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Published : July 27, 2010 | Author : drpremnath
Category : Company Law | Total Views : 3139 | Unrated

Dr Prem Nath Associate Professor Deptt. of Laws Panjab University Chandigarh

Yesterday, Today and Tomorrow

When most people think of globalization they think of the rapid expansion of trade, finance markets and corporate activity, and perhaps the associated decline in government power that has occurred in the last decade or two. Certainly, the term “globalization” is older than that, but the actual phenomenon of global expansion is much older and it has gone through a series of different stages that have culminated in the current situation. We need to understand this long history of globalization to have some idea of where it is leading. Specifically, there have been versions distinct but overlapping stages in the centuries old process of globalization.

Historically, the overall form of the control of structure is increasingly shaped by various factors. The exact form of the control structure can vary from time to time, more and more resources must be dedicated to the actual control process.

The roots of the globalization lies when the question of mine and thine arose in the mind of man and he felt the need of property. Further when we read the Yazni Valkya Smriti we see that the relations among the nations were there at that time in different fields including the commercial relations. India’s connection with Rome were dates back as far as, if not earlier, in the days of Mahabharta when the Romans came to do homage to the Emperor Yudhisthira at the time of the Rajasuya sacrifice. And for full 30 centuries India occupied the position of the foremost maritime nations, doing trade with the countries under the dominion of the Roman Empire.[1] Further in 2300 B.C. Adadiddinam and Marts of Babylonia made a partnership and went to Sippura, and in the gate of the sun-god they returned the property and the capital invested and each took as much as he was entitled to and went his way.[2]

It is commonly thought that the Romans have had but little influence upon the English law, and consequently, upon American law except in those states where the French prevailed upon and gave a civil law tone to the legal system. Investigations will, however, show the fallacy of this conception, and it is perhaps nowhere better shown than in the law of partnership. In the system growing out of the Code Justinian, we find that with a few changes, it could almost be taken as a code of American partnership law of today. Partnership, as defined by noted writer of Roman law, is: “A Contract by which two or more persons agree to combine their property or labour, or both on the condition of sharing the common profit and loss”.[3]

In England the law of Partnership was, prior to the passing of the Partnership Act 1895, to be sought in the books of the textbook writers and judicial decisions, and this was only in keeping with the traditions of the English law most of which is unwritten English judges had to turn to Roman Law for precedent when no direct authority could be found in the text books or judicial decisions on the ground that it afforded no small evidence of the soundness of the conclusion at which we arrived, if it proved to be supported by that law. The fruit of researches of the most learned men, the collective wisdom of ages, and the groundwork of the Municipal Law of most of the countries of Europe.[4] This was not all. Opinions of eminent French text book writers such as Potheir and the Civil Code of France were also frequently cited in the law courts of England and helped considerably in building up that body of opinion which ultimately found expression in the Partnership Act 1895. This could not be otherwise for, France being then one of the most commercially developed jurisprudence and its laws were regarded as authority, equal to, if not greater than, the Roman Law, in most countries of Europe.[5]

Similarly, the law relating to Negotiable instruments is not the law of one country or one nation; it is the law of the commercial world in general, for, it consists of certain principles of equity and usage of trade which general convenience and common sense of justice had established to regulate the dealings of merchants and mariners in all the commercial countries of the civilized world. Even now the law of several countries in Europe are, at least so far as general principles are concerned, similar in many respects. Of course, on questions of detail, different countries have solved their various problems in different ways, but the essentials are the same, and this similarity of law is a prerequisite for the vast international transactions that are carried on among the different countries.

