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DEC, 2020 EXAMS – PAPER 2 : LAW AND BCR
SECTIONS LIST AND CASE LAWS FOR CA FOUNDATION

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THE INDIAN CONTRACT ACT, 1872 DEC, 2020 EXAMS – PAPER 2 : LAW AND BCR
SECTIONS LIST FOR CA FOUNDATION STUDENTS
THE INDIAN CONTRACT ACT, 1872

Section Particular
1 Short title. Extent. Commencement. Saving.
2 Interpretation-clause.
3 Communication, acceptance and revocation of proposals.
4 Communication when complete.
5 Revocation of proposals and acceptances.
6 Revocation how made.
7 Acceptance must be absolute.
8 Acceptance by performing conditions or receiving consideration.
9 Promises, express and implied.
10 What agreements are contracts.
11 Who are competent to contract.
12 What is a sound mind for the purposes of contracting.
13 “Consent” defined.
14 “Free consent” defined.
15 “Coercion” defined.
16 “Undue influence” defined.
17 “Fraud” defined.
18 “Misrepresentation” defined.
19 Voidability of agreements without free consent.
19A Power to set aside contract induced by undue influence.
20 Agreement void where both parties are under mistake as to matter of fact.
21 Effect of mistakes as to law.
22 Contract caused by mistake of one party as to matter of fact.
23 What considerations and objects are lawful, and what not.
24 Agreement void, if considerations and objects unlawful in part.
25 Agreement without consideration, void, unless it is in writing and registered, or is a
promise to compensate for something done, or is a promise to pay a debt barred by
limitation law.
26 Agreement in restraint of marriage, void

27 Agreement in restraint of trade, void. Saving of agreement not to carry on business of
which good-will is sold.
28 Agreements in restraint of legal proceeding void. Saving of contract to refer to arbitration
dispute that may arise. Saving of contract to refer questions that have already arisen. Saving
of a guarantee agreement of a bank or a financial institution.
29 Agreements void for uncertainty.
30 Agreements by way of wager, void. Exception in favour of certain prizes for horse-racing.
Section 294A of the Indian Penal Code not affected.
31 “Contingent contract” defined.
32 Enforcement of contracts contingent on an event happening.
33 Enforcement of contracts contingent on an event not happening.
34 When event on which contract is contingent to be deemed impossible, if it is the future
conduct of a living person.
35 When contracts become void which are contingent on happening of specified event within
fixed time. When contracts may be enforced, which are contingent on specified event not
happening within fixed time.
36 Agreement contingent on impossible events void.

37 Obligation of parties to contracts.
38 Effect of refusal to accept offer of performance.
39 Effect of refusal of party to perform promise wholly.
40 Person by whom promise is to be performed
41 Effect of accepting performance from third person.
42 Devolution of joint liabilities.
43 Any one of joint promisors may be compelled to perform. Each promisor may compel
contribution. Sharing of loss by default in contribution.
44 Effect of release of one joint promisor.
45 Devolution of joint rights.
46 Time for performance of promise, when no application is to be made and no time is
specified.
47 Time and place for performance of promise, where time is specified and no application to
be made.
48 Application for performance on certain day to be at proper time and place.
49 Place for performance of promise, where no application to be made and no place fixed for
performance.
50 Performance in manner or at time prescribed or sanctioned by promisee.
51 Promisor not bound to perform, unless reciprocal promisee ready and willing to perform.
52 Order of performance of reciprocal promises.
53 Liability of party preventing event on which the contract is to take effect.
54 Effect of default as to that promise which should be first performed, in contract consisting
of reciprocal promises.
55 Effect of failure to perform at fixed time, in contract in which time is essential. Effect of such
failure when time is not essential. Effect of acceptance of performance at time other than
that agreed upon.
56 Agreement to do impossible act. Contract to do an act afterwards becoming impossible or
unlawful. Compensation for loss through non-performance of act known to be impossible
or unlawful.
57 Reciprocal promise to do things legal, and also other things illegal.
58 Alternative promise, one branch being illegal.
59 Application of payment where debt to be discharged is indicated.
60 Application of payment where debt to be discharged is not indicated.

61 Application of payment where neither party appropriates.
62 Effect of novation, rescission, and alteration of contract.
63 Promisee may dispense with or remit performance of promise.
64 Consequences of rescission of voidable contract.
65 Obligation of person who has received advantage under void agreement, or contract that
becomes void.
66 Mode of communicating or revoking rescission of voidable contract.
67 Effect of neglect of promisee to afford promisor reasonable facilities for performance.
68 Claim for necessaries supplied to person incapable of contracting, or on his account.
69 Reimbursement of person paying money due by another, in payment of which he is
interested.
70 Obligation of person enjoying benefit of non-gratuitous act.
71 Responsibility of finder of goods.
72 Liability of person to whom money is paid, or thing delivered, by mistake or under
coercion.
73 Compensation for loss or damage caused by breach of contract. Compensation for failure to
discharge obligation resembling those created by contract.
74 Compensation for breach of contract where penalty stipulated for.
75 Party rightfully rescinding contract, entitled to compensation.
CASE LAWS LIST FOR CA FOUNDATION STUDENTS
THE INDIAN CONTRACT ACT, 1872

