MCQ Ultimate Solution - by Shubham Singhal

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Author’s Message
Hi Future CAs,
My name is Shubham Singhal. I had cleared my CA Final with an AIR-4 and I had done my
articleship with Deloitte in the Statutory Audit Department. I am a professor of CA Final Paper 4
and Paper 6D.
Bringing to you the third book of the “The Ultimate Solution Series” (after the Ultimate Solution
Summary Notes and Question Bank).
In the MCQ Compiler, I have compiled all the MCQs from ICAI MCQ Booklet and from the RTP
and MTP of May’21 and Dec’21 attempt. This compiler also includes MCQs from RTP of May’22
attempt. I have not compiled questions from RTP/MTP of 2020 and prior attempts because that is
not necessary but that will make the syllabus unmanageable. If you have some time and intent, feel
free to go with further past paper questions.
Special thanks to Vishnu Kumar and Ankita Jaiswal for supporting me in this effort!
Features of this MCQ compiler:

1. 130+ MCQs for Practice
2. Chapter-wise categorization of questions
3. Summary at the end of each question for ease of understanding gist of the question
4. A,B and C categorization of all the Questions:
 Category A – Must solve questions.
 Category B – Good to solve. If you have time, you must not Skip
 Category C – Can definitely skip if you are well versed with basic concepts of the chapter
5. Section Nos. mentioned along with each question for ease of reference.
6. Any incorrect answers in ICAI’s MCQ booklet has been correctly explained by way of
Author’s Note
Wishing you a happy learning!
Regards,
Shubham Singhal
Connect with me here:

Email – [email protected]
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The Ultimate Solution – MCQ Booklet (By Shubham Singhal AIR 4)

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Chapter-wise Index
Category Additional Page
SN Chapter Name Total
A B C Q* No.
Appointment and Qualification of
1 4 3 9 - 16 3
Directors
2 Meeting of Board and its Power 5 2 8 1 16 11
3 Managerial Remuneration 2 2 5 - 9 19
Inspection, Inquiry, and 24
4 1 5 6 - 12
Investigation
Compromise, Arrangement and 31
5 2 4 4 2 12
Amalgamation
Prevention of oppression and 37
6 2 3 2 1 8
Mismanagement
7 Miscellaneous (Companies Act) 11 6 1 8 26 42
8 SEBI Act and SEBI LODR 2 - - - 2 54
9 FEMA 5 2 - 5 12 55
10 Foreign Contribution Regulation Act - - 1 3 4 61
11 Prevention of Money Laundering 1 - - 3 4 63
12 Insolvency Bankruptcy Code 3 3 - - 6 65
13 Arbitration and Conciliation Act 1 1 - 2 4 68
Total Questions 39 31 36 25* 131
*Please Note – For past attempt RTPs and MTPs, repeat questions or repeat concepts have been
excluded here. These 25 questions are handpicked and must be practiced!
Upcoming Live Batch – Question Bank Summary Notes

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Chapter 1 – Appointment and Qualification of Directors
Category A question
Question:1 [Section:161(4)]
The Board of Directors of Pristine Pharmaceuticals Limited, which was incorporated under the
Companies Act, 2013, consists of seven directors. It so happened that one of the directors Mr.
Avinash who was appointed in the immediately previous Annual General Meeting (AGM) met with a
serious accident which ultimately resulted in his untimely death after a couple of days of this mis-
happening. Consequently, a casual vacancy in the office of director arose which needs to be filled
up. The Board of Directors of Pristine Pharmaceuticals Limited is contemplating to appoint Mr.
Rakesh in place of Mr. Avinash to fill the casual vacancy so originated. From the given options which
one you would have chosen as a CA if you were to advise the Board of Directors regarding the time
limit within which Mr. Rakesh could be appointed to fill such casual vacancy in the light of applicable
provisions of the Companies Act, 2013:
a) The casual vacancy created due to the untimely death of Mr. Avinash needs to be filled by the
Board of Directors of Pristine Pharmaceuticals Limited within 3 months from the date of
creation of such vacancy.
b) The casual vacancy created due to the untimely death of Mr. Avinash needs to be filled by the
Board of Directors of Pristine Pharmaceuticals Limited by passing a board resolution at its
meeting and such appointment of Mr. Rakesh shall be subsequently approved by the members
in the immediate next general meeting.
c) The casual vacancy created due to the untimely death of Mr. Avinash needs to be filled by the
Board of Directors of Pristine Pharmaceuticals Limited within one month from the date of
d) The casual vacancy created due to the untimely death of Mr. Avinash needs to be filled by the
Board of Directors of Pristine Pharmaceuticals Limited within two months from the date of
Answer – (b)
Summary: There is no specified time limit for filling casual vacancy u/s 161(4). Law only mentions
that such vacancy is to be filled by the BoD at a BoD meeting and such appointment shall be
subsequently approved by members in the immediate next GM
Question:2 [Section:165]
Prince is holding directorships in 20 companies of which 7 are public companies and out of 7, 3 have
been categorized as dormant companies. Further, in 2 of these 7 public companies, he is holding
alternate directorships. He has been offered directorships in 8 more public companies. Choose the
correct alternative from the following options whether he can legally hold directorships in all these
newly offered 8 public companies:
a) Along with existing 20 directorships he can be director in all the 8 new companies which have
offered him directorship.
b) Being already director in twenty companies, he cannot accept further directorship in any other
company.
c) Along with existing twenty directorships he can be director only in six new companies.
d) Along with existing twenty directorships he can be director only in three new companies.

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Answer – (d)
Author’s Note: As per Sec 165, no person shall hold office of director (incl. alt. director) in more
than 20 companies at the same time. Provided that, max no. of public co. in which a person can be
director shall not exceed 10. For reckoning limit of 20 cos., directorship in dormant company shall
NOT be included.
In this case, Prince is already director in 20 companies (of which 3 are dormant company), so he
can only become director in 3 more companies.
Question:3 [Section:168(1) + Rule 15]

Ritika Hospitality Services Limited, having its registered office in Bhikaji Cama Place, New Delhi,
is providing various kind of services, major components of which are tours and travels, both in
India and abroad. In addition to six directors, Andrezj, a resident of Warsaw, Poland also held
directorship in the company as foreign director. However, due to his extremely busy schedule at
Warsaw, he resigned and requested the company to relieve him from the directorship w.e.f. 23rd
July, 2021. With a view to intimate the Registrar regarding resignation of Andrezj, the company
filed DIR-12 on 26th July, 2021. In respect of signing and filing of DIR-11, which of the following
persons in India can be authorised by Andrezj in addition to a practising Chartered Accountant, a
Cost Accountant in practice and a Company Secretary in practice who can sign and file the said
Form DIR-11 on his behalf:
a) His professional friend Shailja, an advocate practising in Delhi High Court.
b) His cousin Bartek residing in India and holding directorship in an unlisted company, namely,
Mithila Dairy Products Limited.
c) His earlier co-director Kritika, a resident director of Ritika Hospitality Services Limited who
filed DIR-12 on behalf of the company intimating the Registrar regarding resignation of
Andrezj.
d) His close friend Devansh, Managing Director of Sunshine Travels Limited which is a listed
company
Answer – (c)
Summary: As per sec 168, in case of a foreign director, if co. has already filed DIR 12, the
foreign director may authorize (in writing) CA/CS or cost accountant or any other resident
director to sign Form DIR 11 on his behalf.
Mr. Anand, Mr. Bipin, Mrs. Carol, Mr. Dhruv and Mr. Eknath are 5 Directors of the Elite
Transporters Ltd. The Board of Directors of Elite Transporters Ltd. conducted 5 Board Meetings
in the FY 2020-21 which were attended by Mr. Anand, Mrs. Carol and Mr. Dhruv in full whereas Mr.
Bipin attended only 4 meetings. However, it was noticed that Mr. Eknath failed to attend any of
the Board Meetings and therefore, was liable to vacate the office of directorship but he did not
vacate the office despite attracting the disqualification. You are required to choose the correct
option from the following 4 which indicates the quantum of punishment that is applicable in case of
Mr. Eknath for attracting the disqualification but not vacating the office of directorship as a
consequence thereof:
a) Mr. Eknath shall be punishable with fine which shall not be less than Rs 1,00,000 but which
may extend to Rs 5,00,000.
b) Mr. Eknath shall be punishable with fine which shall not be less than Rs 50,000 but which may
extend to Rs 5,00,000
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c) Mr. E shall be punishable with fine which shall not be less than Rs 1,00,000 but which may
extend to Rs 3,00,000.
d) Mr. Eknath shall be punishable with fine which shall not be less than Rs 1,50,000 but which
may extend to Rs 3,00,000.
Answer – (a)
Summary: As per section 167, penalty for not vacating the office of directorship even after
attracting disqualification - Fine Rs. 1,00,000 to Rs 5,00,000
Category B
Amar Furniture and Fixtures Limited is a listed company engaged in the production of furniture
and fittings at its factory located in Pune. There are 50,000 small shareholders of which some
want to elect a small shareholders’ Director so that due representation to the small shareholders
is accorded by the company and the issues relating to them are resolved during the Board
Meetings at the earliest. Accordingly, 750 small shareholders served a notice on the company
for the appointment of Vishal, a small shareholder, who, if elected, shall hold the office of
Director on behalf of the small shareholders. From the following four options, choose the one
which is applicable in the given situation:
a) Notice served by 750 small shareholders is valid and therefore, Amar Furniture and Fixtures
Limited shall appoint Vishal as a small shareholders’ Director.
b) Notice served by 750 small shareholders is not valid and therefore, Amar Furniture and Fixtures
Limited shall appoint Vishal as a small shareholders Director only on the requisition of 1000 small
shareholders
c) Notice served by 750 small shareholders is not valid and therefore, Amar Furniture and Fixtures
Limited shall appoint Vishal as a small shareholders Director only on the requisition of 5000
small shareholders.
d) Notice served by 750 small shareholders is not valid and therefore, Amar Furniture and Fixtures
Limited shall appoint Vishal as a small shareholders Director only on the requisition of 7500
small shareholders.
Answer – (b)
Summary: For section 151, notice has to be served by - Lower of 1000 SSH or 1/10th SSH
HCQ Pharma Ltd., a company listed with the Bombay Stock Exchange, was incorporated on January
20, 2002. The Directors of the company want to appoint Mr. Sanjay who is a Managing Partner of
Sanjay and Associates LLP, firm of Lawyers, as an Independent Director of the company at the
forthcoming Annual General Meeting (AGM) to be held on September 24, 2021. Mr. Sanjay is acting
as a legal advisor to Genesis Laboratory Ltd., Associate Company of HCQ Pharma Ltd. It is to be
noted Adv. Sanjay charged consultation fees as given below:
Year Fees Gross turnover of Sanjay and Associates
2018-19 2,00,00,000 40,00,00,000
2019-20 10,00,00,000 50,00,00,000
2020-21 0 45,00,00,000

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You are required to identify the correct statement from those given below:
a) HCQ Pharma Ltd. can appoint Mr. Sanjay as an Independent Director irrespective of the fact
that he is Legal Advisor to Genesis Laboratory Ltd. which is its Associate Company.
b) HCQ Pharma Ltd. cannot appoint Mr. Sanjay as an Independent Director as he is Managing
Partner of the firm which is legal advisor to Genesis Laboratory Ltd., its Associate Company,
irrespective of the amount of fees charged by Mr. Sanjay from its Associate Company.
c) HCQ Pharma Ltd. cannot appoint Mr. Sanjay as an Independent Director as he is Managing
Partner of the firm which is Legal Advisor to Genesis Laboratory Ltd., its Associate Company,
and the fees charged by Mr. Sanjay exceeds the percentage as specified in the Companies Act,
2013, during one year out of the three immediately preceding FYs.
d) HCQ Pharma Ltd. can appoint Mr. Sanjay as an Independent Director even though he is the
Managing Partner of the firm which is Legal Advisor to Genesis Laboratory Ltd., its Associate
Company, as Mr. Sanjay did not charge any fee during the immediately preceding FY.
Answer – (c)
Summary: Following person is disqualified to be Independent director u/s 149(6):
Employee/Proprietor/Partner in (CY + Last 3 FY) in a - Legal/Consulting Firm having transaction
with CASH of >=10% of Gross T/O
National Software Limited, a government company with 14 Directors, is desirous of appointing two
more Directors to enable good governance and to manage its affairs more efficiently and
effectively. However, Mr. X, the Managing Director of National Software Limited, is of the view
that the company can validly appoint only one more director and therefore, appointment of two
more Directors would be a violation of the statutory provisions. Out of the following four options,
choose the one which is applicable in the given situation:
a) The contention of Mr. X, the Managing Director of National Software Limited, that the
appointment of appointment of two more Directors in the company, thus raising the number of
directors to more than fifteen, is valid since such action shall violate the statutory provisions.
b) Appointment of more than fifteen Directors can be validly made by National Software Limited
by passing an ordinary resolution in the general meeting.
c) Appointment of more than fifteen Directors can be validly made by National Software Limited
by passing a special resolution in the general meeting.
d) In view of the fact that government companies are exempt from the provision which limits the
maximum number of Directors in a company, National Software Limited can appoint two more
directors, thus raising the total number of directors to sixteen from the present fourteen.
Answer – (d)
Summary: U/s 149(1) - For government companies, the limit of 15 directors (and SR to increase
the limit) is not applicable provided section 92 & 137 are complied with.
Category C
Question:8 [Section:149(1), Rule3]
In compliance with the Companies Act, 2013, at least one woman director shall be on the Board of
the prescribed class or classes of companies. Ms. Riya is keen to seek the office of woman director
in a company. Which of the following companies is mandatorily required to appoint a woman director
where Ms. Riya can hold such office:
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a) PQR Limited, an unlisted company, whose paid-up share capital is 150 crore rupees as per the
last date of latest audited financial statements is mandatorily required to appoint a woman
director.
b) ABC Limited, a listed company, whose turnover is 150 crore rupees as per the last date of latest
audited financial statements is mandatorily required to appoint a woman director.
c) XYZ Limited, an unlisted company, whose turnover is 350 crore rupees as per the last date of
latest audited financial statements is mandatorily required to appoint a woman director.
d) All of the above
Answer – (d)
Summary – As per Rule 3 - Following class of companies shall appoint at least one woman director-
every listed company, every other public company having- paid–up share capital of Rs. 100 crores
or more or turnover of Rs. 300 crores or more.
Kutumb Agro Limited (KAL), a newly incorporated company, has not mentioned the names of the
first Directors in its Articles of Association. There are eight subscribers to the Memorandum of
Association including Parivaar Agro Private Limited. From the following four options, choose the
one which indicates as to who shall be deemed to be the first Directors of KAL when nothing is
mentioned in the Articles?
a) All the eight subscribers to the Memorandum of Association of KAL shall be deemed to be the
first Directors.
b) Except Parivaar Agro Private Limited, all other subscribers to the Memorandum of Association
of KAL shall be deemed to be the first Directors.
c) The shareholders shall appoint the first Directors in the General Meeting of KAL
d) Out of the eight subscribers to the Memorandum of Association, the first Directors being
three individuals shall be nominated by Sriniwas, the CA who has signed the Memorandum as
witness and they shall be deemed to be the first Directors of KAL.
Answer – (b)
Summary: Where the AoA does not mention anything related to first directors, the subscribers
to MOA (who are individuals only) will become first director.
Question:10 [Section: 149(1),Rule3 ]

The turnover of XYZ Components Limited as on the last date of latest audited financial statements
is 400 crore rupees. An intermittent vacancy of a woman Director arose on June 15, 2021 due to
the resignation of Ms. Swati. The immediate Board Meeting after the resignation of Ms. Swati was
held on October 10, 2021. From the following options, choose the one which indicates the date by
which the vacancy of the woman Director must be filled by XYZ Components Limited.
a) July 14, 2021.
b) August 14, 2021.
c) September 14, 2021.
d) October 10, 2021.
Answer – (d)

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Summary: Any intermittent vacancy of a woman director shall be filled-up by the Board at the
earliest but not later than immediate next Board meeting or 3 months from the date of such
vacancy whichever is later.
Mr. Q, a Director of PQR Limited, is proceeding on a foreign tour covering entire Europe for four
months. He proposes to appoint Mr. Y as an alternate Director to act on his behalf during his
absence. The Articles of Association of PQR Limited provide for the appointment of alternate
Directors. Mr. Q claims that he has a right to appoint alternate Director of his choice. Which of
the following options is applicable in the given situation:
a) Claim made by Mr. Q to appoint Mr. Y as alternate Director is valid as the Articles of
Association of PQR Limited provide for such appointment.
b) Claim made by Mr. Q to appoint Mr. Y as alternate Director is not valid as the authority to
appoint alternate Director has been vested in the Board of Directors only and that too subject
to empowerment by the Articles of Association.
c) Mr. Y cannot be appointed as an alternate Director in place of Mr. Q since Mr. Q is proceeding
on a foreign tour covering entire Europe for four months only which is less than the required
absence of minimum six months.
d) Mr. Y cannot be appointed as an alternate Director in place of Mr. Q since Mr. Q is proceeding
on a foreign tour covering entire Europe for four months only which is less than the required
absence of minimum nine months.
Answer – (b)
Summary: Power to appoint alternate director vests with Board and needs empowerment via AOA.
The original director has no power to appoint alternate director.
Mr. Nagarjuna, one of the directors of MGT Mechanics Limited, due to his own business interests,
decided to resign as director and accordingly, sent his resignation letter dated 12th June, 2021 to
the company stating that he intends to resign w.e.f. 15th June, 2021. Since no communication in
relation to his resignation was received from MGT Mechanics Limited, he sent an e-mail on 17th
June, 2021 enquiring about the receipt of his resignation letter by the company but there was no
response. However, MGT Mechanics Limited received his resignation letter on 18th June, 2021. Out
of the following four options, choose the one which indicates the correct date from which his
resignation will be effective:
a) 12th June, 2021.
b) 15th June, 2021.
c) 17th June, 2021.
d) 18th June, 2021.
Answer – (d)
Summary: Resignation u/s 168 to be effective from – date on which notice is received by co. or date
specified in notice (if any) whichever is LATER.

