opinion and expression,
(b) freedom to assemble peacefully and without arms,
(c) freedom to form political party,
(d) freedom to form unions and associations,
(e) freedom to move and reside in any part of Nepal; and
(f) freedom to engage in any occupation or be engaged in employment, establish and operate industry,      trade and business in any part of Nepal.

Section 51 (d) –State Policies
Policies regarding finance, industry and commerce:
(1) Strengthening national economy through the participation and free development of public sector, cooperative sector and private sector.

(2) Achieving economic prosperity with the maximum utilization of available resources and means by stressing on the roles of private sector in the economy;

(3) Promoting cooperatives with its maximum utilization for national development.

(4) Providing for regulation to maintain fairness, accountability and competitive atmosphere in all activities of economic sector to promote and mobilize them for the overall national development;

(5) Fair distribution of the fruits of development and available means and resources.

(6) Diversifying and expanding markets for productions and services through the development and expansion of industries and promotion of exports by identifying the areas of comparative advantages.

(7) Protecting consumer rights by maintaining discipline and business fairness by controlling anomalies and malpractices such as black-Draft of the Constitution of Nepal, Unofficial English Translation by International IDEA - 19 -
marketing, monopoly, artificial scarcity and unhealthy competition and making national economy competitive.

(8) Prioritizing domestic investment based on Nepali labor, skill and raw material for the development of the economy of the country through the protection and promotion of national industries and resources and means.

(9) According priority to domestic investment for development of national economy;

(10) Encouraging and mobilizing foreign capital and technology investment for infrastructure
development in the areas of export promotion, and import to suit national interest.

(11) Foreign aid shall be based on national needs and priority, and it shall be made transparent. The amount received as foreign aid shall be included in the national budget.

(12) Utilizing the knowledge, skill, technology and capital of the non-resident Nepalis for national development.

Offer and Acceptance

Offer

Offer generally known as proposal is an expression of willingness by one person put forward to another person with a view to get assent. A person is said to have made the proposal when he signifies to another his willingness to do or abstain from doing anything with a view to obtaining the assent of that offer to such act or abstinence. It must be made by one person to another person. It must be an expression of readiness or willingness to do or abstain from doing something. It must be made with a view to obtain the consent of that person to proposed act or abstinence.

Section 2(b) of NCA 2056 defines offer as a proposal put by a person to another with a hope to get assent from him for doing or not doing any work.

Section 2(a) of ICA 1872 mentions, “when one person signifies to another, his willingness to do or abstain from doing something with a view to obtaining assent of that other to such act or abstinences, he is said to make a proposal.”

The person who makes the proposal is called the promisor or offerer and the person to whom it is made is called promisee or offeree.

Types of Offer

1. Express or Implied Offer: An express offer is made by using words in written or verbal form that makes a formal contract. Implied offer is made by the conduct of the parties or circumstances.
Eg. A offers to sell his bike to B over phone(Express)
A transport company runs a bus in particular route(Implied)
2. Specific and General offer: An offer made to a particular group or person is specific offer and the offer made to general public or society at large is general offer.
3. Cross and Counter Offer: Where both the parties make their offer innocently to each other at the same time through any medium, this is cross offer.
Counter offer is a rejection of original offer by making a new offer which may not amount to a contract. where an offeree intends to accept the offer after alteration in any terms of offer, there is counter offer.
4. Standing Offer: Where large quantity of goods are required from time to time during a particular period continuously there is an standing offer. it is open for a certain period of time. For e.g., A, the supplier of rice, offers to Arms Police to supply rice and vegetables, for a certain period of 1 year, at certain rate. This is standing offer.