SN CASE LAW PARTICULARS
State of Gujarat when on dissolution of a partnership, the assets of the firm were divided
vs. Ramanlal S among the partners, the sales tax officer wanted to tax this transaction. It was
1
& Co. held that it was not a sale. The partners being joint owner of those assets
cannot be both buyer and seller.
Balfour v. A husband agreed to pay to his wife certain amount as maintenance every
Balfour month while he was abroad. Husband failed to pay the promised amount.
2 Wife sued him for the recovery of the amount. Here in this case wife could not
recover as it was a social agreement and the parties did not intend to create
any legal relations.
Carlill Vs. In this famous case Carbolic smoke Ball Co. advertised in several newspapers
Carbolic Smoke that a reward of £100 would be given to any person who contracted influenza
3 Ball Co. (1893) after using the smoke balls produced by the Carbolic Smoke Company
according to printed directions. One lady, Mrs. Carlill, used the smoke balls as
per the directions of company and even then suffered from influenza. Held,
she could recover the amount as by using the smoke balls she had accepted
the offer.
Lalman Shukla G (Gauridutt) sent his servant L (Lalman) to trace his missing nephew. He
v. Gauri Dutt then announced that anybody who traced his nephew would be entitled to a
4 certain reward. L, traced the boy in ignorance of this announcement.
Subsequently when he came to know of the reward, he claimed it. Held, he
was not entitled to the reward, as he did not know the offer.
Boulton v. Boulton bought a business from Brocklehurst. Jones, who was Broklehurst’s
Jones creditor, placed an order with Brocklehurst for the supply of certain goods.
Boulton supplied the goods even though the order was not in his name. Jones
5 refused to pay Boultan for the goods because by entering into the contract
with Blocklehurst, he intended to set off his debt against Brocklehurst. Held,
as the offer was not made to Boulton, therefore, there was no contract between
Boulton and Jones.
Harvey vs. In this case, Privy Council succinctly explained the distinction between an
Facie [1893] AC offer and an invitation to offer. In the given case, the plaintiffs through a
552 telegram asked the defendants two questions namely, (i) Will you sell us
6
Bumper Hall Pen? and (ii) Telegraph lowest cash price. The defendants
replied through telegram that the “lowest price for Bumper Hall Pen is £ 900”.
The plaintiffs sent another telegram stating “we agree to buy Bumper Hall
Pen at £ 900”. However the defendants refused to sell the property at the
price.
The plaintiffs sued the defendants contending that they had made an offer to
sell the property at £ 900 and therefore they are bound by the offer.
However the Privy Council did not agree with the plaintiffs on the ground
that while plaintiffs had asked two questions, the defendant replied only to
the second question by quoting the price but did not answer the first question
but reserved their answer with regard to their willingness to sell. Thus they
made no offer at all. Their Lordships held that the mere statement of the
lowest price at which the vendor would sell contained no implied contract to
sell to the person who had enquired about the price.
Mac Pherson vs where the owner of the property had said that he would not accept less than £
7 Appanna [1951] 6000/- for it. This statement did not indicate any offer but indicated only an
A.S.C. 184 invitation to offer.
Harris vs. the auctioneer does not contract with any one who attends the sale. The
Nickerson auction is only an advertisement to sell but the items are not put for sale
8 (1873). though persons who have come to the auction may have the intention to
purchase. Similar decision was given in the case of Harris vs. Nickerson
(1873).
Brogden vs. B a supplier, sent a draft agreement relating to the supply of coal to the
Metropolitan manager of railway Co. viz, Metropolitian railway for his acceptance. The
Railway Co. manager wrote the word “Approved” on the same and put the draft
9 (1877) agreement in the drawer of the table intending to send it to the company’s
solicitors for a formal contract to be drawn up. By an over sight the draft
agreement remained in drawer. Held, that there was no contract as the
manager had not communicated his acceptance to the supplier, B.
Neale vs. M offered to sell his land to N for £280. N replied purporting to accept the
Merret [1930] offer but enclosed a cheque for £ 80 only. He promised to pay the balance of £
10
W. N. 189 200 by monthly installments of £ 50 each. It was held that N could not enforce
his acceptance because it was not an unqualified one.
Union of India A offers to sell his house to B for ₹ 1,00,000/-. B replied that, “I can pay ₹
v. Bahulal AIR 80,000 for it. The offer of ‘A’ is rejected by ‘B’ as the acceptance is not
11
1968 Bombay unqualified. B however changes his mind and is prepared to pay ₹ 1,00,000/-.
294 This is also treated as counter offer and it is upto A whether to accept it or not.
Bhagwandas v. Where an offer made by the intended offeree without the knowledge that an
12
Girdharilal offer has been made to him cannot be deemed as an acceptance thereto.
Heyworth vs. A mere variation in the language not involving any difference in substance
13 Knight [1864] would not make the acceptance ineffective.
144 ER 120
Felthouse vs. F (Uncle) offered to buy his nephew’s horse for £30 saying “If I hear no more
Bindley (1862) about it I shall consider the horse mine at £30.” The nephew did not reply to F
at all. He told his auctioneer, B to keep the particular horse out of sale of his
14
farm stock as he intended to reserve it for his uncle. By mistake the auctioneer
sold the horse. F sued him for conversion of his property. Held, F could not
succeed as his nephew had not communicated the acceptance to him.
[Central Bank Where a resolution passed by a bank to sell land to ‘A’ remained
YeotmalvsVyan uncommunicated to ‘A’, it was held that there was no communication and
15
katesh (1949) A. hence no contract.
Nag. 286
Entores Ltd. v. When an offer is made of instantaneous communication like telex, telephone,
Miles Far East fax or through e-mail, the contract is only complete when the acceptance is
16 Corporation received by the offeree, and the contract is made at the place where the
acceptance is received. However, in case of a call drops and disturbances in
the line, there may not be a valid contract.
Mukul Datta When someone travels from one place to another by air, it could be seen that
vs. Indian special conditions are printed at the back of the air ticket in small letters [in a
Airlines [1962] non computerized train ticket even these are not printed] Sometimes these
AIR cal. 314 conditions are found to have been displayed at the notice board of the Air
lines office, which passengers may not have cared to read. The question here
17 is whether these conditions can be considered to have been communicated to
the passengers of the Airlines and can the passengers be treated as having
accepted the conditions. The answer to the question is in the affirmative and
was so held in Mukul Datta vs. Indian Airlines [1962] AIR cal. 314 where the
plaintiff had travelled from Delhi to Kolkata by air and the ticket bore
conditions in fine print.
Lilly White vs. delivered some clothes to drycleaner for which she received a laundry receipt
Mannuswamy containing a condition that in case of loss, customer would be entitled to claim
18 (1970) 15% of the market price of value of the article, P lost her new saree. Held, the
terms were unreasonable and P was entitled to recover full value of the saree
from the drycleaner.
Raipur A transport carrier accepted the goods for transport without any conditions.
19 transport Co. Subsequently, he issued a circular to the owners of goods limiting his liability
vs. Ghanshyam for the goods. In such a case, since the special conditions were not
[1956] A. communicated prior to the date of contract for transport, these were not
Nag.145 binding on the owners of goods
Ramsgate a person who applied for shares in June was not bound by an allotment made
Victoria Hotel in November.
Co. Vs
20
Montefiore
(1866 L.R.Z. Ex
109)
India
Cooperative
Navigation and
21 Trading Co.
Ltd. Vs
Padamsey
PremJi.
Misa v. Currie “A valuable consideration in the sense of law may consist either in some right,
interest, profit or benefit accruing to one party (i.e. promisor) or forbearance,
22
detriment, loss or responsibility given, suffered or undertaken by the other
(i.e., the promisee).”
Durga Prasad v. D (defendant) promised to pay to P (plaintiff) a certain commission on articles