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Question :13 [Section:161(1)]

The Board of Directors of MNO Pharma Limited is willing to appoint Mr. R, a qualified Cost
Accountant having fifteen years of rich industrial experience, as Additional Director but the
Articles of Association are silent about such appointment. Mr. M, the Managing Director of MNO
Pharma Limited, is of the view that the Board does not have the power to appoint an Additional
Director and therefore, if any such appointment is made, it shall be invalid. From the following four
options, choose the one which is applicable in the given situation:
a) An ordinary resolution in general meeting needs to be passed by MNO Pharma Limited for
appointment of Mr. R as Additional Director.
b) A special resolution in general meeting needs to be passed by MNO Pharma Limited for
appointment of Mr. R as Additional Director.
c) An enabling provision in the Articles of Association is needed which confers requisite power on
the Board of Directors of MNO Pharma Limited for appointment of Additional Director.
d) The Board of Directors of MNO Pharma Limited has the power to appoint Mr. R as an Additional
Director irrespective of whether any clause finds place in the Articles of Association for such
appointment or not.
Answer – (c)
Summary: As per Section 161(1) - For appt. an additional director, authorisation in AoA is a must.
Mr. Z is proposed to be appointed as the Director in RLP Mechanics Limited. It is noteworthy that
Mr. Z already holds directorship in 1 dormant company, 2 Section 8 companies, 8 public limited
companies and 9 Private Ltd. companies. However, out of nine private limited companies, two are
subsidiaries of public limited companies. In the given circumstances, is it possible for Mr. Z to
accept another directorship in RLP Mechanics Limited without attracting any invalidity:
a) It is not possible for Mr. Z to accept another directorship in RLP Mechanics Limited since he
is already holding directorships in twenty companies.
b) It is not possible for Mr. Z to accept another directorship in RLP Mechanics Limited since he
is already holding directorships in eight public limited companies and two such private limited
companies which are subsidiaries of public limited companies.
c) It is possible for Mr. Z to accept another directorship in RLP Mechanics Limited since Section
8 companies and dormant companies are excluded while calculating the limit of twenty
companies.
d) It is possible for Mr. Z to accept another directorship in RLP Mechanics Limited since there
is no limit on holding any number of directorships.
Answer – (b)
Summary: For the purpose of Sec 165 – A private company that is subsidiary of public company
shall be deemed as Public company only.
Question :15 [Section:149(3)]

Taurus Mechanical Products Limited, having Registered Office in Connaught Place, New Delhi, has
three directors, namely, Arun, Varun and Smriti, who often visit foreign countries in order to
develop and secure business opportunities for the company on sustainable basis. One of the legal
requirements for an Indian company is that at least one of its directors must stay in India for a
specified period. To reckon as ‘resident director’ for the FY 2021-22, advise the company by
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selecting the correct option as to which period spent in India by any one of its directors shall
count towards statutory period.
a) Period spent in India during the previous FY 2020- 21.
b) Total of fifty percent of the period spent in India during the FY 2019-20 and another fifty
percent of the period spent in India during the FY 2020-21.
c) Total of fifty percent of the period spent in India during the FY 2020-21 and another fifty
percent of the period spent in India during the FY 2021-22.
d) Period spent in India during the FY 2021-22
Answer – (d)
Summary: Every company shall have at least one director who has stayed in India for a total
period of >= 182 days during the FY (same FY, not prior FY)
Question:16 [Section:149(1),Rule3]
As per the audited financial statements of immediately preceding FY 2020-21, the paid-up capital
of Aastha Metal Products Limited was Rs. 75 crores (much below the threshold limit) which did
not require appointing a woman director. However, the turnover during the same period was Rs. 334
crores i.e., above the threshold limit which required appointing a woman director. Choose t h e
correct option from those given below as to whether Aastha Metal Products Limited is required to
bring on the Board a woman director or not.
a) The company is not required to appoint a woman director since only one of the parameters and
not both have crossed the threshold limit.
b) The company is required to appoint a woman director since any one parameter out of the two
exceeding the threshold limit shall necessitate such appointment.
c) The requirement of appointing a woman director arises only when paid up capital exceeds the
threshold limit and therefore, the company is not required to appoint a woman director.
d) In a situation where one parameter is below and the other is above the threshold limit, the
company, as per its discretion, may or may not appoint a woman director.
Answer – (b)
Summary: The following class of companies shall appoint at least one woman director-(i) every
listed company; OR (ii) every other public company having -(a) PUSC <= 100 crores OR (b) turnover
>= Rs. 300 . The Condition is OR hence if anyone condition satisfies then Woman director needed

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Chapter 2: Appointment and Remuneration of Managerial Personnel
Category A
In case of a company where minimum ------------------ per cent members (in number) are relatives
of promoters or are related parties, they are not precluded from voting on a resolution for
approving any related party transaction.
a) 80
b) 85
c) 90
d) 95
Answer – (c)
Summary: As per section 188, provided that no member of the company shall vote on such matter to
approve any contract or arrangement which may be entered into by the co., if such member is a
related party. However nothing contained in the proviso shall apply to a company in which 90% or
more members, in number, are relatives of promoters or are related parties
Question :18 [Section:186]

Out of the total strength of six Directors of SQ Transformers Limited, five are attending a Board
Meeting to consider the investment of funds of the company. The resolution relating to investment
shall be taken as passed in which of the following cases:
a) When all the five Directors of SQ Transformers Limited attending the meeting consent to
such investment of funds.
b) When any four Directors of SQ Transformers Limited out of five attending the meeting
consent to such investment of funds.
c) When any three Directors of SQ Transformers Limited out of five attending the meeting
consent to such investment of funds.
d) Investment proposal must be consented to by the total strength of six Directors of SQ
Transformers Limited.
Answer – (a)
Summary: As per Section 186, no investment shall be made or loan or guarantee or security given
by the company unless the resolution sanctioning it is passed at a meeting of the Board with the
consent of all the Directors present at the meeting. Hence, all the directors present at the meeting
shall give their consent.
Rachit, Sanchit, Devshikha, Niharika, Vaishnavi, Mohit and Somesh are the directors of Vrinda
Plants Limited. Sanchit was appointed as an alternate director on 25th August, 2021, in place of
Mohit who had gone out of India for five months and also on the same date Somesh was appointed
as an additional director. It is to be noted that whenever a board meeting is held after the above
date it shall be the first meeting to be attended by both Sanchit and Somesh. Devshikha was an
interested director who was required to disclose her interest at the immediate Board Meeting to
be held any time after 25th August, 2021 though her presence would not be counted when a
discussion takes place on the proposal in which she was interested. Rachit expressed his inability
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to attend any Board meeting if it was to be held within two months from 25th August, 2021. A Board
th
meeting is scheduled to be held on 20 September, 2021. Legally speaking, which of the directors
need not be served a notice of this Board meeting.
a) Mohit need not be served a notice of the board meeting to be held on 20th September, 2021.
b) Rachit need not be served a notice of the board meeting to be held on 20th September, 2021.
c) Devshikha need not be served a notice of the board meeting to be held on 20th September,
2021.
d) None of the above.
Answer – (d)
Summary: As per section 173(3), notice of the meeting is to be served to all the directors
(additional, alternate, interested). It is to be served even to a director who has expressed inability
to attend the meeting
Roopali is one of the directors in Superfast Vehicles Limited. She gave a written notice dated 10th
June, 2021 in the specified Form disclosing her shareholding interest in Vixen Traders (Pvt.)
Limited and caused its disclosure at the Board Meeting held immediately thereafter on 17th June,
2021. From which of the given dates, eight years are to be counted for preserving her ‘notice of
disclosure of interest’:
a) From the date of notice i.e., 10th June, 2021.
b) From the end of the FY 2021-22.
c) From the date of the Board Meeting (i.e., 17th June, 2021) in which the interest was disclosed.
d) From the date of the forthcoming Annual General Meeting AGM) to be held on 27th
September, 2021.
Answer – (b)
Summary: Notice of interest (Form MBP -1) to be kept at registered office for 8 Years from end
of FY to which it pertains.
Question:21 [Rule 3 (Meeting of board & its powers)]

In case of a Board Meeting which is conducted through the means of video conferencing, the draft
minutes shall be circulated among all the Directors within ___ days of the meeting either in writing
or in the electronic mode as may be decided by the Board of Directors of the company.
a) 5
b) 10
c) 15
d) 20
Answer – (c)
Summary: The draft minutes of the meeting shall be circulated among all the directors within 15
days of the meeting either in writing or in electronic mode as may be decided by the Board

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Category B
Audit Committee may make omnibus approval for:
a) Making of investment in other companies.
b) Related party transactions proposed to be entered into by the company.
c) Transferring of non-functional undertaking.
d) All of the above.
Answer – (b)
Summary: As per Section 177, Omnibus approval can only be given for Related Party Transactions
Question:23 [Section: 177(8)]

Ruby Diamonds Limited is required to establish ‘Vigil Mechanism’ though it is neither a listed
company nor a company which has accepted deposits from the public. Name the third criterion
because of which it is necessitated that the company needs to create ‘Vigil Mechanism’.
a) As per the last audited financial statements, Ruby Diamonds Limited has borrowed money from
banks and public financial institutions in excess of Rs.50 crores.
b) As per the last audited financial statements, the subscribed capital of Ruby Diamonds Limited
is in excess of Rs.50 crores.
c) As per the last audited financial statements, the paid-up capital of Ruby Diamonds Limited is
in excess of Rs.50 crores.
d) As per the last audited financial statements, the turnover of Ruby Diamonds Limited is in
excess of Rs.50 crores.
Answer – (a)
Summary: As per sec 177. Vigil mechanism is applicable to - (a) listed company (b) company having
accepted deposits from the public (c) companies which have borrowed money from banks and public
financial institutions in excess of Rs 50 crores , as per latest FS.
Category C

Three directors, namely Samiksha, Santosh and Samta intimated PlutoPlastic & Mechanical Toys
Limited about their participation in the Board Meetings through video conferencing at the
appropriate time of the year. However, after attending the first Board Meeting held in the FY
2021-22 by means of video conferencing, Santosh wants to participate in the next Meeting to be
held at a future date in person. Is it possible for him to do so when consent given for participation
in meetings through video conferencing remains valid for full one year? Choose the correct A
Answer from the options stated below:
a) Santosh cannot attend future Board Meetings in person even if the company is intimated of
such intention sufficiently in advance.
b) Santosh can attend future Board Meetings in person if he intimates the company of his
intention sufficiently in advance.
c) Santosh can attend future Board Meetings in person only if all the remaining directors consent
to such request.

14
d) Santosh can attend future Board Meetings in person but at least seventy five percent of the
remaining directors (rounded off to next higher figure in case of a fraction) consent to such
request.
Answer – (b)
Summary: As per Sec 173(2) - When a director intends to participate via VC/AV – May intimate
at beginning of each Calendar Year. Such declaration shall be valid for 1 year. However, such
declaration not to debar him from attending in person if he intimates sufficiently in advance.
Chetan Motorboats Limited, incorporated on 25th June, 2019 is desirous of making donations to a
reputed political party. Out of the following options, choose the one which correctly depicts as to
when Chetan Motorboats Limited shall be eligible to make such donations to a political party:
a) Chetan Motorboats Limited shall be eligible to make donations to a political party after one
year from the date of its incorporation.
b) Chetan Motorboats Limited shall be eligible to make donations to a political party after two
years from the date of its incorporation.
c) Chetan Motorboats Limited shall be eligible to make donations to a political party after three
d) Chetan Motorboats Limited shall be eligible to make donations to a political party after five
Answer – (c)
Summary: As per Section 182 - A company, other than a Govt. company and a Co. which has been
in existence for <3 FY, may contribute any amount directly or indirectly to any political party
Question:26 [Section 174(3)]

Where at any time the number of interested Directors exceeds or is equal to ----------- of the
total strength of the Board of Directors of a company, the quorum shall be the number of non-
interested Directors who are present at the meeting and not less than two.
(a) 1/2
(b) 2/3
(c) 1/3
(d) None of the above
Answer – (b)
Summary: As per Section 174, where interested director > = 2/3rd of total strength of directors,
quorum shall be higher of:
a. No. of non-interested director present at such meeting
b. 2 directors.
st
Seafood Marketing Limited, incorporated on 1 April, 2019, conducted four Board Meetings during
the FY 2019-20 i.e., on 6th April, 2019, 28th August, 2019, 30thSeptember, 2019 and 30th March,
2020. Select the correct option from those given below as to whether there is contravention of

15
provisions or not regarding frequency of holding the Board Meetings by Seafood Marketing
Limited:
a) There is no contravention of the provisions relating to holding of Board Meetings because four
Board Meetings have been held by Seafood Marketing Limited during the FY 2019-20.
b) There is no contravention of the provisions relating to holding of Board Meetings by Seafood
Marketing Limited because the first Board Meeting was held within 30 days of the
incorporation of the company.
c) There is contravention of provisions in respect of conduct of the Board Meetings by Seafood
Marketing Limited because gap between initial two consecutive Board Meetings (held on 6th
April, 2019 and 28th August, 2019) is 143 days and further, gap between next two consecutive
Board Meetings (held on 30th September, 2019 and 12th March, 2020) is 163 days.
d) There is contravention of provisions in respect of conduct of the Board Meetings by Seafood
Marketing Limited because gap between initial two consecutive Board Meetings (held on 6th
April, 2019 and 28th August, 2019) is 123 days and further, gap between next two consecutive
Board Meetings (held on 30th September, 2019 and 12th March, 2020) is 143 days.
Answer – (c)
Summary: As per section 173, every company shall hold the first BoD meeting within 30 days of
the date of incorp. and thereafter hold a min. no. of 4 BoD meetings every year in such a manner
that not more than 120 days shall intervene between two consecutive meetings of the Board.
The Board of Directors of Very Well Hospitality Services Limited is desirous of contributing
certain amount to Janta Vikas Sewa Samiti, a bona fide charitable organization operating in the
National Capital Region, during the FY 2020-2021. The profits and losses of the earlier five FYs
are as under:
Year Profit/ (Loss)
2019-2020 (30,00,000)
2018-2019 1,80,00,000
2017-2018 2,10,00,000
2016-2017 1,85,00,000
2015-2016 1,40,00,000
From the following four options, select the appropriate one which indicates the amount that the
Board of Directors of Very Well Hospitality Services Limited can contribute to Janta Vikas Sewa
Samiti:
a) The Board of Directors of Very Well Hospitality Services Limited cannot contribute any
amount to Janta Vikas Sewa Samiti in the FY 2020-2021 since it suffered losses of Rs.
30,00,000 in the immediate previous FY 2019-2020.
b) The Board of Directors of Very Well Hospitality Services Limited can contribute maximum of
Rs. 9,00,000 to Janta Vikas Sewa Samiti in the FY 2020-2021.
c) The Board of Directors of Very Well Hospitality Services Limited can contribute maximum of
d) The Board of Directors of Very Well Hospitality Services Limited can contribute maximum of

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Answer – (c)
Summary –As per Section 181, the contribution that can be made without prior approval of
shareholders is – 5% of average net profit of last 3 FY. In this case, the max limit would be –
(210+180-30)/3*5% = Rs. 6 lakhs.
A 7 days’ notice of the Board Meeting was served on all the 10 directors of Goodluck Publishers
Limited by sending it on their registered postal addresses. However, before the holding of
scheduled Board Meeting, some unavoidable happenings took place. Mr. M was hospitalised because
of serious stomach pain just two days before the Meeting. Mr. Y proceeded to London since his
son met with an accident and the incidence required his immediate presence. As scheduled earlier,
Mr. X and Mr. B went to Australia for attending a technical seminar that would help improving the
existing publishing techniques. Mr. A, extremely busy in finalizing the arrangements relating to his
daughter’s marriage, was also unable to attend the impending board meeting. A day before the
board meeting, Mr. E’s grand-mother got hospitalised and therefore, he was involved in taking care
of her but he assured to attend the meeting through video conferencing. Mr. P were scheduled to
arrive for the meeting by 2 p.m. on the same day of the meeting but his flight got delayed by eight
hours. Mr. D, Mr. G and Mr. H were in the town and were available for the Board Meeting. Could
the Board Meeting be held as per the scheduled time?
a) The Board Meeting cannot be held because minimum sixty percent directors (i.e., 6 out of 10)
must attend it at the scheduled time to complete the quorum.
b) The Board Meeting cannot be held because minimum fifty percent directors (i.e., 5 out of 10)
must attend it at the scheduled time to complete the quorum.
c) Since the quorum is complete, the available directors can hold the Board Meeting as per the
schedule.
d) The Board Meeting cannot be held because minimum seventy percent directors (i.e., 7 out of
10) must attend it at the scheduled time to complete the quorum.
Answer – (c)
Summary – As per Sec 174, quorum in a meeting is higher of (a) 1/3rd of total strength or (b) 2
directors. In this case, total no. of directors is 10. Therefore, quorum is met when at least 4
directors attend the meeting. At 2PM, 4directors are available – Mr. D, E, G and H and hence, the
quorum is met.
In the F.Y. 2021-22, Roshni Electricals Private Limited for the first time is treated as a ‘small
company’ according to the prescribed norms. It held its first Board Meeting on 15th June, 2021
and another one on 9th July, 2021. As two board meetings have already been held in Ist half and
IInd half of the calendar year, 2021, the directors do not intend to hold any other Board Meeting
during rest of the year 2021-22. Select the correct statement from those given below as to
whether the directors Roshni Electricals Private Limited are at fault or not.
a) A ‘small company’ needs to hold only two Board Meetings in a calendar year and therefore, the
directors of Roshni Electricals Private Limited are absolutely not at fault.

