1.

What are the various ways in which a contract can be discharged? Explain with cases.

Ans: When an agreement, which was binding on the parties to it, ceases to bind them, the
contact is said to be discharged. A contract may be discharged in the following ways:
1.
By Performance of the contract ;
Under a contract each party is bound to perform his part of the obligation. After the parties have
made due performance of the contract, their liability under the contract comes to an end. In such a
case the contract is said to be discharged by performance.
2.
By breach of the contract ;
When a party having a duty to perform a contract fails to do that, or does an act whereby the
performance of the contract by him becomes impossible, or he refuses to perform the contract, there
is said to be a breach of contract on his part. On the breach of contract by one party, the other party is
discharged from his obligation to perform his part of the obligation, and he also gets a right to sue the
party making the breach of contract for damages for the loss occasioned to him due to the breach of
contract. The breach of contract may be either actual, i.e., non-performance of the contract on the
due date of performance, or anticipatory, i.e., before the due date of performance has come. For
example, A is to supply certain goods to B on 1st January. On 1st January A does not supply the goods.
He has made actual breach of contract. On the other hand, if A informs B on 1st December that he will
not perform the contract on 1st January next, A has made anticipatory breach of contract
3.

By impossibility of performance ;
Section 56, which deals with this question, mentions two kinds of impossibility.
Firstly, impossibility existing at the time of the making of the contract.
An agreement to do an act impossible in itself is void. The object of making any contract is that the
parties to it would perform their respective promises. If a contract is impossible of being performed,
the parties to it will never be able to fulfil their object, and hence such an agreement is void. For
example, A agrees with B to discover treasure by magic. The performance of the agreement being
impossible, the agreement is void. Similarly, an agreement to bring a dead man to life is also void.
Secondly, a contract which is possible of performance and lawful when made, but the same
becomes impossible or unlawful thereafter due to some supervening event.
Ex: A Contracts to take in cargo for B at a foreign port. As Government afterwards declares war
against the country in which the port is situated. The contract becomes void when war is declared.

The performance of the contract may be possible when the contract is entered into but because of
some event, which the promisor could not prevent, the performance may become impossible or
unlawful.
4.

By Agreement and Novation

Section 62 and 63 deals with contracts in which the obligation of the parties to it may end by
consent of the parties.
Novation
Novation means substitution of an existing contract with a new one. When, by an agreement
between the parties to a contract, a new contract replaces an existing one, the already existing
contract is thereby discharged, and in its pace the obligation of the parties in respect of the new
contract comes into existence.
Ex: For example, A owes B 10,000 rupees. A enters into an agreement with B , and gives B a
mortgage of his (As) estate for 5,000 rupees in place of the debt of 10,000 rupees. This is a new

contract and extinguishes the old. In this illustration the parties to the contract remain the same but
there is a substitution of a new contract with altered terms in place of the old one.

Q2. Explain Goods under Sales of Goods Acts. Explain the rights of an unpaid seller.
ANS: As per Sale of Goods Act, 1930, goods means every kind of movable property other than
actionable claims and money; and includes stock and shares, growing crops, grass, and things
attached to or forming part of the land which are agreed to be severed before sale or under the
contract of sale.
Unpaid seller means a person who has sold the good for a price but price has not been paid to him
unpaid seller has rights against the goods and buyer.

RIGHTS OF AN UNPAID SELLER

The unpaid seller has following rights.
1) Rights against the goods.
i.Rights of lien
The right of lien means lawfully right to retain the goods possession until the full price is received.
Anunpaid seller can exercise his right of lien in following cases. Sec 47-49
I. Where the goods have been sold on the cash basis.
II. Where the goods have been sold on credit basis and the term of credit has expired.
III.Where the buyer has become insolvent even if the period of credit has not been expired
Example: A seller S sells a TV set to B and delivers it to B and since the TV set was not
functioning properly,B delivered it back to S for the repairs. It was held that S can not exercise
his right of lien over TVset.

ii.Right of stoppage of goods in transit

It means stoppage of goods while they are in transit to take possession until the price is paid (sec.
50-52)
Unpaid seller can stop the goods in transit in the following cases.
I. While the buyer becomes insolvent
II. While the goods are out of actual possession of seller, but have not reached buyers possessioni.e.
goods are in transit with career.
III.The unpaid seller can stop the goods in transit only for payment of the price of the goods andnot
for any other charges

Example: A sells TV set to B. A delivers the TV to the carrier to carry it to B. Later on gets
news that Bhas become insolvent; A can stop delivery.

iii. Right of resale

If a buyer fails to pay or offer the price within a reasonable time, the unpaid seller has the right to
resellthe goods in the following circumstances.
a)Where the goods are of perishable nature.
b)Where the unpaid seller has exercised his right of lien or stoppage in transit and gives a noticeto
buyer of his intension of resell the goods.
c)Where the unpaid seller has expressly reserved his right of resale.
Example: a)X sells vegetable to Y on credit, Y does not pay, X can resell to any other person.
b)M sells 100 blankets to N and gives him one week for payment. N does not pay. M
canresell those to any other person.

2)Rights against buyer personally

i. Suit for price
Where ownership of the goods has passed to the buyer and the buyer refuses to pay the price
accordingto the terms of the contract, the seller can sue the buyer for price, irrespective of delivery
of the goods
ii. Suit for damages for non-acceptance
Where the buyer refuses to accept and pay for the goods, the seller may sue him for damages for
non-acceptance. The seller can recover damages only and not the full price
iii. Suit for special damages and interest
The seller can sue the buyer for special damages where the parties are aware of such damages at
thetime of contract. The unpaid seller can recover interest at a reasonable rate on the total unpaid
price of goods, from the time it was due until it is paid.