Baldeo which would be sold through their agency in a market. Market was
23
constructed by P at the desire of the C (Collector), and not at the desire of the
D. D was not bound to pay as it was without consideration and hence void.
Chinnayya vs. An old lady made a gift of her property to her daughter with a direction to
Ramayya (1882) pay a certain sum of money to the maternal uncle by way of annuity. On the
same day, the daughter executed a writing in favour of the brother agreeing
24
to pay annuity. The daughter did not, however, pay the annuity and the uncle
sued to recover it. It was held that there was sufficient consideration for the
uncle to recover the money from the daughter.
Kadarnath v. If a promisee undertakes the liability on the promise of the person to
25 Gorie contribute to charity, there the contract shall be valid.
Mohammad
Mohori Bibi vs. A, a minor borrowed ₹ 20,000 from B and as a security for the same executed a
Dharmo Das mortgage in his favour. He became a major a few months later and filed a suit
26 Ghose (1903) for the declaration that the mortgage executed by him during his minority
was void and should be cancelled. It was held that a mortgage by a minor was
void and B was not entitled to repayment of money.
Kirpa Ram vs. A youth of 18 years of age, spend thrift and a drunkard, borrowed ₹ 90,000 on
Sami-Ud-din a bond bearing compound interest at 2% per mensem (p.m.). It was held by
27
Ad. Khan (1903) the court that the transaction is unconscionable, the rate of interest charged
being so exorbitant
Word vs. H sold to W some pigs which were to his knowledge suffering from fever. The
28 Hobbs. (1878) pigs were sold ‘with all faults’ and H did not disclose the fact of fever to W.
Held there was no fraud.
Regier V. A broker was asked to buy shares for client. He sold his own shares without
Campbell disclosing this fact. The client was entitled to avoid the contract or affirm it
29 Staurt with a right to claim secret profit made by broker on the transaction since the
relationship between the broker and the client was relationship of utmost
good faith.
Hazi Ahmed v. Every material fact must be disclosed by the parties to a contract of marriage
30
Abdul Gassi
State of A crossword puzzle was given in magazine. Abovementioned clause was
Bombay vs. stated in the magazine. A solved his crossword puzzle and his solution
31 R.M.D. corresponded with previously prepared solution kept with the editor. Held,
Chamarbangwa this was a game of chance and therefore a lottery (wagering transaction).
la AIR (1957)
HADLEY vs. The crankshaft of P’s flour mill had broken. He gives it to D, a common carrier
BAXENDALE who promised to deliver it to the foundry in 2 days where the new shaft was
to be made. The mill stopped working, D delayed the delivery of the
crankshaft so the mill remained idle for another 5 days. P received the
repaired crankshaft 7 days later than he would have otherwise received.
32 Consequently, P sued D for damages not only for the delay in the delivering
the broken part but also for loss of profits suffered by the mill for not having
been worked. The count held that P was entitled only to ordinary damages
and D was not liable for the loss of profits because the only information given
by P to D was that the article to be carried was the broken shaft of a mill and it
was not made known to them that the delay would result in loss of profits.
Gibbons v West A business man whose credit has suffered will get exemplary damages even if
Minister Bank he has sustained no pecuniary loss. But a non-trader cannot get heavy
33
damages in the like circumstances, unless the damages are alleged and
proved as special damages.
ShyamLal vs. where ‘K’ a government servant was compulsorily retired by the government.
State of U.P. He filed a writ petition and obtained an injunction against the order. He was
34
A.I.R (1968) 130 reinstated and was paid salary but was given no work and in the mean time
government went on appeal. The appeal was decided in favour of the
government and ‘K’ was directed to return the salary paid to him during the
period of reinstatement.
Hollins vs. ‘H’ picked up a diamond on the floor of ‘F’s shop and handed over the same
Howler L. R. & to ‘F’ to keep till the owner was found. In spite of the best efforts, the true
H. L., owner could not be traced. After the lapse of some weeks, ‘H’ tendered to ‘F’
35
the lawful expenses incurred by him and requested to return the diamond to
him. ‘F’ refused to do so. Held, ‘F’ must return the diamond to ‘H’ as he was
entitled to retain the goods found against everybody except the true owner.
Shivprasadvs Every kind of payment of money or delivery of goods for every type of
Sirish Chandra ‘mistake’ is recoverable.
36
A.I.R. 1949 P.C.
297
Sales tax officer A payment of municipal tax made under mistaken belief or because of mis-
vs. Kanhaiyalal understanding of the terms of lease can be recovered from municipal
37
A. I. R. 1959 S. authorities.
C. 835
Seth Similarly, any money paid by coercion is also recoverable. The word coercion
Khanjelekvs is not necessarily governed by section 15 of the Act. The word is interpreted to
38
National Bank mean and include oppression, extortion, or such other means
of India
Trikamdas vs. ‘T’ was traveling without ticket in a tram car and on checking he was asked to
Bombay pay ₹5/as penalty to compound transaction. T filed a suit against the
39 Municipal corporation for recovery on the ground that it was extorted from him. The suit
Corporation A. was decreed in his favour.
I. R.1954
THE SALE OF GOODS ACT, 1930 DEC, 2020 EXAMS – PAPER 2 : LAW AND BCR
THE SALE OF GOODS ACT, 1930

