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Test Series: October, 2023
MOCK TEST PAPER

FINAL GROUP – II
PAPER – 6D: ECONOMIC LAWS
Question Paper comprise of five case study questions. The candidates are requested to answer any
four case study questions out of five.
Time Allowed – 4 Hours Maximum Marks – 100
Case Study 1
Syringe Bank Ltd. served notice to Vijay and LLP, a secured debtor declaring it as NPA. Vijay and LLP
mortgaged residential properties worth ` 1000 crore with the Syringe Bank Ltd. in Faridabad. Syringe Bank
Ltd. appointed Mr. Vijay, one of the managers of the Bank (authorised officer) to undertake sale of the
residential immovable properties.
The authorised officer undertook following steps to the above:
• He put possession notice at the bottom right of the door.
• He published in two newspapers, namely 'Economic Times' (in English) and 'Bharat Sahara' (in Hindi).
Bharat Sahara is an independent publication in the State of Haryana. The notice was published in the
Delhi Edition of 'Bharat Sahara', on a page which was meant for 'East Delhi'.
• He undertook the possession of the residential immovable properties and decided to undertake public
auction to sell the properties.
• He caused a public notice about the auction of the properties in two newspapers as mentioned above.
All the above immovable properties got sold to the bidders at a price of ` 900 crore.
One of the bidders, Gregorius LLP who bid for the residential immovable properties in Faridabad decided to
venture in the business of development of real estate projects. Since they were new to the industry, it decided
that it will build only 4 apartments on a land of 400 sq metres in the State of Assam.
Assam Government decided to reduce the exemption limit under the Real Estate (Regulation and
Development) Act, 2016 to development of real estate projects on a plot area of 300 sq metres or more to
cover more real estate projects under the ambit of the Real Estate (Regulation and Development) Act, 2016.
Since the bidder was quite successful in developing the aforesaid 4 apartments in one year from taking
the project on hand, it got an offer for repair of a building which is 25 years old and has 100 apartments
spread over 50,000 sq metres.
Gregorius LLP was inspired to venture into the business of real estate by Mr. Amit Jalan and DBBI Developers
Ltd., both of them are in the business of real estate since last 10 years and registered unde r the Real Estate
(Regulation and Development) Act, 2016.
DBBI Developers Ltd. made a plan for a tower of 100 flats in the hub of Mumbai. Its named “Exulus Towers”.
DBBI Developers Ltd. launched the plan in the month of May 2021 and by June 2022, it got booking for 70
flats as under:
• 64 flats booked in the name of different individuals.
• 5 flats booked by Mr. Aamir :1 flat in the name of Mr. Aamir, 1 flat in the name of Mr. Adir, son of
Mr. Aamir who is settled in USA, 1 flat in the name of Aamir Industries Ltd., one partnership firm where
Mr. Aamir is 10% partner and one flat in the name of Mr. Aamir’s wife who works in TCS.
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• 1 flat was acquired by Mr. Godrej in September 2021 and later on transferred by him to Mr. Ambani in
April, 2022.
After seeing the fabulous response for the Exulus Towers, DBBI Developers Ltd. decided to make following
changes in the layout of the plan:
• change the layout of the swimming pool. It decided to make two swimming pools instead of one as
planned earlier.
• To make 4 lifts instead of 3 lifts.
• To make the base for rainwater harvesting
DBBI Developers Ltd. informed all the allottees about the changes in the plan and following gave wr itten
consent accepting the changes in the layout of the plan.
• Out of 64 flats, 42 flats agreed
• All the flats booked by Mr. Aamir agreed
• 1 flat owner didn’t agree.
On the basis of the above approval, DBBI Developers Ltd. carried out the changes in the plan .
Due to certain personal problems, DBBI Developers Ltd. decided to transfer the project of Exulus Towers to
a profound developer named Vishwas Developers Ltd. who is in the business of developing real estate
projects since 25 years. Vishwas Developers Ltd. sought extension from the allottees to complete the project
in 3 more years as they were busy with various projects across Mumbai. But it promised to deliver the same
variables as promised by DBBI Developers Ltd.
Mr. Amit Jalan decided to stop the business of developing real estate and decided to become a real estate
agent.
Please answer the following questions:
1.1 The bidder Gregorius LLP who decided to venture into development of real estate project is required to
seek which of the required compliance:
(a) Registration under the Real Estate (Regulation and Development) Act, 2016 as undertaking of any
real estate projects requires registration.
(b) Not required to register under the Real Estate (Regulation and Development) Act, 2016 as the
number of apartments and size of the plot area to be developed covers the project under exemption
from the Act.
(c) Registration under the Real Estate (Regulation and Development) Act, 2016 as the state of Assam
has reduced the limit of exemption under the Act to plot size of 300 sq metres.
(d) Registration under the Real Estate (Regulation and Development) Act, 2016 as the State of Assam
has reduced the number of apartments to 3 for claiming the exemption from registration under the
Act. (2 Marks)
1.2 Kindly state which of the following statement is true for undertaking the repair project of 25 year s old
building.
(a) Gregorius LLP is required to register under the Real Estate (Regulation and Development) Act,
2016 as repairs to building is also covered under the ambit of the Real Estate (Regulation and
Development) Act, 2016.
(b) Gregorius LLP is not required to register under the Real Estate (Regulation and Development) Act,
2016 as repairs to building is not covered under the ambit of the Real Estate (Regulation and
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(c) Gregorius LLP is not required to register under the Real Estate (Regulation and Development) Act,
2016 separately as already it has got registration for development of 4 apartment building.
(d) Gregorius LLP is required to register under the Real Estate (Regulation and Development) Act,
2016 as the number of apartments are 100. (2 Marks)
1.3 Is Mr. Amit Jalan required to obtain registration under Real Estate (Regulation and Development) Act,
2016 as real estate agent.
(a) Mr. Amit Jalan is not required to obtain separate registration as real estate agent since he is already
registered under Real Estate (Regulation and Development) Act, 2016.
(b) Mr. Amit Jalan is required to obtain separate registration as real estate agent even though project
has been registered under Real Estate (Regulation and Development) Act, 2016.
(c) It is optional for Mr. Amit Jalan to obtain registration as real estate agent.
(d) There is no need for a real estate agent to register under Real Estate (Regulation and
Development) Act, 2016. (2 Marks)
1.4 Is the number of approvals from flat owners received enough for getting the changes in the layout of the
plan?
(a) DBBI Developers Ltd. received approval from 47 flat owners. Thus, it meets the minimum approval
criteria required for getting the approval for changes in the layout of the plan.
(b) DBBI Developers Ltd. received approval from 45 flat owners. Thus, it meets the minimum approval
(c) DBBI Developers Ltd. received approval from 46 flat owners. Thus, it meets the minimum approval
(d) DBBI Developers Ltd. received approval from 44 flat owners. Thus, it does not meet the minimum
approval criteria required for getting the approval for changes in the layout of the plan. (2 Marks)
1.5 How can DBBI Developers Ltd. transfer the real estate project to Vishwas Developers Ltd?
(a) DBBI Developers Ltd. can transfer the real estate project after obtaining written consent from 2/3 rd
allotees.
(b) DBBI Developers Ltd. can transfer the real estate project after obtaining written consent from 2/3 rd
allotees and with the prior written approval of the Authority.
(c) DBBI Developers Ltd. can transfer the real estate project after obtaining written approval of the
Authority.
(d) DBBI Developers Ltd. can transfer the real estate project without any procedural formalities.
(2 Marks)
1.6 Advise the legal position as to the validity of the selling of the residential immovable properties taken by
the Authorised Officer in the light of the stated facts given in the case study. (6 Marks)
1.7 Enumerate whether the process followed by DBBI Developers Ltd. to obtain the approval of flat owners
for changes in the layout of the plan is justified and in order. (6 Marks)
1.8 Specify the obligations of Vishwas Developers Ltd. in respect of Exulus Towers? (3 Marks)
Case Study 2
1. Vitran Bank, a leading financial institution in India, decides to transfer a portfolio of non -performing
assets (NPAs) to Dravin ARC Pvt. Ltd. for the purpose of asset reconstruction. Vitran Bank executes a
document in favor of Dravin ARC Pvt. Ltd. to facilitate this transfer. The document is executed on 18th
September, 2023. On the date of acquisition of the said assets by the Dravin ARC Pvt. Ltd., an appeal
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is pending against Vitran Bank before the Debt Recovery Appellate Tribunal (DRAT) regarding one of
the transferred assets.
Further, Vitran Bank and Arpitam Bank have both filed separate applications before two different Debt
Recovery Tribunals’, respectively, for the recovery of their respective secured debts from a single
borrower. The borrower's financial asset, consisting of debts owed to both banks, has been acquired by
Dravin ARC Pvt. Ltd. only. Accordingly, Dravin ARC Pvt. Ltd. intends to streamline the recovery process
by transferring all pending applications to a single DRT.