Q.3: Define Defects and Deficiencies. What are the rights available to a consumer who has
suffered from the two.
ANS: Section 2(1)(f) of the Act provides that, defect means any fault, imperfection or shortcoming
in the quality, quantity, potency, purity or standard which is required to be maintained by or under
any law of the time being in force under any contract, express or implied or as is claimed by the
trader in any manner whatsoever in relation to any goods.
This is an exhaustive definition. It means that the Act recognises only those defects which are
covered by the definition. Any type of defect not mentioned here will not be entertained by
Consumer Forums. Moreover the defect has to be in relation to goods only, i.e., if an item does not
fall within the definition of Goods, no defect can be complained therein. However, the coverage of
this definition is very wide.
Section 2(1)(g) of the Act provides that, deficiency means any fault, imperfection, shortcoming or
inadequacy in the quality, nature and manner of performance which is required to be maintained by
or under any law for the time being in force or has been undertaken to be performed by a person in
pursuance of a contract or otherwise in relation to any service.

RIGHTS AVAILABLE TO A CONSUMER WHO SUFFERED FROM DEFECTS AND DEFICIENCIES:

Depending on the facts and circumstances, the Redressal Forums may give order for one or more of
the following relief to consumer in case of defects or deficiencies found in the product:
1. Removal of defects from the goods;
2. Replacement of the goods;
3. Refund of the price paid;
4. Award of compensation for the loss or injury suffered;
5. Removal of defects or deficiencies in the services;
6. Discontinuance of unfair trade practices or restrictive trade practices or direction not to repeat
them;
7. Withdrawal of the hazardous goods from being offered to sale; or
8. Award for adequate costs to parties.
There is no limit on amount of compensation you can claim, but it has to be proportionate & rational
with the loss or injury suffered by you. Always be reasonable in the amount you want to claim as this
will make it easier for the court to make a finding in your favor.

Q4. Explain the difference between cheques, bills of exchange and promissory notes?
Ans: Promissory Statements -> A promissory note is an instrument in writing containing an
unconditional undertaking signed by the maker to pay a certain sum of money only to a certain
person or the bearer of the instrument.
Bill of Exchange -> A bill of exchange is an instrument in writing containing an unconditional order,
signed by the maker, directing a certain person to pay another person a certain sum of money.
Cheque -> A cheque is a bill of exchange on a specified banker and not expressed to be payable
otherwise than on demand.

Some Common differences:

1. Unconditional order/promise: A cheque and a bill of exchange contain an order to the
drawee whereas a promissory note contains a promise by the maker to his creditor. Thus the main
difference between a cheque and a bill on the one hand and a promissory note on the other is that
the cheque and the bill contain an order from the creditor to the debtor to pay a sum of money
while he promissory note contains an undertaking or promise made by the debtor to his creditor to
pay the sum specified therein.
2. The drawee of a cheque or bill : The main difference between a cheque and a bill is that the
former is always drawn on and is payable by a banker specified therein, while a bill of exchange may
be drawn on any person, firm or company. Thus only a customer of a bank having a current or a
savings bank account is entitled to draw a cheque on his banker i.e., the particular branch of a bank
where he has opened his bank account. The name and address of the drawee bank are specifically
printed on the cheque form. A bill of exchange is generally drawn by a seller on his customer, or by a
creditor on his debtor. Sometimes accommodation bills are also drawn to help a familiar party.
3. The amount of the instrument must be certain: The order of the drawer of a cheque or a
bill and the promise by the writer of a promissory note must be to pay a certain sum of money and
not anything else, e.g., securities or goods, etc. The amount of money to be paid must be certain and
specified in words and figures. According to Section 5, the sum payable may be certain although.

4. The time of payment: A cheque is always payable on demand, through words to this effect
are not mentioned therein. A bill may be payable at sight or after a period of time specified therein.
A promissory not or a bill of exchange in which no time for payment is specified is payable on
demand (Section 19). If a bill is payable after a certain period it must be accepted by a drawee. But
no such acceptance is necessary in case of a cheque. If cheque is a post-dated cheque is does not
constitute an order to the banker till the date specified therein approaches Banks do not make
payment of such cheques before the date given in the cheques
5. Stamping of promissory notes and bills of exchange is necessary: The Indian Stamp Act,
1899 requires that the promissory note and the bills of exchange must be stamped. This is not
required in case of a cheque. The value of stamp depends upon the value of the note or the bill and
whether it is payable on demand or at a future date. A note or bill without stamp cannot be
admitted in evidence. It may be stamped either before or at the time of its execution.
Promissory Note

Bill of Exchange

In a promissory note there are two parties i.e. the maker

and payee
A promissory note contains an unconditional promise to
pay
The maker of a promissory note is the debtor himself and
he undertakes to pay.
A promissory note cannot be made payable to the maker
himself.
The liability of the maker of a promissory note is primary
and absolute
A note needs no acceptance as it is signed by the person
who is liable to pay.

In a bill of exchange there are three parties the drawer,

drawee and payee
A bill of exchange contains an unconditional order to pay.