Section Particular
1 Short title, extent and commencement.
2 Definitions.
3 Application of provisions of Act 9 of 1872
4 Sale and agreement to sell.
5 Contract of sale how made.
6 Existing or future goods.
7 Goods perishing before making of contract.
8 Goods perishing before sale but after agreement to sell.
9 Ascertainment of price.
10 Agreement to sell at valuation.
11 Stipulations as to time.
12 Condition and warranty.
13 When condition to be treated as warranty.

14 Implied undertaking as to title, etc.
15 Sale by description.
16 Implied conditions as to quality or fitness.
17 Sale by sample.
18 Goods must be ascertained.
19 Property passes when intended to pass.
20 Specific goods in a deliverable state.
21 Specific goods to be put into a deliverable state.
22 Specific goods in a deliverable state, when the seller has to do anything thereto in order to
ascertain price.
23 Sale of unascertained goods and appropriation. Delivery to carrier.
24 Goods sent on approval or “on sale or return”.
25 Reservation of right of disposal.
26 Risk prima facie passes with property.
27 Sale by person not the owner.
28 Sale by one of joint owners.

29 Sale by person in possession under voidable contract.
30 Seller or buyer in possession after sale.
31 Duties of seller and buyer.
32 Payment and delivery are concurrent conditions.
33 Delivery.
34 Effect of part delivery.
35 Buyer to apply for delivery.
36 Rules as to delivery.
37 Delivery of wrong quantity.
38 Instalment deliveries.
39 Delivery to carrier or wharfinger.
40 Risk where goods are delivered at distant place.
41 Buyer’s right of examining the goods.
42 Acceptance.
43 Buyer not bound to return rejected goods.
44 Liability of buyer for neglecting or refusing delivery of goods.

45 “Unpaid seller” defined.
46 Unpaid seller’s rights.
47 Seller’s lien.
48 Part delivery.
49 Termination of lien.
50 Right of stoppage in transit.
51 Duration of transit.
52 How stoppage in transit is effected.
53 Effect of sub-sale or pledge by buyer.
54 Sale not generally rescinded by lien or stoppage in transit.
55 Suit for price.
56 Damages for non-acceptance.
57 Damages for non-delivery.
58 Specific performance.
59 Remedy for breach of warranty.
60 Repudiation of contract before due date.

61 Interest by way of damages and special damages.
62 Exclusion of implied terms and conditions.
63 Reasonable time a question of fact.
64 Auction sale.
64A In contracts of sale, amount of increased or decreased taxes to be added or deducted.
65 [Repealed.].
66 Savings
THE SALE OF GOODS ACT, 1930

SN CASE LAWS PARTICULARS
1 Bombay Burma timber was purchased for the express purpose of using it as railways sleepers
Trading and when it was found to be unfit for the purpose, the Court held that the
Corporation contract could be avoided.
Ltd. vs. Aga
Muhammad
2 Mount D. F. A entered into a contract to sell cartons in possession of a wharfinger to B and
Ltd. vs Jay & agreed with B that the price will be paid to A from the sale proceeds
Jay (Provisions) recovered from his customers. Now B sold goods to C and C duly paid to B.
Co. Ltd But anyhow B failed to make the payment to A. A wanted to exercise his right
of lien and ordered the wharfinger not to make delivery to C. Held that the
seller had assented to the resale of the goods by the buyer to the sub-buyers.
As a result A’s right to lien is defeated
THE INDIAN PARTNERSHIP ACT, 1932 DEC, 2020 EXAMS – PAPER 2 : LAW AND BCR
INDIAN PARTNERSHIP ACT, 1932

Section Particular
1 Short title extent and commencement.
2 Definitions.
3 Application of provisions of Act IX of 1872.
4 Definition of "Partnership", "Partner
5 Partnership not created by status.
6 Mode of determining existence of partnership.
7 Partnership-At-Will.
8 Particular Partnership.
9 General duties of partners.
10 Duty to indemnify for loss caused by fraud.
11 Determination of rights and duties of partners by contract.
12 The conduct of the business.
13 Mutual right and liabilities.

14 The property of the firm.
15 Application of the property of the firm.
16 Personal profits earned by partners.
17 Rights and duties of partners after a change in the firm.
18 Partner to be agent of the firm.
19 Implied authority of partner as agent of the firm.
20 Extension and restriction of partner's implied authority.
21 Partner's authority in an emergency.
22 Mode of doing act to bind firm.
23 Effect of admission by a partner.
24 Effect of notice to acting partner.
25 Liability of a partner for acts of the firm.
26 Liability of the firm for wrongful acts of a partner.
27 Liability of firm for misapplication by partners.
28 Holding out.
29 Rights of transferee of a partner's interest.