When the system of bartering, by which crude and uncivilized societies carried on their commerce, was found inconvenient, a common medium of exchange and a representative of property of easily convertible character was found necessary, and money came into use. It might have had its humble origin in courie shells, brass or copper rigns, but when once the utility of money was found, it never was lost sight of. With the progress of civilization, nobler metals displaced the baser ones, and the use of gold and silver as instrument of exchange is now to be found generally current in all civilized countries. With the facility of communication between countries, and security of peace between nations, commerce of the world grew space, and one nation after another struggled for supremacy. The Phoenicians, Greecians and Carthaginians were more or less the chief commercial nations of the ancient world. The routes along which the vast commerce was carried on were insecure and merchants carrying species or coins were robbed of their wealth by roving pirates on sea and marauding robbers on land. Money by itself did not oviate all there difficulties arising from the multiplicity of commercial transactions, and in the course of centuries, there came into existence the idea of exchange, where by letters of credit, generally called bills of exchange from a merchant in one country to his debtor, a merchant in another, were issued requiring debt to be paid to a third person who carried the letter to the place where the debtor resided. A bill of exchange was then originally an order to pay a trade, debt, and the system of such bills afforded a convenient and facile way for payment of debt in one country due to a person in another without the danger or encumbrance of carrying money in specie. For example, if A in Madras buy goods from B a merchant in London, and if A has merchant C in London who owes him money, B of London by getting an order from A on C for the payment of that money to himself, can collect that price of his goods at London without the risk or the trouble of carrying the coins from Madras to London. The loss of interest during the time occupied by the journey, the trouble which A is relieved of in collecting his debt in a foreign place and even the absence of ready money in the hands of A or the time of the transaction are some of the causes which would promote the wide use of such bill of exchange it was found that the person in whose favour such offer was made might, with advantage, transfer it to another, and such transfers came to be recognized. In its origin, then, a bill of exchange affected the transfer of trade debts of person residing in distant countries and when once the advantages of such a course were realized the system was extended to apply to in land trade debts, and gradually to private debt also.[6]

During this period also industrial revolution came in England. Market to sell the product and raw material for the industries was needed. This gave birth to the colonial rules. Also there was competition for market between England, France and Portugal. According to Sucha Singh Gill, a renowned Economist, the globalization of that period was different from the present one because during that period there was a flow of both capital and labour between the countries of the world. So even if the country is a labour intensive globalization creates no problem for them. In the sixties, China also started emerging as world power along with USA and USSR. There was also cold war between world powers. So unanimity could not be reached between the G-7 countries regarding the trade policy between the countries.[7] In the eighties, USSR collapsed and England and USA through various means put pressure on G-7 countries to decide the trade policy unanimously that is too, which fulfill their interests. So, after centuries USA succeeded in deciding the policy which only fulfill its interests. Now there was free flow of capital only. So the corporate sector came into existence and it entered in the retail market also.

So, India amended its laws to meet the requirement of globalization. For example, in the Arbitrated Act, 1996. The Preamble of the Act says:
“Whereas the United Nations Commission on the International Trade Law (UNCITL) has adopted the UNCITRAL Model Law on International commercial Arbitration in 1985,
And whereas the General Assembly of the United Nations has recommended that all countries give one consideration to the said Model Law in view of the desirability of the uniformity of the Law of arbitral procedure and the specific need of international commercial arbitration practices,
And whereas the UNCITRAL has adopted the UNCITRAL conciliation
And whereas rules on 1980, the General Assembly of the United Nations has recommended the use of the said Rules in cases where a dispute arises in the context of international commercial relations and the parties seek an amicable settlement of dispute by recourse to conciliation,
And Whereas the said Model Law and rules make significant contribution to the establishment of a unified legal framework for the fair and efficient settlement of dispute arising in international commercial relations.

And whereas it is expedient to make law respecting arbitration and conciliation, taking into account the aforesaid Model Law and Rules
Be it enacted by Parliament in the Forty Seventh year of the Republic of India as follows”.[8]

Even foreign corporate sector enter in Indian market including the retail market. But India is overpopulated and there is majority of unskilled labour. So this form of globalization badly effect India. Seeing a attack on their livelihood there was a protest by unskilled labour throughout the country. No doubt, the advanced countries start entering the retail market and farm sector but developed countries also put visa restrictions on the migration of unskilled labour. So there was only possibility of the migration of skilled labour to advance countries of the world. On the entry of corporate sector the income of the skilled increase by 500 times and on the other hand the income of the unskilled labour increased only 25 times.[9] In this way the gap of the income between the skilled and unskilled further increased. This also affect the purchasing power of the two. Globalization also affect the budget allocation of our country. Because due to the rising power of China and relation with Pakistan, the allocation on defence could not be reduced. So the government of the time reduced the budget allocation on education especially higher education and health which it consider a soft target.