2. Dravin ARC Pvt. Ltd. is one of the very old clients of a CA firm, SJK & Co. which regularly consults Mr.
Deepak Sodhi, one of the partners of SJK & Co. for its financial matters as Mr. Deepak being an
insolvency professional minutely understands the complexities involved in the bus iness of Dravin ARC
Pvt. Ltd.
Mr. Deepak has been appointed as a resolution professional in various corporate insolvency resolution
processes. Currently, he has been assigned 6 assignments as a resolution professional, having admitted
claims of ` 400 crore and ` 750 crore, ` 870 crore, ` 1400 crore, ` 1550 crore, and ` 1700 crore,
respectively. Mr. Deepak is able to devote adequate time to each assignment without any work pressure.
Gimut Ltd., a corporate debtor undergoing the insolvency resolution process, in which Mr. Deepak is
involved as a resolution professional, has received a resolution plan approved by the Committee of
Creditors (CoC) and the said plan is with the Adjudicating Authority for consideration of approval of the
same.
3. In a proceeding under the Prevention of Money Laundering Act, 2002, the Assistant Director impounded
certain records from BSL Pvt. Ltd. which is one of the clients of SJK & Co., without recording any reasons
for doing so. The Assistant Director retained the records in his custody for a period of 80 days without
obtaining the previous approval of the Joint Director. Due to which, the internal audit of the company
was delayed by the engagement partner of SJK & Co.
Mr. Sharman Dhull, one of the directors of BSL Pvt. Ltd. was charged with the offence of money
laundering under the relevant charging section of the Prevention of Money Laundering Act, 2002. During
the trial in the Special court, the prosecution presented evidence regarding the proceeds of crime
allegedly involved in money laundering.
4. Mr. Deepak had filed a complaint with the Real Estate Regulatory Authority (RERA) against Uttung
Builders Pvt. Ltd. (not a government company), a real estate developer for not delivering his flat as per
the promised specifications. RERA passed an order in favor of Mr. Deepak, but the developer challenged
the order before the Appellate Tribunal. The Appellate Tribunal has now passed an order in favor of Mr.
Deepak.
Due to such legal issues being faced by Uttung Builders Pvt. Ltd., now and then, its director made an
attractive employment offer to Mr. Sharma who has been serving as a Judicial Member in the State Real
Estate Regulatory Authority (RERA) for several years and has recently, ceased to hold office as a
Judicial Member, to join their legal team.
5. CMS Corp. Ltd., one of the participants in a cartel in which Uttung Builders Pvt. Ltd. is also involved,
wished to seek the benefit of a lesser penalty by coming forward and cooperating with the Competition
Commission of India (CCI) by providing vital information and evidence to establish such cartel.
2.1 Which of the following statements is true regarding number of assignments handled by Mr. Deepak?
(a) Deepak is in violation of the regulation as he has exceeded the maximum number of assignments
allowed for an insolvency professional.
(b) Deepak is in compliance with the regulation as long as he can manage his time effectively and
fulfill his duties for each assignment.
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(c) Deepak is in violation of the regulation as he has exceeded the maximum number of assignments
with admitted claims exceeding the stipulated amount.
(d) Deepak would be considered in compliance with the regulation, provided he has taken due
permission for the same from the respective authority. (2 Marks)
2.2 In case of BSL Pvt. Ltd., whether the act of the Assistant Director would be considered valid?
(a) No, due to failure to record reasons and also due to failure to obtain previous approval of the Joint
Director.
(b) No, due to the Assistant Director's failure to record reasons.
(c) Yes, as reasons are to require to be only recorded if such records are retained for a period of 3
months.
(d) Yes, as previous approval of the Joint Director was not required for retaining records for such
period. (2 Marks)
2.3 What presumption can be made by the Special Court in the case of Mr. Sharman Dhull?
(a) The Court will presume that the proceeds of crime are involved in money laundering, unless the
accused can prove otherwise.
(b) The Court’s presumption will depend upon the quantum of amount involved in the money
laundering.
(c) The Court may presume that the proceeds of crime are involved in money laundering, but the
burden of proof lies with the prosecution.
(d) The Court will only consider the evidence presented by the prosecution and not make any
presumption regarding money laundering. (2 Marks)
2.4 Which of the following options is correct regarding the stamp duty exemption to Dravin ARC Pvt. Ltd.
with respect to the document executed for transfer of assets?
(a) The document is exempt from stamp duty, regardless of the purpose of acquisition.
(b) The document is exempt from stamp duty as the acquisition is for the stipulated purpose.
(c) The document is not exempt from stamp duty as the acquisition is of non -financial assets.
(d) The document is not exempt from stamp duty, irrespective of the purpose of acquisition.
(2 Marks)
2.5 Which of the following options is correct regarding the status of pending appeal and substitution of the
Dravin ARC's name in such appeal?
(a) The pending appeal will abate and be discontinued, and the appellant will need to file a fresh
appeal against Dravin ARC.
(b) The pending appeal will continue against Vitran Bank, and the ARC cannot be substituted.
(c) The pending appeal will continue and the ARC’s name can be substituted in the pending appeal
with the consent of Vitran Bank by the ARC.
(d) The pending appeal will continue and the ARC’s name can be substituted in the pending appeal
without the need for consent from Vitran Bank by the ARC. (2 Marks)
2.6 Advise how Dravin ARC Pvt. Ltd. can make such transfer of pending applications? (4 Marks)
2.7 Enlist the factors that Adjudicating Authority needs to consider before approving the plan of Gimut Ltd.
and who would be bound by such an approved plan? (2 Marks)
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2.8 Can Mr. Sharma accept the employment offer from ABC Builders? (2 Marks)
2.9 Whether the order made in favor of Mr. Deepak can be executed as decree of civil court? (2 Marks)
2.10 Discuss the conditions that CMS Corp. Ltd. needs to fulfill to qualify for a lesser penalty. (5 Marks)
CASE STUDY 3
Mr. Rajesh and Mr. Suresh were childhood friends. They grew up together sharing everything including their
passion for construction. So, upon attaining the majority, they started their own venture and formed a Public
Limited Company named R.S. Constructions Limited (RSCL). Their businesses flourished and soon they
became a household name. Expecting a future uptrend in land prices and better prospects for commercial
development, both of them decided to build land bank across India. So, R.S. Constructions Limited hired the
services of Mr. Sanjay to assist in the process of acquisition of lands. R.S. Constructions Limited issued a
detailed offer letter to Mr. Sanjay for the purchase of around 100 acres of land at a maximum price of INR
10,00,000 per acre in different parts of India within a period not exceeding five years. The said offer was
accepted by Mr. Sanjay by a letter of acceptance. A legally binding and valid contract came to be in force
between R.S. Constructions Limited and Mr. Sanjay.
Mr. Sanjay received from R.S. Constructions Limited, a sum of INR 1,000 crore as a loan/ advance for the
purchase of land as specified in the contract between the parties, Mr. Sanjay purchased various movable and
immovable properties with the fund received from R.S. Constructions Limited. Since all the funds could not
be invested directly in the land as required by the contract, investments were made by Mr. Sanjay by himself
or through his Company in purchase of immovable property including land, built -up residential and
commercial buildings, etc. both in India and abroad. Investments were also made in fixed deposits in the
name of Mr. Sanjay and his associated companies. Investments were also made in the movable properties
including bullions, precious stones, bank balances, and luxury cars. He also created fictitious companies out
of the proceeds that he received from RSCL and made investments in smuggled items, booking false incomes
on trading/use of such items.
In the meantime, the Director of Enforcement initiated a suo moto proceedings under the provisions of the
Prevention of Money Laundering Act, 2002 (PMLA, 2002) and registered a complaint under Section 3 and
Section 4 of the Act, and attached the properties of Mr. Sanjay under the PMLA, 2002. Aggrieved by the
action of the Director of Enforcement, Mr. Sanjay got a stay from the High Court for any proceedings under
the said Act. The stay was subsequently vacated.
Mr. Rajesh, in the meantime, started entering into fictitious transactions and all the proceeds from the same
were diverted to a different offshore Companies. Mr. Rajesh also arranged a credit sanction for exports to be
made to a fictitious Malaysian Company. The money so received was diverted to a M alaysian based benami
Company owned by Mr. Rajesh and was later on re-routed to India. Most of the transactions that took place
were in between close contacts of Rajesh. As Mr. Rajesh frequently needed to travel to Malaysia, he bought
a flat there. It was purchased with transmittals beyond the permissible limits under the Liberalised Remittance
Scheme (LRS).