Rules regarding offer

i) Express or implied offer
An offer can be made by words or conduct. E.g., A says B “will you buy my watch for 1000?” (express); A transport company runs buses in different routes to carry passenger(implied)

ii) intention to create legal relationship
To create an offer, the offeror must intend to create legal obligation. Ordinary invitations to social affairs are not offer in the eyes of law, because the idea of bargain is absent in such cases and there is no intention to create legal relationship. E.g., an agreement between two persons to go together to picture, or for a walk does not create legal obligations on their part to abide by it, as it relates to social matters. (note: Balfour v. Balfour)

iii) certain and unambiguous terms
Terms of offer must be certain and unambiguous and not vague. If the terms of the offer are vague, no contract can be entered. E.g., X offers to sell to Y his car for Rs. 1, 00,000 or Rs. 1, 50,000. Here X’s offer is not certain because it is not clear which of the two prices was to be given by Y.

iv) different from a Mere Declaration of Intention
The offer must be distinguished from a mere declaration of intention. Intention or willingness expressed to know the opinion of someone is mere declaration of intention. No obligation arises even though it is accepted. Such statement or declaration merely indicates that an offer will be made or invited in future. E.g., a father wrote to his would be son in law that his daughter would have a share of what he left after the death of his wife. It was held that the letter was a mere intention and not an offer.

v) different from an Invitation to offer
An offer must be distinguished from an invitation to offer. In case of an invitation to offer, the person making an invitation invites others to make an offer to him. E.g., goods are displayed in the shop with price tags attached on each article. The display of goods is an invitation to offer.

vi) Communication
Offer must be communicated to the person to whom it is made. An offer is complete only when it is communicated to the offeree. One can accept the offer only when he knows about it. Thus an offer accepted without its knowledge does not confer any legal rights on the acceptor. Section 7(1) of NCA 2056 clearly mentions that an offer must be communicated to the offeree. Notice must be given to him for whom the offer is made. Offeree must have knowledge of the offer made to him.
E.g., A writes a letter to B offering to sell his house for RS 5000000/- but never posts the letter. This is not an offer as B never knew about the offer.
 E.g., G sent his servant L to trace his lost nephew. When servant left, G announced reward of Rs 500. L found the boy and brought him home. Later he knew about reward filed the case. His suit was dismissed on the ground that he could not accept the offer unless he had knowledge of it. It was held that L was not entitled to reward because he did not know about the reward when he found the missing boy. (Lalman Shukla v. Gauri dutt (1913)

Revocation and lapse of offer

Revocation means cancellation or withdrawal or taking back offer made by the offerer before the offer is accepted. The term lapse of offer refers to the condition under which the offer automatically gets terminated. It does not depend upon the will of the offeror. Revocation or lapse of offer can take place as under:

1. By notice of revocation
Revocation means withdrawal. According to section 8(1) of NCA 2056, the offerer may at any time withdraw offer by serving a notice of revocation to the offeree before the notice of acceptance is received. In such case, the offer gets terminated and no contract is formed.

2. By expiry of time
According to section 9 (a), (b) of NCA, an offer must be accepted with in stipulated time in the offer, if any. The offer if not accepted within such time gets automatically terminated.
e.g.; A offers to sell his bus to B and agrees to give 5 days time to B for acceptance. If B doesnot accept within 5 days, the offer gets terminated.

3. By death/insanity of the offeror
Section 9 (c) of NCA, mentions that if an event of death or insanity takes place before the offer is accepted, the offers gets terminated.

4. By rejection of the offer by offeree
Rejection is the refusal to accept what is offered. The offeree can accept or reject the offer. Thus, an offer lapses as soon as it is rejected by the offeree. As per section 2 (c) and 9 of NCA, rejection takes place under any of the following condition:

a) Counter offer
If a person to whom an offer is made accepts the offer changing the terms of offer is counter offer. Counter offer is the rejection of the original offer made by the offeror.

b) Conditional acceptance
If a person to whom an offer is puts condition, there is no contract. For e.g.; A makes an offer to B to sell his bike for Rs 50,000/-. B says he will purchase the bike if he appoints B as accountant of A’s company.

c) Non fulfillment of condition
If there is a condition in the offer, and such condition must be fulfilled. If offeree accepts it without fulfilling the condition the offer is naturally revoked. E.g, failure to pay advance if asked etc.

d) Failure of accepting modes
If the prescribed mode is not followed by the offeree the offer gets terminated.