Bill Of Exchange

Cheque

A bill of exchange may be drawn on any person, including

a banker
A bill of exchange must be accepted before the drawee
can be called upon to make payment upon it.
Every bill of exchange which is not expressed to be
payable on demand is entitled to 3 days of grace.
A bill is never crossed

A cheque is always drawn on a banker

drawn on a banker
A cheque does not require acceptance

The drawer of a bill of exchange is the creditor who directs

the drawee i.e. his debtor to pay.
In a bill the drawer and the payee may be one and the same
person
The liability of the drawer of a bill is secondary and
conditional as the bill needs acceptance.
A bill payable after a certain period must be accepted by the
drawee before it is presented for payment.

A cheque is not entitled to any days of grace.

A cheque may be crossed

Q5: What are the rights of a person if a cheque or BOE given to him are dishonored?
ANS:
The rights of a person if a BOE GIVEN TO HIM ARE DISHONORED are covered under section 99 and
100 of Negotiable Instruments Act, 1881. They are:
Noting
Where a note or bill is dishonoured, the holder is entitled after giving due notice of dishonour, to sue
the drawer and the endorsers. Section 99 provides a convenient method of authenticating the fact
of dishonour by means of "Noting". Where a bill or note is dishonoured, the holder may, if he so

desires, cause such dishonour to be noted by a notary public on the instrument, or on a paper
attached thereto or partly on each. The noting or minute must be recorded by the notary public
within a reasonable time after dishonour and must contain the fact of dishonour, the date of
dishonour, the reason, if any, assigned for such dishonour if the instrument has not been expressly
dishonoured the reasons why the holder treats it dishonoured and notary's charges.
Protest
The protest is the formal notarial certificate attesting the dishonour of the bill, and based upon the
noting which has been effected on the dishonour of the bill. After the noting has been made, the
formal protest is drawn up by the notary and when it is drawn up it relates back to the date of
noting.
Where the acceptor of a bill has become insolvent, or has suspended payment, or his credit has
been publicly impeached, before the maturity of the bill, the holder may have the bill protested for
better security. The notary public demands better security and on its refusal makes a protest known
as "protest for better security".
Foreign bills must be protested for dishonour when such protest is required by the law of the
place where they are drawn. Foreign promissory notes need not be so protested. Where a bill is
required by law to be protested, then instead of a notice of dishonour, notice of protest must be
given by the notary public.
A protest to be valid must contain on the instrument itself or a literal transcript thereof,the names
of the parties for and against whom protest is made, the fact and reasons for dishonour together
with the place and time of dishonour and the signature of the notary public. Protest affords an
authentic evidence of dishonour to the drawer and the endorsee.
INCASE OF DISHONOUR OF CHEQUES
Chapter XVII of the Negotiable Instruments Act provides for penalties in case of dishonour of certain
cheques for insufficiencies of funds in the accounts. Sections 138 to 142 deal with these aspects.
The provisions contained in this Chapter provide that where any cheque drawn by a person for
discharge of any liability is returned by the bank unpaid for the reason of insufficiency of the amount
of money standing to the credit of the account on which the cheque was drawn or for the reason
that it exceeds the arrangement made by the drawer of the cheque with the banker for that
account, the drawer of such cheque shall be deemed to have committed an offence. In that case, the
drawer, without prejudice to the-6fher provisions of the Act, shall be punishable with imprisonment
for a term which may extend to one year, or with fine which may extend to twice the amount of the
cheque, or with both.
In order to constitute the said offence
(a) such cheque should have been presented to the bank within a period of six
months from the date on which it is drawn or within the period of its validity, whichever is earlier;
and
(b) the payee or holder in due course of such cheque should have made a demand for the payment
of the said amount of money by giving notice, in writing, to the drawer of the cheque within fifteen
days of the receipt of information by him from the bank regarding the return of the cheque unpaid;
and

(c) the drawer of such cheque should have failed to make the payment of the said amount of money
to the payee or the holder in due course of the cheque within fifteen days of the receipt of the said
notice.
It has also been provided that it shall be presumed, unless the contrary is proved, that the holder of
such cheque received the cheque in the discharge of a liability

Q.6: What is meant by breach of contract? What are the remedies available for the same?
Ans: When a party having a duty to perform a contract fails to do that, or does an act whereby the
performance of the contract by him becomes impossible, or he refuses to perform the contract,
there is said to be a breach of contract on his part. On the breach of contract by one party, the other
party is discharged from his obligation to perform his part of the obligation, and he also gets a right
to sue the party making the breach of contract for damages for the loss occasioned to him due to
the breach of contract. The breach of contract may be either actual, i.e., non-performance of the
contract on the due date of performance, or anticipatory, i.e., before the due date of performance
has come. For example, A is to supply certain goods to B on 1st January. On 1st January A does not
supply the goods. He has made actual breach of contract. On the other hand, if A informs B on 1st
December that he will not perform the contract on 1st January next, A has made anticipatory
breach of contract

When one of the parties to the contract makes a breach of the contract the following
remedies are available to the other party.
1.
Damages : Remedy by way of damages is the most common remedy available to the injured
party. This entitles the injured party to recover compensation for the loss suffered by it due to the
breach o9f contract, from the party who caused the breach. Section 73 to section 75 incorporate
provisions in this regard.
2.
Quantum meruit : When the injured party has performed a part of his obligation under the
contract before the breach of contract has occurred, he is entitled to recover the value of what he
has done, under this remedy.
3.
Specific Performance and Injunction :
Sometimes a party to the contract instead of recovering damages for the breach may have
recourse to the alternative remedy of specific performance of the contract, or an injunction
restraining the other party from making a breach of the contract. Provisions regarding
these remedies have been contained in the Specific Relief Act, 1963.