Mr. Rajesh's maternal uncle resided in London since 2005. He died in the year 2019, but in the year 2018,
out of natural love and affection, he gifted his eastern London mansion worth $ 1,50,000 to Mr. Rajesh. His
family felt rejoiced to hear that, they now have a home in London too. In 2020, Mr. Rajesh's cousin residing
in London, contacted him to buy a new mansion, built on the side of the river Thames. The cost of the mansion
was $ 4,00,000, his cousin advised him to buy the mansion jointly with him. He sold the property for
$ 2,00,000 and with that amount, he jointly bought the new mansion with his cousin. In between, Mr. Rajesh
went on a vacation to Hungary. He took $ 7,000 along with him. On returning, he had $ 3,300 unspent with
him. Out of this amount he gave $ 1,000 to his friend, who is going abroad next month.
Rajesh's yet another maternal uncle residing in Nagpur has been subjected to investigation under the PMLA,
2002 on account of information of bank accounts in tax haven country X which was shifted with money earned
from extortions. In this regard, Mr. "Z", the Investigating Officer of this case, is of the opinion that certain
information such as number of accounts and details of transactions may be available only from country " A".
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Hence, he made an application to the Special Court seeking permission to write a letter to the Competent
Authority of Country 'A' to seek information.
In the meantime, Rajesh came to know that his childhood friend Mr. Suresh used his car for smuggling cash
and the Special Court found on conclusion of trial that an offence of money laundering was committed by
Mr. Suresh under the PMLA, 2002. The car was under hypothecation to a Nationalized Bank for the car loan
obtained. Nevertheless, the car was confiscated by an order of the Special Court made under the provisions
of the PMLA, 2002.
3.1 The Investigating Officer made an application to the Special Court seeking permission to write a letter
to the Competent Authority of Country "A" seeking information. In this regard:
(a) The Special Court is empowered to act on the requests of the Investigating Officer.
(b) The Special Court is not empowered to act on the requests of the Investigating Officer.
(c) The Special Court needs the prior approval of the Central Government in this regard.
(d) The Special Court can recommend the request of the Investigating Officer to the Police Officers .
(2 Marks)
3.2 The Directorate of Enforcement (ED) provisionally attached the properties of Mr. Sanjay. Such
provisionally attached properties can be attached for a:
(a) Period not exceeding 120 days from the date of the order including the period of stay granted by
the High Court.
(b) Period not exceeding 180 days from the date of the order including the period of stay granted by
the High Court.
(c) Period not exceeding 180 days from the date of the order excluding the period of stay granted by
the High Court.
(d) Period not exceeding 120 days from the date of the order excluding the period of stay granted by
the High Court. (2 Marks)
3.3 Mr. Suresh's car was confiscated by an order of the Special Court. In this regard:
(a) The Special Court cannot order to confiscate the car when it is encumbered to a Nationalized Bank.
(b) The Special Court can order to confiscate the car and declare such an encumbrance to be void.
(c) The Special Court can confiscate the car despite the existence of an encumbrance provided, it gets
the consent of the Central Government.
(d) The Special Court will leave the matter to be handled by the Police Officers. (2 Marks)
3.4 On returning from London, Mr. Rajesh had unspent $ 3,300. He gave $ 1,000 to his friend, who was
leaving abroad next month. Is he permitted to do so?
(a) Rajesh needs to give a declaration to the authorised agent that he gave $1,000 of the amount
remaining with him to his friend.
(b) Rajesh cannot do so, as he needs to deposit the amount exceeding beyond $ 2,000 to the
Authorised Dealer (AD) within specified days.
(c) Rajesh needs to surrender the remaining $ 2,300 to the AD within specified days.
(d) Rajesh can do so, as he bought this amount from AD. (2 Marks)
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3.5 Mr. Rajesh's residential flat in Malaysia was bought in contravention of the FEMA, 1999 regulat ions.
Fearing legal action against him, he wants to gift the same to his nephew, Mr. Udav, who is residing in
Malaysia for the last 15 months with him. Can he do so?
(a) Since Mr. Udav is a resident of India, so, Mr. Rajesh can gift him the flat.
(b) Mr. Rajesh can only transfer it to Udav via inheritance.
(c) Mr. Rajesh cannot gift it to Udav as it was bought in contravention of the FEMA, 1999 provisions.
(d) Mr. Rajesh can gift it to Udav as the FEMA, 1999 provisions are not applicable to a property lo cated
in Malaysia. (2 Marks)
3.6 Properties confiscated under the provisions of the Prevention of Money Laundering Act, 2002, shall be
available for disposal by the Ministry of Finance as and when necessary. Examine the correctness of
the above statement. (3 Marks)
3.7 One of the employees of R.S. Constructions Limited was given an offer by a Company vendor to disclose
him the bid quoted by the Company. The employee accessed the computer of Mr. Rajesh and passed
on the information to the vendor and thus helped him to grab the said plot of land. Will the employee be
liable under the Prevention of Money Laundering Act, 2002? (2 Marks)
3.8. Whether a statement made before Directorate of Enforcement (PMLA, 2002) is binding on the accused
without proof as admission? (4 Marks)
3.9. Mr. Rajesh jointly bought a mansion with his cousin in London, evaluate on the validity of the acquisition
of the said immoveable property outside India by Mr. Rajesh and is there any legal consequences
according to the provisions of the FEMA, 1999? (6 Marks)
CASE STUDY 4
1. KL Wise Bank, which is designated AD Category-I bank, has observed a series of cash deposits-
withdrawals from the directors of Alark Ltd. (one of its clients) within the June month that are indi vidually
valued ` 5 lakhs each. However, the monthly aggregate of these transactions was ` 45,00,000, only.
Mr. Saurabh Kapadiya is the personal guarantor for a loan taken by Alark Ltd., from KL Wise Bank. The
corporate entity, Alark Ltd., is facing insolvency proceedings initiated by KL Wise Bank before the NCLT
in Mumbai, where the registered office of Alark Ltd. is located. Meanwhile, another creditor of Mr.
Saurabh Kapadiya initiates bankruptcy proceedings against him before the Debt Recovery Tribunal
(DRT) in Delhi, where Mr. Saurabh Kapadiya resides.
2. Mr. Surya Rastogi is the Interim Resolution Professional (IRP) of Alark Ltd. After following the due
procedure, he filed the report certifying the constitution of the committee of creditors to the Adjudicating
Authority within the specified time period.
The company has financial debts owed to multiple creditors. Certain financial debt of Alark Ltd. is in the
form of debentures, and the terms of the debentures explicitly state the appointment of a trustee as the
authorized representative for all the financial creditors.
Also, Alark Ltd. has a certain class of creditors exceeding the specified number, and the terms of their
financial debts do not provide for the appointment of a trustee or agent as the authorized representative
for such creditors. Further, the company has one of the financial creditors represented by a guardia n.
3. The said Bank had initiated sale of immovable property of one of its clients, Mr. Pradyuman Vasad for
default in payment of the loan instalments, after following the prescribed procedure. However, the first
sale attempt has been postponed for want of a bid of an amount not less than the specified reserve
price.
Also, Mr. Pradyuman Vasad faced a legal issue where, the Adjudicating Authority made an order of
confiscation of his luxurious car held to be benami and sent a copy of the same to the Authorised Officer.
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4. Aamnay Ltd., an Indian company, associate of Alark Ltd., is considering making an overseas investment
in a foreign entity. The company has identified a foreign entity, All Blossom Inc., which is engaged in
real estate activities. The legal team of company approached its AD, KL Wise Bank, to seek clarification
and guidance on the matter.
Aamnay Ltd. got involved in a corporate dispute and approached the National Company Law Appellate
Tribunal (NCLAT) for an appeal against a finding of the Competition Commission. The company also
wanted to have adjudication on claim for compensation that arose from the findings of the Commission.
5. Adhruti Ltd., a borrower, has raised External Commercial Borrowings (ECBs) under the ECB fr amework
from KL Wise Bank but the company has failed to submit prescribed returns under the ECB framework
since the past 2 years.
Also, the bank has been unable to establish contact with Adhruti Ltd. for the past 7 months. The entity
or its related persons are not responsive to emails, letters, or phone calls despite repeated
communication and reminders. The bank's officials have also found that Adhruti Ltd. is not operational
at its registered office address, and the entity has not submitted Statutory Aud itor's Certificates for the
past two years.
4.1 In the case of Aamnay Ltd.'s appeal, which of the following statements is true regarding the authority of
the NCLAT?
(a) NCLAT can only hear the appeal filed by Aamnay Ltd. and has no power to adjudicate on claim for
compensation.
(b) NCLAT can only pass orders for the recovery of compensation if the CCI has explicitly
recommended it in its findings.
(c) NCLAT has the power to adjudicate on claim for compensation arising from the findi ngs of CCI.
(d) CCI has the power to adjudicate on claim for compensation and the NCLAT can only pass orders
for the recovery of compensation if the CCI has explicitly recommended it in its findings.
