USN No:

XX Trimester EMBA Examinations – Oct 2021

Course Title: Business Law ethics and Social Responsibility
Course Code: 18EPG203
Duration: 03 Hours Date:
XX-XX-XXXX
Time: XX:XX AM to XX:XX Max
Marks: 100

Note: 1. All sections are compulsory

2. Draw neat diagrams wherever necessary
3. Use calculators wherever necessary

SECTION – A
(Short Answer – Answer any THREE Questions) 05x03=15 Marks

In each of the following provisions of which Act would apply:

a. Your friend wants to know what are the contents of a Prospectus - Companies Act
2013
b. You bought a television and it turned out to be defective, however the seller is unwill-
ing to replace it stating that “Goods once sold is not returned” Consumer Protection
Act 2019 or Sale of Goods Act 1930
(05
01. c. You were taking coaching classes in a tennis academy, however you realise that the
Marks)
trainer is not a tennis player and has never trained before either. Indian Contract Act
1872 or Consumer Protection Act 2019
d. You have rented out your house property to a person who is refusing to vacate it. In-
dian Contract Act 1872
e. You received a cheque from your customer which bounced on presentment. Nego-
tiable Instruments Act 1881

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 Which of the following can be tenable in the court of law? Answer in yes or no and the
reason for your answer in one sentence.
a. You wrote a cheque to your friend as a gift, for Rs. 50,000/- The cheque bounces. Can
your friend approach the court? Why? No because there is no consideration.
b. You gave your car away to your brother to drive, without consideration. The car had
some mechanical glitch. Can your brother file a case against you? And Why? No be-
cause the car is not sold for a consideration
c. You bought a chocolate and gifted it to your friend’s kid. You did not know that the
chocolate was contaminated. When the kid opened the chocolate she found a worm in (05
02.
the pack. Your friend is upset with you. Marks)
i. Can your friend file a case against you? Why? No because there is no financial
consideration
ii. Can you file a case against the store or the manufacturer? Why? Yes because the
shop/manufacturer are responsible to sell a reasonable product.
d. You bought a lottery and it turned out to be fake. You asked your friend whether you
can file a case against the seller, your friend who knows very little about law said that
lottery is a wager and therefore it is illegal so you cannot file a case. Is your friend right?
Why? No because Lottery is an exception in contracts act and is valid.

You have money to invest. Give 5 reasons why you would invest in shares of a company.
(Hint: list any 5 characteristics of a company which makes this possible)
a. Limited Liability
(05
03. b. Separate Legal Entity
Marks)
c. Transferability of shares.
d. Professional management
e. Perpetual Existence

True or False:
a. Contracts can be written or oral True
b. Caveat emptor means buyer beware True
(05
04. c. Doctrine of indoor management means that companies need not have transparent
Marks)
policies and procedures False
d. Goods cannot include crops because they are attached to land False
e. Right to be Informed is a right under Consumer Protection Act 2019 True

SECTION – B
(Short Essay – Answer any FOUR Questions) 04x10=40 Marks

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 Your 10 year old son is amazed at the sight of a chequebook and wants to know what it
is. You have recently learned about cheques in your law class and you begin to tell him
the fun facts about cheque. List 10 interesting facts about the cheque which you would
share.

a. It is a negotiable instrument
b. It is much like money and can be negotiated just like money
c. It expires in 3 months
d. If the cheque gets stolen and handed over to someone who does not know about the
fact of it being stolen, That person can claim the payment of the cheque. (Holder in (10
05.
Due Course) Marks)
e. Cheque is an order to your bank to pay money to the person holding it.
f. Cheques can be crossed.
g. Cheques must be dated and signed, but not stamped
h. Cheque has 3 parties - The Drawer the the Bank and the Payee.
i. The wording on the cheque can make it a bearer or order cheque
j. An order cheque can be endorsed by writing an endorsement in the back of the
cheque.

Note: there can be more points and answers may differ.