5. Effects of two notices
As per section 8(4) of NCA, after sending notice of offer to the offeree if the offeror send a letter of withdrawing the offer, and the offeree gets both the letter at the same time, contract is not deemed to have formed. The offer lapses that mean the withdrawal notice gets validity over the offer.

6. By subsequent illegality
After the offer is made but before accepted by the offeree if the offered matter becomes subsequently illegal, the offer lapses. E.g. A offers to supply 100 tons of oil to B on a certain date, before accepted if government puts ban on selling oil by individual, the offers ends.

7. By destruction of subject matter
Where the subject matter of the offer is destroyed (by fire, loot etc) before it is accepted by the offeree, the offer lapses.

Acceptance

Acceptance means giving consent to the offer. It is an expression by the offeree of his willingness to be bound by the terms of the offer. Section 2 (c) of NCA defines acceptance as a consent given by a person in the same sense in which the offeror has taken the substance of the proposal presented by him to the former.  Acceptance is the act of assenting by the offeree to an offer.
Offer + Acceptance = Contract

Rules relating to Acceptance

a) Absolute and unconditional : Offer may consists several condition but acceptance should be absolute and unconditional, even a single word could not be changed from the offer. For e.g, A offers B to sell his car for Rs 3,00,000. B agrees to buy if for Rs 2,50,000. B’s Act is a counter offer not an acceptance to A’s offer. Now if B accepts the original offer to buy the car for Rs 3,00,000. A will not be bound to sell the car because B’s counter offer puts the original offer into end.

b) Communication: Once an offer is accepted by offeror it must be communicated to the offeree. E.g., A offered to supply coal to a railway company. The manger of the company accepted the offer and kept it in the drawer intending to send it but he forgot to do so. There is no contract as acceptance of the contract was not communicated to the offeror
.
c) it must be according to the mode prescribed: offeree must accept the offer in the mode or manner as prescribed by the offeror, if not according to usual and reasonable method.

d) it must be given within a reasonable time: acceptance must be given within a right time within which acceptance must be given. If time is not prescribed it should be accepted within reasonable time.

e) acceptance must be given before the offer lapses or before the offer is withdrawn: E.g., A by a letter offered to B to sell his house for Rs 5,00,000. Subsequently A withdraws his offer by telegram which is duly received by B before the receipt of the letter of offer. Here B’s acceptance cannot be valid after the receipt of withdrawal notice.

Revocation and lapse of offer

1. By notice of revocation: Revocation means withdrawal and revocation of acceptance means an act of withdrawing acceptance. Section 8(2) of NCA 2056 mentions that the offeree can revoke his acceptance by giving notice but if offeror has already received the letter of acceptance it cannot be revoked. For e.g., A offers by a letter dated 5th July sent by post to sell his house to B for Rs 5,00,000. B accepts the offer on 11th July by letter sent through post. A receives the letter on 16th July. Here B can revoke his acceptance before 16th July.

2. Effects of two notices: As per section 8(4) of NCA, after sending notice of acceptance to the offeror if the offeree sends a letter of withdrawing the acceptance, and the offeror gets both the letter at the same time, contract is not deemed to have formed. The acceptance lapses that mean the withdrawal notice gets validity over the acceptance.

3. By death or insanity: acceptance is deemed to be lapsed if the offeree dies or becomes insane before the offeror receives the notice of acceptance. However, the acceptance is not lapsed, if the offeree dies or becomes insane only after receiving a notice of acceptance by offeror. It amounts to a valid contract whereby the hiers and legal representatives of deceased or insane offeree must be liable.

Meaning of Law

law

The word ‘Law’ has been derived from the Teutonic word ‘Lag, which means ‘definite’. On this basis Law can be defined as a definite rule of conduct and human relations. It also means a uniform rule of conduct which is applicable equally to all the people of the State. Law prescribes and regulates general conditions of human activity in the state.

· Law is a collection of rules imposed by authority. It is a relation of individual with one  another.

· This relation affects the social and economic order.

· It is a body of rule of conduct. This is the way that a court uses to make a    decision.

· It is a regulation established by a community, society or nation by some      authority and   applicable to all people living under it.

· It influences the political, economic and social system of every civilized society.