(2 Marks)
4.2 When should Mr. Surya have filed report certifying the constitution of CoC with the Adjudicating
Authority?
(a) Within seven days of the commencement of insolvency proceedings.
(b) Within two days of the verification of claims received.
(c) Within 40 days of the appointment of resolution professional.
(d) Within two days of the first meeting of the committee. (2 Marks)
4.3 Should KL Wise Bank requires mandatorily to maintain records of such cash transactions?
(a) KL Wise Bank is not required to maintain records of these cash transactions as the transactions
are below the specified value.
(b) KL Wise Bank should maintain records of these cash transactions as the transactions individually
are below the specified value but in aggregate exceed the specified value.
(c) KL Wise Bank is not required to maintain records of these cash transactions as the transactions
individually and in aggregate are below the specified value.
(d) KL Wise Bank should maintain records for all cash transactions, regardless of their value or
frequency which are integrally connected to each other. (2 Marks)
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4.4 What would be further procedure for confiscation in respect of such property of Mr. Pradyuman?
(a) The authorized officer can directly confiscate the same without any further action.
(b) The authorised officer must obtain a valuation report from the relevant authority, and the property
will be returned to the owner upon payment of a fine.
(c) The authorized officer must obtain a fixed deposit receipt from the specified bank, equivalent to
the value of the movable property, as security in the name of the Administrator on the basis of
valuation report of the property from the relevant authority.
(d) The authorized officer must provide notice to the owner of the property and allow them to submit
an objection before confiscation. (2 Marks)
4.5 What may be done by KL Wise Bank for the sale of immovable property?
(a) KL Wise Bank is required to reduce the reserve price and initiate a fresh sale process.
(b) The immovable property shall be sold at a lower price than the specified reserve price.
(c) KL Wise Bank can authorize its officer to bid for the immovable property on its behalf at any
subsequent sale.
(d) The immovable property will be retained by KL Wise Bank, and a new reserve price will be
determined for future sale attempts. (2 Marks)
4.6 Explain who can act as the authorized representative for the financial creditors in case of Alark Ltd.?
(4 Marks)
4.7 What is the Standard Operating Procedure (SOP) to be followed by KL Wise Bank in case of Adhruti
Ltd.? (4 Marks)
4.8 As a representative of KL Wise Bank, how would you advise Aamnay Ltd. regarding their pr oposed ODI
in All Blossom Inc.? (4 Marks)
4.9 What would be the appropriate forum for the bankruptcy proceedings against Mr. Saurabh Kapadiya?
(3 Marks)
Case Study 5
Mr. Arvind Ashok is a hard-working educationalist with good amount of information technology experience
and currently residing in Hyderabad. After graduating from the Indian School of Business, Arvind started a
Company, Aspire Consultancy Services Private Limited (ACS) along with Mr. Pandu Govind with their office
in Jubilee Hills. ACS was aspiring to make ground breaking business opportunities in the Edu -Tech business,
focusing on providing digital learning platforms for college students to equip themselve s on big data, analytics,
artificial intelligence and other cyber skills. Over the period of time, ACS expanded its product/service range
and market reach apart from a significant improvement in customer response time through the introduction
of innovative techniques. ACS’s ethical work culture and employee- friendly policies allowed it to retain
employees for a longer duration. Arvind and his team developed a core Lea rning Management Solution
(LMS), which also provided a portal for conducting online live classes, sharing course and conduct online
exams, after which the successful candidates will be provided a certificate of completion. The software with
the help of artificial intelligence automatically generated pop-up at the screen of candidates' device that he/
she is not viewing towards the camera and a similar pop- up also gets generated at the screen of the invigilator
(who invigilate digitally from the control room, through the camera of candidates' device and control of
screen). Further, the platform enabled direct one-to-one interaction between the students and the facilitators
and thereby provided a lot of authenticity to the entire program. They also identified a new business model
of only providing the LMS platform to other educational institutions like universities etc. on PAAS basis.
Pandu and Arvind were very happy with the success of their new Learning Management Solution. However,
they also understood that there is significant competition for the same due to the presence of many active
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players in the market who were already rendering service of conducting the online exam for testing agencies
either at their own location (test centres) or remote location; hence, it was not easy for ACS to penetrate in
the market and capture reasonable share. ACS entered a Platform as a Service (PAAS) agreement with the
top universities in different cities to use their respective computer lab facilities for running the LMS. In this
manner, ACS also got equipped with testing centres in different cities. Against the competitors, they had the
leverage of AI-equipped testing software. ACS, against the prevailing market prices of ` 850 and ` 550 per
candidate for the conduct of online tests at the centre and remote respectively, offered and charged the price
of ` 700 and ` 400 respectively. Since ACS has its own server and other IT facilities including human
resources, hence after covering the directly attributable and overhead (for centralised shared services) costs,
it barely managed to break even and which are substantially lesser than the ACS's average rate of earning.
After few years of the success of testing LMS in the market, ACS market share reached 45% in the online
testing segment. Many small and standalone players in the industry had to quit during this peri od. Only those
who reduced their prices (and were able to cover their operating costs with such reduced prices) were able
to survive. During that time, Pandu decided to increase the prices to ` 825 and ` 525 per candidate for online
tests at the centre and remote, respectively. ACS successfully managed to retain a 40% market share. The
loss of market share was compensated by high profits due to enhanced prices, hence the bottom line
improved a bit. Using their PAAS with one of the top universities which fix ed a limited number of seats for a
course, ACS wrote a dynamic pricing algorithm based on which the fee for the course will be decided and as
per the PAAS agreement, ACS retained 20% of the fee as their revenue and remitted the balance to the
university. Both the university and the student did not have a role in the pricing model. For the purpose of
construction of a new home, Arvind took a loan of INR 200 lakhs from ABC Bank and for that purpose, ACS
provided a guarantee to ABC Bank.
For the import of servers from the UK for hosting the LMS, ACS had sought professional advice from Server
and Networks PLC (S&N) based in the UK for which they raised a bill of GBP 305,000, equivalent to INR 305
lakhs. S&N were not paid GBP 110,000 out of their total receivable amount, so the advocate of S&N sent a
demand notice for payment under Section 8 of the Insolvency and Bankruptcy Code, 2016 against which
there was no reply made by ACS within the stipulated time and so the advocate of S&N moved a petition
under Section 9 of the Insolvency and Bankruptcy Code, 2016 seeking commencement of insolvency process
against ACS. They were not having any office or bank account in India, so it could not submit a “Certificate
from a financial institution” as required under the Code. S&N also contended that Pandu fraudulently removed
assets of ACS to the tune of INR 1,000,000, 6 months before the insolvency commencement date. Once ACS
became aware of the fact that S&N have filed an application for insolvency process, ACS sent an email t o
S&N stating that there was the existence of dispute for the unpaid amount of GBP 110,000 because there
was a breach by S&N of a warranty and liquidated damages clause as per the agreement between the two
parties but there was no evidence available with ACS to support its assertion of fact and thereafter also filed
a hard copy of the email with the Adjudicating Authority within 5 days of the filing of application by S&N.
Due to certain difficulties, Arvind could not repay the loan taken from ABC Bank and A BC Bank wanted to
invoke the provisions of IBC, 2016.
Answer the following questions:
5.1 Assuming that the allegations of S&N against Pandu are upheld, what is the potential penalty /
punishment applicable for Pandu under IBC 2016?
(a) Imprisonment for a term of 3 to 5 years, fine ranging from one lakh to one crore or both.
(b) Imprisonment for a term of 1 to 5 years, fine ranging from one lakh to one crore or both.
(c) Imprisonment for a term of 3 to 5 years, fine ranging from one lakh to three lakhs or both.
(d) Fine ranging from one lakh to one crore. (2 Marks)
5.2 What is the status of ACS regarding the invocation of IBC, 2016 by ABC Bank for the housing loan
obtained by Arvind?
(a) ACS is considered as a corporate debtor.
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(b) ACS is not considered as a corporate debtor since it is not the principal borrower.
(c) The guarantee provided by ACS is not covered within the definition of financial debt under IBC
2016.
(d) The guarantee given will be considered as an operational debt since it has been given based on
the "services provided” by Arvind to the Company. (2 Marks)
5.3 Pandu wanted to provide a free tablet for every student who undergoes a course with ACS and wanted
to ensure that the LMS platform is accessible only on the tablet provided by the Company and cannot
be accessed through the web and ACS refused to provide the LMS without the tablet. What is the nature
of this arrangement?
(a) Refusal to deal
(b) Horizontal agreement
(c) Exclusive supply agreement
(d) Tie in agreement (2 Marks)
5.4 Which of the following is not one of the advantages of perfect competition?
(a) Promotes innovative practices
(b) Providing greater choice to sellers to decide the buyer
(c) Ensure cost of production is kept at its lowest
(d) Effective allocation of resources (2 Marks)
5.5 Can the price of ` 700 and 400, respectively charged by ACS be considered as predatory pricing?
(a) No, because the price charged recovers the costs incurred.
