NEW SCHEME MAY 2021

INTERMEDIATE COURSE - GROUP 1

PAPER 2 - Corporate and Other Laws
Syllabus 100A
Total No of Questions - 5 Total No. of Printed Pages – 9
Time Allowed – 3 hours Maximum Marks – 100

GENERAL INSTRUCTIONS TO CANDIDATES

1. The question paper comprises of two parts, Part I and Part II.
2. Part I comprises of Multiple Choice Questions (MCQs).
3. Part II comprises questions which require descriptive type answers.
4. Ensure that you receive the question paper relating to both the parts. If you have not
received both, bring it to the notice of the invigilator.
5. Answers to Questions in Part-I are to be marked in OMR answer sheet only. Answers to
questions in Part II are to be written on the descriptive type answer book. Answers to
MCQs, if written in descriptive type answer book, will not be evaluated.
6. Duration of the examination is 3 hours.

PART – II

1. Question paper – Part-II comprises 5 questions. Answer the first question i.e. Q.1 which
is compulsory and any 3 out of the remaining 4 questions.
2. Answers to the questions are to be given only in English except in the case of candidates
who have opted for Hindi Medium.

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 Part I

Multiple choice question

1. Max Ltd. was incorporated on 15th July 2014 and under the jurisdiction of Maharashtra
and the registered office is located in Mumbai and has various branches in Delhi, Kolkata
Chennai. Under the dynamic leadership of Mr

Hanif, Chairman and CEO of the company in the span of two and half years the business
of the Company reached the heightsand company started earning huge profit.
In an AGM which was held on 15th September 2017 Company declared the dividend @
8% on paid up value of the shares for the financial year 2016-2017. Similarly for the
financial year 2017-2018 and for the financial year 2018-2019 Company declared the
dividend @ 9% and 10% respectively.
One of the employee of the company suggested that it is compulsory to transfer the certain
amount of the profit to reserve. But he is not sure whether he is correct or not
Due to Covid-19 pandemic the company suffered loss in the financial year 2019-2020. But
to keep the goodwill of the company, one of the director, Mr M is of the opinion that they
should declare the dividend.
But the other director, Mr A has a different opinion that the company is suffering from
loss so the company is not eligible for declaring dividend.
Referring to the provisions of the Act, answer the following:
(i) Whether the contention of the employee to transfer the amount to reserve is
correct or not
(a) Yes, because it is mandatory to transfer certain amount to reserve
before declaration of dividend
(b) No, because it is not mandatory to transfer certain amount to reserve
before declaration of dividend
(c) Yes, company should transfer atleastminimal amount
(d) Yes, company has to retain certain profit for future project before
declaration of dividend
(ii) If company can wants to declare dividend then how much amount shall be
transfer to reserve
(a) Average percentage of last 3 years dividend
(b) Average percentage of last 3 years profit
(c) Any amount as decided by board of Directors
(d) Average percentage of last 5 years profit

(iii) Whether company can declare dividend even though company is suffering a
loss
(a) Yes, company can declare dividend
(b) No, company cannot declare dividend as company is suffering loss
(c) Yes, company can declare dividend out of reserves
(d) No, because once the company makes profit than only company is
eligible to declare dividend.
(2x3=6 marks)

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2. A is residing in Delhi and has a house in Mumbai. A appoints B by a power of attorney to
take care of his house. State the nature of agency created between A and B
(a) Implied agency
(b) Agency by ratification
(c) Agency by necessity
(d) Express agency (1 Mark)

3. Sec 6 of General Clauses Act,1897 applies to

(a) Only Repeal
(b) Only Omission
(c) Both Repeal and omission
(d) Either Repeal or Omission (1 mark)

4. Mr. Allen a landlord has given a land on rental basis to Mr.Solly (tenant), who has not
paid the rent for past 3 months. So Mr. Allen sent him the notice via registered post and
the same was returned by tenant Mr. Solly with an endorsement of refusal, it will be
presumed that
(a) the notice has been served
(b) the notice has not been served
(c) Landlord has to re-send the notice
(d) Option (b) and it should be followed by option (c) (2 marks)

5. A truncated cheque means a cheque which is truncated during the course of clearing cycle
by
(a) The clearing house
(b) The paying Banker
(c) The collecting banker
(d) Any of these (2 marks)

6. Statement (1): It is presumption of law that every holder of a negotiable instrument is a

holder in due course
Statement (2): It may be proved before the court that a holder of negotiable instrument is
not a holder in due course.
(a) Only statement (1) is correct
(b) Only statement (2) is correct
(c) Both the statements are correct
(d) None of the statements is correct (2 marks)