· It affects every person directly or indirectly and regulates practically for every known    human activity.

· It is those rules and principles that govern and regulate social conduct which can be  enforced in the court.

· It operates to regulate the action of a person. It is enforced for maintaining  peace, security, and justice in the state. Law is correlated with justice.

· It is not static, it is dynamic in nature and will be changed as per the  requirement of      the state.

Law can be either public or private. Public law is concerned with the public or it looks public as a whole and this is divided into three class such as constitution law, administrative law, and criminal law. Similarly, private law concerns to the individual. It is separated into such special fields as a contract of agencies, sales, negotiable instruments, etc. These areas generally pertain to the business sector.

According to Hooker, "Law refers to any kind of rule or cannon(gun) whereby actions are framed."

According to Salmond, "Law is the body of principles recognized and applied by the state in the administration justice."

According to Austin, "Law is a rule of conduct imposed and enforced by the state."

Black’s Law Dictionary: A rule or method according to which phenomena or actions co-exist or follow each other.

According to Justinian, "Law is the king of all mortal and immortal affairs..“

Ulpian defined law as “the art of science of what is equitable and good."

Black Stone says, "Law in its most general and comprehensive sense, signifies a rule of action, and is applied indiscriminately to all kind of actions whether animate or inanimate, rational or irrational"

Nature of law

Law is the result of continuous effort through a workable set of rules in the society. It is not pure science based upon unchanging and universal truth. It affects every activity of the individual. The nature of law are as follows:

·  Justice is an aim of Law- Justice is always provided through law. The law means to provide justice to people.

·  Create a peaceful and harmonious relation between people living under society-Law is made for keeping peace and harmonious relation by providing security.

· The law is pervasive (spreading or spread throughout)- Every person is presumed to know it.

· It regulates human activities- It regulates human behavior in three ways: Prohibitory, mandatory and permissive.

·     Ignorance of law is not excused.

·     It is a set of rules which is set by the state.

·     It regulates the human conduct.

·     It is created and maintained by the state.

·     It has the certain amount of stability, fixity and uniformity.

·     It is backed by coercive authority.

·     Its violation leads to punishment.

·    It is the expression of the will of the people and is generally written down to give it definiteness.

·    It is related to the concept of 'sovereignty' which is the most important element of the state.

Characteristics of Law

1) It is a set of rules.

2) It regulates the human conduct

3) It is created and maintained by the state.

4) It has certain amount of stability, fixity and uniformity.

5) It is backed by coercive authority.

6) Its violation leads to punishment.

7) It is the expression of the will of the people and is generally written down to give it definiteness.

8) It is related to the concept of 'sovereignty' which is the most important element of state.

Purpose of Law

(i) To maintain Order

(ii) To protect rights.

(iii) To preserve freedom.

(iv) To bring about peaceful change (Change with stability)

(v) To secure Justice.

(vi) To resolve conflicts.

vii) To maximize the happiness of the greatest number with minimum of friction.

viii) To define relationship among the members of Society.

(ix) To satisfy the interests of the community and its members.

(x) To set and strengthen values.

Types of Law:

Broadly speaking there are two main kinds of Law:

(i) National Law i.e. the body of rules which regulates the actions of the people in society and it is backed by the coercive power of the State.

(ii) International Law i.e. the body of rules which guides and directs the behaviour of the states in international relations. It is backed by their willingness and consent that the states obey rules of International Law. It is a law among nations and is not backed by any coercive power.

National Law is the law by which the people are governed by the state. It stands classified into several kinds:

1. Constitutional Law

2. Ordinary Law:

It is stands classified into two sub types:

2 (a) Private Law

2(b) Public Law:

It stands again sub-divided into two parts:

2(b) (i) General Public Law

2(b) (ii) Administrative Law

1. Constitutional Law:

Constitutional Law is the supreme law of the country. It stands written in the Constitution of the State. The Constitutional Law lays down the organisation, powers, functions and inter-relationship of the three organs of government. It also lays down the relationship between the people and the government as well as the rights, freedoms (fundamental rights) and duties of the citizens. It can be called the Law of the laws in the sense all law-making in the State is done on the basis of powers granted by the Constitutional Law i.e. the Constitution.