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b) As the gap between two Board Meetings should be ‘not less than 60 days’, the directors of
Roshni Electricals Private Limited need to hold another Board Meeting on a date which must
be after 60 days from 15th June 2021, so that no fault is committed.
c) As the gap between two Board Meetings should be ‘not less than 90 days’, the directors of
Roshni Electricals Private Limited need to hold another Board Meeting on a date which must
be after 90 days from 15th June 2021, so that no fault is committed.
d) There is no need to observe gap of more than 60 or 90 days if the directors of Roshni
Electricals Private Limited hold another board meeting in the month of July, 2021 itself,
totalling number of meetings to three.
Answer – (c)
Summary – As per Section 173(5) - Small company shall be deemed to have complied with the
provisions of this section if at least 1 BoD meeting is held in each half of a CY + Min Gap – 90 days
Jupiter Shopping Mall Limited was incorporated on 3rd December, 2019. As on 31st March 2021, it
had free reserves of Rs 50.00 lacs and its Securities Premium Account showed a balance of Rs 7.50
lacs. One of its Directors Raha has a leaning towards a particular political party in which his other
family members are actively involved. Raha convinced the other two Directors of the company i.e.
Promila and Rana to contribute a sum of Rs. 10.00 lacs to this political party. Accordingly, the Board
of Directors held a meeting on 16th December, 2021 and passed a resolution to contribute the
decided amount. Out of the following four options, select the appropriate one, which indicates the
amount that Jupiter Shopping Mall Limited can contribute to a political party in the FY 2021-22.
a) According to the above-stated facts, Jupiter Shopping Mall Limited cannot contribute any
amount to a political party in the FY 2021-22.
b) According to the above-stated facts, Jupiter Shopping Mall Limited can contribute maximum
Rs 2.50 lacs to a political party in the FY 2021-22.
c) According to the above-stated facts, Jupiter Shopping Mall Limited can contribute maximum
Rs.3.75 lacs to a political party in the FY 2021-22.
d) According to the above-stated facts, Jupiter Shopping Mall Limited can contribute maximum
Rs.5.00 lacs to a political party in the FY 2021-22.
Answer – (a)
Summary: As per Section 182, a company which has been in existence for less than 3 FY, cannot
contribute any amount towards political contribution.
Additional MCQs - Must Solve [From RTP and MTP – May’21, Dec’21 and May’22]
Question:32 [Category B] [Section:180]

In order to make Robotics Toys Private Limited as its subsidiary, Golden Rays Robots Limited
raised its investment in Robotics Toys from 40% to 60% of its paid-up capital. From the options
given below, choose the one which correctly indicates as to when the Robotics Toys shall be
considered the undertaking of Golden Rays Robots Limited.
a) In order that Robotics Toys is considered as one of its undertaking, Golden Rays is
required to invest more than 10% of its ‘net worth’ calculated as per the audited balance

18
sheet of the preceding year or the Robotics Toys must have contributed in generation of
10% of the total income of Golden Rays during the previous Financial Year.
b) In order that Robotics Toys is considered as one of its undertaking, Golden Rays is
c) In order that Robotics Toys is considered as one of its undertaking, Golden Rays is
d) In order that Robotics Toys is considered as one of its undertaking, Golden Rays is
Answer – (b)
Summary: As per Sec 180, Undertaking means a co. in which investment of Co. >20% of its net worth
or generates >= 20% of total income of co. (during previous FY)

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Chapter 3: Meetings of Board and its Powers
Category A
The Board of Directors of Capable Hospitality Services Limited has entrusted Mr. Vikas, the newly
appointed Managing Director (MD) of the company, with some powers. However, Mr. Vikas is not
interested in discharging administrative functions as authorised by the Board of Directors, since he
is of the view that he should have been entrusted with substantial powers of the management. Out
of the following four options, which one is correctly applicable in relation to the functions which
Mr. Vikas, the MD of Capable Hospitality Services Limited, can undertake:
a) To draw and endorse any cheque on the account of Capable Hospitality Services Limited
maintained with National Commercial Bank Limited, the main banker of the company.
b) To sign the financial statements of Capable Hospitality Services Limited.
c) To draw and endorse any bill of exchange when it exceeds R s 1,00,000.
d) To draw and endorse any bill of exchange when it exceeds R s 5,00,000.
Answer – (b)
Summary: A person having power to do administrative acts of a routine nature when so authorised
by the Board such as the power to - affix common seal, draw and endorse any cheque or negotiable
instrument or to sign any certificate of share or to direct registration of transfer of any share,
shall not be deemed to be included within the substantial powers of management.
Question:34 [Section: 196 and 203]

Murlidhar Masala Enterprises Limited, incorporated under the Companies Act, 2013, is into the
business of trading of different kinds of spices used in the cooking of daily food items. Mr. Vinayak
was appointed as the Chief Financial Officer (CFO) of the company on July 2, 2018 by the Board of
Directors for a period of five years. In the Board Meeting held on July 30, 2021, Mr. Rinkesh aged
55 years was appointed as Managing Director of the company. In this meeting itself, the Board of
Directors also made re-appointment of Mr. Vinayak as the Chief Financial Officer (CFO) for
another term of 3 years and it was resolved that the new term of 3 years will start after the
completion of the first term of five years. Further, in the Annual General Meeting of the company
held on September 29, 2021, the appointment of Mr. Rinkesh as Managing Director was approved
by the company and the members also noted the re-appointment of Mr. Vinayak as Chief Financial
Officer (CFO) for another term of 3 years which would start after completion of the first term
of five years. You are required to choose the correct option from the following four whether the
re- appointment of Mr. Vinayak is valid or not:
a) The re-appointment of Mr. Vinayak as Chief Financial Officer (CFO) for another term of 3
years is valid since the Board of Directors may appoint him for any term as it may think fit.
b) The re-appointment of Mr. Vinayak as Chief Financial Officer (CFO) for another term of 3
years is not valid since no Key Managerial Personnel (KMP) shall be re-appointed earlier than
one year before the expiry of his term.
c) The re-appointment of Mr. Vinayak as Chief Financial Officer (CFO) for another term of 3
years is not valid since his re- appointment has not been subsequently approved by the company
in the Annual General Meeting held on September 29, 2021.
d) Both (b) and (c) above.

20
Answer – (a)
Summary: A CFO is not covered in the purview of Section 196 and hence the provisions of Section
196 related to term of appointment and reappointment is not applicable for CFO. CFO can be re-
appointed any time before the end of this tenure.
Category B
Due to non-compliance of certain requirements under the Companies Act, 2013 not amounting to
fraud, Shikha Super-Market Limited was required to re-state its financial statements for the FY
2017-18 during the current year. After the financial statements were re- stated, it was found that
Mr. Kumar, the Managing Director (MD) of that period, who is now retired, was paid excess
remuneration to the extent of Rs. 5,00,000.
In the given situation, choose the correct option out of those given below, which indicates whether
such excess remuneration paid to ex-MD Mr. Kumar is recoverable or not.
a) Excess remuneration of Rs 5,00,000 paid to Mr. Kumar, ex-MD of Shikha Super-Market
Limited, cannot be recovered since such recovery after retirement is invalid.
b) Excess remuneration of Rs 5,00,000 paid to Mr. Kumar, ex-MD of Shikha Super-Market
Limited, shall be recovered irrespective of his retirement from the company.
c) Only Rs 2,50,000, being 50% of excess remuneration of Rs 5,00,000, paid to Mr. Kumar, ex-
MD of Shikha Super-Market Limited, is validly recoverable because no fraud implicating him
is involved.
d) Only Rs 1,25,000, being 25% of excess remuneration of Rs 5,00,000, paid to Mr. Kumar, ex-
MD of Shikha Super-Market Limited, is validly recoverable because no fraud implicating him
is involved.
Answer – (b)
Summary: As per sec 199, Where a co. is required to re-state its FS due to fraud or non-
compliance with the prov. of this Act, co. shall recover from past/present MD/WTD/Manager or
CEO (not NED/ID), who during such period for which FS is re-stated received remuneration, in
excess of what would have been payable to him as per re-stated FS.
Question:36 [ Section: 203]

Go Dairy Products Limited, incorporated under the Companies Act, 2013, is into the business of
selling dairy products through online mode. Mr. Dhaval was holding the office of the Whole-time
Director in the Company. However, by the end of the FY 2020-21, Mr. Dhaval had to vacate the
office of Whole-time Director after attracting one of the disqualifications prescribed under
Section 164 of the Companies Act, 2013. You are required to select the correct option from those
given below as to the time period within which the Board of Directors are required to fill the
vacancy of Whole-time Director created by the resignation of Mr. Dhaval considering the
applicable provisions of the Companies Act, 2013:
a) The vacancy of Whole-time Director created by the resignation of Mr. Dhaval shall be filled
by the Board of Directors at a meeting of the Board within a period of three months from the
date of creation of such vacancy.
b) The vacancy of Whole-time Director created by the resignation of Mr. Dhaval shall be filled
by the Board of Directors at a meeting of the Board within a period of six months from the

21
c) The vacancy of Whole-time Director created by the resignation of Mr. Dhaval shall be filled
by the Board of Directors at a meeting of the Board within a period of two months from the
d) The vacancy of Whole-time Director created by the resignation of Mr. Dhaval shall be filled
by the Board of Directors at a meeting of the Board within a period of one month from the
Answer – (b)
Summary: As per section 203 - Vacancy in office of whole time KMP, to be filled by BoD within 6m
of vacancy
Category C
Mr. Joseph Daniel, holding the office of Whole-time Director (WTD) in Tasty Choco-Chips Limited,
is desirous of appointing Mr. Vanilla Sequera, who has attained the age of 72 years, as the Managing
Director (MD) of the company. However, the Board of Directors is of the opinion that no company
shall appoint or continue the employment of any person as Managing Director, Whole-time Director
or Manager who is below the age of twenty-one years or has attained the age of seventy years.
From the following four options, select the one which is applicable in relation to the validity or
invalidity of appointing Mr. Vanilla Sequera as the Managing Director (MD) of Tasty Choco-Chips
Limited:
a) In spite of the fact that Mr. Vanilla Sequera has attained the age of 72 years, he can be validly
appointed as Managing Director by the Board of Directors of Tasty Choco-Chips Limited when
the recommendation has been made by Mr. Joseph Daniel, the Whole-time Director.
b) Since Mr. Vanilla Sequera has attained the age of 72 years, he cannot be validly appointed as
Managing Director of Tasty Choco-Chips Limited.
c) In spite of the fact that Mr. Vanilla Sequera has attained the age of 72 years, he can be validly
appointed as Managing Director by the shareholders of Tasty Choco-Chips Limited through
passing a Special Resolution in general meeting.
d) In spite of the fact that Mr. Vanilla Sequera has attained the age of 72 years, he can be validly
appointed as Managing Director of Tasty Choco-Chips Limited if an application is made to the
jurisdictional NCLT and its permission is received for such appointment.
Answer – (c)
Summary: U/S Sec 196 - for appointment of a person who has attained age of 70 years – Pass SR.
Question:38 [ Section:196(2)]
On June, 20, 2017, Mr. Anil Mehra was appointed as Manager of PQR Music Systems Limited
for a period of five years. Considering his performance and dedication towards the company,
the management of PQR Music Systems Limited decided to re-appoint him as Manager before
the completion of his tenure. Out of the following four options, choose the one which indicates
the date on which his re-appointment will be considered valid?
(a) June 24, 2021.
(b) February 1, 2021.
(c) March 12, 2020.
(d) September 10, 2020.
22
Answer – (a)
Summary: As per Sec 196, no re-appointment shall be made earlier than one year before the
expiry of the MD/WTD or Manager’s term
Lockworth Safety Gears Limited which pays remuneration to its directors on yearly basis, has
Harsha as Whole-time Director (WTD). Recently, the company appointed Mr. Raviyansh as
Managing Director (MD). While paying remuneration, Lockworth Safety Gears Limited needs to
keep in view that the overall remuneration payable to the Directors including Managing Director,
Whole-time Director and Manager shall not exceed maximum limit prescribed under the relevant
provisions. After the appointment of Mr. Raviyansh as Managing Director, since the company has
both Whole-time Director as well as Managing Director, select the appropriate option from those
given below which indicates the maximum remuneration that is allowed in a FY:
a) 3% of net profits.
b) 5% of net profits.
c) 10% of net profits.
d) 11% of net profits.
Answer – (c)
Summary: As per Section 197 - The remuneration payable to any one MD/WTD or manager shall
not exceed 5% of the net profits and if there is more than one such director, remuneration shall
not exceed 10% of the net profits to all such MD/WTD or manager taken together
M&N Limited whose more than 51% of the paid-up share capital is held by F&I Limited. After
considering the applicable provisions, you are required to choose the correct option from the
following four which indicates whether Mr. Abhishek can validly proceed or not with the offer of
Whole-time Director extended by M&N Limited while also continuing as Chief Financial Officer
(CFO) of F&I Limited:
a) Mr. Abhishek can validly proceed with the offer of Whole-time Director at M&N Limited while
also continuing as Chief Financial Officer (CFO) because being a Key Managerial Personnel he
shall not be disentitled from accepting the offer of Whole-time Director in any other company
after obtaining the permission of Board of Directors of his parent company i.e., F&I Limited.
b) Mr. Abhishek will not be able to proceed with the offer of Whole-time Director at M&N
Limited since a whole time Key Managerial Personnel cannot hold office in more than one
company at the same time.
c) Mr. Abhishek can proceed with the offer of Whole-time Director at M&N Limited while also
continuing as Chief Financial Officer (CFO) since M&N Limited is a subsidiary of F&I Limited.
d) Mr. Abhishek will not be able to proceed with the offer of Whole-time Director at M&N
Limited since a whole time Key Managerial Personnel cannot hold office in more than one
company at the same time including its subsidiary company.

23
Answer – (c)
Summary: As per section 203, A whole time KMP shall not hold office in more than one co. at the
same time except in subsidiary co. In this case, M&N Ltd is a subsidiary of F&I Limited and hence
CFO of F&I Ltd can be appointed as WTD in M&N Ltd.
Question:41 [ Section:196]
Hasmukh Entertainment Limited, incorporated under the Companies Act, 2013, appointed Mr. Ram
Kishore, a well-qualified and experienced person, as Whole-time Director (WTD) for a period of
five years in the Annual General Meeting (AGM) held on August 28, 2019. In order that Mr. Ram
Kishore continues with the company as Whole- time Director (WTD), he was re-appointed in
advance as Whole-time Director (WTD) for another term of five years in the Annual General
Meeting which was held on September 28, 2021. The second term of five years will start after the
expiry of first term in August, 2024. From the following alternatives, choose the one which
indicates the validity or otherwise of re-appointment of Mr. Ram Kishore for the second term of
five years by the company:
a) The re-appointment of Mr. Ram Kishore in advance as Whole- time Director (WTD) for another
term of five years is valid because re-appointment can be made for a period not exceeding 5
years at any time provided the Articles of Association of the company provide for such re-
appointment before one year from the completion of his ‘yet-to-expire’ term.
b) The re-appointment of Mr. Ram Kishore in advance as Whole- time Director (WTD) for another
term of five years is invalid because his re-appointment as Whole-time Director (WTD) cannot
be made earlier than one year before the expiry of his first term.
c) The re-appointment of Mr. Ram Kishore in advance as Whole- time Director (WTD) for another
term of five years is valid provided the resolution for such re-appointment had earlier been
passed with the consent of all the Directors present at the Board Meeting and thereafter,
such re-appointment was taken up at the Annual General Meeting for approval.
d) The re-appointment of Mr. Ram Kishore in advance as Whole- time Director (WTD) for another
term of five years is invalid because no special resolution for his re-appointment was passed
at the Annual General Meeting for approval.
Answer – (b)
Summary: As per Sec 196, no re-appointment shall be made earlier than one year before the expiry
of the MD/WTD or Manager’s term

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Chapter 4: Inspection, Inquiry and Investigation
Category A
Mr. Raman, an Inspector appointed under Section 212 of the Companies Act, 2013, started
investigations into the affairs of C-Tech Innovative Solutions Ltd. During the process of
investigation, Mr. Raman noticed certain unusual facts and information regarding the transactions
made by C-Tech Innovative Solutions Ltd. with its subsidiary company Shyamala InfoTech
Solutions Ltd. Based on the information so collected from the investigation, Mr. Raman wanted to
investigate the affairs of Shyamala InfoTech Solutions Ltd. also. Out of the following options,
which one correctly indicates whether Mr. Raman can proceed with the investigation of the affairs
of subsidiary company Shyamala InfoTech Solutions Ltd. or not in the light of the applicable
provisions of the Companies Act, 2013.
a) Mr. Raman shall be able to proceed with the investigation of the affairs of subsidiary company
Shyamala InfoTech Solutions Ltd. after obtaining the prior approval of the Director, Serious
Fraud Investigation Office (SFIO).
b) Mr. Raman shall not be able to proceed with the investigation of the affairs of subsidiary
company Shyamala InfoTech Solutions Ltd. since it is not within his powers to undertake
investigation of any other entity.
c) Mr. Raman shall be able to proceed with the investigation of the affairs of subsidiary company
Shyamala InfoTech Solutions Ltd. after obtaining the prior approval of the NCLT in whose
jurisdiction the registered office of the subsidiary company is located.
d) Mr. Raman shall be able to proceed with the investigation of the affairs of subsidiary company
Shyamala InfoTech Solutions Ltd. after obtaining the prior approval of the CG.
Answer – (d)
Summary: Investigation u/s 219 can be undertaken only related companies only after prior
approval of the CG.
Category B
Sanchita TechMart Limited is in the grip of serious apprehensions that its shares might be
cornered by a group of unscrupulous persons and if it happens, it would certainly result in change in
the Board of Directors which might be prejudicial to the public interest. With a view to impose
restrictions, Ramneek, one of the directors of Sanchita TechMart Limited, seeks your advice as to
how the company can impose restrictions on the transfer of shares of the company. Choose the
correct option from those given below:
a) Sanchita TechMart Limited can make an application to the NCLT under Section 222 for
imposition of restrictions on securities.
b) Sanchita TechMart Limited can make an application to the CG under Section 222 for imposition
of restrictions on securities.
c) Sanchita TechMart Limited can make an application to the NCLT under Section 216 for
investigation into the ownership of company.
d) Sanchita TechMart Limited can make an application to the CG under Section 216 for
investigation into the ownership of the company.