(b) No, because ACS is free to fix whatever price it wants in a free economy.
(c) Yes, because these are lower than the prevailing market price.
(d) Yes, because the profits earned are lower than the average rate of return for ACS. (2 Marks)
5.6 Examine, with reasons whether ACS holds a dominant position in the relevant market and whether its
actions tantamount to abuse of dominant position. (5 Marks)
5.7 One of ACS's competitors was of the view that the PAAS agreement entered into by ACS with the
dynamic pricing model was in violation of Section 3(1) read with Section 3(3)(a) of the Competition Act.
Evaluate with reasons. (4 Marks)
5.8 Can the adjudicating authority reject the application filed by S&N based on the premise that the amount
claimed by S&N is under dispute? (3 Marks)
5.9. Does the non-availability of the certificate from a financial institution in any way impact the CIRP process
filed by S&N? (3 Marks)
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Test Series: October, 2023
MOCK TEST PAPER
FINAL COURSE GROUP – II
PAPER 6D: ECONOMIC LAWS
SUGGESTED ANSWERS
Answer to Case Study 1
1.1 (c)
1.2 (b)
1.3 (b)
1.4 (d)
1.5 (b)
1.6 As per Rule 8 of the Security Interest (Enforcement) Rules, 2002 which deals with Sale of immovable
secured assets, following steps are required to be followed –
(a) Possession Notice: Where the secured asset is an immovable property, the authorised officer
shall take or cause to be taken possession, by delivering a possession notice, to the borrower and
by affixing the possession notice on the outer door or at such conspicuous place of the property.
[Rule 8(1)]
Thus, the possession notice displayed at the bottom of the door is incorrect. It should be placed at
the conspicuous place of the property.
(b) Possession Notice to be published in Newspaper: The possession notice shall also be
published in two leading newspaper, one in vernacular language having sufficient circulation in that
locality, by the authorised officer. [Rule 8(2)]
(2A) All notices under these rules may also be served upon the borrower through electronic mode
of service. [Rule 8(2)]
(c) Actual possession of immovable property: In the event of possession of immovable property
which is actually taken by the authorised officer, such property shall be kept in his own custody or
in the custody of any person authorised or appointed by him, who shall take as much care of the
property in his custody as an owner of ordinary prudence would, under the similar c ircumstances,
take of such property. [Rule 8(3)]
(d) Insurance of immovable property: The authorised officer shall take steps for preservation and
protection of secured assets and insure them, if necessary till they are sold or otherwise disposed
of. [Rule 8(4)]
(e) Valuation of property: Before effecting sale of the immovable property, the authorised off icer
shall obtain valuation of the property from an approved valuer and in consultation with the secured
creditor, fix the reserve price of the property and may sell the whole or any part of such immovable
secured asset by any of the following methods:—
• by obtaining quotations from the persons dealing with similar secured assets or otherwise
interested in buying of such assets; or
• by inviting tenders from the public;
• by holding public auction including through e-auction mode; or
• by private treaty. [Rule 8(5)]
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(f) Notice to borrower and publication in newspaper:
The authorised officer shall serve to the borrower a notice of 30 days for sale of the immovable
secured asset.
Provided that if the sale of such secured asset is being effected by either inviting tenders from the
public or by holding public auction, the secured creditor shall cause a public notice in two leading
newspapers one in vernacular language having sufficient circulation in the locality by setting out
the terms of sale, which shall include, -
(a) the description of the immovable property to be sold, including the details of the
encumbrances known to the secured creditor;
(b) the secured debt for recovery of which the property is to be sold;
(c) reserve price, below which the property may not be sold;
(d) time and place of public auction or the time after which sale by any other mode shall be
completed;
(e) depositing earnest money as may stipulated by the secured creditor;
(f) any other thing which the authorised officer considers it material for a purchaser to know in
order to judge the nature and value of the property. [Rule 8(6)]
All the other steps are followed by the authorised officer as mentioned above. Lets see whether
the publication in newspaper is according to the steps prescribed above.
As per the decided Case Law of Anil Kumar Batla v. Allahabad Bank, W.P. (C) No. 1135 of 2014 dated
19th August, 2014), (High Court of Delhi), the property was situated in Faridabad. The question raised
before the Appellate Tribunal was whether the newspaper namely 'Economic Times' (in English) and
'Bharat Sahara' (in Hindi) had sufficient circulation in Faridabad. In so far as the 'Economic Times' is
concerned, there was nothing on record that it has sufficient circulation in Faridabad. There is some
merit in the submission of respondent No. 2 that the newspaper 'Economic Times' is generally purchased
by a specific class of people who are interested in financial matters. The intent of sub-rule (6) of rule 8
of the Enforcement Rules, is to ensure a widest publicity in order to get a best price for the property.
The word "sufficient" has been defined in the Oxford Dictionary to mean 'adequate' (esp. in qua ntity or
extent) for a certain purpose; enough (for a person or thing, to do something). There is no evidence on
record that there is sufficient or adequate circulation of this newspaper (Economic Times) in Faridabad.
Further, the property in question is a residential house and not a commercial property. However, one
would not primarily rest its finding for publication in the Economic Times. There is a specific finding that
'Bharat Sahara' has an independent edition for the State of Haryana. There is also a finding that the
public notice was published in the Delhi Edition of 'Bharat Sahara', that too, on a page which was meant
for 'East Delhi'. It is a matter of knowledge that East Delhi is a Trans Yamuna area, abutting the city of
Ghaziabad and Noida in UP, and is in the other direction to Faridabad which abuts Badarpur, South East
Delhi.
It was held by the High Court of Delhi that auction sale on the basis of notice published in n ewspaper
having low circulation in locality where property was situated was not valid.
Thus, in the instant case, the act of authorised officer to put the notice for auction as well as
possession notice for sale of residential properties was invalid and not in compliance as per the
legal requirements.
1.7 Section 14 of the Real Estate (Regulation and Development) Act, 2016 requires a promoter to adhere
to the sanctioned plans and the project specifications.
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(1) Promoter to adhere to the approved plans: The proposed project shall be developed and
completed by the promoter in accordance with the sanctioned plans, layout plans and
specifications as approved by the competent authorities.
(2) Disclosure of approved plans to the purchaser: Notwithstanding anything contained in any law,
contract or agreement, after the sanctioned plans, layout plans and specifications and the nature
of the fixtures, fittings, amenities and common areas, of the apartment, plot or building, as the case
may be, as approved by the competent authority, are disclosed or furnished to the person who
agree to take one or more of the said apartment, plot or building, as the case may be, the promoter
shall not make—
(i) any additions and alterations in the sanctioned plans, layout plans and specifications and the
nature of fixtures, fittings and amenities described therein in respect of the apartment, plot or
building, as the case may be, which are agreed to be taken, without the previous consent of
that person.
Provided that the promoter may make such minor additions or alterations as may be required
by the allottee, or such minor changes or alterations as may be necessary due to architectural
and structural reasons duly recommended and verified by an authorised Architect or Engineer
after proper declaration and intimation to the allottee.
Explanation.—For the purpose of this clause, "minor additions or alterations" excludes
structural change including an addition to the area or change in height, or the removal of part
of a building, or any change to the structure, such as the construction or removal or cutting
into of any wall or a part of a wall, partition, column, beam, joist, floor including a mezzanine
floor or other support, or a change to or closing of any required means of access ingress or
egress or a change to the fixtures or equipment, etc.
(ii) any other alterations or additions in the sanctioned plans, layout plans and specifications of
the buildings or the common areas within the project without the previous written consent of
at least two-thirds of the allottees, other than the promoter, who have agreed to take
apartments in such building.
Explanation.—For the purpose of this clause, the allottees, irrespective of the number of
apartments or plots, as the case may be, booked by him or booked in the name of his family,
or in the case of other persons such as companies or firms or any association of individuals,
etc., by whatever name called, booked in its name or booked in the name of its associated
entities or related enterprises, shall be considered as one allottee only.
The type of alterations which DBBI Developers Ltd intends to carry fall under Section 14(2)(ii)
of the Real Estate (Regulation and Development) Act, 2016 which requires written consent of
the 2/3rd of the total allottees.
The written consent of the allotee obtained is as under:
Out of the 5 approvals obtained from Mr. Aamir for 5 different flats booked by them, only
following will be counted for the purpose of counting the number of allotees:
• 1 flat in the name of Mr. Aamir will be counted.
• 1 flat in the name of Mr. Adir, son of Mr. Aamir who is settled in USA will be counted
since he will not be counted under the family as per Section 2(x) of Real Estate
(Regulation and Development) Act,2016,”family" includes husband, wife, minor son and
unmarried daughter wholly dependent on a person. Since Mr. Adir is independent, he
will not be counted under the definition of family.