7. A guarantee obtained by a creditor by keeping silence as to material circumstances is:

(a) Valid
(b) Voidable
(c) Unenforceable
(d) Invalid (1 mark)

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8. A, B and C, as sureties for D, enter into three bonds, each in a different penalty, namely, A
in the penalty of 1,00,000 rupees, B in that of 2,00,000 rupees, C in that of 4,00,000
rupees, conditioned for D’s duly accounting to E. D makes default to the extent of
3,00,000 rupees. According to the Indian Contract Act, 1872:

(a) Only A is liable

(b) A and B are each liable to pay 1,00,000 and 2,00,000 rupees respectively.
(c) A and B are each liable to pay 1,00,000 rupees.
(d) A, B and C are each liable to pay 1,00,000 rupees. (1 mark)

9. Nestle Ltd. paid Rs 25 lakhs as advance to Parle Ltd. towards the purchase of a printing
machinery on 15.1.19 with delivery instructions to deliver the same in the last week of
June, 2019. Further on 2.2.19 Nestle Ltd. purchased two diesel generator sets from Parle
Ltd. for Rs 30 lakhs on 90 days Credit term. In the accounts for 2018-19, Nestle Ltd.
intends to adjust the advance paid against Credit purchase and show the net amount of Rs
5 lakhs as due from them. As the statutory auditor, how would you deal with this?

(a) The auditor should advise X Ltd. to show these two items separately. If X Ltd.
does not accept theadvice, the auditor should qualify his report with suitable
quantification of amount involved.
(b) The auditor’s advice to X Ltd. to show these two items separately is not Valid.
(c) The auditor’s advice to X Ltd. to show these two items together is Valid.
(d) The auditor should advise X Ltd. to show these two items jointly. If X Ltd. does
not accept the advice, the auditor should qualify his report with suitable
quantification of amount involved. (2 marks)

10. It is the cardinal rule of construction that words, sentences and phrases of a statute should
be read in their ordinary, natural and grammatical meaning unless such a construction
leads to an absurdity or the content or object of the statute suggests a different meaning.

(a) Rule of Reasonable Construction

(b) Rule of Harmonious Construction
(c) Rule of Literal Construction
(d) Rule of Beneficial Construction (1 mark)

11. Which of the following is not bailment

(a) Goods seized by custom

(b) Money deposited in bank as fixed deposit
(c) Acceptance of articles by post office as V.P.P
(d) Acceptance of goods by a transport company (2 marks)

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12. A Infrastructures Limited is a listed company quoted at National Stock Exchange. The
company closed its Register of Members in June and August, 2019 for 12 and 21 days
respectively. The CFO of company has informed the company secretary to consider
closing of register in December for another 15 days for some strategic reasons. Referring
to the provisions of Companies Act, 2013, examine the validity of above action of the
company.
(a) Valid, as the closure of register of members by company each time is not
exceeding 30 days.
(b) Invalid, as company cannot go for closure of Register of members more than
twice in a year.
(c) Invalid, as the period of closing register of members exceeding 30 days in a year.
(d) Invalid, as the period of closing the Register of members by the company is
exceeding 45 days in a year. (2 marks)

13. Exim Bank Limited is a growing Company and requires additional funds for expansion
from time to time. They are following the same process for making an offer to public and
then issue those shares. This is very time and energy consuming for them. Kindly advise
them if there is any way out.
(a) During first offer they shall file prospectus with a validity on one year, so
subsequent offer issued during the period of validity of that prospectus, no further
prospectus is required;
(b) During first offer they shall file prospectus with a validity on two years, so
subsequent offer issued during the period of validity of that prospectus, no further
prospectus is required;
(c) During first offer they shall file shelf prospectus with a validity on one year from
date of filing the shelf prospectus , so subsequent offer issued during the period of
validity of that prospectus, no furtherprospectus is required;
(d) During first offer they shall file shelf prospectus with a validity one year from the
date of first issue, so subsequent offer issued during the period of validity of that
prospectus, no further prospectus is required; (2 marks)

14. The members of Maggi Limited requisitioned for calling Extra Ordinary General Meeting
to consider some urgent matters. The same was called by the company. Meeting was
scheduled on 31st August, 2019. However, required quorum was not present at the
meeting. In this case, what Matrix Limited shall do?
(a) Matrix Limited shall adjourn the meeting to the same day in the next week at the
same time and place;
(b) Matrix Limited shall adjourn the meeting to such other day at such other time and
place;
(c) The meeting shall be cancelled;
(d) Matrix Limited shall proceed ahead with the available quorum;
(1 mark)