30 Minors admitted to the benefits of partnership.
31 Introduction of a partner.
32 Retirement of a partner.
33 Expulsion of a partner.
34 Insolvency of a partner.
35 Liability of estate of deceased partner.
36 Right of outgoing partner to carry on competing business.
37 Right of outgoing partner in certain cases to share subsequent profits.
38 Revocation of continuing guarantee by change in firm.
39 Dissolution of a firm.
40 Dissolution by agreement.
41 Compulsory dissolution.
42 Dissolution on the happening of certain contingencies.
43 Dissolution by notice of partnership at will.
44 Dissolution by the Court.
45 Liability for acts of partners done after dissolution.

46 Right of partners to have business wound up after dissolution.
47 Continuing authority of partners for purposes of winding up.
48 Mode of settlement of accounts between partners.
49 Payment of firm's debts and of separate debts.
50 Personal profits earned after dissolution.
51 Return of premium on premature dissolution.
52 Rights where partnership contract is rescinded for fraud.
53 Right to restrain from use of firm-name or firm-property.
54 Agreements in restraint of trade.
55 Sale of goodwill after dissolution.
56 Power to exempt from application of this chapter.
57 Appointment of registrar of firms and deputy and assistant registrars.
58 Application for registration.
59 Registration.
59A-I Late registration on payment of penalty.
59A Deletion and addition of certain entries relating to certain firms.

59B Deletion of entries relating to certain firms by reason of formation.
60 Recording of alterations in [Firm-Name, Nature of business]
61 Noting of closing and opening of breaches.
62 Noting of changes in Names and Address of partners.
63 Recording of changes in and dissolution of a firm.
64 Rectification of mistakes.
65 Amendment of register by order of court.
66 Inspection of register and filed documents.
67 Grant of copies.
68 Rules of evidence.
69 Effect of Non-Registration.
69A Penalty for contravention of Section 60,61,62, or 63.
70 Penalty for furnishing false particulars.
70A Maximum fees and power to amend schedule I.
71 Power to make rules.
72 Mode of giving public notice.

73 Repeals.
74 Savings.
INDIAN PARTNERSHIP ACT, 1932

SN. CASE LAWS PARTICULARS
1 KD Kamath & The Supreme Court has held that the two essential conditions to be satisfied
Co. are that:
there should be an agreement to share the profits as well as the losses of
business; and
the business must be carried on by all or any of them acting for all, within the
meaning of the definition of ‘partnership’ under section 4.
The fact that the exclusive power and control, by agreement of the parties, is
vested in one partner or the further circumstance that only one partner can
operate the bank accounts or borrow on behalf of the firm are not destructive
of the theory of partnership provided the two essential conditions, mentioned
earlier, are satisfied.
2 Santiranjan In Santiranjan Das Gupta Vs. DasyranMurzamull, following factors weighed
Das Gupta Vs. upon the Supreme Court to reach the conclusion that there is no partnership
Dasyran between the parties:
Murzamull Parties have not retained any record of terms and conditions of partnership.
(Supreme
Court) Partnership business has maintained no accounts of its own, which would be
open to inspection by both parties
No account of the partnership was opened with any bank
No written intimation was conveyed to the Deputy Director of Procurement
with respect to the newly created partnership.
3 Vishnu The Supreme Court in Vishnu Chandra Vs. Chandrika Prasad, held that the
Chandra Vs. expression ‘if any partner wants to dissociate from the partnership business’,
Chandrika in a clause of the partnership deed which was being construed, comprehends
Prasad a situation where a partner wants to retire from the partnership. The
[Supreme expression clearly indicated that in the event of retirement, the partnership
Court] business will not come to an end.
THE LIMITED LIABILITY PARTNERSHIP ACT, 2008 DEC, 2020 EXAMS – PAPER 2 : LAW AND BCR
LIMITED LIABILITY PARTNERSHIP ACT, 2008

Section Particular
1 Short title extent and commencement.
2 Definitions.
3 Limited liability partnership to be body corporate.
4 Non-applicability of the Indian Partnership Act, 1932.
5 Partners.
6 Minimum number of partners.
7 Designated partners.
8 Liabilities of designated partners.
9 Changes in designated partners.
10 Punishment for contravention of sections 7, 8 and 9.
11 Incorporation document.
12 Incorporation by registration.
13 Registered office of limited liability partnership and change therein.

14 Effect of registration.
15 Name.
16 Reservation of name.
17 Change of name of limited liability partnership.
18 Application for direction to change name in certain circumstances.
19 Change of registered name.
20 Penalty for improper use of words “limited liability partnership” or “LLP”.
21 Publication of name and limited liability.
22 Eligibility to be partners.
23 Relationship of partners.
24 Cessation of partnership interest.
25 Registration of changes in partners.
26 Partner as agent.
27 Extent of liability of limited liability partnership.
28 Extent of liability of partner.
29 Holding out.
30 Unlimited liability in case of fraud.
31 Whistle blowing.
32 Form of contribution.
33 Obligation to contribute.
34 Maintenance of books of account, other records and audit, etc.
35 Annual return.
36 Inspection of documents kept by Registrar.
37 Penalty for false statement.
38 Power of Registrar to obtain information.
39 Compounding of offences.
40 Destruction of old records.
41 Enforcement of duty to make returns, etc.
42 Partner’s transferable interest.
43 Investigation of the affairs of limited liability partnership.
44 Application by partners for investigation.
45 Firm, body corporate or association not to be appointed as inspector.