25
Answer – (a)
Summary: Appln. u/s 222 shall be made to NCLT (not CG) for imposition of restriction on securities
After perusal of the inspector’s report made under Section 223 of the Companies Act, 2013, it
appears to the CG that some action is required to be taken against a company, it may cause to be
presented to the Tribunal:
a) A petition for the winding up of the company on the ground that it is just and equitable that
it should be wound up.
b) An application under Section 241 of the Companies Act, 2013.
c) Both (a) and (b).
d) A petition for the merger of the company on the ground that it is just and equitable that it
should be merged.
Answer – (c)
Summary: As per Sec 223, If any Co/BC is liable to be wound up under this Act and it appears to
the CG from any such report u/s 223 that it is expedient so to do ,the CG may cause to be
presented to the Tribunal (a) a petition for WUP of the co/BC on the ground that it is just and
equitable that it should be wound up; or (b) an application under section 241; or (c) both.
Some of the creditors of Alpha Tyres Limited made a complaint to the jurisdictional RoC pleading
that the management of the company is indulged in destruction and falsification of the accounting
records. The complainants request the RoC to take immediate steps to stop the management to
tamper with the records. The complaint was received in the morning on 1st January, 2022 and the
RoC entered the premises of Alpha Tyres Limited, the same day when the complaint from the
creditors was received for the search. From the options given below, choose the one that correctly
indicates the course of action that the RoC may take in such a situation:
a) The RoC may enter the premises of Alpha Tyres Limited and search the place where such books
or papers are kept and seize them.
b) The RoC may enter the premises of Alpha Tyres Limited and search the place where such books
or papers are kept and seize them only after obtaining an order from the Special Court.
c) RoC may enter the premises of Alpha Tyres Limited and search the place where such books or
papers are kept only after obtaining the order to this effect from the NCLT.
d) RoC may enter the premises of Alpha Tyres Limited, search the place where such books or
papers are kept and give an opportunity to the company to represent why such documents may
not be seized.
Answer – (b)
Summary: As per Section 209, search and seizure can be undertaken by RoC only after prior
approval of the special court.
The CG appointed Mr. Rishikesh as an inspector to conduct investigation into the affairs of Oriental
Threads Ltd. in accordance with relevant provisions of the Companies Act, 2013. During the course

26
of investigation of Oriental Threads Ltd., Mr. Rishikesh found that company had reduced the
position of Mr. Gopal Prasad (who was a senior employee) from Joint Manager to Assistant Manager
within a few days after the commencement of investigation. No permission, whatsoever, was
obtained from any authority but it was a sole decision of the company based on the recommendation
of the Recruitment Committee to demote Mr. Gopal Prasad. Select the appropriate option from
those given below as to whether Oriental Threads Ltd. is within its rights to reduce the rank of
Mr. Gopal Prasad from Joint Manager to Assistant Manager during investigation:
a) It being an internal matter of the company, Oriental Threads Ltd. is very much within its rights
to reduce the rank of Mr. Gopal Prasad from Joint Manager to Assistant Manager during
investigation and no authority, whatsoever, can interfere in the matter.
b) Irrespective of whether there is investigation or not, if a company finds that an employee is
not suitable for the position he is holding, then it can demote such employee.
c) Oriental Threads Ltd. cannot reduce the rank of Mr. Gopal Prasad from Joint Manager to
Assistant Manager during the period when investigation is continuing without seeking approval
of the NCLT for which an application needs to be made which shall be disposed of within next
30 days.
d) Oriental Threads Ltd. cannot reduce the rank of Mr. Gopal Prasad from Joint Manager to
Assistant Manager during the period when investigation is continuing without seeking approval
of the CG for which an application needs to be made which shall be disposed of within next 30
days.
Answer – (c)
Summary: As per Sec 218 – A Co. cannot reduce the rank of employee during the period when
investigation is continuing without seeking approval of the NCLT. Application to be disposed by
NCLT in 30 days
Question:47 [Section: 223]

While conducting an inspection of JupiterRise Portraits Ltd. under Section 207 of the Companies
Act, 2013, the inspector, Mr. Suneet Prabhu noticed various irregularities which were committed
while handling business affairs of the company. Mr. Suneet Prabhu sought necessary explanations
from the Directors of JupiterRise Portraits Ltd. regarding those irregularities who furnished
necessary explanations. Thereafter, Mr. Suneet Prabhu prepared the Inspection Report under
Section 208 for onwards submission. You are required to choose the correct option from those
given below as to whom the inspection report shall be submitted and whether Mr. Suneet Prabhu,
as inspector has the right to make recommendations for further investigation?
a) The Inspection Report as prepared by Mr. Suneet Prabhu shall be submitted to the NCLT and
he, as Inspector, has a right to make recommendations for further investigation provided he
has given his reasons in support for such recommendations.
b) The Inspection Report as prepared by Mr. Suneet Prabhu shall be submitted to the RoC and
he, as Inspector, has a right to make recommendation for further investigation provided he
has given his reasons in support for such recommendations.
c) The Inspection Report as prepared by Mr. Suneet Prabhu shall be submitted to the CG and he,
as Inspector, has a right to make recommendations for further investigation provided he has
given his reasons in support for such recommendation.
d) The Inspection Report as prepared by Mr. Suneet Prabhu shall be submitted to the Serious
Fraud Investigation Office (SFIO) and he, as Inspector, has a right to make recommendations

27
for further investigation provided he has given his reasons in support for such
recommendation.
Answer – (c)
Summary: As per Sec 208, the inspector’s report shall be submitted to CG. It may include
recommendation for further investigation supported with reasons therefor
Category C
Sunder Cosmetics Limited was served a notice by the jurisdictional RoC to produce at his office
for inspection of certain more books of accounts, other books, papers and explanations, etc. at 11
A.M. on January 5, 2022. Choose the applicable option from those given below that indicates the
reason for such inspection by the concerned Registrar of Companies:
a) Since no information or explanation was furnished by Sunder Cosmetics Limited to the RoC
within the time specified in the earlier notice issued by him.
b) Since Registrar of Companies, on an examination of the documents furnished by Sunder
Cosmetics Limited, was of the opinion that the information or explanation furnished by the
company was inadequate.
c) Since RoC was satisfied on a scrutiny of the documents furnished by Sunder Cosmetics
Limited, that an unsatisfactory state of affairs existed in the company and the information or
documents so furnished did not disclose a full and fair statement of the information required.
Answer – (d)
Summary: If no information or explanation is furnished to the Registrar within the time
specified or if the Registrar on an examination of the documents furnished is of the opinion
that the information or explanation furnished is inadequate or if the Registrar is satisfied on
a scrutiny of the documents furnished that an unsatisfactory state of affairs exists in the
company and does not disclose a full and fair statement of the information required, he may,
by another written notice, call on the company to produce for his inspection such further books
of account, books, papers and explanations as he may require at such place and at such time as
he may specify in the notice.
At an Extra-ordinary General Meeting of Ravi Share-brokers Limited, held at its Registered Office
situated at Rajendra Place, New Delhi, the shareholders passed a special resolution to the effect
that the affairs of the company ought to be investigated. Ravi Share-brokers Limited, thereafter,
submitted the special resolution so passed to the CG for further action. Under the given situation,
you are required to select the appropriate option from those given below:
a) Power of the CG to order an investigation into the affairs of Ravi Share-brokers Limited as
requested in the special resolution so submitted by the company is discretionary and
therefore, it may or may not order an investigation.
b) Power of the CG to order an investigation into the affairs of Ravi Share-brokers Limited as
requested in the special resolution so submitted by the company is mandatory and therefore,
it shall order an investigation.
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c) CG is not empowered to pass order of investigation in case of non-government companies and

therefore, no order of investigation into the affairs of Ravi Share-brokers Limited as
requested in the special resolution so submitted by the company shall be ordered.
Answer – (a)
Summary: As per Section 206, Where the CG is of the opinion, that it is necessary to investigate
into the affairs of a co. —(a) on receipt of report u/s 208. (b) intimation of a SR passed by co. that
affairs ought to be investigated; or (c) public interest, it may order an investigation. Not mandatory
Question:50 [ Section:206]
Prakash, the Production Manager of Saharanpur based Garima Sugar Mills Limited, a company
incorporated in the year 2001, proceeded on superannuation on October 30, 2019, handing over
charge of his department to Aniket, the newly appointed Production Manager. It so happened that
after his retirement Prakash received a notice from the jurisdictional RoC requiring him to furnish
certain information and explanation regarding production of sugar pertaining to the FYs 2017-18
and 2018-19. However, Prakash did not furnish any information to the RoC since he was no more an
employee of Garima Sugar Mills Limited. Choose the appropriate option from the four givens below:
a) Since the information required by the RoC relates to the FYs 2017-18 and 2018-19 when
Prakash was serving Garima Sugar Mills Limited as Production Manager, he is liable to furnish
the requisite information.
b) Though the information required by the RoC relates to the FYs 2017-18 and 2018-19 but at
the time of seeking information, Prakash is not serving Garima Sugar Mills Limited as
Production Manager and therefore, he is not liable to furnish the requisite information.
c) Though the information required by the RoC relates to the FYs 2017-18 and 2018-19 but at
Production Manager and therefore, Aniket, the current Production Manager, is liable to furnish
the requisite information.
d) Though the information required by the RoC relates to the FYs 2017-18 and 2018-19 but at
Production Manager and therefore, Vignesh who worked as foreman under Prakash and is still
in employment, is liable to furnish the requisite information instead of Aniket, the newly
appointed Production Manager.
Answer – (a)
Summary: As per Sec 206, where such info. relates to any past period, the officers who had been
in the employment of the co. for such period, if so called upon by the Registrar through a written
notice, shall also furnish such information or explanation to the best of their knowledge.
Under the garb of cement business, some of the directors of Royal Cement Limited, a company
incorporated in the year 2001 and having its factories at Rohtak and Bhiwani, were involved in
several illegal activities. In such a situation, on receipt of a report of the RoC or inspector under
Section 208 or in the public interest or on request from any Department of the CG or a State
Government, the CG may, by order, assign the investigation into the affairs of Royal Cement Limited
to the Serious Fraud Investigation Office (SFIO). In addition to the above bases, there is one
more basis which may prompt the CG to assign the investigation to the Serious Fraud Investigation
29
Office (SFIO). From the following 4 options, choose such appropriate basis for assigning the
investigation to the SFIO.
a) On intimation through an Ordinary Resolution passed by the shareholders of Royal Cement
Limited that the affairs of the company are required to be investigated.
b) On intimation through a Special Resolution passed by the shareholders of Royal Cement Limited
that the affairs of the company are required to be investigated.
c) On an intimation received from certain senior employees of Royal Cement Limited that the
affairs of the company are required to be investigated.
d) On an intimation received from certain ex-directors of Royal Cement Limited that the affairs
of the company are required to be investigated.
Answer – (b)
Summary: Where the CG is of the opinion, that it is necessary to investigate into the affairs of
a company by the SFIO, inter-alia, on intimation of a SR passed by a co. that its affairs are
required to be investigated, it may, by order, assign the investigation to SFIO.
Mr. Dinesh, Finance Manager of Sarvottam Steel Limited got retired on May 30, 2019. After
examination of the financial statements of Sarvottam Steel Limited for the year ended 31st March
2019, the jurisdictional RoC observed certain serious irregularities in writing off huge amounts of
bad debts and no satisfactory explanation was provided for such write-off by the company. In such
a situation, the RoC seeks some explanation from the company as well as Mr. Dinesh, ex-Finance
Manager and therefore, respective notices were served in this respect. Can the RoC seek
explanation from Mr. Dinesh after his retirement?
a) Since Mr. Dinesh is no more in the employment of Sarvottam Steel Limited, he cannot be called
upon by the RoC to furnish the requisite explanation.
b) Though Mr. Dinesh is no more in the employment of Sarvottam Steel Limited, yet he can be
called upon by the RoC to furnish the requisite explanation through a written notice served on
him, but only within a period of one year from the date of his retirement.
c) Though Mr. Dinesh is no more in the employment of Sarvottam Steel Limited, yet he can be
him, but only within a period of 180 days from the date of his retirement.
d) Though Mr. Dinesh is no more in the employment of Sarvottam Steel Limited, yet he can be
him without any limit as to the time period.
Answer – (d)
Summary: As per Sec 206, where such info. relates to any past period, the officers who had been
in the employment of the co. for such period, if so called upon by the Registrar through a written
notice, shall also furnish such information or explanation to the best of their knowledge.
Utility Transporting Services Ltd., having its registered office at Connaught Place, New Delhi, was
incorporated on 15th July 2020. Recently, some of the shareholders of Utility Transporting
Services Ltd. came to know that certain transactions entered into by the company were not in
accordance with the provisions of the Companies Act, 2013 and were also prejudicial to the interest
of company and its members. Accordingly, they decided to make an application to the CG to conduct
30
investigation into affairs of the company by appointing an Inspector under the provisions of the
Companies Act, 2013. Will the application of these shareholders, if made, be acceptable under the
relevant provisions of Companies Act, 2013
a) The shareholders of a company do not have any right to make an application to the CG for
conducting an investigation into the affairs of company u/s 210 of Companies Act, 2013.
b) The shareholders of a company, after passing a special resolution at the General Meeting, have
a right to make an application to the CG for conducting an investigation into the affairs of the
company under Section 210 of the Companies Act, 2013.
c) The shareholders of a company, even without passing a special resolution, have a right to make
an application to the CG for conducting an investigation into the affairs of the company under
Section 210 of the Companies Act, 2013, when it is suspected that the affairs of the company
are not managed in the interest of the company as well as the shareholders.
d) The shareholders of a company, even after passing a special resolution in the General Meeting,
have no right to make an application to the CG for conducting an investigation into the affairs
of the company under Section 210 of the Companies Act, 2013.
Answer – (b)
Summary: As per Section 206, Where the CG is of the opinion, that it is necessary to investigate
into the affairs of a co, on intimation of a SR passed by co. that affairs ought to be investigated,
it may order an investigation. Not mandatory

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Chapter 5: Compromises, Arrangements and Amalgamations
Category A
It is imperative that the Scheme of Compromise or Arrangement needs to be approved by the
members or class of members or creditors or class of creditors. From the given options, select the
one which correctly indicates the minimum requirement for such approval:
a) The Scheme of Compromise or Arrangement shall be approved by more than 50% majority in
number of members or class of members or creditors or class of creditors, as the case may
be, who are present and voting at the meeting.
b) The Scheme of Compromise or Arrangement shall be approved by more than 75% majority in
value of members or class of members or creditors or class of creditors, as the case may be,
who are present and voting at the meeting.
c) The Scheme of Compromise or Arrangement shall be approved by more than 75% majority in
number of members or class of members or creditors or class of creditors, as the case may
be, who are present and voting at the meeting.
d) Both (a) and (b) together.
Answer – (d)
Summary: As per Sec 230, Scheme of compromise/arrangement shall be approved by majority of
person representing 3/4th in value agree to the SCA [Present and voting]
Orange Communications Limited is planning to merge with itself its Wholly-owned Subsidiary (WoS)
Vaartalaap Tech Limited under the scheme of fast-track merger. After due approval of the Merger
Scheme, the same was filed with the CG (CG) for its approval. However, the CG is of the opinion
that the said Merger Scheme is not in the public interest. In case such an opinion is formed, then
with which authority the CG can file an application stating its objections?
a) The CG cannot file an application in this respect except to decide the matter on its own.
b) The CG can file an application before the NCLT stating its objections.
c) The CG can file an application before the Delhi High Court stating its objections.
d) The CG can file a ‘Special Leave Petition’ before the Supreme Court stating its objections.
Answer – (b)
Summary: As per sec 233, where CG is of opinion that scheme is not in public interest, make
application to NCLT within 60 days of receiving the scheme.
Category B
Choose the correct statement from those given below as regards the preservation of books and
papers of an amalgamated company:
a) Books and papers of an amalgamated company can be disposed of any time after one year with
the permission of Board of Directors of transferee company.
b) Books and papers of an amalgamated company can be disposed of with the permission of CG
after five years.

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c) Books and papers of an amalgamated company cannot be disposed of without obtaining prior
permission of the CG.
d) Books and papers of an amalgamated company cannot be disposed of.
Answer – (c)
Summary: As per Section 239, the books and papers of a company which has been amalgamated
with, or whose shares have been acquired by, another company under this Chapter shall not be
disposed of without the prior permission of the CG.