Mr. Murli Manohar Joshi, Minister of Human Resource Development on his visit to Panjab University, Chandigarh, when apprised about the financial position of the University, speaking on the Convocation said that the Universities should create its own financial resources. It is policy of government resulting into the privatization of education. So many private institutions emerged specially in medical and engineering and they charge higher fee especially in Medical and Engineering colleges. In this way Engineering and Medical Education was not within the reach of not only poor but also the middle class.

In Mohni Jain V/S State of Karnataka,[10] the Supreme Court held
“The educational institutions must function to the best advantage of citizens. Opportunity to acquire education not to be confined to the richer section of society. Increasing demand for medical education has led to the opening of large number of medical colleges by private persons, groups and trusts with the permission and recognition of state governments. The Karnataka state has permitted the opening of several medical colleges under various private bodies and organizations. The institutions are charging capitation fee as a consideration for admission. Capitation fee is nothing but a price for selling education. The concept of “teaching shops” is contrary to the constitutional scheme and is wholly abhorrent to the Indian culture and heritage”.[11]

Further, justifying the high fee of private institutions, the Supreme Court in Unni Krishnan V/S State of Andhra Pradesh held
“Where aid is not granted to private educational institutions and merely recognition or affiliation is granted, it may not be insisted that the private educational institution shall charge only that fee as is charged for similar courses in government institutions. The private educational institutions have to and are entitled to charge a higher fee not exceeding the ceiling fixed in that behalf. They have to meet the cost of imparting education from their own resources….”[12]

So the shift of the students were started towards the social sciences because they could not pay the higher fees. It also resulted in the increase of the number of unemployed unskilled labour. Large number of private hospitals were set up by the private sector. Treatment in these hospitals also is beyond the reach of the poor and middle class. Because the treatment was costly in these hospitals. The concept of corporate farming was also introduced and the Ladowal Farm was given to the Airtel. It affected the small farmers badly who were burdened with debt due to the higher cost of farming. They could not pay the debt and it led them to commit suicide. It was pleaded before the Planning Commission that there were about 17 thousand suicide by the farmers who were debt ridden and study conducted in the Malwa region of Punjab shows that 1,882 suicides were committed in this area in 15 years.

Parliamentary Standing Committee on Agriculture had put at 2 in the year 2006. But Inderjit Singh Jaijee, a social activist, who did pioneering work on the issue, had put the figures at 50,000.

Two years ago, the Bhartiya Kisan (Rajewal) pegged the number at 13,000 but more realistic figure has now been offered by a research project undertaken in Punjabi University, Patiala. The research confined itself to the four districts – Sangrur, Mansa, Bhatinda and Ferozepur where 2882 farmers committed suicide between 1992 and 2006.

The district wise figure is as under:





















Note: Between 1985 and 1991 the figure is pegged at 122.
Source: Research Project, Punjabi University, Patiala.

So, it was pleaded before the Planning Commission that the allocation to farm sector be increased. But the plea was turned down by the Commission on the ground that the allocation cannot be increased, as the growth rate in agriculture is low.

On the other hand globalization increased the investment in the corporate sector and started earning huge profits. It also resulted in the reduction of government control. If the profit were high as a result of globalization the losses and fraud were also committed resulting a huge loss to the economy. The I.M.F. has already forecast slow down in Asia.

The story of the ill effect of the globalization started when the fraud was committed in a leading Bank of France. 22 Banks collapsed in USA in 2008. The banks collapsed due to fraud and mismanagement of the banks. These frauds and failure of the banks is the start of the downtrend of the globalization which resulted in the form of recession throughout the world. 16 Banks failed in USA within two months.[13]

The failure and fraud in the corporate sector and banks in USA, France and India badly affected the economic growth all over the world which resulted in the unemployment in corporate sector. According to a study conducted by the ILO which says “Global unemployment in 2009 could increase over and more than 50 millions, the situation is likely to deteriorate”.[14] Royal Bank of Scotland slashed 20,000 jobs.[15] On dated 26 February Oversea Indian Affairs Minister Vyalar Ravi told that between 16000 and 20000 Indian have returned home after losing their jobs oversea due to the global economic crises.[16] India was not an exception to it. The effect of the recession was seen for the first time in India when Kingfisher terminated the services of 1000 of its employees, which was retained with the intervention of the Supreme Court. Further according to a study, public sector under taking have to shed 44,000 employees in 2007-08. This is according to a 48th Public Sector Enterprises Survey 2007-08.[17] According to ILO, 6 lakhs persons have to lose their jobs in organised sector.[18]