2. Statute Law or Ordinary Law:

It is also called the national law or the municipal law. It is made by the government (legislature) and it determines and regulates the conduct and behaviour of the people. It lays down the relations among the people and their associations, organisations, groups and institutions. The legislature makes laws, the executive implements these and judiciary interprets and applies these to specific cases.

Ordinary Law is classified into two parts:

2 (a) Private Law and

2 (b) Public Law

2 (a) Private Law:

Private Law regulates the relations among individuals. It lays down rules regarding the conduct of the individual in society and his relations with other persons. It guarantees the enjoyment of his rights. It is through this law that the State acts as the arbiter of disputes between any two individuals or their groups.

2 (b) Public Law:

The law which regulates the relations between the individual and the State is Public Law. It is made and enforced by the State on behalf of the community.

Public Law stands sub divided into two categories:

2(b) (i) General Law:

It lays down the relations between the private citizens (Non-officials or who are not members of the civil service) and the State. General Public Law applies to all the citizens in their relations with the State.

2(b) (ii) Administrative Law:

It lays down the rules governing the exercise of the constitutional authority which stands delegated by the Constitution of the State to all the organs of government. It also governs the relations between the civil servants and the public and lays down the relations between the civil servants and the State.

Business law

British was the first nation to development market economy business rules and regulations in the world. All the countries started to follow British business transaction. There is direct of British impact of business rules in the world. It means our business rules are influenced by British rules. There is an important role of British business rule to develop our business law. So it is taken as an important source of Nepalese business law.

Business comprises all profit seeking activities that provide goods and services necessary to an economic system. Business refers to the economic activities in which goods and service are supplied in exchange for some payment. It includes buying and selling, manufacturing products, extracting natural resources.

Law refers to the principles and regulations established by a government applicable to people.

Thus Business law is that portion of legal system which guarantees an orderly conduct of business affairs and settlement of legitimate dispute. It establishes a set of rules and prescribes conduct to order to avoid misunderstandings in business relationship.

Business law, also called commercial law or mercantile law, the body of rules, whether by convention, agreement, or national or international legislation, governing the dealings between persons in commercial matters.

Business law falls into two distinctive areas: (1) the regulation of commercial entities by the laws of company, partnership, agency, and bankruptcy and (2) the regulation of commercial transactions by the laws of contract and related fields

Features of Business Law

· Regulates industry, trade and commerce

· Regulates every business activity

· Promotes rights and interest of business activity

· It is the law of commerce or commercial law as it deals with all the aspects of entering into        selling and purchasing agreements. 

· It includes the study of the law of contract which is important in agreements or contracts that    involve two or more parties buying and selling things in exchange for a consideration or purchase  price. 

· Business law clearly explains the rights, duties, liabilities and legal obligations of the parties  involved in a contract of sales, purchase or any other kind of contract or agreement entered into in  relation to any kind of business or commercial activity. 

· It includes intellectual property law (patents, trademarks, copyrights, etc.) and consumer protection    law. 

· Business law will also apply to anyone who plans on opening or starting a business of their own. 

· Business law also deals with banking law, finance law and other important civil laws. 

Importance of Business law

· Protection of economic right

· Regulation and systematization of business

· Commencement and development of business

· Enforcement

Purpose of Business Law

Enforcement: Provide enforcement that allows contractual relationships to stay intact.

Predictability Allow people in business to enter into multiple transactions with certain protection.

Uniformity When business owners rely on the same laws to conduct business, they need to know that State Agencies and Courts apply the laws in a uniform fashion.