Mr. Aman is a registered holder of 15,000 equity shares of Kanha Textiles Limited whose issued
capital is Rs. 1,00,00,000 divided into 10,00,000 equity shares of Rs 10 each. He was offered a
price, as determined by the registered valuer, for purchase of his shares by the majority
shareholders. Since he has agreed to the proposal of selling his shares at the offered price, you
are required to select the correct option from those given below that indicates the period within
which such amount shall be disbursed to him:
a) Maximum within 15 days, such offered amount shall be disbursed to him.
b) Maximum within 30 days, such offered amount shall be disbursed to him.
c) Maximum within 60 days, such offered amount shall be disbursed to him.
d) Maximum within 90 days, such offered amount shall be disbursed to him.
Answer – (c)
Summary: As per sec 235(4), sum received by the transferor co. shall be disbursed to the entitled
shareholders within 60 days of such receipt (via Separate bank account)
Abhik Trading and Marketing Company Limited is wholly owned subsidiary (WOS) of Eternal
Cosmetics Limited. Keeping in view the expansion plans, Swapna and Shilpa, the two Directors of
latter company are contemplating to make an application before the appropriate forum for merger
of the subsidiary company Abhik Trading and Marketing Company Limited with holding company
Eternal Cosmetics Limited under Section 232 of the Companies Act, 2013. However, Vibha Kumar,
the Company Secretary of Eternal Cosmetics Limited is of the opinion that the merger between a
holding and subsidiary company should have been undertaken as per the provisions of Section 233
which states procedure for fast-track merger and not under Section 232. Which statement, out
of the four given below, is applicable in the above stated situation:
a) The opinion of Vibha, the Company Secretary of the Eternal Cosmetics Limited, holds ground
since merger between a holding and subsidiary company should have been undertaken as per
the provisions of Sec 233 of Co. Act, 2013 which states procedure for fast-track merger.
b) The opinion of Vibha, the Company Secretary of the Eternal Cosmetics Limited, does not hold
ground since merger between a holdi ng and subsidiary company is validly possible only as per
Section 232 of the Companies Act, 2013.
c) The opinion of Vibha, the Company Secretary of the Eternal Cosmetics Limited, does not hold
ground since the provisions given for fast-track merger under Section 233 of the Companies
Act, 2013 are of the optional nature.

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d) The opinion of Vibha, the Company Secretary of the Eternal Cosmetics Limited, does not hold
ground since the provisions given for fast-track merger under Section 233 of the Companies
Act, 2013 can be applied for merging only small companies.
Answer – (c)
Summary: Mergers for companies u/s 233 (i.e., Fast track merger) is optional in nature and not
mandatory.
NCLT has passed an order on January 25, 2021 approving the merger of two companies, namely,
RGL Engineers Private Limited and RVGL Machines Limited. The merger order of the NCLT, which
shall become effective from March 2, 2021, has been received by RGL Engineers Private Limited
on January 27, 2021. Out of the following four options which one is the most appropriate as regards
filing of the certified copy of the order by RGL Engineers Private Limited with the jurisdictional
Registrar of Companies?
a) RGL Engineers Private Limited shall file the certified copy of the order with the jurisdictional
RoC latest by February 24, 2021, being one month from the date of passing of order by the
NCLT.
b) RGL Engineers Private Limited shall file the certified copy of the order with the jurisdictional
RoC latest by February 26, 2021, being thirty days from the date of receipt of the order
passed by the NCLT.
c) RGL Engineers Private Limited shall file the certified copy of the order with the jurisdictional
RoC latest by April 1, 2021, being thirty days from March 1, 2021, i.e. the date from which the
order of the NCLT shall be effective.
d) RGL Engineers Private Limited shall file the certified copy of the order with the jurisdictional
RoC by April 26, 2021, being three months from the date of receipt of order passed by the
NCLT.
Answer – (b)
Summary: As per sec 232, Every co. in relation to which the order u/s 232 is made shall cause a
certified copy of order to be filed with RoC for registration within 30 days of receipt the order
Category C
Navneet Textiles Limited, with a view to save itself from the looming liquidation, proposed a
scheme of compromise to its creditors which valued Rs. 75,00,000. In the process, the company
filed the said Scheme with the jurisdictional NCLT. From the following options, select the one
which correctly depicts the minimum strength of creditors in value that must confirm to the
scheme of compromise so that Tribunal may dispense with calling of a meeting of the creditors:
a) The strength of creditors in value of Navneet Textiles Limited that must confirm to the
scheme of compromise so that Tribunal may dispense with calling of a meeting of the creditors
is minimum 70%.
b) The strength of creditors in value of Navneet Textiles Limited that must confirm to the
is minimum 80%.

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c) The strength of creditors in value of Navneet Textiles Limited that must confirm to the
is minimum 90%.
d) The strength of creditors in value of Navneet Textiles Limited that must confirm to the
is minimum 95%.
Answer – (c)
Summary: As per sec 230, Tribunal may dispense with calling of meeting of Crs. if > = 90% of Crs in
value agree and confirm to the scheme of compromise and arrangement by affidavit

Sectoral Regulators shall be able to make representation, if any, within _________ from the
date of receipt of Notice of the Meeting to be called, held and conducted by the NCLT in respect
of a scheme of compromise or arrangement.
a) 45 days.
b) 30 days.
c) 60 days.
d) 90 days.
Answer – (b)
Summary: As per Sec 230, the sectoral regular shall make representations within 30 days of receipt
of such notice, else – Presume no representation.
In respect of a scheme of compromise submitted by Neon ColorPrints Limited to the jurisdictional
NCLT, a meeting of the shareholders was held on the specified date and time and at the
designated place. The company had 1200 shareholders holding equity shares of Rs. 1,20,00,000
(12,00,000 equity shares of Rs.10 each) who all voted using the prescribed modes. However, 100
shareholders holding Rs.36,00,000 worth of shares voted against the approval of the scheme of
compromise. Choose the correct option from those stated below as to whether the scheme of
compromise submitted by Neon ColorPrints Limited to the jurisdictional NCLT is to be considered
as approved or not:
a) The scheme of compromise submitted by Neon ColorPrints Limited to the jurisdictional NCLT
is to be considered as approved since shareholders holding more than one-half worth of shares
in value voted in favour of the scheme.
b) The scheme of compromise submitted by Neon ColorPrints Limited to the jurisdictional NCLT
is to be considered as approved since shareholders holding more than fifty-five percent worth
of shares in value voted in favour of the scheme.
c) The scheme of compromise submitted by Neon ColorPrints Limited to the jurisdictional NCLT
is to be considered as approved since shareholders holding more than sixty percent worth of
shares in value voted in favour of the scheme.
d) The scheme of compromise submitted by Neon ColorPrints Limited to the jurisdictional NCLT
is not to be considered as approved by the shareholders.
Answer – (d) Summary: As per Sec 230, Scheme of compromise/arrangement shall be approved
by majority of person representing 3/4th in value agree to the SCA [Present and voting]

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PentoCure Laboratories Limited, a service provider of diagnostic tests and having paid-up capital
of Rs 3,00,00,000 (30,00,000 shares of Rs 10 each), filed a scheme of arrangement with the NCLT.
After considering the scheme, NCLT passed an order directing PentoCure Laboratories Limited to
conduct a meeting of the shareholders of the company. A notice of meeting was sent to all the 1000
shareholders holding total paid-up capital of Rs 3,00,00,000 i.e., 30,00,000 lakh shares of Rs 10
each. On the date of meeting which was held at the Registered Office of the company, only 580
shareholders holding 21 lakh shares (paid-up value Rs 2,10,00,000) attended the meeting. Out of
580 shareholders, 400 shareholders holding 16 lakh shares (paid-up value Rs 1,60,00,000) voted in
favour of the scheme of arrangement as proposed by PentoCure Laboratories Limited and
remaining 180 shareholders holding 5 lakh shares (paid-up value Rs 50,00,000) voted against the
said scheme. From the following 4 options which one correctly indicates whether the scheme of
arrangement gets the required approval of the shareholders of PentoCure Laboratories Limited or
not:
a) The scheme of arrangement gets valid approval of the shareholders with requisite majority.
b) The scheme of arrangement does not get valid approval of the shareholders since minimum
60% of shareholders (i.e., minimum 600 shareholders out of total 1000) did not attend the
meeting for approving the scheme.
c) The scheme of arrangement does not get valid approval of the shareholders since minimum
70% of shareholders (i.e., minimum 700 shareholders out of total 1000) did not attend the
d) The scheme of arrangement does not get valid approval of the shareholders since minimum
80% of shareholders (i.e. minimum 800 shareholders out of total 1000) did not attend the
Answer – (a)
Summary: As per Sec 230, Scheme of compromise/arrangement shall be approved by majority of
person representing 3/4th in value agree to the SCA [Present and voting]
State which statement is correct as regards the preservation of books and papers of amalgamated
company:
a) It can be disposed any time after 1 year with permission of Board of Directors of
Transferee Company.
b) It can be disposed with permission of Central Government after 5 years
c) Not be disposed of without prior permission of the Central Government
d) It cannot be disposed.
Answer – (c)
Summary: As per Sec 239, books of amalgamated company shall not be disposed off without prior
approval of CG

36

Kiara Limited holds 77% of the shares of Sunny Limited. Kiara Limited makes an application for
merger of Holding and Subsidiary Company under section 233 – Fast Track Merger of the
Companies Act, 2013. The legal counsel of Kiara Limited states that company cannot apply for
merger under section 233 of the said Act. He further stated that company shall have to apply for
merger as per section 232 of the Act i.e. Merger and Amalgamation of Companies. State the
correct statement in terms of the validity of the difference in the opinion of the legal counsel.
a) Opinion of the legal counsel of Kiara Limited is valid as the provisions given for fast
track merger in section 233 can be made between only small companies.
b) Opinion of the legal counsel of Kiara Limited is invalid as merger shall be possible only
as per section 233 between Holding and Subsidiary Company.
c) Opinion of the legal counsel of Kiara Limited is valid as the provisions given for fast
track merger in section 233 can be made between Holding and wholly owned subsidiary.
d) Opinion of the legal counsel of Kiara Limited is invalid as merger of Holding and
Subsidiary company is possible under both section 232 and section 233.
Answer – (c)
Summary: As per section 233, a fast track merger can be entered only between holding and its
Wholly-Owned Subsidiary.

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Chapter 6: Prevention of Oppression and Mismanagement

Category A
The shareholders of Viable Plastic Industries Limited passed a special resolution at the Extra-
ordinary General (EGM) of the company to alter the Articles of Association and empower Board of
Directors to transfer the shares of any shareholder who competes with the business of the
company. Mr. Akshat, one of the minority shareholders of Viable Plastic Industries Limited who
was carrying on a competing business of manufacturing plastic bottles and containers as well as
marketing them, challenged the validity of the alteration to be made in the Articles of Association
and claimed such action as oppression against minority. Which of the option from the following
four is applicable in the given situation?
a) The action of Mr. Akshat challenging the validity of the alteration to be made in the Articles
of Association and claiming such action as oppression against minority is not valid since the
Articles are being altered after following the due process of law.
b) The action of Mr. Akshat challenging the validity of the alteration to be made in the Articles
of Association and claiming such action as oppression against minority is not valid since the
Articles are being altered in the interest of the company.
c) The action of Mr. Akshat challenging the validity of the alteration to be made in the Articles
of Association and claiming such action as oppression against minority is valid since the act
complained of is oppressive and prejudicial to the interest of the company.
d) Both (a) and (b)
Answer – (d)
Summary: Read the question. It’s kind of a case study.

Mr. Derek Jonathan, a majority shareholder, represented himself to be the Managing Director of
Floyd Ceramics Ltd., and also discharged the functions in the capacity as Managing Director.
However, he was not formally appointed as Managing Director of Floyd Ceramics Ltd. A group of 6
members, holding 1/12th of the issued share capital, which amounted to 1/10th of paid-up share
capital of the company filed an application with the NCLT claiming that such an act of Mr. Derek
Jonathan constituted oppression. The total number of members of Floyd Ceramics Ltd. are 72.
Which of the following statements is the most appropriate one in the above-mentioned situation?
a) The group of 6 members cannot file an application with NCLT as the strength of members is
less than 1/10th of total number of members of Floyd Ceramics Ltd. However, after filing the
application with NCLT, it is within the discretion of NCLT to allow the application to be filed
even with fewer number of members.
b) The group of 6 members cannot file an application with NCLT since the members hold less than
1/10th of the issued share capital of the company.
c) The group of 6 members cannot file an application with the NCLT since the given fact pattern
does not constitute oppression.
d) Since the group of six members holds 1/10th of the paid-up share capital of the company, they
can file an application with the NCLT.
Answer – (c)

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Summary: A majority shareholder of company, representing himself as MD of the company although

not formally appointed as MD is not an act of oppression and hence application us 244 cannot be
filed.
Category B
Meenu Automotive Private Limited, whose issued and paid-up share capital is Rs 1,00,00,000
consisting of 1,00,000 lakh equity shares of Rs 100 each, has 150 shareholders as per its Register
of Members. Some of the shareholders are contemplating to file an application before the NCLT
alleging various acts of fraud and mismanagement. Which of the following options correctly
indicates as to who can apply to the NCLT for relief against oppression and mismanagement
happening in a company having share capital:
a) Minimum 125 or not less than 1/5th of the total number of members, whichever is more, or any
member or members holding at least 1/5th of the issued share capital on which all the calls
have been paid.
b) Minimum 50 or not less than 1/10th of the total number of members, whichever is more, or any
have been paid.
c) Minimum 75 or not less than 1/5th of the total number of members, whichever is less, or any
have been paid.
d) Minimum 100 or not less than 1/10th of the total number of members, whichever is less, or any
have been paid.
Answer – (d)
Summary: As per sec 244, application shall be made, in case of a company having a share capital,
not less than 100 members or 1/10th of the total number of its members, whichever is less, or
members holding not less than 1/10th of the issued share capital of the company, provided that
applicant has paid all calls and other sums due on his or their shares
Question:69 [Section: 241+ Worldwide Agencies Pvt Ltd]

For the past 5 years Mr. Rohtash was the holder 5,500 shares of Delta Software Solutions Ltd.
which has issued share capital of Rs. 5,00,000 divided into 50,000 shares of Rs. 10 each. Mr.
Rohtash was in the knowledge of some material changes that had taken place in Delta Software
Solutions Ltd. and according to him they were prejudicial to the interest of members as well as the
company. To contain the directors from continuing with unjustified changes, he wanted to make an
application to the jurisdictional NCLT under Section 241 of the Companies Act, 2013. However,
before Mr. Rohtash could proceed further and file the application with NCLT, he expired within
one hour because of severe heart attack. Immediately thereafter, his only son Umang, a child
specialist working in the Government Hospital, inherited his 5,500 shares. Is it possible for Umang
to file an application with the jurisdictional NCLT highlighting the conduct of the affairs of the
company in a manner which is prejudicial to the interest of members as well as the company Choose
the correct option from those given below whether Umang can proceed further:
a) Though Mr. Rohtash was eligible under Section 244 of the Companies Act, 2013 to make an
application to the jurisdictional NCLT but his son Umang cannot file the application because
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he has not yet completed six months as holder of the shares which he inherited after the
death of his father Mr. Rohtash.
b) Though Mr. Rohtash was eligible under Section 244 of the Companies Act, 2013 to make an
he has not yet completed four months as holder of the shares which he inherited after the
c) Though Mr. Rohtash was eligible under Section 244 of the Companies Act, 2013 to make an
he has not yet completed three months as holder of the shares which he inherited after the
d) Since Mr. Rohtash was eligible under Section 244 of the Companies Act, 2013 to make an
application to the jurisdictional NCLT, his son Umang can also file the application because he
has inherited the 5,500 shares after the death of his father Mr. Rohtash.
Answer – (d)
Summary: The legal heir is entitled to file a petition under Section 241 for relief against oppression
and mismanagement even when the name of the deceased member is still recorded in the register of
members.