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• 1 flat in the name of Aamir Industries Ltd and one partnership firm where Mr. Aamir is
10% partner will not be counted as per Section 14 (2) of Real Estate (Regulation and
• 1 flat in the name of Mr. Aamir’s wife who works in TCS will not be counted as Mr. Aamir’s
wife is counted under the definition of family and thus on a combined reading of Section
14(2) and Section 2(x) of Real Estate (Regulation and Development) Act, 2016, this flat
will not be counted for the number of allottee.
Thus, out of above 5 flats, only 2 flats will be counted for the purpose of allottee. Thus, in all 42
allottees plus 2 allottees = 44 allottees gave their approval. Approval of 2/3 rd number of allottees is
a must for making any alterations in the layout of the plan. Thus, out of 70 allottees, 2/3*70=47
allottees should grant their approval. Since only 44 allottees have given their appr oval, it does not
meet the 2/3rd criteria required for changes in layout of the plan.
Since the 2/3rd criteria is not met, DBBI Developers Ltd. cannot undertake the changes in the layout
of the plan.
So the procedure followed by DBBI Developers Ltd. to obtain the written consent is correct
but without obtaining the 2/3 rd consent, it undertook the changes in the layout of the plan is
incorrect.
1.8 Section 15(2) of Real Estate (Regulation and Development) Act, 2016 deals with the responsibilities of
Vishwas Developers Ltd in respect of Exulus Towers.
New Promoter to comply the pending obligations: On the transfer or assignment being permitted by
the allottees and the Authority under sub-section (1), the intending promoter shall be required to
independently comply with all the pending obligations under the provisions of this Act or the rules and
regulations made thereunder, and the pending obligations as per the agreement for sale entered into by
the erstwhile promoter with the allottees.
It is provided that any transfer or assignment permitted under provisions of this section shall not result
in extension of time to the intending promoter to complete the real estate project and he shall be required
to comply with all the pending obligations of the erstwhile promoter, and in case of default, such intending
promoter shall be liable to the consequences of breach or delay, as the case may be, as provided under
this Act or the rules and regulations made thereunder.
Thus, as per above, Vishwas Developers can’t seek for extension of the project “Exulus Towers”.
It is bound to complete the project within the time frame committed by the DBBI Developers Ltd.
Answer to Case Study 2
2.1 (b)
2.2 (b)
2.3 (a)
2.4 (b)
2.5 (c)
2.6 As per Section 5A(1) of the SARFAESI Act, 2002, if an Asset Reconstruction Company (ARC) acquires
a financial asset that comprises secured debts from more than one bank or financial institution, and
each of those banks or financial institutions has filed applications before two or mo re Debt Recovery
Tribunals (DRTs), the ARC has the authority to file an application to the Debt Recovery Appellate
Tribunal (DRAT). The purpose of this application is to request the transfer of all pending applications
related to the financial asset to any one of the DRTs as deemed fit by the ARC.
Page 745
Upon receiving such an application, the DRAT, in accordance with Section 5A(2) of the SARFAESI Act,
will provide an opportunity for all the parties involved to be heard. After considering the arguments and
representations, the DRAT may pass an order for the transfer of all the pending applications to any one
of the DRTs.
Section 5A(3) of the said Act, provides that, notwithstanding anything contained in the RDB Act, 1993,
any order passed by the DRAT shall be binding on all the DRTs, as if such order had been passed by
the DRAT having jurisdiction on each such DRT.
Further, as per Section 5A(4) of the said act, any recovery certificate, issued by the DRT to which all the
pending applications are transferred, shall be executed in accordance with the provisions contained in
section 19(23) and other provisions of the RDB Act, 1993 shall, accordingly, apply to such execution.
Thus, Dravin ARC Pvt. Ltd. needs to make an application to the DRAT for making such transf er of
pending applications and the DRAT will pass an order for such transfer after providing an opportunity
for all the parties involved to be heard.
2.7 The Adjudicating Authority needs to consider two key factors before approving the resolution plan unde r
Section 30(4) of the IBC, 2016. Firstly, the Authority must be satisfied that the resolution plan meets the
requirements as per Section 30(2) of the IBC. Secondly, the Authority must ensure that the resolution
plan has provisions for its effective implementation.
Once the Adjudicating Authority approves the resolution plan, it becomes binding on various
stakeholders involved in the resolution process. These stakeholders include the corporate debtor, its
employees, members, creditors (including the Central Government, State Government, or any local
authority to whom a debt is owed), statutory authorities to whom dues are owed, guarantors, and other
stakeholders involved in the resolution plan.
2.8 According to Section 50(1)(a) of the RERA Act, 2016, a Chairperson, Judicial Member, Technical
Member, or Administrative Member, upon cessation of office, is restricted from accepting any
employment in, or connected with, the management or administration of any person or organization
associated with any work under the RERA Act.
While there is an exception stated in Section 50(1)(a), which allows employment under the appropriate
Government, local authority, statutory authority, or certain specified entities, this exception does not
apply to employment with a real estate developer like Uttung Builders Pvt. Ltd. Accepting employment
with Uttung Builders Pvt. Ltd. would be considered in violation of the restrictions imposed by Section 50
of the RERA Act.
Therefore, based on the provisions mentioned, Mr. Sharma is restricted from accepting the employment
offer from Uttung Builders Pvt. Ltd. due to his previous role as a Judicial Member in the State RERA and
the potential conflict of interest that may arise.
2.9 According to Section 57 of RERA, 2016, every order made by the Appellate Tribunal under this Act shall
be executable as a decree of civil court, and for this purpose, the Appellate Tribunal shall have all the
powers of a civil court.
Further, the Appellate Tribunal may also transmit any order made by it to a civil court having local
jurisdiction and such civil court shall execute the order as if it were a decree made by the court.
Thus, the order made in favor of Mr. Deepak shall be mandatorily executed as decree of civil court either
the Appellate Tribunal itself executes it is a decree or get it done from the civil court having local
jurisdiction.
Page 746
2.10 To qualify for a lesser penalty under the Competition Commission of India (Lesser Penalty) Regulations,
2009, CMS Corp. Ltd. must comply with the conditions outlined in Regulation 3. These conditions are
as follows:
1. Cease participation in the cartel: CMS Corp. Ltd. must immediately stop any further participation
in the cartel from the time of its disclosure, unless otherwise directed by the Commission.
2. Provide vital disclosure: CMS Corp. Ltd. is required to provide essential disclosure regarding the
contravention of the provisions of Section 3 of the Act.
3. Provide all relevant information, documents, and evidence: CMS Corp. Ltd. must furnish all
relevant information, documents, and evidence as may be requested by the Commission during
the investigation and other proceedings.
4. Genuine and continuous cooperation: CMS Corp. Ltd. should genuinely, fully, continuously, and
expeditiously cooperate with the Commission throughout the investigation and other proceedings.
5. Preservation of relevant documents: CMS Corp. Ltd. must not conceal, destroy, manipulate, or
remove any relevant documents that may contribute to establishing the existence of the cartel.
Additionally, if CMS Corp. Ltd. is an enterprise, it must provide the names of individuals involved in the
cartel on its behalf, seeking a lesser penalty for those individuals.
Failure to comply with the aforementioned conditions may result in the Commission freely using the
information and evidence submitted by CMS Corp. Ltd., as per Section 46 of the Act.
Furthermore, the Commission has the discretion to impose additional restrictions or conditions on CMS
Corp. Ltd. based on the facts and circumstances of the case.
The Commission's exercise of discretion in reducing the monetary penalty will consider factors such as
the timing of CMS Corp. Ltd.'s disclosure, the evidence already in possession of the Commission, the
quality of the information provided, and the overall facts and circumstances of the case.
Thus, CMS Corp. Ltd., to avail the benefit of a lesser penalty under the Competition Commission of India
(Lesser Penalty) Regulations, 2009, must adhere to the conditions specified in Regulation 3. Compliance
with these conditions, including ceasing participation in the cartel, providing vital disclosure, cooperating
genuinely, and preserving relevant documents, is crucial for CMS Corp. Ltd. to be eligible for a reduced
penalty.
Answer to Case study 3
3.1 (a)
3.2 (c)
3.3 (b)
3.4 (b)
3.5 (c)
3.6 As per the provision given under Section 9 of the Prevention of Money Laundering Act, 2002, where an
order of confiscation has been made in respect of any property of a person, all the rights and title in
such property shall vest absolutely in the Central Government free from all encumbrances.
Further section 10 of the Prevention of Money Laundering provides of m anagement of confiscated
properties –
Page 747
(1) The Central Government may, by order published in the Official Gazette, appoint as many of its
officers (not below the rank of a Joint Secretary to the Government of India) as it think fit to perform
the functions of an Administrator.