Q7. Exceptions to Caveat Emptor

Ans: The shelter of caveat emptor rule is not available to shelter on the following occasions; When
caveat emptor is not applicable buyer can repudiate the contract.

When Sale is need by means of description: When goods are sold on the basis of description, the
delivered goods must be in accordance with description. If it is not so, sellers fraudulent behavior can
be observed and there is no ground to say that buyer is negligent. Then caveat emptor rule is not
applicable and buyer can repudiate the contract.
A case on this point is Vorley Vs Whipp. In this case, there is a sale between A and B according to
which A has to sell his harvester to B. While selling A gives a lot of description about the machine.
There after B comes to know that the delivered machine is not in accordance with given description. B
Sues for repudiation of contract of sale. Court decides that as delivered goods are not in accordance
with given description, caveat emptor rule is not applicable and hence buyer can repudiate the
contract.
When sale is made by means of sample: When goods are sold on the basis of sample, the delivered
goods must be in resemblance with sample. Otherwise seller cannot claim the shelter of caveat
emptor rule.
Related case is Wallis Vs Prat. In this case a contract of sale gets formed between A and B according to
which A has to supply English sain fain seeds. The contract is based on samples. But A supplies giant
sain fain seeds. Court decides that buyer can repudiate the contract of Sale.
When purpose is mentioned: at the time of purchasing the goods if buyer communicates the purpose
for the sake of which he is purchasing the goods seller should sell such goods only which are suitable
to that purpose otherwise caveat emptor rule is not applicable.
A case on the point is Priest Vs Laste. In this case, B purchases a bottle from A. At the time of
purchasing the bottle the buyer says that it should be qualified for storage of hot water. Thus here
purpose is mentioned but the seller sells such a bottle which is not qualified for storage of hot water.
As a consequence buyers wife gets injured. Court decides that buyer can claim compensation.
When concealment is made: In case where buyer conceals material facts and thus fraudulently sells
goods, then also caveat emptor rule is not applicable.
A case on this point is Smith Vs Green. In this case a contract of sale gets formed between A and B
according to which A has to sell an animal to B out of his (A`s) farm. B selects an animal and requests
A to confirm that there is no any sickness to that animal. Actually the animal has been suffering from
some sickness and A conceals the fact. There after it comes across death and court decides that B can
get the amount back.

When mis-representation is made: When seller sells the goods by giving mis-representation, he
cannot claim the protection of caveat emptor rule. Hence buyer can repudiate the contract. Under
first point Vorley Vs Whipp is explained. In the same case mis-representation or wrong description can
be seen in connection with Harvester.

Q8 Define a company under Companies Act, 2013 and explain how directors of a company are
appointed and their responsibilities under the act.

Ans:
Clause 20 of the Companies Act, 2013 define the term 'company' as " a company formed and
registered under the Act or an existing company i.e. a company formed or registered under any of
the previous company laws

Characteristics of a Company
Incorporation offers the following advantages to the business community as compared with all other
kinds of business organisations
1.
Independent Corporate Existence / Legal Entity
2.
Limited Liability
3.
Perpetual Succession
4.
Separate property
5.
Transferable Shares
6.
Common Seal
7.
Capacity to sue and being sued

Definition: Director
The Directors of a company are selected according to the Articles of Association of the
company and the provisions of the Company Act. They are in charge of the management of the
affairs of the company. The directors are collectively called the Board of Directors. The board is the
companys executive authority.

Appointment of the Directors

a) First Director: The Articles of a company usually mention the names of the first directors by their
respective names or prescribe the method of appointing them. The person whose name is
mentioned in the Articles becomes the first director of the company. If no name is mentioned in the
Articles, then the number of directors and the names of the directors shall be determined in writing
by the subscribers of the Memorandum or a majority of them (Clause 64 of Table A).
b) Appointment of the directors by the company (sec 255 to 257, 263 and 264): In the case of a
public company or a private company which is a subsidiary of a public company, at least 2/3rds of
the total number of directors shall be liable to retire by rotation. Such directors are called rotational
directors. The directors are appointed by the shareholders of the company in the general meeting.
c) Appointment of directors by the Board of directors: The Board of directors of a company may
also appoint the directors as:
Additional directors: Any additional director appointed by the directors shall hold office only upto
the date of the next annual general meeting of the company. The number of directors and the
additional director must not exceed the maximum strength fixed for the Board by the Articles.
Casual vacancy: In case of either a private or a public company, if the office of any director
appointed by the company in a general meeting is vacated before his term of office expires in the
normal course, then the resulting casual vacancy may be filled by the Board of directors at a meeting
of the Board.