Sources of law/ Business Law

A source means an origin or resources or cause or place from where law emanates. The term source of law denotes two meaning. Firstly the place or point from where the law begins and secondly the place from where the rules get legal authority. The main sources of business law are discussed below:

a)  Custom and Usage: 

                                    The custom is known as particular way of life or behavior. If such behavior is followed continuously by the people in the society, it becomes a customs or usages which are important sources of law. When there were no business rules in the world the earlier business cultural and tradition to manage and regulate business transaction.  A large part of our business rules our business rules are influenced by that culture and tradition. Before making business rules our law makers follow that business culture and tradition. It means it helps us to make good business rules. This types of custom should not oppose to statutory law, mortality and public welfare. If there is no legislation, no precedents the matter is to be decided by the custom or usage of that particular.

b) Statutes/ Legislation: 

                                     The legislatory law come from parliament or law making body of the nation. This types of law is the outcome of demand of people and need of the time. It is made after fulfilling a series of discussion by lawmakers. Now a day's most of business activities are regulated by the law made by parliament.

c) Judicial Decision: 

                                Judicial decision are known as precedent. Precedent is a judicial decision which contains in itself a principle. In other words it is the earlier decision of supreme court which is taken as a rule while deciding the later cases. Where there is no law to deal the problems in such cases the court can make decision in the light of justice and equity such decision are treated as law for that matter. It is the one of the major sources of modern business law.

d) English Mercantile law: 

                                          Business law was developed in England. It is the pioneer of business law in the world. Nepal is conjoined influenced by the British rule since year.

e) Professional Opinion of experts:

                                                       Lawyers and critics may play significant role creating good legal environment. The opinion and explanation made by such professional may give proper instruction and better contribution to the development of law.

f) Business Agreement, Conventions: 

                                                            Conventional law refers to any rule or system of rule agreed upon by the parties to regulate their business conduct. International business organization are more active in national, region and world business nowdays. Examples: ( WTO, SAFTA) . And bilateral agreement between the nations and conventions of business communities are the main sources of national and international business law.

Material Requirement Planning

MRP is a means for determining the number of parts, components & materials needed to produce a product. Dependent demand drives MRP. Dependent demand means that the demand for one item is related to the demand for another demand.

So, MRP is a dependent demand technique that uses a bill of material, inventory, expected receipts & master production schedule to determine material requirements.

MRP provides time scheduling information specifying when each of the materials, parts & components should be produced/ordered.

It is software based production planning & inventory control system used to manage manufacturing processes.

Application of MRP/Benefits of MRP:         

-          Low level of in process inventories.

-          Ability to track material requirements.

-          Ability to evaluate capacity requirements.

-          Means of allocating production time.

-          It is most valuable in industries where a number of products are made in batches using the same productive equipment. Most valuable to companies involved in assembly operation and least valuable to those in fabrication.  Fabrication items are manufactured by machine rather than assembled from parts.

Purposes of MRP:

-          The main purpose of a basic MRP system is to control the inventory level, assign operating priorities for items, and plan capacity to load the production system.

-          The theme of MRP is getting the right place at the right time.

Dependent inventory model requirements or requirement for effective MRP:

Effective use of dependent inventory model requires that the operations mangers know the following:

1      1.  Master Production Schedule (MPS)

Master production schedule deals with the end products but if end item is quite large/quite expensive.  MPS may schedule major subassemblies or components instead. MPS is time-phased plan specifying what is to be made and when. It should be in accordance with production plan. The production plan sets the overall level of output in broad terms (e.g. product families, standard hours or dollar value). It also includes a variety of inputs, including financial plans, customer demand, engineering capabilities etc. The master production schedule is derived from the aggregate schedule.

Aggregate production plan is established in gross terms such as families of products. The master production schedules are established in terms of specific products.

Characteristics of good master schedule:

-          Include all demand from product sales, warehouse  replenishment, spares and inter-plant requirements.

-          Never loosed site of the aggregate plan.

-          Be involved with customer order promising.

-          Be visible to all levels of management.

-          Identify and communicate all problems.

Time fences :

Flexibility within master production schedule depends upon several factors like:

production  lead time, commitment of parts and components to a specific end item, amount of excess capacity, reluctance or willingness of management to make changes. Time fences is defined as time having some specified level of opportunity for the customer to make changes.

Frozen-No schedule change allowed within this window.

Moderately firm- Specific changes allowed within product group as long as parts are available.

Flexible- significant variation allowed as long as overall capacity requirements remain at the same level.