(2) The Administrator appointed by Central Government, shall manage the property in relation to which
an order has been made in such manner and subject to such conditions as may be prescribed.
(3) The Administrator shall also take such measures, as the Central Government may direct, to dispose
of the property, which is vested in the Central Government under Section 9.
Thus, the statement “Properties confiscated under the provisions of the Prevention of Money Laundering
Act, 2002, shall be available for disposal by the Ministry of Finance (i.e. Central Government) as and
when necessary”, is correct.
3.7 According to the scheduled offence given under the Prevention of Money Laundering Act, 2002 (PMLA),
under the Paragraph 22 of Part A which deals with the offences related to breach of confidentiality and
privacy under the Information Technology Act, 2000, the employee is liable.
The employee of R.S. Construction Ltd. in the given case, without the consent of Mr. Rajesh, accessed
the electronic records and passed on the official information to the vendor without permission.
This information tends to produce large profits to employee and legitimize the ill-gotten gains through
money laundering. It is punishable under Section 72 of the Information Technology Act, 2000 and hence,
as mentioned above, the employee is liable under PMLA.
3.8 As per the judgment given in Dalmia Cement Bharat Ltd. Vs State of AP, Hyderabad, under the PMLA,
a person is required to give truthful statement if such person is summoned by the Director. This power
to the director is given under section 50(2) of PMLA which provides that Director (or additional director,
joint director, deputy director or assistant director) has the power to summon any person whose
attendance he considers necessary whether to give evidence or to produce any records during the
course of any investigation or proceeding. All such summoned persons are bound to state the truth or
make statements, and produce such documents as may be required [Section 50(3) of PMLA].
Furthermore, the court held that “The protection under Article 20(3) of the Constitution of India is
available at the stage of investigation, the court held that the provisions of Section 50 of PMLA are
required to be read down so as to ensure that petitioners are not prejudiced in the CBI case as well as
under PMLA.”
In line with said judgement, a statement made before ED, is binding on the accused without proof as
admission.
3.9 According to Section 6 (4) of the FEMA, 1999 read with the Foreign Exchange Management (Overseas
Investment) Rules, 2022, a person resident in India may hold, own, transfer or invest in foreign currency,
foreign security or any immovable property situated outside India if such currency, security or proper ty
was acquired, held or owned by such person when he was resident outside India or inherited from a
person who was resident outside India.
Further, as per Overseas Investment Rules, 2022, a person resident in India may acquire immovable
property outside India from a person resident outside India jointly with a relative who is a person resident
outside India.
For the purposes of these regulations, 'relative' in relation to an individual means husband, wife, brother
or sister or any lineal ascendant or descendant of that individual.
In the instance, Mr. Rajesh jointly bought a mansion with his cousin in London. Jointly purchasing of
mansion with the cousin is not included in the scope of relative as provided for the purpose of this
section.
Page 748
So the acquisition of the immovable property outside India (Mansion in London), jointly with Mr. Rajesh
is not valid.
Legal Consequences: As per Section 13 (1A) and (1C) of the FEMA, if any person is found to have
acquired any immovable property, situated outside India, of the aggregate value exceeding the threshold
prescribed under the proviso to Section 37A(1)-
• he shall be liable to a penalty up to three times the sum involved in such contravention a nd
confiscation of the value equivalent, situated in India from the immovable property.
• also punishable with imprisonment for a term which may extend to five years and with fine.
Answers to Case Study 4
4.1 (c)
4.2 (b)
4.3 (b)
4.4 (c)
4.5 (c)
4.6 As per Section 21(6A) of the Insolvency and Bankruptcy Code, 2016:-
(i) Where the financial debt of Alark Ltd. is in the form of securities or deposits (debentures, in the
given case) and the terms of the financial debt provide for the appointment of a trustee or agent
as the authorized representative, such trustee or agent would act on behalf of all the financial
creditors.
(ii) Where Alark Ltd. has a class of creditors exceeding the specified number, but their terms do
not provide for the appointment of a trustee or agent as the authorized representative for such
creditors, the interim resolution professional (IRP), Mr. Surya, is required to make an a pplication
to the Adjudicating Authority. The application should include a list of all financial creditors, along
with the name of an insolvency professional (other than the IRP) proposed to act as their authorized
representative who shall be appointed by the Adjudicating Authority prior to the first meeting of the
committee of creditors.
(iii) Where Alark Ltd. has a financial creditor represented by a guardian, executor, or administrator,
such individuals act as authorized representatives on behalf of the financial creditors. The
appointed representative attends committee of creditors meetings, represents the interests of the
financial creditors they represent, and exercises voting rights on their behalf, proportionate to their
respective voting share.
4.7 The following SOP has to be followed by designated AD Category-I banks in case of untraceable entities
who are found to be in contravention of reporting provisions for ECB by failing to submit prescribed
return(s) under the ECB framework, either physically or electronically, for past eight quarters or more.
i. Definition: Any borrower who has raised ECB will be treated as ‘untraceable entity’, if
entity/auditor(s)/director(s)/ promoter(s) of entity are not reachable/responsive/reply in negative
over email/letters/phone for a period of not less than two quarters with documented communication/
reminders numbering 6 or more and it fulfills both of the following conditions:
(a) Entity not found to be operative at the registered office address as per records available with
the AD Bank or not found to be operative during the visit by the officials of the AD Bank or
any other agencies authorised by the AD bank for the purpose;
(b) Entities have not submitted Statutory Auditor’s Certificate for last two years o r more
8
Page 749
ii. The bank should undertake the following actions:
(a) File a revised Form ECB, if required, and the last Form ECB 2 Return without certification
from the company, clearly marking it as 'UNTRACEABLE ENTITY' on top. The outstanding
amount will be treated as written-off from the external debt liability of the country but may be
retained by the lender for potential recovery through legal or non -legal means.
(b) The bank should not process any fresh ECB applications from Adhruti Ltd.
(c) The Directorate of Enforcement should be informed about the designation of Adhruti Ltd. as
an 'UNTRACEABLE ENTITY.'
(d) No inward remittance or debt servicing will be permitted for Adhruti Ltd. under the automatic
route.
In the case of Adhruti Ltd. being designated as an 'UNTRACEABLE ENTITY,' KL Wise Bank must
follow the SOP outlined in the reporting requirements for ECBs. This involves filing revised forms,
informing the Directorate of Enforcement, and restricting further ECB applications and transactions
for the entity. These measures are taken to address non-compliance with reporting provisions and
unresponsiveness of the borrower. The bank can retain the outstanding amount in its books for
recovery through judicial or non-judicial means.
4.8 According to Rule 19(1)(a) of the Foreign Exchange Management (Overseas Investment) Rules, 2022,
unless otherwise provided, no person resident in India can make an ODI in a foreign entity engaged in
real estate activity without specific approval from the Reserve Bank. Howe ver, it is important to
understand the definition of "real estate activity" as provided in the explanation to the sub -rule.
"Real estate activity" refers to the buying and selling of real estate or trading in Transferable
Development Rights (TDR). However, it explicitly excludes the development of townships, construction
of residential or commercial premises, roads, or bridges for selling or leasing.
Further, Rules 19(2) and 19(3) of the said rules, provides that any ODI in start-ups recognised under the
laws of the host country or host jurisdiction as the case may be, shall be made by an Indian entity only
from the internal accruals whether from the Indian entity or group or associate companies in India and
in case of resident individuals, from own funds of such an individual.
No person resident in India shall make financial commitment in a foreign entity that has invested or
invests into India, at the time of making such financial commitment or at any time thereafter, either
directly or indirectly, resulting in a structure with more than two layers of subsidiaries:
Based on this provision, the representative of KL Wise Bank would advise Aamnay Ltd. that if the foreign
entity's activities fall within the definition of "real estate activity" as defined in the regulations, specific
approval from the Reserve Bank would be required to proceed with the ODI. However, if the foreign
entity's activities involve the development of townships, construction of residential or commercial
premises, roads, or bridges for selling or leasing, the ODI may be permissible without the need for
specific approval.
Further, if the foreign entity, All Blossom Inc., is a start up then the ODI shall be made only from the
internal accruals and also it should also be checked that the said foreign entity has not invested or
invests into India which results in a structure with more than two layers of subsidiaries, at the time of
making such financial commitment of ODI by Aamnay Ltd. or at any time thereafter, either directly or
indirectly.
Page 750
4.9 The bankruptcy proceedings against Mr. Saurabh Kapadiya, the personal guarantor, should be
transferred to the NCLT in Mumbai, where the insolvency proceedings against the corporate debtor
(Alark Ltd.) are already pending.
