(a) (i) "The role of Board of Directors is to govern and not to manage." Comment on the statement and bring out the elements of…

(a)(i) Board of Directors: to govern, not to manage

The statement is largely right. The board sets the company's purpose and strategy, appoints and reviews the chief executive, approves major policies and budgets, oversees risk and compliance, and answers to shareholders. Management runs day-to-day operations within that framework. Mixing the two weakens oversight, as the Satyam scandal of 2009 showed, where a dominant promoter-executive misstated accounts while the board failed to question. Yet governing needs informed engagement: directors cannot be remote, and in small or founder-led firms the line blurs.

The elements of corporate governance are accountability of the board, transparency and disclosure, independent directors and committees (audit, nomination and remuneration, as in Sections 149, 177 and 178 of the Companies Act, 2013), fairness to all shareholders, ethical conduct, risk management and responsibility to stakeholders, including CSR under Section 135.

(a)(ii) The Public Distribution System, food security and poverty

The PDS supplies subsidised foodgrains through fair price shops, with the Food Corporation of India procuring and storing grain at minimum support prices and states distributing it. Under the National Food Security Act, 2013, about two-thirds of the population is entitled to 5 kg of grain per person per month at ₹3, ₹2 and ₹1 a kg for rice, wheat and coarse grains, and the poorest households under Antyodaya Anna Yojana get 35 kg per household. Free grain under PM Garib Kalyan Anna Yojana has been extended for five years from January 2024.

It contributes to food security by guaranteeing access to cereals and by cushioning households from price rise. It reduces poverty by raising real income of the poor, and supports farmers through assured procurement. Reform through Aadhaar seeding, electronic point-of-sale devices and One Nation One Ration Card has reduced leakages and helps migrants.

Its goals are availability of staples at affordable prices, price stability, nutrition support, protection of vulnerable groups and support for farmers. Problems remain in leakage and diversion, targeting errors and the narrow range of foods, so extension to pulses and millets is argued.

(b)(i) The Consumer Protection Act and liability for faulty goods

The Consumer Protection Act, 2019, replacing the 1986 Act, devotes Chapter VI to product liability. A claim lies against the manufacturer for a manufacturing or design defect, a deviation from specification, failure to meet an express warranty, or failure to give adequate warnings or instructions. A product service provider is liable for faulty service, and a seller is liable if it exercised substantial control over the product, altered it, or made an independent warranty, or if the manufacturer cannot be traced. Exceptions include misuse or alteration by the consumer. The Central Consumer Protection Authority can order recall of dangerous goods, refund and discontinuation of unfair trade practice, and can penalise misleading advertisements.

Remedies before the District, State and National Commissions include repair or replacement, refund, compensation, and punitive damages, and mediation is available.

A critical view: the strengths are that liability does not depend on proving negligence, jurisdiction by value is simple, e-filing is allowed and the authority acts for the class. The weaknesses are that the consumer must still prove the defect and the harm, litigation is slow, commissions are short of staff, and awards are often not enforced.

(b)(ii) Industrial policy and environment

Industrial policy since 1991 removed licensing but kept environmental clearance as a condition for polluting industries, supported by the Policy Statement for Abatement of Pollution (1992), the National Environment Policy (2006) and the environmental impact assessment rules. It encouraged cleaner technology, pollution control equipment and waste minimisation.

Programmes to encourage green business include the Eco-mark for green products, ISO 14001 certification, Perform, Achieve and Trade for energy efficiency, extended producer responsibility for plastic and e-waste, the Zero Defect Zero Effect certification for small firms, cleaner-production and common effluent plant support, and carbon market and renewable energy incentives.

(c)(i) Legal aspects of cyber security

The Information Technology Act, 2000 is the main law. It penalises hacking and unauthorised access (Sections 43 and 66), identity theft and cheating by personation (66C and 66D), and attacks on protected systems (70), and makes a body corporate liable to pay compensation if negligent security practice causes loss of sensitive data (43A). It also creates CERT-In under Section 70B. Serious offences also fall under the Bharatiya Nyaya Sanhita, 2023.

Organisations have legal duties. They must keep reasonable security practices, such as ISO 27001, and the CERT-In directions of 2022 require reporting of specified incidents within six hours and retention of logs for 180 days. The Digital Personal Data Protection Act, 2023, whose Rules were notified on 13 November 2025 with obligations phased in over 18 months, requires data fiduciaries to take reasonable security safeguards and report personal data breaches, with penalties up to ₹250 crore. Sectoral regulators add duties, as the Reserve Bank and SEBI do for banks and market entities.

The legal position is therefore a mix of compensation, criminal liability and regulatory compliance, and the gap is in enforcement capacity and clear standards.

(c)(ii) Government policies for small-scale industries amid competition

Small firms now come under the MSME category, whose limits were raised from 1 April 2025 (small: investment up to ₹25 crore and turnover up to ₹100 crore). The MSMED Act, 2006 and Udyam registration give identity and benefits.

Policies include credit through MUDRA, PMEGP and the Credit Guarantee Fund Trust scheme, a public procurement policy reserving 25 per cent of purchases from micro and small enterprises, the Samadhaan portal and income-tax rule on payment within 45 days to counter delayed payments, TReDS for invoice financing, cluster development, technology upgrade and quality support, and Zero Defect Zero Effect certification. Reservation of items for small industries was ended by 2015, and so they now face open competition from large and foreign firms.

The assessment is that credit and procurement help, but small firms need more help with technology, scale, market access and finance. Digital platforms such as GeM and ONDC give market access, but late payment, informality and weak finance still limit them against large companies.