2. Bills of materials (BOM)

BOM is list of quantities of components, ingredients and materials required to make a product. It is a file that contains complete product description listing but only the materials, parts and components but also the sequence in which product is created. It is one of major input of MRP program. BOM file is often called the product structure file or product free because it shows how a product is put together. It contains the information to identify each item and the quantity used per unit of each product.BOM can be shown as follows:

                                              Fig: product tree structure for assembly 

Items above any level are called parents; items below any level are called components/children.

Modular bill of material:

BOM may be organized are around product modules. Modules are not final products to be sold but are components that can be produced and assembled into units. They are often major components of final products or product options A modular bill of material is the term for a buildable item that can be produced and stocked as a subassembly. Many end items that are large and expensive are better scheduled and controlled as modules.

Super bills:

A super bill of material includes items with fractional options. E.g  0.3 of part meaning 30 % of the units produced contain that part and 70 % do not.

Modular and super bills of materials are called planning bills of materials since they simplify the planning process.

Low level coding:

If all identical parts occur at the same level for each product, the total no. of parts and materials needed for a product can be computed easily.  Low level coding of items is necessary when identical items exist at various levels in the BOM. Low level coding means item is coded at the lowest level at which it occurs.

3. Accurate inventory records:

Good inventory management is an absolute necessity for an MRP system to work. Experts suggest at least 99% record accuracy for the MRP to work.

4. Purchase order outstanding

Well managed purchasing and inventory control departments should provide knowledge of purchase order outstanding. When the purchase orders are executed records of those orders and their scheduled delivery dates must be available to production department. Only with good purchasing data can managers prepare a good production plan and effectively execute MRP system.

5. Lead time for components       

Once managers determine when products are needed they need to determine when to acquire them. The time required to acquire on item is known as lead time. In purchasing system lead time is the time between recognition of the need for an order and receiving it. In production system it is the order wait move, queue, setup and runtimes for each component.

MRP system

-          The MRP closely interacts with master schedule inventory record/status files, bill of materials and output reports.

MRP system works as follows:

-          Orders for products are used to create a master production schedule, which states the number of items to be produced during specific time periods.

-          A bill of material identifies the specific materials used to make each item and the correct quantities of each.

-          The inventory record files contain data such as the no. of units on hand and an order.

-          These three sources master production schedule, bill of material and inventory record file become the data source for the MRP programs.

-          MRP program expands the production schedule into a detailed order scheduling plan for the entire production sequence.

Inputs of MRP

·         Demand for products/ Master Production Schedule

Product demand for end item comes primarily from two main sources. The first is known customers who have placed specific orders such as those generated by sales personnel, or from interdepartmental transactions. These orders usually carry promised delivery date. The second source is forecast demand. These are the normal independent demand orders which are predicted using several forecasting techniques. In addition to the demand for the end products customers also order specific parts and components either as spare parts or for service and repair. These demands are not usually part of MPS; instead they are fed directly into MRP program at appropriate levels.

·         Inventory record files

MRP system must update the inventory system. Inventory status file is a complete documentation of inventory status containing each item in product structure including items identification, on hand quantity, safety stock level, quantity allocated and lead time of each item. In other words inventory status file provides information about items to be ordered, quantity of items, time of order release etc.

·         Inventory transaction file

The inventory status file is kept up to date by posting inventory transactions as they occur. These changes occur because of stock receipts and disbursements, scrap losses, wrong parts, cancelled orders and so forth.

·         Bill of material already discussed.

MRP Computer Processing

MRP program operates using information from inventory records, master schedule and bill of materials. Master schedule specifies a list of products needed in each period. BOM specifies the detail description of the materials and parts needed to make each product. Similarly the number of units of each product and material currently on hand and an order are contained in the inventory file.

MRP program works on the inventory file which is segmented into time periods. While continually referring to BOM file to compute the quantities of each item needed. The number of units of each item required is then corrected for on hand amounts and the net requirements is offset (set back in time) to allow for the lead time needed to obtain the material..

The process of calculating the exact requirements for each item managed by the system is often referred to as the explosion process.

Output of MRP        

From the information given availed by MRP program varieties of reports can be prepared. These reports are usually classified as primary and secondary reports.