The requisite members of Shukla Stationers Limited filed a class action suit to restrain the
company from taking action contrary to a resolution passed by the company in the Extra-ordinary
General Meeting (EGM). After following the due process of law, the NCLT passed an order
restraining the company from taking action contrary to the resolution. Instead of complying with
such order of NCLT, Shukla Stationers Limited took action which was contrary to the said
resolution. From the following options, choose the one which indicates the fine that can be levied
on Shukla Stationers Limited:
a) Fine which shall not be less than Rs. 5 lakh but which may extend to Rs. 25 lakh.
b) Fine which shall not be less than Rs. 1 lakh but which may extend to Rs. 5 lakh.
c) Fine which shall not be less than Rs. 50,000 but which may extend to Rs. 5 lakh.
d) Fine which shall not be less than Rs. 25,000 but which may extend to Rs. 1 lakh
Answer – (a)
Summary: As per sec 245, where a company fails to comply with order of NCLT - Fine – Rs. 1 lakh
to Rs. 25 lakhs
Question:71 [Case Law: Thomas Veddon Vs Kuttanad Rubber Ltd]

Due to the impending recession, the profits of Super Star Car Manufacturers Limited nosedived
considerably for the FY 2020-2021 and therefore, its Board of Directors did not recommend any
dividend for the year. At the Annual General Meeting of Super Star Car Manufacturers Limited, a
group of shareholders objected to the Board’s decision of not recommending any dividend and
coerced the directors to reverse such decision. On refusal by the Board, the disappointed members
felt oppressed and filed a complaint with the NCLT against the action of the Board. In the given
scenario, which option out of the four mentioned below, is the most appropriate:
a) The contention of the shareholders shall be tenable.
b) The action of the Board of Directors, not to recommend any dividend shall amount to
oppression and mismanagement.
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c) The action of the Board of Directors who acted in the interest of the company by not
recommending any dividend shall not amount to oppression and mismanagement.
d) Both (a) and (b).
Answer – (c)
Summary: Failure to declare dividend does not amount to oppression. Refer Case Law: Thomas
Veddon Vs Kuttanad Rubber Ltd
Category C
The issued and paid-up equity share capital of Golden Kalash Clothes Private Limited is Rs
1,00,00,000 (10,00,000 equity shares of Rs. 10 each) which is held by 10 shareholders. Jasmine
holds 80,000 equity shares worth Rs 8,00,000. Sensing oppression and mismanagement in the
company, she is contemplating to apply to the NCLT for relief. Out of the following 4 options which
one is applicable in the given situation:
Jasmine being a single member cannot apply for relief against oppression and mismanagement
propagated by Golden Kalash Clothes Private Limited since at least 60% of total shareholders must
apply for such relief i.e., at least 6 shareholders in the present case.
a) Jasmine cannot apply to the NCLT for relief against oppression and mismanagement since she
is holding 80,000 equity shares worth Rs.8,00,000 which is less than one-tenth of the issued
and paid-up equity share capital of Golden Kalash Clothes Private Limited.
b) Jasmine, being one-tenth of the total number of shareholders, can apply to the NCLT for relief
against oppression and mismanagement propagated by Golden Kalash Clothes Private Limited.
c) Jasmine, being one-tenth of the total number of shareholders, can apply to the NCLT for relief
against oppression and mismanagement propagated by Golden Kalash Clothes Private Limited.
d) Jasmine, being a single member, cannot apply for relief against oppression and mismanagement
propagated by Golden Kalash Clothes Private Limited since at least 50% of total shareholders
must apply for such relief i.e., at least 5 shareholders in the present case.
Answer – (c)
Summary: As per sec 244, in case of a company having a share capital, not less than 100 members
of the company or not less than 1/10th of the total number of its members, whichever is less
Question:73 [Category A] [Section 243]

The members of H Limited apply to the NCLT under section 241 of the Companies Act, 2013 on
grounds of oppression and mismanagement by the Board of Directors. The NCLT passed an order
removing the Managing Director of the Company, Mr. M. One year later, Mr. M is now a changed
man and the Board of Directors want Mr. M back, as Manager of the company. The Board of
Directors seek your expert opinion as to what they should do to get Mr. M appointed as the
Manager of the Company. State your opinion, in light of the relevant provisions of the Companies
Act, 2013.

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a) Mr. M cannot be appointed as the Manager of the company for a period of 5 years from
the date of order of the NCLT and the only solution available in this regard to the Board
is to wait for 4 more years.
b) Mr. M can be appointed as Manager if the special approval of the Central Government is
obtained.
c) Mr. M can be appointed by way of making an application to the NCLT.
Answer – (d)
Summary: As per sec 243, MD/manager/other director whose agreement is so terminated/set aside
shall be disqualified to be appointed as MD/mgr/director for 5 years except with the leave of
Tribunal.
Tribunal shall not grant leave unless notice of intention to apply for such leave is served to CG and CG
has been given reasonable OOBH

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Chapter 7: Miscellaneous Chapters
Category A
Question:74
A Ltd. was amalgamated into AB Ltd. The latter company AB Ltd. had held 100% shares in AC Ltd.
Both AB Ltd. and AC Ltd. held 10,000 shares in A Ltd. before the amalgamation took place. A Ltd.
had total 1,00,000 issued shares before amalgamation and 70,000 shares therein were held by B
Ltd. which also later became shareholder of AB Ltd. under amalgamation. But the shareholders
apart from B Ltd. (and excluding AB Ltd. and AC Ltd.) holding 10,000 shares did not become
shareholders in the new AB Ltd. Assuming all other conditions for amalgamation in the ‘nature of
merger’ are fulfilled, would this be:
a) Amalgamation in the ‘Nature of Merger’.
b) Amalgamation in the ‘Nature of Purchase’.
c) Both of these.
d) None of these.
Answer – (b)
Question:75
B. Real Estate Developers Limited was demerged to B. Reality Constructions and Developers Limited
and B. Real Estate Developers Limited. Choose the correct option from those given below as to
what type of demerger is this:
a) Total demerger.
b) Partial demerger.
c) Internal reconstruction.
d) Demerger in the ‘nature of purchase’.
Answer – (b)

Morgen Stern Digi Cables GmbH incorporated in Berlin, Germany, established a place of business
at Mumbai to conduct its business of data interchange and other digital supply transactions online.
However, Morgen Stern Digi Cables GmbH failed to deliver certain documents to the jurisdictional
RoC within the prescribed time period in compliance with the respective statutory provisions.
Which option, out of the four given below, shall correctly indicate the amount of fine with which
Morgen Stern Digi Cables GmbH shall be punishable for its failure to deliver certain documents:
a) Fine which shall not be less than 50,000 rupees but which may extend to 5,00,000 rupees and
in the case of a continuing offence, with an additional fine upto 25,000 rupees for every day
after the first during which the contravention continues.
b) Fine which shall not be less than 1,00,000 rupees but which may extend to 5,00,000 rupees
and in the case of a continuing offence, with an additional fine upto 20,000 rupees for every
day after the first during which the contravention continues.
c) Fine which shall not be less than 2,00,000 rupees but which may extend to 5,00,000 rupees

43
d) Fine which shall not be less than 1,00,000 rupees but which may extend to 3,00,000 rupees
Answer – (d)
Summary: As per sec 392, co. shall be punishable with fine (Rs. 1,00,000 to Rs. 3,00,000) and in the
case of a continuing offence - additional fine upto Rs. 50,000 for every day after the first during
which the contravention continues.

Fam Software Company Inc., a company incorporated in Australia, proposes to establish a place of
business at Mumbai. The list of the Directors includes (i) Mr. Arjun – Managing Director, (ii) Mr.
Ranveer – Director, (iii) Mr. Ramesh Malik - Director and (iv) Mr. Arbaaz - Director. Ms. Lavina has
been appointed as the Secretary of Fam Software Company Inc. It is to be noted that Mr. Ramesh
Malik and Mr. Arbaaz, resident in India, are the persons who have been authorised by Fam
Software Company Inc. to accept on behalf of the company service of process, notices or other
documents required to be served on Fam Software Company Inc. In relation to the company’s
establishment, you are required to enlighten the Fam Company Inc. with respect to whose, a
declaration will be required to be submitted to the RoC by Fam Software Company Inc. for not
being convicted or debarred from formation of companies in or outside India.
a) Mr. Arjun, Mr. Ranveer, Mr. Ramesh Malik, Mr. Arbaaz and Ms. Lavina.
b) Mr. Arjun, Mr. Ramesh Malik, Mr. Arbaaz and Ms. Lavina.
c) Mr. Ramesh Malik and Mr. Arbaaz.
d) Mr. Arjun, Mr. Ranveer, Mr. Ramesh Malik and Mr. Arbaaz.
Answer – (d)
Summary: As per sec 380, declaration that none of the directors or authorised representative in
India has ever been convicted or debarred from formation of companies and management in India
or abroad is to be given within 30 days of establishment. This declaration is to be given only w.r.t.,
directors or AR and NOT secretary

Towering Mobiles Ltd., a company incorporated in Indonesia, proposes to establish a place of
business in India through electronic mode. Towering Mobiles Ltd. issued prospectus to the citizens
of India for subscription of its securities. The company has been into the business for more than
3 years since it received the commencement of business certificate. What should the prospectus
issued by Towering Mobiles Ltd. include in addition to (i) date and signature on the prospectus; (ii)
the instrument defining the constitution of company; (iii) the enactment under which the company
is incorporated; (iv) address in India where documents mentioned at (ii) and (iii) can be inspected:
a) Date and country of incorporation of company.
b) Address of principal office in India, if any.
c) Disclosure of all such matters which are specified u/s 26 of the Companies Act, 2013.

44
Answer – (d)
Summary: Please read all the documents required with prospectus as per Sec 387 of Companies Act

Aakaar Solar Energy Private Limited was allowed the status of a ‘dormant company’ after a
certificate to this effect was issued on 1st July 2021 by the Registrar of Companies, Delhi and
Haryana. From the four options stated below, select the one which correctly indicates the latest
date after which the RoC is empowered to initiate the process of striking off the name of the
company if Aakaar Solar Energy continues to remain as a dormant company.
a) The latest date after which the RoC is empowered to initiate the process of striking off the
name of the company if Aakaar Solar Energy continues to remain as a dormant company shall
be 30th June, 2022.
b) The latest date after which the RoC is empowered to initiate the process of striking off the
be 30th June, 2023.
c) The latest date after which the RoC is empowered to initiate the process of striking off the
be 30th June, 2024.
d) The latest date after which the RoC is empowered to initiate the process of striking off the
be 30th June, 2026.
Answer – (d)
Summary: RoC to initiate process of strike off name from Reg. of Cos if co. remains DC for 5 years
consecutively.
Nanny Marcons Private Limited was incorporated on 9th June, 2019. For the FY 2019-2020, it did
not file its financial statements and annual returns. For the time being the company desires to be
treated as ‘inactive company’ since it does not intend to carry on any business permitted by its
Memorandum. Which of the following options correctly indicates as to when the RoC can issue
certificate of status of dormant company to Nanny Marcons Private Limited on the basis of non-
submission of financial statements if the company makes an application to the Registrar in this
respect?
a) The RoC can issue certificate of status of dormant company to Nanny Marcons Private Limited
after non- submission of financial statements for the two FYs
i.e., 2020-21 and 2021-22, if the company makes an application to the Registrar in this respect.
b) The RoC can issue certificate of status of dormant company to Nanny Marcons Private Limited
after non- submission of financial statements for the next FY
i.e., 2020-21, if the company makes an application to the Registrar in this respect.
c) The RoC can issue certificate of status of dormant company to Nanny Marcons Private Limited
after non- submission of financial statements for the three FYs
i.e., 2020-21, 2021-22 and 2022-23, if the company makes an application to the Registrar in
this respect.

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d) The RoC can issue certificate of status of dormant company to Nanny Marcons Private Limited
after non- submission of financial statements for the four FYs i.e. 2020-21, 2021-22, 2022-
23 and 2023-24, if the company makes an application to the Registrar in this respect
Answer – (b)
Summary: As per section 455, inactivate company = Not filed FS or Annual Return for 2 consecutive
years
Mr. Rudra Sampat, an employee of Rajeev SuperMart Limited, filed a complaint against the company
for the illegal issue and transfer of securities before the Special Court. Choose the correct basis
from the 4 bases given below on which the said complaint shall be rejected by the Special Court:
a) The above offence of illegal issue and transfer of securities by Rajeev SuperMart Limited is
a non-cognizable and therefore, it is out of the jurisdiction of the Special Court.
b) Since the Court is barred to entertain a complaint relating to illegal issue and transfer of
securities by Rajeev SuperMart Limited, it is out of the jurisdiction of the Special Court.
c) Mr. Rudra Sampat, being an employee of Rajeev SuperMart Limited, is not a competent person
to file a complaint against the company for an offence relating to illegal issue and transfer of
securities.
d) In respect of illegal issue and transfer of securities by Rajeev SuperMart Limited, a complaint
can be filed before the Court by the Registrar of Companies, a shareholder or a member of
the company, or a person authorised by the CG in that behalf.
Answer – (c)
Summary: A Court may take cognizance of offences relating to issue and transfer of securities and
non-payment of dividend, on a complaint in writing, by a person authorised by the SEBI

Jackson Communications LLC, incorporated in Arizona, USA, has established a principal place of
business at Kolkata, West Bengal. It is required to deliver requisite documents to the specified
authority. You are required to select an appropriate option from the four given below which
indicates the number of days within which such documents shall be delivered:
a) Within 10 days of the establishment of a principal place of business in India
b) Within 15 days of the establishment of a principal place of business in India
c) Within 30 days of the establishment of a principal place of business in India
d) Within 45 days of the establishment of a principal place of business in India
Answer – (c)
Summary: As per sec 380, a foreign company shall, within 30 days of the establishment of a
principal place of business in India, deliver the requisite documents to the specified authority.
Question:83 [Foreign Co. Unique]

Modern Books Publishers plc., a company incorporated in United Kingdom (UK) has a wholly owned
subsidiary by the name Beta Periodicals Limited whose Registered Office is situated at Mumbai
and which is engaged in publishing scientific, technical and speciality magazines, periodicals and
journals. Beta Periodicals Limited considers itself to be a foreign company since it is a wholly owned

46
subsidiary of Modern Books Publishers plc. which is a foreign company. From the four options given
below, you are required choose the one which appropriately indicates whether Beta Periodicals
Limited can be considered as a foreign company
a) Beta Periodicals Limited cannot be considered as a foreign company even if it is a wholly owned
subsidiary of Modern Books Publishers plc. which is a foreign company.
b) Beta Periodicals Limited shall be considered as a foreign company since it is a wholly owned
subsidiary of Modern Books Publishers plc. which is a foreign company.
c) Beta Periodicals Limited can be granted the status as a foreign company, if its holding company
Modern Books Publishers plc. makes an application to the Regional Director having jurisdiction
over New Delhi for considering its wholly owned subsidiary Beta Periodicals Limited a foreign
company.
d) Beta Periodicals Limited can be granted the status as a foreign company, if its holding company
Modern Books Publishers plc. makes an application to the New Delhi Bench of National Company
Law Tribunal for considering its wholly owned subsidiary Beta Periodicals Limited a foreign
company
Answer – (a)
Summary: A company incorporated in India cannot be considered as a foreign company merely
because it is a wholly owned subsidiary of a Foreign Company.
Rhea Marketing and Consultants Limited, incorporated under the Companies Act, 2013, had made
political contributions amounting to Rs 1,00,000 to a political party registered under section 29A
of the Representation of the People Act, 1951. The statutory auditor of the company, while
reviewing the donations made to the said political party, found that no proper board resolution
authorizing the donation was made. Since there is contravention of the applicable provisions, it is
imperative that the Directors of Rhea Marketing and Consultants Limited would liable to be
punished with imprisonment upto six months and with fine up to five times the amount of
contribution so made. You are required to choose the correct option which indicates the category
under which offence committed by the Directors of the company will fall considering the applicable
provisions of the Companies Act, 2013:
a) Compoundable offence.
b) Non-compoundable offence.
c) Compoundable and cognizable offence.
d) Non-compoundable and non-cognizable offence.
Answer – (d)
Summary: As per section 439, every offence is non-compoundable and Non-cognizable offence
except 212(6)
With the consent of the parties involved, the Delhi Bench of NCLT passed an order on September
21, 2021 in respect of an application filed before it. Mr. Rohit, who received the order of NCLT on
September 24, 2021, felt aggrieved by the said order and therefore, filed an appeal before the
National Company Law Appellate Tribunal (NCLAT) on January 5, 2022 showing sufficient cause of
delay for not filling the appeal within 45 days from the date of the order of NCLT or even within
the extended period of 45 days. Choose the correct option from those given below as to whether

47
the appeal is admissible before the National Company Law Appellate Tribunal (NCLAT) after
showing the cause of delay in filing the appeal:
a) Even after showing sufficient cause of delay in filing the appeal, Mr. Rohit’s appeal can be
admitted only upto the extended period of next 45 days after the expiry of first 45 days
from the receipt of the order and the said extended period of time has already expired.
b) Since NCLT passed the order with the consent of the parties involved, Mr. Rohit’s appeal can
be admitted by NCLAT within the initial 45 days because extended period of 45 days cannot
be granted to him.
c) Since Mr. Rohit has shown sufficient cause of delay for not filing the appeal within the
extended period of 45 days after the expiry of first 45 days from the receipt of the order,
his appeal can be admitted by NCLAT.
d) Mr. Rohit’s appeal cannot be admitted by NCLAT since the order was passed by the NCLT with
the consent of the parties who filed the application before it.
Answer – (d)
Summary: As per Section 421, where an order has been passed with the consent of the parties
involved, appeal cannot be made against such order
Category B
5K Cosmetic Shop plc., a company incorporated in Switzerland, is involved in digital supply services
through electronic mode, the server of which is located outside India. The company follows
calendar year as its FY. Every year the company is required to prepare a balance sheet and profit
and loss account. You are required to choose the correct timeline within which such documents shall
be filed with the RoC considering the provisions of Chapter XXII of the Companies Act, 2013:
a) Within a period of 30 days from the close of the FY of 5K Cosmetic Shop plc.
b) Within a period of 3 months from the close of the FY of 5K Cosmetic Shop plc.
c) Within a period of 60 days from the close of the FY of 5K Cosmetic Shop plc.
d) Within a period of 6 months from the close of the FY of 5K Cosmetic Shop plc.
Answer – (d)
Summary: Foreign company to file FS within 6 months from the close of the FY

The RoC, Mumbai, moved an application under Section 272 of the Companies Act, 2013 to the NCLT
for winding-up of the Isabella Gymnasium Products Limited. During the pendency of the winding-up
application, the NCLT, considering the best interest of the parties to the application, suo motu is
desirous of referring the matter of the proceedings pending before it to the Mediation and
Conciliation Panel formed under Section 442 of the Companies Act, 2013. You are required to select
the correct option from the four given below whether NCLT can, suo motu, refer the proceedings
pending before it to the Mediation and Conciliation Panel:
a) The NCLT is empowered to refer, suo motu, any matter pertaining to above stated proceedings
to the Mediation and Conciliation Panel.
b) The NCLT cannot, suo motu, refer any matter pertaining to above stated proceedings to the
Mediation and Conciliation Panel as only CG is empowered to take such action.