46 Power of inspectors to carry out investigation into affairs of related entities, etc.
47 Production of documents and evidence.
48 Seizure of documents by inspector.
49 Inspector’s report.
50 Prosecution.
51 Application for winding up of limited liability partnership.
52 Proceedings for recovery of damages or property.
53 Expenses of investigation.
54 Inspector’s report to be evidence.
55 Conversion from firm into limited liability partnership.
56 Conversion from private company into limited liability partnership.
57 Conversion from unlisted public company into limited liability partnership.
58 Registration and effect of conversion.
59 Foreign limited liability partnerships.
60 Compromise, or arrangement of limited liability partnerships.
61 Power of Tribunal to enforce compromise or arrangement.

62 Provisions for facilitating reconstruction or amalgamation of limited liability partnerships.
63 Winding up and dissolution.
64 Circumstances in which limited liability partnership may be wound up by Tribunal.
65 Rules for winding up and dissolution.
66 Business transactions of partner with limited liability partnership.
67 Application of the provisions of the Companies Act.
68 Electronic filing of documents.
69 Payment of additional fee.
70 Enhanced punishment.
71 Application of other laws not barred.
72 Jurisdiction of Tribunal and Appellate Tribunal.
73 Penalty on non-compliance of any order passed by Tribunal.
74 General penalties.
75 Power of Registrar to strike defunct limited liability partnership off register.
76 Offences to limited liability partnerships.
77 Jurisdiction or Court.
78 Power to alter Schedules.
79 Power to make rules.
80 Power to remove difficulties.
81 Transitional provisions.
THE COMPANIES ACT, 2013 DEC, 2020 EXAMS – PAPER 2 : LAW AND BCR
PLEASE NOTE
THERE ARE 470 SECTIONS IN THE COMPANIES ACT, 2013. SECTION 1 TO 148 IS COVERED IN CA
INTERMEDIATE LAW, WHEREAS SECTION 149 TO 470 IS COVERED IN CA FINAL LAW. CA
FOUNDATION STUDENTS ARE NOT GIVEN ANY PARTICULAR SECTION TO REMEMBER, BUT
STILL HERE ARE SOME IMPORTANT SECTION NUMBERS THAT ARE REFFERED TO IN THE
MODULE.
THE COMPANIES ACT, 2013

Section Clause Particular
1 Short title, extent,commencement and application
2 Definitions
5 Articles
6 Associate Company
8 Authorised Capital
9 Banking Company
11 Body Corporate
15 Called up Capital
17 Chartered Accountant
20 Company
21 Company limited by guarantee
22 Company limited by shares
27 Control
39 Financial Institutions
41 Financial Year
42 Foreign Company
45 Government Company
46 Holding Company
50 Issued Capital
52 Listed Company
56 Memorandum
62 One Person Company
64 Paid up Share Capital
68 Private Company
71 Public Company
72 Public Financial Institutions
84 Share
85 Small Company
86 Subscribed Capital
87 Subsidiary Company
92 Unlimited Company
3 Formation of company
4 Memorandum
5 Articles
7 Incorporation of company
8 Formation of companies with charitable objects, etc
9 Effect of registration
10 Effect of memorandum and articles
43 Kinds of Shares
399 Inspection, Production and Evidence of Documents Kept by Registrar
455 Dormant Company
447 Punishment for Fraud
THE COMPANIES ACT, 2013

SN CASE LAWS PARTICULARS
1 Macaura v. Macaura (M) was the holder of nearly all (except one) shares of a timber
Northern company. He was also a major creditor of the company. M Insured the
Assurance Co. company’s timber in his own name. The timber was lost in a fire. M claimed
Limited (1925) insurance compensation. Held, the insurance company was not liable to him
as no shareholder has any right to any item of property owned by the
company, for he has no legal or equitable interest in them.
2 Salomon Vs. In Salomon vs. Salomon & Co. Ltd. the House of Lords laid down that a
Salomon and company is a person distinct and
Co Ltd. separate from its members. In this case one Salomon incorporated a
company named “Salomon & Co. Ltd.”, with seven subscribers consisting of
him self, his wife, four sons and one daughter. This company took over the
personal business assets of Salomon for £ 38,782 and in turn, Salomon took
20,000 shares of £ 1 each, debentures worth £ 10,000 of the company with
charge on the company’s assets and the balance in cash. His wife, daughter
and four sons took up one £ 1 share each. Subsequently, the company went
into liquidation due to general trade depression. The unsecured creditors to