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15. Mr.Nilesh is a Company Secretary of Max Private Limited. For calling Company’s
Annual General meeting, Mr.Nilesh has to issue notice of that meeting before stipulated
period of time. Draft notice is ready with him. However, he is confused on agenda items
for which he has to attach explanatory statement to the notice. Please help him to
understand which agenda item needs explanatory Statement?
(a) Consideration of Auditors Report;
(b) Fixing remuneration of Auditor;
(c) Fixing remuneration of Manager;
(d) Declaration of any dividend; (1 mark)

16. Raman is the owner of a garment store. In March 2019, he got the idea of forming a ‘One
Person Company’ and convinced his sister Suzan, an Indian citizen who resides in London
but visits India from time to time, to become nominee in his OPC. In the year 2018, Suzan
first came to India on 10th January and left for London on 26thFebruary. Thereafter,
sheagain visited India on 7th June and remained here till 10th October and boarded an
evening flight for London on thesame day. From then onward she did not visit India in the
year 2018 but on 2ndJanuary 2019 she came to India for ashort duration and left for
London on 14th February, 2019. Is it possible for Ravi to appoint Suzan as nominee?
(a) Suzan can be appointed as nominee by Raman because she is a natural person, an
Indian citizen and resided in India for more than 90 days during the year 2018.
(b) Suzan can be appointed as nominee by Raman because she is a natural person, an
Indian citizen and resided in India for more than 182 days during the years 2018
and 2019 i.e. prior to March 2019 when Raman contemplated to form his OPC.
(c) Raman cannot appoint Suzan as nominee in his OPC because she did not reside in
India for 182 days or more during the year 2018 though she is a natural person and
also an Indian citizen.
(d) Since Raman is the sole member of his OPC who will look after all its affairs and
the appointment of nominee is just a formality, a visit to India during 2018 for any
number of days would make Suzan eligible to be appointed as nominee.
(2 marks)

17. CSR Committees of the Board shall consists of:

(a) Directors forming 1/3rd of the total no. directors.
(b) At least 2 directors
(c) 3 or more directors
(d) 3 or more directors, out of which at least 1 director shall be an independent.
(1 mark)

18. Mithibai Ltd decided to shift its registered office from jurisdiction of one Registrar to the
jurisdiction of another Registrar. Mithibai Ltd complied with the provisions of Companies
Act, 2013 and did all relevant filing within due period of time. Confirmation on such
shifting was received by Regional Director on 26th June, 2020. By when Mithibai Ltd has
to file thatconfirmation with the Registrar?
(a) 11th July, 2020
(b) 25th July, 2020
(c) 11th August, 2020
(d) 25th August, 2020 (1 mark)

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 Part II

1. (a)Sharad sent a consignment of mobile phones worth Rs 60,000 to Hemant and obtained a
railway receipt therefore. Later, he borrowed a loan of Rs 40,000 from Saraswat Bank and
endorsed the railway receipt in favour of the Bank as security. Due to negligence of
railway authority, the consignment of mobile phones was lost in transit. The Bank files a
suit against the railway for a claim of Rs 60,000, the value of the consignment.
The railway contended that the Bank is entitled to recover the amount of loan i.e. Rs
40,000 only. Examining the provisions of the Indian Contract Act, 1872, decide, whether
the contention of the railway is valid. (4 Marks)

(b) The Secretary of a Company issued a share certificate to ‘Anna’ under the Company’s
seal with his own signature and the signature of a Director forged by him. ‘Anna’
borrowed money from ‘Bharavi’ on the strength of this certificate. ‘Bharavi’ wanted to
realise the security and requested the company to register him as a holder of the shares.
Explain whether ‘Bharavi’ will succeed in getting the share registered in his name.
(5 Marks)

(c) The management of Vini Engineering Ltd., has decided to take up the business of
chemical processing activity because of the downward trend in Engineering business.
There is no provision in the object clause of the Memorandum of Association to enable the
company to carry on such business. State with reasons whether its object clause can be
amended. State briefly the procedure to be adopted for change in theobject clause in the
light of Companies Act, 2013. (6 marks)

(d) Rajan was doing the business of footwear as a sole proprietor. He decided to convert
his proprietor concern into a company. He wants to incorporate the company as Rajan Ltd.
But he requires some advice from you. As a Chartered Accountant please advice.
(i) Rajan Ltd wants to maintain its books of accounts under single entry system. Is it
permitted under the provisions of Companies Act, 2013?
(ii) Rajan Ltd. wishes to keep its books of accounts at the place another than registered
office (4 marks)

2. (a)Give the answer of the following:

(i) A draws a cheque in favour of M,a minor. M endorses the same in favour of
X. The cheque is dishonoured by the bank on grounds of inadequate funds.
Discuss the rights of X.
(ii) A promissory note was made without mentioning any time for payment. The
holder added the words “on demand” on the face of the instrument .Does this
amount to material alteration?
(iii) A draws a cheque for Rs 100 and hands it over to B by way of gift. Is B a
holder in due course? Explain the nature of his title, interest and right to
receive the proceeds of the cheque.
(iv) A cheque is drawn payable to “B or order”. It is stolen and the thief forges B’s
endorsement and endorses it to C. The banker pays the cheque in due course.
Can B recover the money from the banker. (4 marks)

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 (b) Discuss the following situations in the light of ‘deposit provisions’ as contained in the
Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014, as
amended from time to time.
(i) Mangal Traders Limited is a company which is formed in the 2019 anissued a
convertible note of Rs 35 Lacs
(ii) Orange Ltd issued unsecured non-convertible bonds and company listed such bonds in
BSE.
(iii) If in above question no. (ii) if the company has issued compulsorily convertible bonds
then whether your answer will change?
Advise whether it is a deposit or not. (6 marks)

(c) In section 115 JB of the Income tax Act, 1961, for calculation of book profits, the
Companies Act, 1956 are required to be referred. With the advent of Companies Act,
2013, the corresponding change has not been made in section 115 JB of the Income tax
Act, 1961. Explain in the light of provisions of General Clauses Act, 1897 how such book
profits to be calculated under section 115 JB of the Income Tax Act? (4 marks)

(d) Explain the following terms Document as per General Clauses Act,1897. (3 marks)

3. (a) Rajesh, who is a resident of New Delhi, sent a transfer deed, for registration of transfer
of shares to the company at the address of its Registered Office in Mumbai on 13.05.2019.
He did not receive the shares certificates till 14.09.2019. He lodged a complaint in the
ROC at New Delhi. Decide, under the provisions of the Companies Act, 2013, whether the
ROC at New Delhi is competent to take action in the said matter (6 marks)

(b) Pharma Ltd wants to issue notice for AGM but they want to issue through electronic
mode. Explain the provision relating to the issue of the notice through electronic mode.
(5 marks)

(c) Board of Directors of M/s. Abay Ltd, in its meeting held on 29th May 2019, declared
an interim dividend payable on paid up Equity Share Capital of the Company. In the
Board Meeting Scheduled for 10th June 2019, the Board wants to revoke the said
declaration. You are required to state with reference to the provisions of the Companies
Act, 2013 whether the Board of Directors can do so (6 marks)

4. (a) Comment on the following ‘Principal is not always bound by the acts of a sub-agent
(4 marks)

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 (b) VG Associate having two partners Mr.Vasant and Mr. Girishand they have ventured
newly into this area. Mr Vasant is having the following issues in his mind. You are
requested to guide him in resolving his issues, stating relevant sections and laws.
(i) Mr Vasant wishes to undertake audit work as well as work as employee with
ABCLtd.
(ii) Mr.Girish is providing an actuarial service in XYZ Ltd. which is subsidiary of
ABCLtd.
Whether VG Associate can undertake the audit of ABC Ltd in above cases (6 marks)

(c) Securities include shares- Comment. (4 marks)

(d) Mr. Veer draws a cheque of Rs. 15,000 and gives to Mr. Gill who is the trustee of
RedCross Charitable trust by the way of the donation. State with reason whether-
(i) Mr. Gill is a holder in due course as per the Negotiable Instrument Act, 1881?
(ii) Mr.Gill is entitled to receive the amount of Rs. 15,000 from the bank
(3 marks)

5. (a) Lemon Ltd does not want to go for public issue so decided to make Private
placement. In the Board meeting the board of the directors decided to offer the shares to
the group of the 500 persons. Company is offering 1000 shares of Rs 10 each to a
shareholder on private placement basis whether the offer made by the Lemon Ltd is in
order? And advice Lemon Ltd. the provision relating to private placement. (5 marks)

(b) Apple Pvt Ltd. an independent company having paid up share capital of Rs 800 Lacs
and having the borrowings from banks and financial institution of Rs 15 crores and
company has not defaulted in the repayment ofsuchborrowings. Apple Pvt Ltd. desires
to accept deposits from its members. Whether they can accept such deposits, if yes then
which provision they need to comply with and the limit of such borrowings. (5 marks)

(c) Where there was prohibition on importation of ‘arms, ammunition, or gun power or
any other goods’ the words ‘any other goods’ were construed as referring to goods
similar to ‘arms, ammunition or gun powder’- Explain the statement with the help of the
provisionof Interpretation of the Statue (4 Marks)

(d) Explain the provisions of the Companies Act, 2013 relating to the ‘Service of
Documents’ on a company and the members of the company. (3 marks)