48
c) The NCLT cannot, suo moto, refer any matter pertaining to above stated proceedings to the
Mediation and Conciliation Panel without first obtaining the consent of the parties to the
proceedings.
d) The NCLT shall refer any matter pertaining to above stated proceedings to the Mediation and
Conciliation Panel only after obtaining prior approval of the CG in this behalf.
Answer – (a)
Summary: As per section 442, NCLT is empowered to refer, suo motu, any matter proceedings to
the Mediation and Conciliation Panel
Requisite number of shareholders of Vimaan Aerospace Limited, which has been incorporated under
the Companies Act, 2013, filed an application with the NCLT under Section 241 highlighting the
mismanagement in the conduct of the affairs of the company. Taking cognizance of the application,
the NCLT passed an order under Section 420 on November 23, 2021, providing the sought-after
relief to the shareholders of Vimaan Aerospace Limited. On finding some mistake in the order, the
shareholders brought the same to the notice of NCLT for rectification. You are required to select
the correct statement from those given below as to the circumstances under which NCLT would
be able to amend its order and the maximum period which the said order can be amended:
a) NCLT can amend its order to rectify any mistake apparent from the record when such mistake
is brought to its notice by the parties and further, the order can be amended by NCLT at any
time within a period of six months from the date of such order provided no appeal has been
made against the said order.
b) NCLT can amend its order to rectify any mistake apparent from the record when such mistake
time within a period of one year from the date of such order provided no appeal has been made
against the said order.
c) NCLT can amend its order to rectify any mistake apparent from the record when such mistake
time within a period of two years from the date of such order provided no appeal has been
d) NCLT can amend its order to rectify any mistake apparent from the record when such mistake
time within a period of three years from the date of such order provided no appeal has been
Answer – (c)
Summary: NCLT can amend its order to rectify any mistake apparent from the record (suo motu or
on application) within a 2 years from date of such order provided no appeal has been made
Question:89 [Winding up]

All the 4 directors of Rinkoo Toys Limited are not on the same pace in running the business
operations of the company; rather they are more concerned in enhancing their own business
interests. Due to this unhealthy phenomenon, the company has defaulted in filing with the
jurisdictional Registrar its financial statements or annual returns. For how many consecutive years
if the company defaults in filing its financial statements or annual returns that the Tribunal may
order its winding up on a petition filed by the Registrar:
49
a) If the company defaults in filing its financial statements or annual returns for immediately
preceding three consecutive FYs, the Tribunal may order its winding up on a petition filed by
the Registrar.
b) If the company defaults in filing its financial statements or annual returns for immediately
preceding five consecutive FYs, the Tribunal may order its winding up on a petition filed by the
Registrar.
c) If the company defaults in filing its financial statements or annual returns for immediately
preceding six consecutive FYs, the Tribunal may order its winding up on a petition filed by the
Registrar.
d) If the company defaults in filing its financial statements or annual returns for immediately
preceding seven consecutive FYs, the Tribunal may order its winding up on a petition filed by
the Registrar.
Answer – (b)
Summary: If the company defaults in filing its FS or Annual Returns for immediately preceding 5
consecutive FYs, the Tribunal may order its winding up on a petition filed by the Registrar

Top Footwear Limited, incorporated in Singapore, established a principal place of business at
Chennai. It seeks to deliver various documents to the specified authority. Choose the correct
option from those given below as to the authority to which Top Footwear Limited is required to
deliver such documents:
a) Top Footwear Limited is required to deliver the relevant documents to the CG.
b) Top Footwear Limited is required to deliver the relevant documents to the RoC having
jurisdiction over New Delhi.
c) Top Footwear Limited is required to deliver the relevant documents to the RoC having
jurisdiction over Chennai.
d) Top Footwear Limited is required to deliver the relevant documents to the NCLT, Chennai
Bench.
Answer – (b)
Summary: Registrar having jurisdiction over foreign Companies is RoC, New Delhi.
Category C

Radix Healthcare Ltd., a company registered in Thailand, although has no place of business
established in India, yet it is engaged in online business through remote delivery of healthcare
services in India. Select the incorrect statement from those given below as to the nature of the
Radix Healthcare Ltd. in the light of the applicable provisions of the Companies Act, 2013:
a) Radix Healthcare Ltd. is not a foreign company as it has no place of business established in
India.
b) Radix Healthcare Ltd. is a foreign company being involved in business activity through
telemedicine.
c) Radix Healthcare Ltd. is a foreign company for conducting business through electronic mode.
d) Radix Healthcare Ltd. is a foreign company as it conducts business activity in India.

50
Answer – (a)
Summary: “Foreign company” means any company or body corporate incorporated outside India which
— (a) has a place of business in India whether by itself or through an agent, physically or through
electronic mode; and(b) conducts any business activity in India in any other manner.
Author’s Note – ICAI’s Answer seems to be incorrect in this case. Radix Healthcare has online
presence in India and hence it will be considered as Foreign Company. Hoping that ICAI gives more
clear options if this question comes in exam.
Question:92 [Category B] [Winding Up]

What is the periodicity of submission of report by company liquidator with respect to the progress
of winding up of the company to the Tribunal:
a) Monthly
b) Bi-monthly
c) Quarterly
d) Half yearly
Answer – (c)
Summary: As per the provision related to Winding up of a company, the liquidator shall submit a
quarterly report to the Tribunal with respect to the progress of winding up
Question:93 [Category A]
In the case of financing of a financial asset by more than one secured creditors, there secured
creditor shall be entitled to exercise any of the rights conferred on him is agreed upon by the
secured creditors representing in order to make such an action binding on all the secured creditors.
a) Less 60% in value of the amount outstanding as on a record date
b) Not less than 60% in value of the amount outstanding as on a record date
c) At least 75% in value of the amount outstanding as on a record date
d) Not less than 75% in value of the amount outstanding as on a record date
Answer – (b)
Question:94 [Category B] [Nidhi Rule COA]

Best Nidhi Limited has been incorporated on 01/04/2020 as a Nidhi Company under section 406
of the Companies Act, 2013 with 250 members. Its main object is to accept deposits from members
and lend loans to members for the mutual benefit of the members. It also provides locker facilities
to members. For FY 2020-2021, the income of the company (before deducting any expense) was
Rs. 40,00,000. Expenses incurred during the year amounted to Rs.10,00,000. Calculate the
maximum amount of rental income that could have been earned during the FY 2020-2021 by the
company.
a) Rs. 10,00,000
b) Rs. 7,50,000
c) Rs. 8,00,000
d) Rs. 6,00,000
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Answer – (c)
Summary: Nidhi companies may provide locker facilities on rent to its members subject to Rental
income from such facilities < 20% of gross income at any point of time during a FY
Question:95 [Category A] [Section: 247]

A valuer in a company will be appointed by the ----------- or in its absence, by the -------------of
that company.
a) Board of directors, Shareholders
b) Board of Directors, Audit committee
c) Shareholders, Audit committee
d) Audit Committee, Board of Directors
Answer – (d)
Summary: Registered Valuer to be appointed by AC or BoD in absence of AC
Question:96 [Category A] [Section:381]

X Ltd., a foreign company along with the financial statement of FY 2020-2021 of its Indian
business operations have to file statement of related party transactions, repatriation of profits
and statement of transfer of funds with the Registrar latest by:
a) April 30,2021
b) June 30,2021
c) September 30, 2021
d) December 31, 2021
Answer – (c)
Summary: As per Sec 381, Every foreign company, shall within 6 months from close of Financial year
file its financial statement with Registrar
Question:97 [Category B] [Section:406 Nidhi Company]

Pankaj Nidhi Limited, incorporated under section 406 of the Companies Act, 2013. Pankaj Nidhi
Limited wants to enter into an agreement for acquiring another company by purchase of its
securities. Now the management of the Pankaj Nidhi Limited is in dilemma with respect to the
requirement of entering into such an agreement. Pankaj Nidhi Limited approached you to provide
with the best course of action considering the provisions of the Companies Act, 2013 read with
Nidhi Rules.
a) Nidhi company can enter into an agreement for acquiring other company by purchase of
its securities provided the Nidhi company has passed a special resolution in its general
meeting or have obtained the previous approval of the Regional Director having
jurisdiction over such Nidhi.
b) Nidhi company can enter into an agreement for acquiring other company by purchase of
meeting and also obtained the previous approval of the Regional Director having
jurisdiction over such Nidhi.
c) Nidhi company can enter into an agreement for acquiring other company by purchase of

52
meeting and have obtained the previous approval of the Registrar of Companies (Roc)
having jurisdiction over such Nidhi.
d) Nidhi company can enter into an agreement for acquiring other company by purchase of
meeting or have obtained the previous approval of the Registrar of Companies (Roc)
having jurisdiction over such Nidhi.
Answer – (b)
Summary: As per Nidhi Rules, Nidhi company can enter into an agreement for acquiring other co. by
purchase of its securities provided it has passed a special resolution in its general meeting and also
obtained the previous approval of the Regional Director having jurisdiction over such Nidhi.
Question:98 [Category A] [Section: 455]

Adheera Limited, a company incorporated under the Companies Act, 2013, has not entered into
significant accounting transaction during the last one financial year. Accordingly, the management
of the company was thinking to obtain the status of the dormant company under section 455 of
the Companies Act, 2013. The Registrar on the filings made during the last financial year found
some irregularities and ordered inspection of the books of accounts under section 207 of the
Companies Act, 2013. Now the management of the Company consults you, to advise on the
application to be made to Registrar for obtaining the status of the dormant company considering
the provisions of the Companies Act, 2013.
1. The company shall be able to obtain the status of the dormant company after passing
special resolution to this effect in the general meeting of the company.
2. The company shall not be able to obtain the status of the dormant company as company
shall be inactive i.e., not carrying significant accounting transactions during the last 2
financial years.
3. The company shall be able to obtain the status of the dormant company after issuing
notice to all the shareholders of the company for this purpose and obtaining consent of at
least 3/4th shareholders in value.
4. The company shall not be able to obtain the status of the dormant company as inspection
u/s 207 of the Act is going on against the Company.
a) Only (3)
b) Either (2) or (4)
c) Either (1) or (3)
d) Both (2) and (4)
Answer – (c)
Author’s Note – ICAI’s answer seems to be incorrect. As the company has been inactive for only 1 FY
and also, inspection u/s 207 is ongoing, company shall not be eligible for application for dormant
company. The correct answer should be (d).
Question:99 [Category B] [Mediation COA]

Mr. Rashtra, one of the parties to the proceedings applied to the Tribunal, for referring the
matter pertaining to such proceedings to the Mediation and Conciliation Panel. The Mediation and
Conciliation Panel shall dispose of the matter referred to it within a period of -------------------
a) two months from the date of such reference
53
b) three months from the date of such reference

c) three months from the date applied to the Tribunal for reference
d) Six months from the date of applied to Tribunal
Answer – (b)
Summary: The Mediation and Conciliation Panel shall dispose of the matter referred to it within 3
months from date of such reference.

54
Chapter 8: The Securities Exchange Board of India Act,

1992, and SEBI (Listing Obligations and Disclosure
Requirement) Regulations, 2015
Category A
Question:100 [Section:15G (SEBI)]
Aayush, Bipin, Caroll & Co., a firm of CAs, was appointed as statutory auditor of Ruchika Flavours
Limited, a listed company, for FY 2019-20. Mr. Bipin is the engaging partner of the said audit with
a team of 15 members. While conducting audit of the financial statements of Ruchika Flavours
Limited, 2 members of Mr. Bipin’s team, who are CAs, passed the info. to their friends and relatives
disclosing that profits of Ruchika Flavours Limited for this year are up by 25% in comparison to
the previous FY. At the time of passing the info., it was not available in the public domain through
the company. Certain persons who were in possession of this info., purchased the shares of Ruchika
Flavours Limited at a low price. After the audited financials came into public domain, the market
price of the shares increased sharply and they made profit by selling those shares. You are required
to select the correct option which indicates whether it is a case of insider trading or not and if it
is a case of insider trading then the quantum of penalty that can be levied under the SEBI, 1992.
a) It is not a case of insider trading since both the CAs are part of statutory audit team and
therefore, are not restricted to use any information relating to Ruchika Flavours Limited.
b) It is not a case of insider trading since the information disclosed by both the CAs of statutory
audit team is not a price-sensitive information.
c) It is a case of insider trading and the penalty leviable would be not less than Rs. 10 lacs but
may extend to Rs. 25 crores or 3x of profits made out of insider trading, whichever is higher.
d) It is a case of insider trading and therefore, the penalty leviable would be not less than Rs.
25 crores or three times of profits made out of insider trading, whichever is lower.
Answer – (c) Summary: In case of insider trading u/s 15G, the penalty would be Min. Rs 10 lacs but
which may extend to Rs. 25 crores or 3x of profits made out of insider trading, whichever is higher
Question:101 [Category A+] [Regulation 29 (SEBI)]

Akshara Builders and Developers Ltd., a company listed on BSE Limited, is contemplating upper
revision in the rate of interest of its existing 12% bonds by 1% so as to make them 13% bonds with
effect from August 14, 2021. The said proposal is to be laid before the Board of Directors at a
Board Meeting to be held on July 14, 2021. From the following options, choose the one which
correctly indicates the latest date by which Akshara Builders and Developers Ltd. is required to
intimate the BSE Limited about the Board Meeting where increase in rate of interest is being
considered, keeping in view the Regulation 29 of SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015, Akshara Builders and Developers Ltd. is required to intimate BSE
Limited about the Board Meeting, where increase in rate of interest is being considered, latest by:
a) July 1, 2021.
b) July 3, 2021.
c) July 5, 2021.
d) July 7, 2021.
Answer – (a) Summary: Any alteration of security shall be intimated to RSE at least 11 days prior
to change (excluding date of intimation and the date of BoD meeting)

55
Chapter 9: The Foreign Exchange Management Act, 1999

Category A
Question:102 [FEMA Sch II Limits]
M/s. Kedhar Sports Academy, a private coaching club, provides coaching for cricket, football and
other similar sports. It coaches sports aspirants pan India. It also conducts various sports events
and campaigns, across the country. In 2022, to mark the 25th year of its operation, a cricket
tournament (akin to the format of T-20) is being organized by M/s. Kedhar Sports Academy in
Lancashire, England, in the first half of April. The prize money for the ‘winning team’ is fixed at
USD 40,000 whereas in case of ‘runner-up’, it is pegged at USD 11,000. You are required to choose
the correct option from the four given below which signifies the steps to be taken by M/s. Kedhar
Sports Academy for remittance of the prize money of USD 51,000 (i.e. USD 40,000 + USD 11,000)
to England keeping in view the relevant provisions of FEMA, 1999:
a) For remittance of the prize money of USD 51,000, M/s Kedhar Sports Academy is required to
obtain prior permission from the Ministry of Human Resource Development (Department of
Youth Affairs and Sports).
b) For remittance of the prize money of USD 51,000, M/s Kedhar Sports Academy is required to
obtain prior permission from the Reserve Bank of India.
c) For remittance of the prize money of USD 51,000, M/s Kedhar Sports Academy is not required
to obtain any prior permission from any authority, whatsoever, and it can proceed to make the
remittance.
d) For remittance of the prize money of USD 51,000, M/s Kedhar Sports Academy is required to
obtain prior permission from the Ministry of Finance (Department of Economic Affairs).
Answer – (c)
Summary: As per Sch II (transactions that require approval of CG), Remittance of prize money /
sponsorship of sports activity abroad by a person other than International/National/State Level
sports bodies, if the amt. involved > US$ 100,000 – Ministry of Human Resource Development.
Question:103 [FEMA LRS Limits]

Akash Ceramics Limited, an Indian company, holds a commercial plot in Chennai which it intends to
sell. M/s. Super Seller, a real estate broker with its Head Office in the USA, has been appointed
by Akash Ceramics Limited to find some suitable buyers for the said commercial plot in Chennai
which is situated at a prime location. M/s. Super Seller identifies Glory Estate Inc., based out of
USA, as the potential buyer. It is to be noted that Glory Estate Inc. is controlled from India and
hence, is a ‘Person Resident in India’ under the applicable provisions of FEMA, 1999. A deal is
finalised and Glory Estate Inc. agrees to purchase the commercial plot for USD 600,000 (assuming
1 USD = Rs 70). According to the agreement, Akash Ceramics Limited is required to pay commission
@ 7% of the sale proceeds to M/s. Super Seller for arranging the sale of commercial plot to Glory
Estate Inc. and commission is to remitted in USD to the Head Office of M/s. Super Seller located
in USA. Considering the relevant provisions of FEMA, 1999, which statement out of the four given
below is correct (ignoring TDS implications arising under the Income-tax Act, 1961):
a) There is no requirement of obtaining prior permission of Reserve Bank of India (RBI) for
remittance of commission upto USD 25,000 by Akash Ceramics Limited to M/s. Super Seller
but for the balance commission of USD 17,000, prior permission of RBI is required to be
obtained.
56
b) There is no requirement of obtaining prior permission of Reserve Bank of India (RBI) for
remittance of commission upto USD 30,000 by Akash Ceramics Limited to M/s. Super Seller
but for the balance commission of USD 12,000, prior permission of RBI is required to be
obtained.
c) There is no requirement of obtaining prior permission of Reserve Bank of India (RBI) for
remittance of entire commission of USD 42,000 by Akash Ceramics Limited to M/s. Super
Seller.
d) It is mandatory to obtain prior permission of Reserve Bank of India (RBI) for remittance of
entire commission of USD 42,000 by Akash Ceramics Limited to M/s. Super Seller.
Answer – (d)
Summary: As per Sch III (LRS) - Commission (per transaction) to agent abroad for sale of
residential flats or commercial plots in India in excess of Higher of $25,000 or 5% of Inward
Remittance would require prior permission of RBI
Question 104: [FEMA Section 3]