Alternate director: An alternate director may be appointed by the Board of directors of the company
if it is so authorized by (i) Articles of the company or (ii) a resolution passed by the company in the
general meeting. He shall act for the original director during his absence for a period of at least 3
months from the state in which the Board meetings are actually held.
d) Appointment of directors by third parties: Directors are also appointed by the third parties like
the debenture holders, creditors who have substantial interest in the company. In certain cases the
Articles gives substantial power to the debenture holders, or other creditors like banks and other
financial institutions who have advanced loans to the company to appoint their nominees to the
Board. The number of directors so appointed should not exceed 1/3rd of the total number of
directors and they are not liable to retire by rotation.
e) Appointment by proportional representation(Sec 265): The articles of a company may provide
for the appointment of not less than 2/3rds of total number of directors of a public company or of a
private company according to the according to the principle of proportional representation. The
proportional representation may be a single transferable vote or by a system of cumulative voting or
otherwise. The appointment shall be made once in 3 years and interim casual vacancies shall be
filled in the manner as provided in the Articles.
f) Appointment of directors by the Central Government (Sec 408): Sec 408 empowers the
Government to appoint such directors to the Board of a company as the Company Law Board may,
by order in writing, specify as necessary to effectively safeguard the interests of the company or its
shareholders or public interest. The appointment will be for a period not exceeding 3 years on any
one occasion.
Any director appointed by the Central government shall not be required to hold any qualification
shares nor can is his tenure liable to termination by retirement of directors.
g) Qualification based on the number of shares held by the person in the company
No person can hold the office of the director in more than 2 companies.

Duties of the Directors of a Company

The duties of the director of a company are as follows:
a) The director must exercise their powers honestly and for the benefit of the company as a whole.
b) The directors must not place themselves in a position in which there is a conflict between their
duties to the company and their personal interests. They must not take out any secret profit out of
their position.
c) Duties of care, skill and diligence: The directors should carry out their duties with reasonable care
in handling the official matters and exercise high degree of skill and diligence as is expected from
persons of their knowledge and status. He is not bound to bring any special qualifications to his
office.
d) To attend the Board meetings and the statutory meetings of the company.
e) It is the duty of the director not to delegate his functions except to the extent authorized by the
Act or the constitution of the company.

f) It is obligatory on the part of the director to disclose his interests in any contract to be entered by
the company and the number of shares held by him.

Q.9: What are the various ways in which a company can be wound up?
ANS:
Winding up of a company is defined as a process by which the life of a company is brought to an end
and its property administered for the benefit of its members and creditors. An administrator, called
the liquidator, is appointed and he takes control of the company, collects its assets, pays debts and
finally distributes any surplus among the members in accordance with their rights. At the end of
winding up, the company will have no assets or liabilities. When the affairs of a company are
completely wound up, the dissolution of the company takes place. On dissolution, the company's
name is struck off the register of the companies and its legal personality as a corporation comes to
an end.
The procedure for winding up differs depending upon whether the company is registered or
unregistered. A company formed by registration under the Companies Act, 1956 is known as a
registered company. It also includes an existing company, which had been formed and registered
under any of the earlier Companies Acts.
Winding up a Registered Company
The Companies Act provides for two modes of winding up a registered company.
Grounds for Compulsory Winding Up or Winding up by the Tribunal
If the company has, by a Special Resolution, resolved that the company be wound up by the
Tribunal.
If default is made in delivering the statutory report to the Registrar or in holding the statutory
meeting. A petition on this ground may be filed by the Registrar or a contributory before the expiry
of 14 days after the last day on which the meeting ought to have been held. The Tribunal may
instead of winding up, order the holding of statutory meeting or the delivery of statutory report.
If the company fails to commence its business within one year of its incorporation, or suspends its
business for a whole year. The winding up on this ground is ordered only if there is no intention to
carry on the business and the Tribunal's power in this situation is discretionary.
If the number of members is reduced below the statutory minimum i.e. below seven in case of a
public company and two in the case of a private company.
If the company is unable to pay its debts.
If the tribunal is of the opinion that it is just and equitable that the company should be wound up.
Tribunal may inquire into the revival and rehabilitation of sick units. It its revival is unlikely, the
tribunal can order its winding up.
If the company has made a default in filing with the Registrar its balance sheet and profit and loss
account or annual return for any five consecutive financial years
If the company has acted against the interests of the sovereignty and integrity of India, the security
of the State, friendly relations with foreign States, public order, decency or morality.
The petition for winding up to the Tribunal may be made by : The company, in case of passing a special resolution for winding up.
A creditor, in case of a company's inability to pay debts.
A contributory or contributories, in case of a failure to hold a statutory meeting or to file a statutory
report or in case of reduction of members below the statutory minimum.
The Registrar, on any ground provided prior approval of the Central Government has been obtained.
A person authorised by the Central Government, in case of investigation into the business of the
company where it appears from the report of the inspector that the affairs of the company have

been conducted with intent to defraud its creditors, members or any other person.
The Central or State Government, if the company has acted against the sovereignty, integrity or

security of India or against public order, decency, morality, etc.

