National University of Study and Research in Law, Ranchi

End Term Examination 2021

Semester -- VI
Subject: Company Law
Subject Code: L118

Total Marks: 70 Maximum Time: 5 Hours

Instructions:
1) No clarifications shall be provided about the question paper during the course of
the exam.
2) All Questions carry equal marks.
3) Attempt any 5
4) Word Limit: 500 words.

1. Billi India Ltd. was a public company incorporated under Companies Act, 2013. It
provided that Mr. Billimoria shall be a permanent director for life. The clause is
reproduced as below:

“… Mr. Billimoria is hereby appointed as a permanent director, i.e. a director for

life…”

Shareholders of Billi India Ltd. amended the Articles of Association to include

that any director shall be removed by replacing the above clause as following:

“… Mr. Billimoria is hereby appointed as a permanent director, i.e. a director for

life…However, any director can be removed by the Shareholders at a general
meeting, if all directors of the Board other than the interested director, provide in
writing a request to such director to resign… Any casual vacancies shall be filled
in by a majority vote of the board of directors…”

Does such and amendment to the articles amount to oppression? [14 Marks]

2. Anna Ltd. has failed to convene the statutory meeting as well as the subsequent
Annual General Meeting and has applied to the Registrar of Companies for an
extension of 3 months due to vacancy of office of the auditor whom the Board had
relied upon; which is rejected. Two – thirds of the members have filed a petition
for winding up before the Tribunal. [14 Marks]

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3. Decide whether the corporate veil in the following cases will be lifted or not with
justification: [5 + 5 + 4 = 14 Marks]
i. A company owned by Chinese nationals as majority and minority (less
than 10% shares) in India for trading of raw materials, prior to Indian
war with China. The Enemy Property Act, 1968 is now amended to
include Chinese Nationals as those who cannot hold property in India.
ii. All revenue of A Ltd. is routed to B. Ltd. (newly incorporated) as loan
from A Ltd. The directors are the same. The Registrar of Companies
has filed for lifting of corporate veil.
iii. Ka Ltd. has acquired the business of its promoter Kanha, who is also
the majority shareholder. Ka Ltd. has suffered losses and creditors
have sued Kanha.

4. Samar and Saahil were two companies engaged in beverage business. They
merged the business with the name and style Summerhill Beverages Pvt. Ltd. A
dispute arose between the two, each holding 50% shares and hence, no AGM was
convened. What are the options available to the company? [14 Marks]

5. X has purchased 800 shares of ABC Ltd. at Rs. 100 per share with a paid
subscription money of 20 Rs. per share. A call has been made by the company to
pay 30 Rs. per share. X is not in a position to pay the amount. What are the
remedies available to X and ABC Ltd.? Can the directors help X? [14 Marks]

6. Auditors made a statement relating to the financial position of a company in a

prospectus. Members of the public purchased the shares including D. D had
received a tip from his friend F about the shares of the company. Later on, D
found that the auditors statement in the prospectus was false and misleading. D
sues the auditors. Decide the case. [14 Marks]

7. Managing Director of BEE Ltd. was able to outvote the minority shareholders and
retain the profits for the directors of the company. The minority shareholders were

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denied inspection of the financial statements of the company. The minority
shareholders have presented a petition before the National Company Law Tribunal
to wind up the company. Discuss whether the company ought to be wound up or
not, with justifiable reasons, provisions and case laws. [14 Marks]

X---X---X

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