All over the world to get rid of the slow down of the economy B-1 visa restrictions imposed by USA. U.K. also put restrictions on visa, so the method of restrictions was used by USA so the method of protection was also adopted from the USA government to help the banks and corporate sector to take them out of the slow down.[19] Yahu cut 1400 jobs[20] American companies cut 7000 jobs. In India also this method was adopted for example Indian government offered help to India Inc. saying “We are ready to offer any help, be it in the form of relief, providing support as anything else to help the industries, support jobs of people. To tide over the crisis, the industries should also take fresh initiative to explore demands or newer Market”.[21] In 2009, the government spent more on education specially higher education in the shape of large number of scholarships to the students, enhanced the salaries of the teachers in the Universities and colleges with the hope to improve the quality of education and attract the intellectual towards the teaching profession. At the same time scholarship to the student were given with the hope to attract students towards the science and social sciences.

S.S.M. Quadri J.of the Supreme Court in T.M.A. Pai foundation and others V/S State of Karnataka held:
“…A rational fee structure should be adopted by the Management which would not be entitled to charge a capitation fee. Appropriate machinery can be devised by the state or university to ensure that no capitation fee is charged and there is no profiteering, though reasonable surplus for furtherance of education is permitted….”[22]

Further, it was also contended that the choice of the Vice-Chancellors should be on the base of the reports of the finding committees and bureaucrats should not be appointed as Vice-Chancellors of the Universities. Further, it was argued that the appointment of the teachers of the Universities should be fair by constituting the committees.

Now it is argued that the policy of protectionism will not take the economy out of the crises. So the attention is given to the black money lying in the Swiss Banks. USA and other countries put pressure to close the accounts of formers whose black money is lying there. A PIL has been introduced by Ram Jethmilani to bring back in India the black money lying in the Swiss Banks. The Supreme Court has ordered the government to tell within 24 hours the action taken on the matter. This is also the slogan of the political parties in their campaign for voters in the coming Lok Sabha elections. It is submitted with respect it to see how much the Court and the Government are sincere to pursue the matter because most of the politicians are the subject of this problem. Fear is also expressed that this money can be used to fund the terrorists.
[1] Dr, Lal Sier, Brojindra Seal, Introduction to Dr., Radha Kumud Mukhi’s Indian Shipping, 1922, Ed. p. 47.
[2] Mukherjee and Dutt, Indian Partnership Act, 1932, 4th Ed., 1978, p. 9.
[3] Morey’s Outlines of Roman Law, p.368.
[4] For Tindal, C.J., in 1249 at 353.
[5] Mukherjee and Dutt, Indian Partnership Act 1932, 4th Edn. 1972, p. 15.
[6] Bhashyam and Adiga, The Negotiable Instruments Act, 1576, Ed. 1940, pp. 2-5.
[7] Sucha Singh Gill presented a paper on Globalization and its effects on India in the First Social Sciences Congress held at Chandigarh on January 21-22, 2009.
[8] Tripathi, S.C., Arbitration and Conciliation Act, 1996, 3rd Edn., 2006, p. 10.
[9] Ibid.
[11] 1982 (1) SCC 666.
[12] 1993 (1) SCC 645.
[13] The Tribune, November 25, 2008.
[14] The Tribune, November 29, 2008.
[15] The Tribune, January 29, 2009.
[16] The Tribune, Feb. 27, 2009.
[17] The Tribune, February 23, 2009.
[18] The Tribune, March 4, 2009
[19] The Tribune, October 15, 2008.
[20] The Tribune, November 8, 2008.
[21] The Tribune, February 4, 2009
[22] AIR, 2003, SC 655.

Authors contact info - articles The  author can be reached at: drpremnath@legalserviceindia.com

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