Voluntary Winding Up of a Registered Company
When a company is wound up by the members or the creditors without the intervention of Tribunal, it
is called as voluntary winding up. It may take place by: By passing an ordinary resolution in the general meeting if :- (i) the period fixed for the duration of
the company by the articles has expired; or (ii) some event on the happening of which company is to
be dissolved, has happened.
By passing a special resolution to wind up voluntarily for any reason whatsoever.
Within 14 days of passing the resolution, whether ordinary or special, it must be advertised in the
Official Gazette and also in some important newspaper circulating in the district of the registered
office of the company.
The Companies Act (Section 484) provides for two methods for voluntary winding up:Members' voluntary winding up
It is possible in the case of solvent companies which are capable of paying their liabilities in full. There
are two conditions for such winding up: A declaration of solvency must be made by a majority of directors, or all of them if they are two in
number. It will state that the company will be able to pay its debts in full in a specified period not
exceeding three years from commencement of winding up. It shall be made five weeks preceding
the date of resolution for winding up and filed with the Registrar. It shall be accompanied by a copy
of the report of auditors on Profit & Loss Account and Balance Sheet, and also a statement of assets
and liabilities upto the latest practicable date; and
Shareholders must pass an ordinary or special resolution for winding up of the company.
The provisions applicable to members' voluntary winding up are as follows: Appointment of liquidator and fixation of his remuneration by the General Meeting.
Cessation of Board's power on appointment of liquidator except so far as may have been sanctioned
by the General Meeting, or the liquidator.
Filling up of vacancy caused by death, resignation or otherwise in the office of liquidator by the
general meeting subject to an arrangement with the creditors.
Sending the notice of appointment of liquidator to the Registrar.
Power of liquidator to accept shares or like interest as a consideration for the sale of business of the
company provided special resolution has been passed to this effect.
Duty of liquidator to call creditors' meeting in case of insolvency of the company and place a
statement of assets and liabilities before them.
Liquidator's duty to convene a General Meeting at the end of each year.
Liquidator's duty to make an account of winding up and lay the same before the final meeting.
Creditor's voluntary winding up
It is possible in the case of insolvent companies. It requires the holding of meetings of creditors
besides those of the members right from the beginning of the process of voluntary winding up. It is
the creditors who get the right to appoint liquidator and hence, the winding up proceedings are
dominated by the creditors.
The provisions applicable to creditors' voluntary winding up are as follows: The Board of Directors shall convene a meeting of creditors on the same day or the next day after
the meeting at which winding up resolution is to be proposed. Notice of meeting shall be sent by
post to the creditors simultaneously while sending notice to members. It shall also be advertised in
the Official Gazette and also in two newspapers circulating in the place of registered office.

 A statement of position of the company and a list of creditors along with list of their claims shall be

placed before the meeting of creditors.

A copy of resolution passed at creditors' meeting shall be filed with Registrar within 30 days of its
passing.
It shall be done at respective meetings of members and creditors. In case of difference, the nominee
of creditors shall be the liquidator.
A five-member Committee of Inspection is appointed by creditors to supervise the work of
liquidator.
Fixation of remuneration of liquidator by creditors or committee of inspection.
Cessation of board's powers on appointment of liquidator.
As soon as the affairs of the company are wound up, the liquidator shall call a final meeting of the
company as well as that of the creditors through an advertisement in local newspapers as well as in
the Official Gazette at least one month before the meeting and place the accounts before it. Within
one week of meeting, liquidator shall send to Registrar a copy of accounts and a return of
resolutions.
Winding up an Unregistered Company
According to the Companies Act, an unregistered company includes any partnership, association, or
company consisting of more than seven persons at the time when petition for winding up is
presented. But it will not cover the following: A railway company incorporated by an Act of Parliament or other Indian law or any Act of the British
Parliament;
A company registered under the Companies Act, 1956
A company registered under any previous company laws.
An illegal association formed against the provisions of the Act.
However, a foreign company carrying on business in India can be wound up as an unregistered
company even if it has been dissolved or has ceased to exist under the laws of the country of its
incorporation.
The provisions relating to winding up of a unregistered company: Such a company can be wound up by the Tribunal but never voluntarily.
Circumstances in which unregistered company may be wound up are as follows: If the company has been dissolved or has ceased to carry on business or is carrying on business only
for the purpose of winding up its affairs.
If the company is unable to pay its debts.
If the Tribunal regards it as just and equitable to wind up the company.
Contributory means a person who is liable to contribute to the assets of a company in the event of
its being wound up. Every person shall be considered a contributory if he is liable to pay any of the
following amounts: Any debt or liability of the company;
Any sum for adjustment of rights of members among themselves;
Any cost, charges and expenses of winding up;
On the making of winding up order, any legal proceeding can be filed only with the leave of the
Tribunal.

Q.10: How have the MRTP / Competition Act tried to restrict the concentration of economic power
in the hands of a few people?
Ans: Restrictive Trade Practice means a trade practice which tends to bring about manipulation of
price or its conditions of delivery or to affect flow of supplies in the market relating to goods or

services in such a manner as to impose on the consumers unjustified costs or restrictions and shall
included
Delay beyond the period agreed to by a trader in supply of such goods or in providing the
services which has led or is likely to lead to rise in the prices
Any trade practice which requires a consumer to buy, hire or avail of any goods or services
as a condition precedent to buying, hiring or availing of other goods or services.

Q11 What are various types of companies that can be registered under the Companies Act, 2013?
Ans:
There are totally 15 types of companies can be formed under the Companies Act, 2013.
Public Limited Companies
1. Public Company limited by shares
2. Public Company limited by Guarantee having share capital
3. Public Company limited by Guarantee and having no share capital
4. Public unlimited Company having share capital
5. Public unlimited Company not having share capital
Public Limited Companies
1. Private Company limited by shares
2. Private Company limited by Guarantee having share capital
3. Private Company limited by Guarantee and having no share capital
4. Private unlimited Company having share capital
5. Private unlimited Company not having share capital
One Person Company (OPC)
1. OPC Company limited by shares
2. OPC Company limited by Guarantee having share capital
3. OPC Company limited by Guarantee and having no share capital
4. OPC unlimited Company having share capital
5. OPC unlimited Company not having share capital.

Q.12 Power of various forums and their jurisdictions?