the tune of £ 7,000 contended that Salomon could not be treated as a secured
creditor of the company, in respect of the debentures held by him, as he was
the managing director of one-man company, which was not different from
Salomon and the cloak of the company was a mere sham and fraud. It was
held by Lord Mac Naughten: “The Company is at law a different person
altogether from the subscribers to the memorandum, and though it may be
that after incorporation the business is precisely the same as it was before
and the same persons are managers, and the same hands receive the profits,
the company is not in law the agent of the subscribers or trustees for them.
Nor are the subscribers, as members, liable, in any shape or form, except to
the extent and in the manner provided by the Act.” Thus, this case clearly
established that company has its own existence and as a result, a shareholder
cannot be held liable for the acts of the company even though he holds
virtually the entire share capital. The whole law of corporation is in fact
based on this theory of separate corporate entity.
3 Daimler Co. if the public interest is not likely to be in jeopardy, the Court may not be
Ltd. vs. willing to crack the corporate shell. But it may rend the veil for ascertaining
Continental whether a company is an enemy company. It is true that, unlike a natural
Tyre & Rubber person, a company does not have mind or conscience; therefore, it cannot be
Co., a friend or foe. It may, however, be characterised as an enemy company, if
its affairs are under the control of people of an enemy country. For this
purpose, the Court may examine the character of the persons who are really
at the helm of affairs of the company.
4 S. Berendsen In certain matters concerning the law of taxes, duties and stamps particularly
Ltd. vs. where question of the controlling interest is in issue.
Commissioner
of Inland
Revenue
5 Juggilal vs. Where corporate entity is used to evade or circumvent tax, the Court can
Commissioner disregard the corporate entity
of Income Tax
AIR (SC)
6 Dinshaw It was held that the company was not a genuine company at all but merely
Maneckjee Petit the assessee himself disguised under the legal entity of a limited company.
The assessee earned huge income by way of dividends and interest. So, he
opened some companies and purchased their shares in exchange of his
income by way of dividend and interest. This income was transferred back
to assessee by way of loan. The Court decided that the private companies
were a sham and the corporate veil was lifted to decide the real owner of the
income.
7 The Workmen The facts of the case are that “A Limited” purchased shares of “B Limited”
Employed in by investing a sum of ₹ 4,50,000. The dividend in respect of these shares was
Associated shown in the profit and loss account of the company, year after year. It was
Rubber taken into account for the purpose of calculating the bonus payable to
Industries workmen of the company. Sometime in 1968, the company transferred the
Limited, shares of B Limited, to C Limited a subsidiary, wholly owned by it. Thus, the
Bhavnagar vs. dividend income did not find place in the Profit & Loss Account of A Ltd.,
The Associated with the result that the surplus available for the purpose for payment of
Rubber bonus to the workmen got reduced.
Industries Ltd.,
Bhavnagar and Here a company created a subsidiary and transferred to it, its investment
another holdings in a bid to reduce its liability to pay bonus to its workers. Thus, the
Supreme Court brushed aside the separate existence of the subsidiary
company. The new company so formed had no assets of its own except those
transferred to it by the principal company, with no business or income of its
own except receiving dividends from shares transferred to it by the principal
company and serving no purpose except to reduce the gross profit of the
principal company so as to reduce the amount paid as bonus to workmen.
8 Merchandise a transport company wanted to obtain licences for its vehicles, but could not
Transport do so if applied in its own name. It, therefore, formed a subsidiary company,
Limited vs. and the application for licence was made in the name of the subsidiary. The
British vehicles were to be transferred to the subsidiary company. Held, the parent
Transport and the subsidiary were one commercial unit and the application for licences
Commission was rejected.
(1982)
9 Gilford Motor Where the device of incorporation is adopted for some illegal or improper
Co. vs. Horne purpose, e.g., to defeat or circumvent law, to defraud creditors or to avoid
legal obligations.
10 Narendra the Supreme court has laid down that the right of a guarantee company to
Kumar Agarwal refuse to accept the transfer by a member of his interest in the company is on
vs. Saroj Maloo, a different footing than that of a company limited by shares. The
membership of a guarantee company may carry privileges much different
from those of ordinary shareholders.
11 Hari Nagar From the date of incorporation mentioned in the certificate, the company
Sugar Mills becomes a legal person separate from the incorporators; and there comes
Ltd. vs. S.S. into existence a binding contract between the company and its members as
Jhunjhunwala evidenced by the Memorandum and Articles of Association
12 State Trading A company on registration acquires a separate existence and the law
Corporation of recognises it as a legal person separate and distinct from its members
India vs.
Commercial
Tax Officer
13 Spencer & Co. It may be noted that under the provisions of the Act, a company may
Ltd. Madras vs. purchase shares of another company and thus become a controlling
CWT Madras company. However, merely because a company purchases all shares of
another company it will not serve as a means of putting an end to the
corporate character of another company and each company is a separate
juristic entity
14 Heavy As has been stated above, the law recognizes such a company as a juristic
Electrical Union person separate and distinct from its members. The mere fact that the entire
vs. State of share capital has been contributed by the Central Government and all its
Bihar shares are held by the President of India and other officers of the Central
Government does not make any difference in the position of registered
company and it does not make a company an agent either of the President or
the Central Government
15 Borland Farwell Justice, in Borland Trustees vs. Steel Bors. & Co. Ltd. observed that
Trustees vs. “a share is not a sum of money but is an interest measured by a sum of
Steel Bors. & money and made up of various rights contained in the contract, including
Co. Ltd. the right to a sum of money of a more or less amount”.
16 Ashbury The facts of the case are: The main objects of a company were:
Railway To make, sell or lend on hire, railway carriages and wagons;
Carriage and
Iron Company To carry on the business of mechanical engineers and general contractors.
Limited v. To purchase, lease, sell and work mines.
Riche-(1875). To purchase and sell as merchants or agents, coal, timber, metals etc.
The directors of the company entered into a contract with Riche, for
financing the construction of a railway line in Belgium, and the company
further ratified this act of the directors by passing a special resolution. The
company however, repudiated the contract as being ultra-vires. And Riche
brought an action for damages for breach of contract. His contention was
that the contract was well within the meaning of the word general
contractors and hence within its powers. Moreover it had been ratified by a
majority of shareholders. However, it was held by the Court that the contract
was null and void. It said that the terms general contractors was associated
with mechanical engineers, i.e. it had to be read in connection with the
company’s main business. If, the term general contractor’s was not so
interpreted, it would authorize the making of contracts of any kind and
every description, for example, marine and fire insurance.
An ultra vires contract can never be made binding on the company. It cannot
become “Intravires” by reasons of estoppel, acquiescence, Iapse of time,
delay or ratification.
17 Guiness vs. The articles of association of a company are its rules and regulations, which
Land are framed to manage its internal affairs. Just as the memorandum contains
Corporation of the fundamental conditions upon which the company is allowed to be
Ireland incorporated, so also the articles are the internal regulations of the company
18 Ashbury “The articles play a part subsidiary to memorandum of association. They
Carriage Co. vs. accept the memorandum as the charter of incorporation, and so accepting it
Riches the articles proceed to define the duties, the rights and powers of the
governing body as between themselves and the company and the mode and
form in which the business of the company is to be carried on, and the mode
and form in which changes in the internal regulation of the company may
from time to time be made.”
19 S.S. Rajkumar The document containing the articles of association of a company (the
vs. Perfect Magna Carta) is a business document; hence it has to be construed strictly. It
Castings (P) regulates domestic management of a company and creates certain rights and
Ltd. obligations between the members and the company
20 The Royal Mr. Turquand was the official manager (liquidator) of the insolvent
British Bank vs. Cameron’s Coalbrook Steam, Coal and Swansea and Loughor Railway
Turquand. Company. It was incorporated under the Joint Stock Companies Act, 1844.
The company had given a bond for £ 2,000 to the Royal British Bank, which
secured the company’s drawings on its current account. The bond was under
the company’s seal, signed by two directors and the secretary. When the
company was sued, it alleged that under its registered deed of settlement
(the articles of association), directors only had power to borrow up to an
amount authorized by a company resolution. A resolution had been passed
but not specifying how much the directors could borrow.
Held, it was decided that the bond was valid, so the Royal British Bank
could enforce the terms. He said the bank was deemed to be aware that the
directors could borrow only up to the amount resolutions allowed. Articles
of association were registered with Companies House, so there was
constructive notice. But the bank could not be deemed to know which
ordinary resolutions passed, because these were not registrable. The bond
was valid because there was no requirement to look into the company’s
internal workings. This is the indoor management rule, that the company’s
indoor affairs are the company’s problem.
21 Howard vs. where the directors could not defend the issue of debentures to themselves
Patent Ivory because they should have known that the extent to which they were lending
Manufacturing money to the company required the assent of the general meeting which
Co. they had not obtained.
22 Morris v a director could not defend an allotment of shares to him as he participated
Kansseen in the meeting, which made the allotment. His appointment as a director
also fell through because none of the directors appointed him was validly in
office.
23 Anand Bihari the plaintiff accepted a transfer of a company’s property from its accountant,
Lal vs. Dinshaw the transfer was held void. The plaintiff could not have supposed, in absence
& Co. of a power of attorney that the accountant had authority to effect transfer of
the company’s property.
24 Haughton & where a person holding directorship in two companies agreed to apply the
Co. v. Nothard, money of one company in payment of the debt to other, the court said that it
Lowe & Wills was something so unusual “that the plaintiff were put upon inquiry to
Ltd. ascertain whether the persons making the contract had any authority in fact
to make it.” Any other rule would “place limited companies without any
sufficient reasons for so doing, at the mercy of any servant or agent who
should purport to contract on their behalf.”
25 Ruben v Great In this case the plaintiff was the transferee of a share certificate issued under
Fingall the seal of the defendant’s company. The company’s secretary, who had
Consolidated affixed the seal of the company and forged the signature of the two directors,
issued the certificate.
The plaintiff contended that whether the signature were genuine or forged
was apart of the internal management, and therefore, the company should
be estopped from denying genuineness of the document. But it was held,
that the rule has never been extended to cover such a complete forgery.
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CA FOUNDATION FREE CLASSES.

