Supplementary Law Material For CA Inter Nov 2023
Supplementary Law Material For CA Inter Nov 2023
OTHER LAWS
B. Guarantee Contracts
QUESTION 1 May 2023 MTP
Masoom owns a residential property at Kailash Colony, Delhi. Masoom has given his
residential property on rent amounting to Rs 50,000 per month to Kamal. Pankaj
became the surety for payment of rent by Kamal. Subsequently, without Pankaj’s
consent, Kamal agreed to pay higher rent to Masoom. After a few months of this,
Kamal defaulted in paying the rent. Evaluate the position of Pankaj in this regard as
per the provisions of the Indian Contract Act, 1872
(Hints: Since, the variance made in the contract is without the surety’s consent in
the existing contract, as per the provision, surety is not liable on his guarantee after
this new arrangement. The reason for such a discharge is that the surety agreed to be
liable for a contract, which is no more there now, and he is not liable on the altered
contract because it is different from the contract made by him. Similar to question
on Page 7)
C. Bailment Contracts
QUESTION 1 May 2023 MTP
As per the provisions of the Indian Contract Act, 1872, the finder of lost goods:
(a) cannot sue and also cannot retain the goods so found
(b) can sue but cannot retain the goods so found
(c) cannot sue but retain the goods so found
(d) can sue and also retain the goods so found
Answers:
1 c
2 a
3 d
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Supplementary Material to 4th Edition of Corporate & Other Laws
QUESTION 4 May 2023 MTP
Examine whether the following constitute a contract of ‘Bailment’ under the provisions
of the Indian Contract Act, 1872:
(i) Golu parks his car at a parking lot, locks it, and keeps the keys with himself.
(ii) Seizure of goods by customs authorities.
(Hints: (i) not a bailment as possession is not transferred (ii) it is a bailment as
possession is transferred to customs authorities)
D. Pledge Contracts
QUESTION 1 May 2023 MTP
Rakshit borrowed a sum of Rs 50,000 from a Bank on the security of gold on
1.07.2022 under an agreement which contains a clause that the bank shall have a right
of particular lien on the gold pledged with it. Rakshit thereafter took an unsecured
loan of Rs 20,000 from the same bank on 1.08.2022 for three months. On
30.09.2022 he repaid entire secured loan of Rs 50,000 and requested the bank to
release the gold pledged with it. The Bank decided to continue the lien on the gold
until the unsecured loan is fully repaid by Rakshit. Decide whether the decision of the
Bank is valid within the provisions of the Indian Contract Act, 1872?
(Hints: The pledgee can exercise general lien only of it is specifically mentioned in the
contract. As it is not so specified in the given case, Bank’s decision to continue the
lien on the gold until the unsecured loan of Rs 20,000/- is repaid is not valid. Similar
question on Page 21)
E. Agency Contracts
QUESTION 1 May 2023 MTP
A substituted agent acts on behalf of …………
(a) Principal (b) Sub-agent (c) Agent (d) anyone, as decided by the agent only
Answers:
1 a
2 c
Answers:
1 d
2 a
3 d
4 b
5 c
Answers:
1 c
2 d
3 b
4 d
5 a
6 a
Answers:
1 c
2 d
INCORPORATION
QUESTION 1 May 2023 MTP
Mr. Ram along with his brothers got registered a company in the state of Telangana
by furnishing false information knowingly. What action may be taken against the
company and its promoters under the provisions of the companies act, 2013?
(Hints: Tribunal may on an application made to it, on being satisfied that the situation
so warrants:
(a) pass orders for regulation of the management of the company, or
(b) direct that liability of the members shall be unlimited, or
(c) direct removal of the name of the company from the register of companies, or
(d) pass an order for the winding up of the company, or
(e) pass such other orders as it may deem fit.
Also the promoters, first directors and persons making declaration at the time of
incorporation shall each be liable u/s 447.)
Answers:
1 b
PROSPECTUS
QUESTION 1 May 2023 MTP
Which of the following statement is contrary to the provisions of the Companies Act,
2013?
(a) A private company can make a private placement of its securities.
(b) The company has to pass a special resolution for private placement.
(c) Minimum offer per person should have Market Value of Rs 20,000.
(d) A public company can make a private placement of its securities.
Answers:
1 c
SHARE CAPITAL
QUESTION 1 May 2023 MTP
Shilpi Developers India Limited owed to Sunil Rs 10,000. On becoming this debt
payable, the company offered Sunil 100 shares of Rs 100 each in full settlement of
the debt. The said shares were allotted to Sunil as fully paid-up in lieu of his debt.
Examine the validity of this allotment in the light of the provisions of the Companies
Act, 2013
(Hints: If a company proposes to issue shares for a consideration other than cash, it
requires a special resolution. Price of such shares shall be determined by the valuation
report of a registered valuer. Upon fulfilment of these conditions, the issue will be
valid. Similar question on Page 199)
DEPOSITS
QUESTION 1 May 2023 MTP
Every company shall pay a penal rate of interest of ----------------- per annum for
the overdue period in case of deposits, whether secured or unsecured, matured and
claimed but remaining unpaid:
(a) 9% (b) 14% (c) 18% (d) 24%
CHARGES
QUESTION 1 May 2023 MTP
Shiv IT Solutions Ltd. is a company engaged in the business of providing customised
software to its clients. These software’s are usually related to the employee’s
attendance, leave management, salary preparation, tax calculation and other matters
incidental to HR.
The company is having its own building and other infrastructure in Bengaluru and also
at Brussels, Belgium. The company have patent rights over few of its software’s and
also have the trade mark right over the company’s logo.