Ans: Establishment of Consumer Disputes Redressal Agencies. - There shall be established for the
purposes of this Act, the following agencies, namely:
(a) a Consumer Disputes Redressal Forum to be known as the "District Forum" established by the
State Government in each district of the State by notification:
Provided that the State Government may, if it deems fit, establish more than one District Forum in a
district.
(b) a Consumer Disputes Redressal Commission to be known as the "State Commission" established
by the State Government in the State by notification; and
(c) a National Consumer Disputes Redressal Commission established by the Central Government by
notification.

Composition of the District Forum. (1) Each District Forum shall consist of,
(a) a person who is, or has been, or is qualified to be a District Judge, who shall be its President;
(b) two other members, one of whom shall be a woman, who shall have the following qualifications,
namely:
(i) be not less than thirty-five years of age,
(ii) possess a bachelor's degree from a recognised university
Jurisdiction of the District Forum.(1) Subject to the other provisions of this Act, the District Forum
shall have jurisdiction to entertain complaints where the value of the goods or services and the
compensation, if any, claimed ''does not exceed rupees twenty lakhs.
(2) A complaint shall be instituted in a District Forum within the local limits of whose jurisdiction,
(a) the opposite party or each of the opposite parties, where there are more than one, at the time
of the institution of the complaint, actually and voluntarily resides or carries on business or has a
branch office or personally works for gain, or
(b) any of the opposite parties, where there are more than one, at the time of the institution of
the complaint, actually and voluntarily resides, or carries on business or has a branch office, or
personally works for gain, provided that in such case either the permission of the District Forum is
given, or the opposite parties who do not reside, or carry on business or have a branch office, or
personally work for gain, as the case may be, acquiesce in such institution; or
(c) the cause of action, wholly or in part, arises.
Composition of the State Commission. (1) Each State Commission shall consist of
(a) a person who is or has been a Judge of a High Court, appointed by the State Government, who
shall be its President:
Provided that no appointment under this clause shall be made except after consultation with the
Chief Justice of the High Court;
Jurisdiction of the State Commission. (1) Subject to the other provisions of this Act, the State
Commission shall have jurisdiction
(a) to entertain
(i) complaints where the value of the goods or services and compensation, if any, claimed exceeds
rupees twenty lakhs but does not exceed rupeesone crore; and
(ii) appeals against the orders of any District Forum within the State; and
(b) to call for the records and pass appropriate orders in any consumer dispute which is pending
before or has been decided by any District Forum within the State, where it appears to the State
Commission that such District Forum has exercised a jurisdiction not vested in it by law, or has failed
to exercise a jurisdiction so vested or has acted in exercise of its jurisdiction illegally or with material
irregularity.
Composition of the National Commission.(1) The National Commission shall consist of
(a) a person who is or has been a Judge of the Supreme Court, to be appointed by the Central
Government, who shall be its President;
Provided that no appointment under this clause shall be made except after consultation with the
Chief Justice of India;

Jurisdiction of the National Commission. Subject to the other provisions of this Act, the National
Commission shall have jurisdiction
(a) to entertain
(i) complaints where the value of the goods or services and compensation, if any, claimed exceeds
rupees one crore; and
(ii) appeals against the orders of any State Commission; and
(b) to call for the records and pass appropriate orders in any consumer dispute which is pending
before or has been decided by any State Commission where it appears to the National Commission
that such State Commission has exercised a jurisdiction not vested in it by law, or has failed to
exercise a jurisdiction so vested, or has acted in the exercise of its jurisdiction illegally or with
material irregularity.

Q13 Define consumers?

Ans: A consumer is a person or group of people, such as a household, who are the final users of
products or services. The consumer's use is final in the sense that the product is usually not
improved by the use.

Q14. Define Relief.

Ans:
Financial assistance provided to the indigent by the government. The redress, or benefit, given by a
court to an individual who brings a legal action.
The relief sought in a lawsuit might, for example, be the return of property wrongfully takenby anoth
er, compensation for an injury in the formof damages, or enforcement of a contract.

Q15. What are the various alternate dispute resolution machinery available in India?
Ans:
The law codified in section 89 recognizes four different types of methods under ADR stated as
follows.
1. Arbitration
Arbitration involves procedurally simplified and expedited fact finding and decision by a
neutral third party, which decision is only binding on the parties in the instant case and
carries no precedential effect.
2. Conciliation
Conciliation involves direct discussion and bargaining between disputing parties to arrive at a

mutually acceptable resolution of disputed issues. Part III of the Act comprising sections 61
to 81 deal with the procedure for conciliation.
3. Mediation
Mediation is a voluntary and consensual process wherein the disputing parties are assisted in
reaching a mutually agreeable settlement by a neutral third party, whose role is to facilitate
communications and discussions, but who has no decision making power.
4. Judicial settlement including settlement through Lok Adalat
Lok Adalats were setup with an intent to provide free and competent legal services to
the economically deprived sections of the society. This noble initiative was implemented
to secure the faith of the rural masses in social justice and promote the ideals of equality before law
and equal protection before law as embedded in our constitution

MISCELLANEOUS ANS:
1. Trade secrets:
A trade secret is any information that allows you to make money because it is not generally known.
A trade secret could be a formula, computer program, process, method, device, technique, pricing
information, customer lists or other non-public information. If the economic value of a piece of
information relies on it being kept private, it could be a trade secret.
One of the most famous examples of a trade secret is the formula for Coca-Cola. The formula, also
referred to by the code name "Merchandise 7X," is known to only a few people and kept in the vault
of a bank in Atlanta, Georgia. The individuals who know the secret formula have signed nondisclosure agreements, and it is rumored that they are not allowed to travel together. In the past,
you could not buy Coca-Cola in India because Indian law required that trade-secret information be
disclosed. In 1991, India changed its laws regarding trademarks, and Coca-Cola can now be sold in
that country.
Trade secrets are very different from patents,copyrights and trademarks. While patents and
copyrights require you to disclose your information in the application process (information that
eventually becomes public), trade secrets require you to actively keep the information secret. Tradesecret protection can potentially last longer than that of patents (20 years) and copyrights (100
years).

