New Delhi

Department of Business & Sustainability

PPM 158 – Legal aspects of Business

Test 3-2020
Date: 17 July 2020
Duration: 3 hours TotalMarks:40
______________________________________________________________________
Instructions:

1. All questions are mandatory

2. You may submit answers either in MS word document or as scanned copies of
handwritten answer sheets
3. Total time given is 3 hrs.

Q.1
The complainant took a loan from the petitioner bank for his business purpose. In order to
secure the loan, he deposited the Title Deeds of an immovable property with the petitioner
bank. After settling the loan by paying a sum of Rs.13,50,000/- to the petitioner bank, he sought
return of the Title Deed, which he had deposited with the petitioner bank. The Title Deed
having not been returned to him, he approached the concerned District Forum seeking
compensation etc. wherein the bank admitted that the original Title Deed was not traceable by
the bank. The District Forum rules in favour of the complainant and awarded Rs.5,00,000/- as
compensation and Rs.30,000/- as litigation cost. In an appeal by the bank, the State Forum
affirmed the order passed by the District Forum. Hence the bank filed a revision petition.
The Petitioner Bank submitted the following three points-

• Bank was ready to provide the certified copy of the Title Deed to the complainant.
• The bank would issue a Certificate to the complainant admitting the deposit of Title
Deed with the bank and its inability to return the same to the complainant.
• The petitioner bank should bear the cost of issuing a public notice in the newspapers
with respect to the loss of the Title Deed.
Decide, as per the Consumer Protection Act, whether the above arguments of the bank are
valid? (5 marks)
Q. 2
Earth Fillers and Movers Ltd. applied for a tender to Deewan Construction Ltd, to hire out a
bulldozer at the rate of Rs. 90,000 per month. The tender was one among the three that were
short-listed. On the request of the party inviting tenders, Earth Fillers and Movers Ltd. gave
them their bulldozer to try out its suitability. Deewan Construction Ltd. made intensive use of
the equipment for doing their work, for 20 days, and then returned it along with a letter
intimating them that their tender had been rejected. Earth Fillers and Movers Ltd. is claiming
Rs. 60,000 as rental for 20 days. Is there a valid contract between the parties? Can Earth Fillers
and Movers Ltd. demand the rent? Decide with reasons according to the Indian Contract Act.
(5 marks)
Q. 3
Daily Mart Ltd., a retail store in a city, entered into an annual service contract with Astar Ltd.,
for the maintenance of its 30 air-conditioners. The terms of the contract were as follows:
1. Food Mart Ltd. will pay 25% of the consideration on signing of the contract, 40%
at the end of the third month of the signing of the contract, and the remaining 35%
at the end of the sixth month of the signing of the contract.
2. Astar Ltd. will service the 30 air-conditioners every month.
The parties signed the contract on April 1. At the time of signing the contract, Daily Mart Ltd.
gave a cheque for 25% of the consideration Astar Ltd. provided their service for the months of
April and May. However, they failed to provide their service in the month of June. Daily Mart
Ltd. does not want to continue with Astar Ltd. as they find them unreliable. They apprehend
that the service would continue to be erratic. Their point of view is that it is better to find
another party than suffer the existing one. In light of the given facts, answer the following
questions:
a. Can Daily Mart Ltd. free themselves from the obligation of paying the two remaining
instalments and Astar Ltd. from doing the monthly maintenance? (5 marks)
b. Decide whether they can end the contract and what will be the legal implications of
the same? (5 marks)
Q. 4
Mr. Clarens was the head of an association who purchased a number of blocks of shale gas
for100 million dollars. Subsequently a company was formed to undertake the mining activities.
An agreement was entered into between Mr. Aston, a nominee of the association and the
company for its purchase at 150 million dollars. A prospectus was also issued and accordingly
many persons bought shares. However the company went into loss and had to wind up its
functioning. The official liquidator sued the promoter for the refund of the profit. Discuss the
liability of the promoter here. (5 marks)

Q. 5

The memorandum of association of a company stated it as a bank and further to invest in

securities and issue of such securities. Mr. X was appointed as a managing director of the
plaintiff company based on the agreement that “he shall not at any time do anything or act
against the interest of the company”. However, soon after his appointment, the company
abandoned its banking business and confined itself to investment activities. The shareholders
later rejected the contract as ultravires. Give your opinion. (5 marks)

Q. 6

Describe the different kinds of anti-competitive practices that are prohibited under the
Competition Act, 2002 with the help of examples. (10 Marks)