DEC, 2020 EXAMS – PAPER 2 : LAW AND BCR

SECTIONS LIST AND CASE LAWS FOR CA FOUNDATION

ABOUT THE AUTHOR.

• CHARTERED ACCOUNTANT BY PROFESSION AND

SECTIONS LIST FOR CA FOUNDATION STUDENTS

THE INDIAN CONTRACT ACT, 1872

26 Agreement in restraint of marriage, void

36 Agreement contingent on impossible events void.

60 Application of payment where debt to be discharged is not indicated.

CASE LAWS LIST FOR CA FOUNDATION STUDENTS

THE INDIAN CONTRACT ACT, 1872

Durga Prasad v. D (defendant) promised to pay to P (plaintiff) a certain commission on articles

SECTIONS LIST FOR CA FOUNDATION STUDENTS

THE SALE OF GOODS ACT, 1930

13 When condition to be treated as warranty.

28 Sale by one of joint owners.

44 Liability of buyer for neglecting or refusing delivery of goods.

60 Repudiation of contract before due date.

CASE LAWS LIST FOR CA FOUNDATION STUDENTS

THE SALE OF GOODS ACT, 1930

SECTIONS LIST FOR CA FOUNDATION STUDENTS

INDIAN PARTNERSHIP ACT, 1932

13 Mutual right and liabilities.

29 Rights of transferee of a partner's interest.

45 Liability for acts of partners done after dissolution.

59A Deletion and addition of certain entries relating to certain firms.

72 Mode of giving public notice.

CASE LAWS LIST FOR CA FOUNDATION STUDENTS

INDIAN PARTNERSHIP ACT, 1932

SECTIONS LIST FOR CA FOUNDATION STUDENTS

LIMITED LIABILITY PARTNERSHIP ACT, 2008

13 Registered office of limited liability partnership and change therein.

45 Firm, body corporate or association not to be appointed as inspector.

61 Power of Tribunal to enforce compromise or arrangement.

SECTIONS LIST FOR CA FOUNDATION STUDENTS

THE COMPANIES ACT, 2013

CASE LAWS LIST FOR CA FOUNDATION STUDENTS

THE COMPANIES ACT, 2013

into liquidation due to general trade depression. The unsecured creditors to

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