You have been asked to explain “Capacity to Contract”. Explain the meaning and also list
and briefly explain, the people who do not have the capacity to contract.

Only a person who is capable of getting into a contract have the capacity to contract.
Therefore the following are excluded from the capacity to contract:
a. Minor - Persons below the age of 18
b. Person of unsound mind:
(10
06. i. A lunatic
Marks)
ii. An idiot
c. Person disqualified by law:
i. Undischarged insolvent
ii Convicts
iii. Alien Enemies
iv Foreign Sovereigns
v. Joint Stock Companies in contracts which are ultra vires.

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 You have been asked to explain the concept of Ultra Vires and whether it can be ratified.
List the contents of an Article of Association and explain with example how an ultra vires
act can be ratified.
a. Powers duties rights and liabilities of directors and Members
b. Rules of meetings
c. Dividends and Reserves
d. Borrowing Power
e. Share Warrants (10
07. f. Alteration of Capital
g. Calls on shares
h. Transfer and Transmission of shares Marks)
i. Forfeiture of shares
j. Surrender of shares
k. Voting power of members
l. Accounts and audits
m. Winding up

Example and explanation of ultra vires to be shared.

Explain the following terms with examples:

a. Doctrine of indoor management
b. Caveat Emptor

a. The doctrine of indoor management, also known as Turquand rule is a 150-year old
concept, which protects the outsiders against the actions done by the company. Any (10
08.
person who enters into a contract with the company shall ensure that the transaction Marks)
is authorised by the articles and memorandum of the company.
b. The principle that the buyer alone is responsible for checking the quality and suitabil-
ity of goods before a purchase is made.

Explanation and example to be shared.

What is a promissory note and how is it different from a bill of exchange?

A promissory note is a debt instrument that contains a written promise by one party
(the note's issuer or maker) to pay another party (the note's payee) a definite sum of
money, either on-demand or at a specified future date. In effect, promissory notes can
enable anyone to be a lender.
Points of differences:
(10
09. a. Definition
Marks)
b. Issued by
c. Parties Involved
d. Need for Acceptance
e. Liability of Drawer/Maker
f. Dishonouring of instrument
g. Copies allowed?
h. Can it be payable to the drawer/maker?

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 SECTION – C (Case Study)
(Answer all Questions) 03x15=45 Marks

PASTE YOUR CASE STUDY HERE

(Please keep case study maximum upto 3 pages)

Integrity and Professional Behaviour

A junior member of staff has just returned to work after taking special leave to care for
her elderly mother. For financial reasons she needs to work full-time. She has been hav-
ing difficulties with her mother’s home care arrangements, causing her to miss a number
of team meetings (which usually take place at the beginning of each day) and to leave
work early. She is very competent in her work but her absences are putting pressure on
her and her overworked colleagues. You are her manager, and you are aware that the
flow of work through the practice is coming under pressure. One of her male colleagues
is beginning to make comments such as “a woman’s place is in the home”, and is under- (15
10. mining her at every opportunity, putting her under even greater stress.
Marks)

a. How should you proceed so as not to discredit yourself, your  profession or the prac-
tice for which you work and at the same time maintaining integrity and confidential-
ity in your actions?
b. What are the ethical aspects to consider in an environment of inclusion?
c. How can you balance performance, while being mindful of inclusion?
“Answers may vary”