2. Patents:

A patent denotes a grant from the Government of a monopoly in respect of an invention. It

is a grant conferring on the patentee for a limited period a monopolistic or exclusive right of making,
selling or licensing the invention.

A patent relates either to a specialised article or to a specialised process of manufacturing an

article. But whether it is an article or process the invention must have utility, novelty and
productivity. Invention is different from discovery. When something or some phenomena which is

existing but unknown, becomes known, it is discovery. Invention indicates some thing which
formerly did not exist, has come into existence.

Unlike a copyright, a patent right is not inherent in any invention. If any person invents a
new machine or other article, it does not mean he has a patented right in respect thereof. He gets
such a right only if he applies to the Government and after necessary inquiries, the Government is
satisfied that the invention deserves a patent; that is why it is said that a patent is a grant from the
Government.

3. Cartelisation:
A combination of producers of any product joined together to control its production, sale, and price, s
o as to obtain a Monopoly and restrictcompetition in any particular industry or commodity. Cartels e
xist primarily in Europe, being illegal in the United States under ANTITRUST LAWS.Also, an association by
agreement of companies or sections of companies having common interests, designed to prevent ext
reme or Unfair
Competition and allocate markets, and to promote the interchange of knowledge resulting from scie
ntific and technical research, exchange ofpatent rights, and standardization of products.
In war, an agreement between two hostile powers for the delivery of prisoners or deserters, or author
izing certain nonhostile intercoursebetween each other that would otherwise be prevented by the sta
te of war, for example, agreements between enemies for intercommunicationby post, telegraph, tele
phone, or railway.
4. Lifting the corporate veil:
DOCTRINE:

When a Company registered under the act, all the dealings with the company will be in the
name of company, and the members will be disregarded.

This shows that there is a veil drawn between the company and its members.

This veil is partition or curtain between the co. & its members.

Following this principle the Courts in most cases have refused to go behind the curtain & see
who are the real persons composing the company.
But sometimes the necessity of the situation may compel the authorities to disregard the corporate
legal entity & look to individual members who are in fact the real beneficial owners of all corporate
property. And this fact known as Lifting the corporate veil.
The Court will Lift the veil where it is essential to secure justice, in public interest or for the benefit
of revenue. But it must be keep in mind that a separate legal entity is still a general rule.
The corporate entity will be disregarded only in exceptional cases.
This case may be divided in:

Under Judicial Interpretation

Under Statutory Provision

1.
2.
3.

Judicial Provisions
Fraud Or Improper Conduct:
For Benefit Of Revenue:
Enemy Character:

4.
5.
6.
7.

1.
2.
3.
4.

Company Avoiding Legal Obligations:

Single Economic Entity:
Agency Or Trust:
Public Interest:
Statutory Provisions
Reduction Of Number Of Members:
Fraudulent Trading:
Misdescription Of The Company:
Holding And Subsidiary Companies:

5. Role of judiciary in India:

The judiciary of India is a powerful and independent institution. It is a mechanism for the legal
redressal of disputes and prosecution of legal offenders as well. Apart from this, the judiciary at the
higher level also interprets the Constitution and resolves disputes between the centre and states as
well as between different states. It protects the fundamental rights guaranteed by the Constitution
and is the mechanism to seek recourse to constitutional remedies. It also strikes down any law that
contravenes the Constitution in letter and spirit. Along with the legislature and the executive, it is
one of the three pillars of Indian democracy.
Justice K. Subba Rao explains the role/function of the judiciary as thus

It is a balancing wheel of the federation;

It keeps equilibrium between fundamental rights and social justice;

It forms all forms of authorities within the bounds;

It controls the Administrative Tribunals.

6. Hierarchy of Indian legal system

7. LEGAL TERMS AND MAXIMS:

A. Amicus Curiae: Someone who is not a party to a case, who offers information that bears on the
case but who has not been solicited by any of the parties to assist a court.
B. Writ of Certiorari:
A writ that a superior appellate court issues in its discretion to an inferior court, ordering it to pro
duce a certified record of a particular case ithas tried, in order to determine whether any irregula
rities or errors occurred that justify review of the case.
C. Alibi: a claim or piece of evidence that one was elsewhere when an act, typically a criminal one, is
alleged to have taken place.
D. Volenti Non fit injuria: a defence in tort that means where a person engages in an event
accepting and aware of the risks inherent in that event, then they cannot later complain of, or
seek compensation for an injury suffered during the event.
E. Injuria sine damnum: According to this maxim whenever there is an invasion of a legal right , the
person in whom the right is vested , is entitled to bring an action though he has suffered no
actual harm and may recover damages . It is sufficient to show that there is violation of a legal
right and the law will presume damage . On the strength of this maxim the libel , assault , battery
, false imprisonment and trespass on land or the mere wrongful acts are actionable without proof
of special damage .