The company got sanctioned term loan facility of Rs 10 crores from Best Bank Ltd on
1st January, 2022 by creating a charge on the assets of the company which includes
the company’s own buildings and intangible assets. The charge should have been created
by the company within the time prescribed under the Companies Act, 2013 with the
Registrar, however, the company could not get registration of charges within the
prescribed time line.
During the course of Secretarial Audit of the company, for the year ended March
2022, it came in the knowledge of the Company Secretary in Practice, that charge
was not registered with the Registrar. He mentioned it in the report and advised the
company to get it registered. However, the Action Taken Report (ATR) on the audit
objection made by the Company Secretary was not apprised to the Board and no follow
up was made by the company thereafter.
Bank’s concurrent auditor and statutory auditor also pointed out this issue and narrated
that since charge was not created by the company, hence this advance be treated as
clean advance and interest rate of clean / unsecured advance, which is 22% (as against
the normal rate of 11%) should be applied from the date of disbursement on the
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Supplementary Material to 4th Edition of Corporate & Other Laws
outstanding amount till date. Bank also asked a professional, whether it can get the
charge registered, at its own, to satisfy the audit objection.
The Bank applied for registration of charge which was considered by the Registrar and
registration of creation of charge was granted. The Bank in order to address the audit
objections, applied the interest @ 22% on the outstanding amount in the loan account
of the company. The company aggrieved with the decision of the Bank, managed to
liquidate the term loans account by raising funds from other sources and filed the
‘Satisfaction of Charge’ with the Registrar.
1. The company can create charge in favour of the lender on the assets which are:
(a) Tangible Assets and situated in India only
(b) Intangible Assets and situated in India only
(c) Assets that are tangible or otherwise and situated in India or Brussels (Belgium)
(d) Assets that are tangible or otherwise and situated in India only
2. Where the company fails to get the registration of charge, whether the Best Bank
Ltd, in whose favour the charge was to be created, can move the application for
creation of charge:
(a) No. It is the responsibility of the borrower company only to get the charge
registered in favour of the lender.
(b) If the company do not get the charge registered in favour of the lender, the
lender suo-moto cannot move application for registration of charge in its favour.
(c) The borrower company can be held liable to pay the penalty only.
(d) Yes. The lender company can move the application for registration of charge in its
favour, if the borrower do not get the charge registered with the prescribed time
Answers:
1 c, d
2 c
1. Regarding the notice of meeting given by Modern Limited, you are required to pick
the correct option in light of provisions of the Companies Act, 2013 and rules notified
thereunder.
I Modern Limited observe the length of notice, as required.
II Notice shall be given to member irrespective he is solvent, adjudged or declared
insolvent, or discharged insolvent; Modern Limited committed default
III Notice to be given to assignee of insolvent member, Modern Ltd correctly did so
IV Wilful omission in giving notice will invalidate the proceeding of the meeting in case
of Modern Limited
(a) Only I, II and IV are correct (b) Only III and IV are correct
(c) Only I is correct (d) Only IV is correct
2. Regarding the place of 18th AGM of Modern Limited, decide whether applicable
provisions violated or not; in light of provisions of the Companies Act, 2013 and rules
notified thereunder.
(a) Violation, because Modern Limited shall convene and conduct AGM only at its
registered office
(b) Violation, because AGM shall be held either at the registered office of the company
or at some other place within the city, town or village in which the registered office
of the company is situated
(c) No violation, because AGM shall be held either at the register or corporate office
of the company or even at some other place within the city, town or village in which
the registered or corporate office of the company is situated
(d) No violation, because AGM of the said company may be held at any place in India
Answers:
1 c
2 b
3 b
4 b, d, b, c
1. Whether Waste Papers Ltd, who suffered losses in year 2022-23, can make payment
of dividend to the shareholders:
(a) In case of losses, the company can’t pay dividend
(b) Company may pay dividend out of profits of previous years (which are free
reserves), subject to the fulfilment of conditions prescribed for declaration of dividend
when there is inadequacy of profits in a particular year
(c) Company may dividend out of Asset Revaluation Reserve Account
(d) Company may dividend without any restriction as it has enough amount in its Free
reserves
2. Romesh (son of the deceased) made a complaint, that even after declaration of
dividend, the company has not posted the dividend warrant at the address given in his
transmission form. Which is the most correct statement in this regard:
(a) The company is not liable to pay dividend to a deceased person
(b) The company is not liable to pay dividend to the legal heirs of the deceased person
(c) The company should deposit the dividend in the court, where the matter is under
consideration
(d) The company is not liable where there is a dispute regarding the right to receive
the dividend.
3. In the given case, the amount due to be recovered from Mahesh Kumar was deducted
by the company and nothing was now payable to him on account of dividend. Is the
action of the company right:
(a) No, payment of dividend is a separate matter and should not be clubbed with any
other matter
(b) Yes, Mahesh Kumar can take action against the company for not paying any
dividend to him
(c) The company can adjust the any sum, due to it, from the shareholder
(d) The company should take into confidence and consent of Mahesh Kumar’s family
members to adjust its dues
Answers:
1 b, d, c
2 c
ACCOUNTS OF COMPANIES
QUESTION 1 May 2023 MTP
Pratham Limited has decided to spend Rs 40 lakhs on project of CSR. The average
net profit of the company is Rs 10 crores. But due to some reasons, company was
able to spend only Rs 30 lakhs. Now what will be the option for the company for the
rest Rs 10 lakhs.
(a) Penal provision will be applicable for unspent amount of Rs 10 lakhs.
(b) No penal provision but explanation is required in Board report for not spending Rs
10 lakhs
(c) No penal provision
(d) The company is required to transfer the amount to separate fund.
Answers:
1 c (within 2% of average net profits)
2 d
3 b
4 b
5 c
6 c
7 d
8 d
Answers:
1 d
2 a