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 Wells Fargo was the darling of the banking industry, with some of the highest returns on
equity in the sector and a soaring stock price. Top management touted the company’s
lead in “cross-selling”: the sale of additional products to existing customers. “Eight is
great,” as in eight Wells Fargo products for every customer, was CEO John Stumpf’s
mantra.
In September 2016, Wells Fargo announced that it was paying $185 million in fines for
the creation of over 2 million unauthorised customer accounts.  It soon came to light that
the pressure on employees to hit sales quotas was immense: hourly tracking, pressure
from supervisors to engage in unethical behaviour, and a compensation system based
heavily on bonuses.
Wells Fargo also confirmed that it had fired over 5,300 employees over the past few
years related to shady sales practices. CEO John Stumpf claimed that the scandal was the
result of a few bad apples who did not honour the company’s values and that there were
no incentives to commit unethical behaviour. The board initially stood behind the CEO
but soon after received his resignation and “clawed back” millions of dollars in his com-
pensation.
Further reporting found more troubling information. Many employees had quit under
the immense pressure to engage in unethical sales practices, and some were even fired
(15
11. for reporting misconduct through the company’s ethics hotline. Senior leadership was
aware of these aggressive sales practices as far back as 2004, with incidents as far back Marks)
as 2002 identified.
The Board of Directors commissioned an independent investigation that identified cul-
tural, structural, and leadership issues as root causes of the improper sales practices.
The report cites: the wayward sales culture and performance management system; the
decentralised corporate structure that gave too much autonomy to the division’s lead-
ers; and the unwillingness of leadership to evaluate the sales model, given its longtime
success for the company.

1. List 5 things that went terribly wrong in the company’s ethical practices.
2. ‘Failure of ethical helpline was by far the worst of all failures in this case’, would you
agree to this statement? Why or why not?
3. How can the board of directors control such misuse of power from happening in the
future? What checks and balances should be put in place? What should be the fre-
quency of such checks and balances and what can be the outcome of it?

“Answers may vary”

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 Ajay Mishra, a senior IAS officer has come to be known as an eccentric officer thanks to
his show of brutal honesty in public service. But his friends and colleagues who know
him personally respect and love him a lot for his vast knowledge and affability.
Recently he was shunted out of a prominent department as a punishment transfer as
Managing Director to an ailing state cooperative milk federation. It was his fifth transfer
in three years. Not able to cope up with her husband’s frequent transfers to east-west
and north-south parts of the state, Ajay’s wife is sick for many years now and the chil-
dren have moved out to foreign countries on the pretext of higher studies never to come
back.
The chairman of state milk federation is a powerful politician very close to the Chief Min-
ister. Ajay, in his first month of duty itself comes to know about many irregularities in
the functioning of the federation and high-handedness of the chairman in financial mat-
ters.
A board member belonging to a political party opposed to that of the chairman and who
has a good chance of becoming chairman once the incumbent steps down or resigns,
meets Ajay privately and hands over few documents and a secret video recording where
the chairman appears to be demanding huge bribe for releasing funds to district milk
unions. The video clearly shows that it is indeed the chairman asking a director of a dis-
trict union for bribe.
As soon as Ajay took over incharge as MD, the chairman was demanding speedy disbur-
sal of funds to district unions which was pending for many months.
Ajay confronted the board member why he didn’t go public with the video himself. The
(15
12. member told him that he is actually blackmailing the chairman for some time now and
he is not yielding to his threats as he is being shielded by the CM. The board member Marks)
now wants MD to confront the chairman and go public himself as this would give the MD
fame and public support. The board member has had requested leader of the opposition
party to pressurise Ajay and it had worked too. Ajay is now being pressurised by promi-
nent leaders of the opposition parties, privately, to go against the chairman. They are of-
fering him a lucrative post in the capital once they come to power. And they want to em-
barrass the government.
Ajay, if he confronts the chairman, he is sure to be transferred immediately to a distant
district again. His wife whose mental status is deteriorating day by day is not in a condi-
tion to move again to a new place.
On the other hand, the opposition party is gaining ground in the state and is sure to
come back to power soon. The board member wants to use Ajay for his political gain by
using him as pawn.

a. List out the primary issues in this case study.

b. Does Ajay have a conflict of interest in this matter?
c. What should be Ajay Mishra’s course of action in the present situation? Analyse your
answer from the point of view of his duty and what constitutes, ethical performance
of his duty.

“Answers may vary”

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Please Note:
· Use Cambria 12 pt font only
· Do not use any other fonts
· Please stick to the above format only

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