The Supreme Court clarified in the case of State Bank of India Vs. V. Ramakrishnan & Anr. [CA No. 3595
of 2018, dated 14.08.2018] held that the insolvency resolution and liquidation for both CDs and personal
guarantors, the AA for which shall be the NCLT having territorial jurisdiction over the place where the
registered office of the corporate person is located. The scheme of section 60(2) and (3) is clear that
the moment there is a proceeding against the CD pending under the Code, any bankruptcy proceeding
against the individual personal guarantor will, if already initiated before the proceeding against the CD,
be transferred to the NCLT or, if initiated after such proceedings had been commenced against the CD,
be filed only in the NCLT.
Thus, to conclude, any bankruptcy proceeding against the personal guarantor should either be initiated
in the NCLT if it was initiated after the proceedings against the corporate debtor commenced, or
transferred to the NCLT if it was initiated before the proceedings against the corporate debtor.
Answers to Case Study 5
5.1 (a)
5.2 (a)
5.3 (d)
5.4 (b)
5.5 (a)
5.6 (i) Whether ACS holds a dominant position in the relevant market
As per explanation (a) to section 4 of the Competition Act, 2002, “dominant position” means a
position of strength, enjoyed by an enterprise, in the relevant market, in India, which enables it to
(i) operate independently of competitive forces prevailing in the relevant market; or (ii) affect its
competitors or consumers or the relevant market in its favour.
ACS didn’t enjoy dominance when it came up initially with the testing software, but after few years
of success, ACS truly acquired the dominant position. Quite a large share i.e. 45% of the segment
of the market, is a clear indicator of their dominance in the relevant market online testing. In the
journey of being zero to acquiring 45% market share, ACS has affected the competitors particularly,
those who are small and in early years of operation, who can’t sustain the heat of low price
competition. ACS has captured the market by its own penetration strategy, independent of market
forces. Here, it is to be mentioned that maintaining of the dominant position in the relevant market
is not prohibited, but abuse of the dominant position in the relevant market is prohibited.
(ii) Whether its actions tantamount to abuse of dominant position.
Further, Section 4(2)(a)(ii) says, there shall be an abuse of dominant position under sub-section
(1) of section 4, if an enterprise or a group directly or indirectly, impo se unfair or discriminatory
prices in purchase or sale.
ACS increased the prices to ` 825/- and `525/- per candidate for online test at the centre and remote
respectively. Even then, ACS successfully managed to retain 40% of the market share (reduced from
45%). The loss of market share was compensated by high profits due to enhanced prices, hence the
bottom line improved a bit. However, one of the reasons that ACS was able to substantially retain its
existing market share is the fact that it offers better technology i.e. Software that is AI-equipped, that
gives its additional competitive advantage and leverage over others and such better technology can
be considered as a justifiable reason for such increase in prices which have also not crossed the
market prices that prevailed when ACS had entered the market of online testing.
10
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According, it does not amount to an abuse of the dominant position.
5.7 The provision relating to Prohibition of Anti-Competitive Agreements has been defined under the
Competition Act, 2002 as under:
Prohibition of Anti-Competitive Agreements [Section 3(1)]
No enterprise or association of enterprises or person or association of persons shall enter into any
agreement in respect of production, supply, distribution, storage, acquisition; or control of goods; or
provision of services, which causes or is likely to cause an appreciable adverse effect on competition
within India.
The clause Appreciable Adverse Effect on Competition (AAEC) has been defined under the
Competition Act as under:
The probable factors mentioned under section 19(3) of the Act, that need to be looked into whilst
determining whether or not an agreement is likely to have an AAEC in the market are provided in the
Act.
These factors mentioned under section 19(3) of the Act, provide that the Commission while deciding
whether or not an agreement is likely to have an AAEC in the market shall bring into consideration any
or all of the following factors:
• creation of barriers to new entrants in the market;
• driving existing competitors out of the market;
• foreclosure of competition by hindering entry into the market;
• accrual of benefits to consumers;
• improvements in production or distribution of goods or provision of services; and
• promotion of technical, scientific and economic development by means of production or distribution
of goods or provision of services.
Further Anti-Competitive Agreements are Void Agreements – Section 3(2), the provision is mentioned
as under:
Any agreement entered into in contravention of the provisions contained in sub-section (1) shall be void.
(3) Any agreement entered into between enterprises or associations of enterprises or persons or
associations of persons or between any person and enterprise or practice carried on, or decision taken
by, any association of enterprises or association of persons, including cartels, engaged in identical or
similar trade of goods or provision of services, which—
(a) directly or indirectly determines purchase or sale prices;
(b) limits or controls production, supply, markets, technical development, investment or provision of
services;
(c) shares the market or source of production or provision of services by way of allocation of
geographical area of market, or type of goods or services, or number of customers in the market
or any other similar way;
(d) directly or indirectly results in bid rigging or collusive bidding, shall be presumed to have an
appreciable adverse effect on competition: Provided that nothing contained in this sub-section shall
apply to any agreement entered into by way of joint ventures if such agreement increases efficiency
in production, supply, distribution, storage, acquisition or control of goods or provision of services.
Explanation.—For the purposes of this sub-section, "bid rigging" means any agreement, between
enterprises or persons referred to in sub-section.
11
Page 752
Analysis of the given case and conclusion: In the instant case, ACS (Started by Mr. Arvind along with
Mr. Pandu) in order to penetrate in the market and capture reasonable share, entered a Platform as a
Service (PAAS) agreement with the top universities in different cities to use their respective computer
lab facilities for running LMS. They reduced the price of online test at the centre and remote and offered
the charges of ` 700 and ` 400 respectively against the prevailing market prices of ` 850 and ` 550.
This resulted that after few years of the success of testing LMS in the market, ACS market share reached
45% in the online testing segment. Due to this, many small and standalone players in the industry had
to quit. During this time Pandu (of ACS) decided to increase the prices to ` 825 and ` 525 per candidate
for online tests at the centre and remote respectively and ACS successfully managed to retain a 40%
market share. Using its PAAS with the one of the top universities ACS came up with dynamic pricing
algorithm based on which the fee for the course was decided in a way that it could retain 20% of the fee
as their revenue and remitted the balance to the university (as their internal arrangements although both
the university and the student did not have a role in the pricing model).
In the above manner ACS limited controlled the markets by first reducing their AI-equipped testing
services first by reducing their penetrating prices lower than the market price and the n increasing their
prices but were still lower than the market prices. This resulted many small and standalone players in
the industry to quit and only those who reduced their prices (and were able to cover their operating costs
with such reduced prices) were able to survive. This amounts to AAEC in violation to section 3(3) (b)
and NOT in terms of section 3(3)(a) as cited in the question.
Therefore, these acts of ACS have caused appreciable adverse effect on competition in violation to the
section 3(3)(b) and not section 3(3)(a).
5.8 As per Section 5(6) of the Insolvency and Bankruptcy Code, 2016, dispute includes a suit or arbitration
proceedings relating to—
(a) the existence of the amount of debt;
(b) the quality of goods or service; or
(c) the breach of a representation or warranty;
In the given case, ACS sent an email for dispute, post the time period for submitting a notice of dispute
under section 8 of the code. In terms of section 8(2)(a), which states that the corporate debtor shall
within a period of 10 days of the receipt of the demand notice or copy of invoice bring to the notice of
the operational creditor existence of a dispute. The ACS had not replied to the aforesaid notice. ACS
sent mail only after the initiation of the CIRP by the operational creditor. This reflects that dispute was
not pre- existing and was thought afterwards.
In the case of Mobilox Innovations (P.) Ltd. Vs Kirusa Software (P.) Ltd. [Civil Appeal No. 9405 of 2017],
the Supreme Court of India, dated 21.09.2017, the court decided that the dispute must truly exist in fact
and is not spurious, hypothetical or illusory.
Conclusion:
Thus, in the given case, the adjudicating authority cannot reject the application of S&N on the ground
that the amount claimed is under dispute.
5.9 As per Section 9 of the Insolvency and Bankruptcy Code, 2016, the operational creditor shall, along with
the application filed in the prescribed form, furnish, interalia,-
12
Page 753
A copy of the certificate from the financial institutions maintaining accounts of the operational creditor
confirming that there is no payment of an unpaid operational debt by the corporate debtor, if available;
The words ‘if available’ used in section 9(3) make it evident that such certificate shall only be submitted
if such a copy is available.
Hence, the application of S & N cannot be rejected on the grounds of the non-availability of a ‘Certificate
from a financial institution’. Hence, the non-availability of the certificate from a financial institution does
not impact the CIRP.
In the case of Macquarie Bank Limited Vs. Shilpi Cable Technologies Ltd. [Civil Appeal No. 15135 of
2017] the Supreme Court of India, dated 15.12.2017, opined that Section 9(3) of The Insolvency and
Bankruptcy Code, 2016 is directory in nature.
13
Page 754

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