Primary reports: these are the main reports used in inventory and production control. These reports include the following matters:

i)                    Planned order including quantities and timing to be released at the future time.

ii)                  Order release notice to execute planned orders.

iii)                Changes in due date of open ordering due to rescheduling.

iv)                Cancellations or suspensions of open orders due to cancellation/suspension of orders on MPS.

v)                  Inventory status data

Secondary reports

Following are different secondary reports.

i)                    Planning reports: these types of reports are to be used for planning of future activities e. g. they are used in forecasting inventory.

ii)                  Performance reports: these are used for the purpose of pointing out inactive items and determining the agreement between actual and programmed item lead times and between actual and programmed quantity usage and costs.

iii)                Exceptions reports: they point out serious discrepancies such as errors, out of range situations, late or overdue orders, excessive scrap.

Embedding JIT to MRP (flow manufacturing)

MRP and JIT both have their benefits. So the question now is can they work together successfully and would one combine them.

Most major manufacturing firms used MRP of the firms using MRP many in repetitive manufacturing also use JIT techniques. Although JIT is best suited to repetitive manufacturing, MRP is used in everything from custom job shop  to assembly line production.

A challenge arises in integrating the shop floor improvement approaches of JIT with an MRP based planning and control system.

The MRP/JIT combination creates what might be considered a hybrid manufacturing system.

The term flow manufacturing is now being used by many software vendors to describe new software modules that combine JIT and MRP logic.

An MRP system combined with JIT can provide the best of both MRP & JIT.

MRP provides the plan and an accurate picture of requirements; while JIT rapidly moves materials in small batches, reducing work in process inventory.

Lot sizing in MRP systems

The determination of lost size in an MRP system is a complicated and difficult problem. Lot sizes are the part quantities issued in the planned order receipt planned order release section of an MRP schedule. For parts produced in house, lot sizes are the production quantities of batch size. For purchased parts, these are the quantities ordered from the suppliers. Lot sizes generally meet part requirement for one or more periods

Most lot-sizing techniques deal with how to balance the step up or order costs and holding cost associated with meeting the net requirements generated by the MRP planning process. Many MRP system have options for computing lots sizes based on some of the more commonly used techniques. It should be obvious, though, that the uses of lot-sizing techniques increase the complexity in generating MRP schedules. When fully exploded, the numbers of parts scheduled can be enormous.

Four types of lot-sizing techniques are lot-for-lot (L4L), economic order quantity (EOQ),least total unit cost(LTC), and least unit cost(LUC). 

Lot for Lot (L4L)

It is the most common technique. It:

·         Sets planned orders to exactly match the net requirements.

·         Produces exactly what is needed each week with none carried over into the future periods.

·         Minimizes the carrying cost

·         Does not consider set up cost or capacity limitations.

The lot sizing techniques used for MRP assume that part requirements are satisfied at the start of the period. Holding cost are charged only to the ending inventory for the period not for the average inventory as in case of EOQ. EOQ assumes the parts are used continuously during the period. The logic for L4L says the production quantity will exactly match the required quantity so there will be no inventory left at the end. Without any inventory to carry over to the next period there is zero holding cost.L4L causes high setup cost.

Economic order quantity (EOQ)

In EOQ model either fairly constant demand must exist or safety stock must be kept to provide for demand variability. The EOQ model uses an estimate of total annual demand, the setup or order cost and the amount of holding cost. It assumes that part requirement is satisfied at the start of the period. Holding cost is charged at ending inventory. Lot sizes generated by EOQ do not always cover the entire periods. It might provide requirement for say 4.6 periods.

Least total cost method (LTC)

The least total cost method is a dynamic lot sizing technique that calculates the order quantity by comparing the carrying cost and setup cost for various lot sizes and then selects the lot in which these are most nearly equal.

Least unit cost (LUC)

LUC is a dynamic lot sizing technique that adds ordering and inventory carrying cost for each trial lot size and divides by the number of units in each lot size, picking the lot size with lowest unit cost.

Limitations of both LTC and LUC are that they are influenced by the length of the planning horizon.