Mr. Raman, a non-resident Indian, has a Systematic Investment Plan (SIP) with a prominent Indian
mutual fund. Due to some impending financial difficulties, he requested his elder brother Mr.
Raghav, a resident Indian currently working as Manager in a multi-national company at Mumbai, to
make payment of a few subsequent instalments of SIP on his behalf. Which option, do you think,
correctly signifies whether Mr. Raghav is permitted to undertake such transaction of paying a few
instalments of SIP on behalf of his non- resident brother considering the applicable provisions of
the FEMA, 1999:
a) Mr. Raghav is not permitted to undertake such transaction of paying a few instalments of SIP
on behalf of his non-resident brother since it amounts to payment for the credit of a non-
resident person.
b) Mr. Raghav is permitted to undertake such transaction of paying a few instalments of SIP on
behalf of his non-resident brother since Mr. Raman is his real brother.
c) Mr. Raghav is permitted to undertake such transaction of paying a few instalments of SIP on
behalf of his non-resident brother only if his employer permits.
d) Mr. Raghav is permitted to undertake such transaction of paying a few instalments of SIP on
behalf of his non-resident brother only if he obtains prior permission of Reserve Bank of India.
Answer – (a)
Summary: As per Section 3 of FEMA, no person shall make any payment to/for credit of person
resident outside India. Hence, in this case, Mr. Raghav (PRI) cannot make SIP payments on behalf
of Mr. Raman (PROI)
Question:105 [FEMA Limits]

Mohita Periodicals and Mags Publications Limited, having registered office in Chennai, has obtained
consultancy services from an entity based in France for setting up a software programme to
strengthen various aspects relating to publications. The consideration for such consultancy
services is required to be paid in foreign currency. The compliance officer of Mohita Periodicals
and Mags Publications Limited, Mrs. Ritika requires your advice regarding the foreign exchange
that can be remitted for the purpose of obtaining consultancy services from abroad without prior
approval of Reserve Bank of India. Out of the following four options, choose the one which correctly
57
portrays the amount of foreign exchange remittable for the given purpose after considering the
provisions of the FEMA, 1999 and regulations made thereunder:
a) Permissible amount of foreign exchange that can be remitted by Mohita Periodicals and Mags
Publications Limited for obtaining consultancy services from an entity based in France without
prior approval of RBI is US$ 50,000,000.
b) Permissible amount of foreign exchange that can be remitted by Mohita Periodicals and Mags
c) Permissible amount of foreign exchange that can be remitted by Mohita Periodicals and Mags
d) Permissible amount of foreign exchange that can be remitted by Mohita Periodicals and Mags
Answer – (d)
Summary: As per Schedule III - Liberalised Remittance Scheme - Consultancy fees per project
other than infra projects procured from o/s India upto $1Mn can be paid without prior permission
of RBI
Question:106 [FEMA – Residential Status]

After 5 years of stay in USA, Mr. Umesh came to India at his paternal place in New Delhi on
October 25, 2019, for the purpose of conducting business with his two younger brothers Rajesh
and Somesh and contributed a sum of Rs. 10,00,000 as his capital. Simultaneously, Mr. Umesh also
started a proprietary business of selling artistic brass ware, jewelry, etc. procured directly from
the manufacturers based at Moradabad. Within a period of two months after his arrival from USA,
Mr. Umesh established a branch of his proprietary business at Minnesota, USA. You are required
choose the appropriate option with respect to residential status of Mr. Umesh and his branch for
the FY 2020-21 after considering the applicable provisions of the FEMA, 1999:
a) For the FY 2020-21, Mr. Umesh and his branch established at Minnesota, USA, are both
persons resident outside India.
b) For the FY 2020-21, Mr. Umesh is a resident in India but his branch established at Minnesota,
USA, is a person resident outside India.
c) For the FY 2020-21, Mr. Umesh and his branch established at Minnesota, USA, are both
persons resident in India.
d) For the FY 2020-21, Mr. Umesh is a person resident outside India but his branch established
at Minnesota, USA, is a person resident in India.
Answer – (b)
Author’s Note – ICAI’s Answer seems to be incorrect. In the author’s opinion, option (C) is correct.
Reason being –Branch or office outside India owned or controlled by a person resident in India is
considered as a person resident in India. In this case, the branch is owned by Umesh (PRI) and
hence option (c). This same question is asked in RTP May’22 and the answer is (c)
Category B
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Question:107 [FEMA LRS Limit]

In September, 2020, Mr. Purshottam Saha visited Atlanta as well as Athens and thereafter, London
and Berlin on a month-long business trip, for which he withdrew foreign exchange to the extent of
US$ 50,000 from his banker State Bank of India, New Delhi branch. In December, 2020 he
further, withdrew US$ 50,000 from SBI and remitted the same to his son Raviyansh Saha who
was studying in Toronto, Canada. In the first week of January, 2021, he sent his ailing mother Mrs.
Savita Saha for a specialized treatment along with his wife Mrs. Rashmi Saha to Seattle where his
younger brother Pranav Saha, holder of Green Card, is residing. For the purpose of his mother’s
treatment and to help Pranav Saha to meet increased expenses, he requested his banker SBI to
remit US$ 75,000 to Pranav Saha’s account maintained with Citibank, Seattle. In February, 2021,
Mr. Purshottam Saha’s daughter Devanshi Saha got engaged and she opted for a ‘destination
marriage’ to be held in August, 2021 in Zurich, Switzerland. While on a trip to Dubai in the last
week of March, 2021, he again withdrew US$ 35,000 to be used by him and Devanshi Saha for
meeting various trip expenses including shopping in Dubai. Later, the event manager gave an
estimate of US$ 2,50,000 for the wedding of Devanshi Saha at Zurich, Switzerland. Which option
do you think is the correct one in the light of applicable provisions of FEMA, 1999 including
obtaining of prior approval, if any, from Reserve Bank of India since Mr. Purshottam Saha withdrew
foreign exchange on various occasions from his banker State Bank of India.
a) In respect of withdrawal of foreign exchange on various occasions from his banker State Bank
of India and remitting the same outside India during the FY 2020-21, Mr. Purshottam Saha is
not required to obtain any prior approval.
b) In respect of withdrawal of US$ 35,000 in the last week of March, 2021, for a trip to Dubai,
Mr. Purshottam Saha must have obtained prior approval of Reserve Bank of India since the
maximum amount of foreign exchange that can be withdrawn in a FY is US$ 1,75,000.
c) After withdrawing US$ 1,00,000, Mr. Purshottam Saha must have obtained prior approval of
Reserve Bank of India for the remaining remittances made during the FY 2020-21, otherwise
SBI would not have permitted further withdrawals.
d) After withdrawing US$ 50,000, Mr. Purshottam Saha must have obtained prior approval of
Reserve Bank of India for the remaining remittances made during the FY 2020-21, otherwise
SBI would not have permitted further withdrawals.
Answer – (a)
Summary: As the overall limit of $250,000 is not breached in FY 20-21, no prior approval of RBI
is required
Question:108 [FEMA]
Nandeesh, a resident Indian, remitted USD 1,00,000 on 7th June, 2021, to his son Ishaan who is
settled in California, USA, since he urgently required funds. On 9th July, 2021, Nandeesh again
remitted USD 71,000 to meet expenses to be incurred in respect of his ailing wife, Medhavi who
had recently gone to USA to meet his son Ishaan but had developed serious coronary disease. For
specialised treatment of Medhavi at a specialised hospital, a sum of USD 79,000 was remitted for
the second time on 30th July, 2021 by Nandeesh. Within next 10 days, Medhavi recovered and was
allowed to return to her son’s residence from the hospital. Choose the correct option from those
stated below as to when Nandeesh can send further foreign exchange to his son Ishaan for the
purpose of purchasing a house without obtaining the prior approval of Reserve Bank of India:

59
a) Without obtaining the approval of Reserve Bank of India, Nandeesh can send further foreign
exchange to his son Ishaan only in the month of April, 2022 or thereafter.
b) Without obtaining the approval of Reserve Bank of India, Nandeesh can send further foreign
exchange to his son Ishaan only in the month of January, 2022 or thereafter.
c) Without obtaining the approval of Reserve Bank of India, Nandeesh can send further foreign
exchange to his son Ishaan only in the month of July, 2022 or thereafter.
d) Without obtaining the approval of Reserve Bank of India, Nandeesh can send further foreign
exchange to his son Ishaan only in the month of November, 2021 or thereafter.
Answer – (a)
Summary: The limit of $2,50,000 under the Liberalised Remittance Scheme is relevant for a FY
and not calendar year. Hence, if the limit is exhausted in FY 21-22, next remittance under LRS can
be done only in April 2022.
Question:109 [Category B] [FEMA – Import of Goods Rules]
Mr. X, a resident of India planned a tour of 15 days to visit Paris and to meet his niece living there.
While returning to India, Mr. X was carrying with him INR 30,000. Her niece told him that limit is
marked on bringing Indian currency notes at the time of return to India. Identify the correct limit
a) INR 2000
b) INR 5000
c) INR 10,000
d) INR 25,000
Answer – (d)
Summary: As per FEMA Import of Goods and Services Regulation - A person resident in India who
had gone outside India on temporary visit may bring Indian currency upto Rs. 25,000.
Question:110 [Category A] [Section 13 FEMA]

Mr. A is an authorized dealer holding a valid Authorization issued by the Reserve Bank of India
under section 10 of the FEMA, 1999. During the course of his business, he violated one of the
conditions subject to which the Authorization was granted to him. The Adjudicating Authority
imposed a penalty of Rs. 1,50,000 under section 13 (being 3 times the amount involved in the
violation, i.e. Rs. 50,000). Mr. A accepted the default. State the time limit before which Mr. A
should pay the penalty, assuming he does not prefer an appeal to the Appellate Authority:
a) Within 30 days from the date of the Order imposing the penalty.
b) Within 45 days from the date of the Order imposing the penalty.
c) Within 60 days from the date of the Order imposing the penalty.
d) Within 90 days from the date of the Order imposing the penalty.
Answer – (d)
Summary: As per Sec 14 of FEMA, penalty u/s 13 shall be paid within 90 days from notice
Question:111 [Category A]

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Z Ltd, a Starup is permitted to raise ECB under the automatic route with the minimum average
maturity period of
a) 1 years
b) 3 years
c) 5 years
d) 10 years
Answer – (b) Summary: For Startups availing ECB, MAMP = 3 years
Question:112 [Category B] [ECB ]

Minimum Average Maturity Period prescribed for ECB raised for working capital purposes or
general corporate purposes under the ECB framework is:
a) 1 year
b) 5 year
c) 7 year
d) 10 year
Answer – (d)
Summary: In case of External borrowing, Minimum Avg. maturity period = 3 years, except for specific
cases. In case of ECB for working capital purpose it is 10 Years.
Question:113 [Category C]
Mr. V, brother of Mr. R , is a resident of Singapore and he owns an immovable property in Chennai
which he inherited from his father, who was a resident of India, Can Mr. V continue to hold the
property?
a) No, he cannot hold transfer or invest In India, since he is resident outside India.
b) Yes, he can continue to hold in India, since he is person of India Origin and the property
is located In India
c) Yes, he can continue to hold the property, since this was inherited from a person who was
resident in India.
d) Yes, he can continue to hold the property, since his brother (Mr. R) uses the property
whenever he travels to Chennai.
Answer – (c)
Summary: As per Section 6, a person resident outside India may hold immovable property in India
acquired from a person resident in India by way of inheritance.

61
Chapter 10: Chapter 4: Foreign Contribution Regulation Act, 2010
Category C
Question:114 [
Alexander Philip, a foreign citizen, has made donations in kind to his known resident Indians for
their personal use. When shall such donation in kind be excluded from the definition of ‘foreign
contribution’ considering the relevant provisions of Foreign Contribution (Regulation) Act, 2010?
a) A donation in kind by a foreign citizen to a resident Indian shall be excluded from the
definition of ‘foreign contribution’, if the market value, in India, of such article, on the date
of such gift, is more than Rs. 1,00,000 but less than Rs. 5,00,000.
b) A donation in kind by a foreign citizen to a resident Indian shall be excluded from the
of such gift, is more than Rs. 5,00,000 but less than Rs. 10,00,000.
c) Any donation in kind given by a foreign citizen to a resident Indian for personal use is always
excluded.
d) A donation in kind by a foreign citizen to a resident Indian shall be excluded from the
of such gift, is not more than Rs. 1,00,000.
Answer – (d)
Summary: Under FCRA, an article given as a gift for personal use of mkt. value in India < Rs. 1 lakh
shall not be termed as Foreign Contribution
Question:115 [Category A] [Section 16]

X Ltd. Submitted an application on 31st August, 2020 for renewal of certificate to Central
Government for acceptance of foreign contribution under FCRA, 2010, shall be renewed latest by:
a) 30th September 2020
b) 29th November 2020
c) 28th February 2021
d) 31st July 2021
Answer – (b)
Summary: As per Section 16 of FCRA, on receipt oof application for renewal, CG shall renew
certificate ordinarily within 90 days (else communicate reason)
Question:116 [Category B]
Intimation of receipt of foreign contribution shall be given-
a) Within 9 months of the closure of the financial year
b) Within 6 months of the closure of the financial year
c) Within 9 months of the date of receipt of the amount
d) Within 6 months of the date of receipt of the amount
Answer – (a)

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Mr. X receives an antique statue from his best friend (who resides abroad) as a gift on his 50th
Birthday of worth Rs. 70,000. State the nature of the gift given to Mr. X in the light of the FCRA:
a) It’s not a foreign contribution as it is not in excess of one lakh rupees.
b) It’s a foreign contribution being made by other than his relative
c) It’s not a foreign contribution, as it is not informed to the Central Government
d) It’s a foreign contribution as is within the limit of one lakh rupees.
Answer – (b)
Author’s Note – The answer of ICAI seems to be incorrect. As per definition of Foreign Contribution,
an article given as a gift from relative for personal use of market value in India < Rs. 1 lakh shall not
be termed as Foreign Contribution.
The correct answer should be (a)

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Chapter 11: The Prevention of Money Laundering Act, 2002

Category A
Question:118
Mr. Roshan gave Rs. 2,00,000 each in cash to two of his friends, Mr. Manav and Mr. Vivian since
they were in dire need of money for their own businesses. Later on, at the time of repayment, he
asked both of them to buy his products at inflated rates via credit cards and online transfer of
funds. The payments were to be made in installments in next couple of months for which he issued
bills and started adjusting the amount in his books of account. Is this ‘payment system’
originating through credit cards and online transfer mode covered under the Prevention of Money
Laundering Act, 2002? Choose the correct A Answer from the following options:
a) Since payments are made through credit cards and online transfers, hence all the transactions
are genuine and not covered under the Prevention of Money Laundering Act, 2002.
b) Money laundering transactions executed through credit cards and online transfers come under
the Prevention of Money Laundering Act, 2002.
c) Since Mr. Manav and Mr. Vivian are not getting any benefit from these transactions, hence
they are not covered under the Prevention of Money Laundering Act, 2002.
d) Since the transactions are not done with shell companies, they are not covered under the
Prevention of Money Laundering Act, 2002.
Answer – (b)
Summary: Definition of Payment System under PMLA - A system that enables payment to be
effected between Payer and Beneficiary and includes – Clearing services, payment or settlement
services or systems enabling credit card, debit card, smart card, money transfer operations, etc.
Question:119 [Category A] [Sec 72]

Proceedings under the Prevention of Money Laundering Act, 2002 were initiated against Mr. Suraj.
Through an order, property of Mr. Suraj has been attached under section 8. Mr. Suraj Preferred
an appeal to the Appellate Tribunal. Mr. Suraj is adjudicated an insolvent during the pendency of
the appeal. What will happen to the proceedings initiated under PMLA in the given case?
a) Proceedings will be dispensed with
b) His legal representatives will continue proceedings before the Appellate Tribunal
c) The official assignee or the official receiver, as the case may be, continue the appeal
before the Appellate Tribunal.
d) Creditors will continue the proceedings before the Appellate Tribunal.
Answer – (c)
Summary: As per sec 72, In case of death/insolvency of person eligible to prefer an appeal, it shall be
lawful for the legal representatives of such person or the official assignee or the official receiver, as
the case may be, to prefer an appeal or to continue the appeal

64
Question:120 [Category A] [Section:8 PMLA]

Mr. Ramnik purchased a property out of an unaccounted money in the joint name of his wife and
son. On complaint, Adjudicating Authority, served a notice to seek information regard the sources
of income and other particulars. State as per the PMLA, 2002, to whom notice may be served by
the Adjudicating Authority:
a) Mr. Ramnik
b) Mr. Ramnik’s wife
c) Mr. Ramnik’s son
d) To all the three i.e., Mr. Ramnik, his wife and son
Answer – (d)
Summary: Notice u/s 8 of PMLA by the Adjudicating Authority shall be send to all such person who
are in possession of proceeds of crime. In this case, as property is held in joint name of wife and son
as well, notice to be sent to all of them.
The dealers in precious metals/ precious stones, can be considered as persons carrying on
designated businesses or professions, when-
a) they engage in any cash transactions with a customer of Rs. 10 lakhs, carried out in a
single operation
b) they engage in any cash transactions with a customer of Rs. 10 lakhs, carried out in a
single operation or in several operations that appear to be linked.
c) they engage in any cash transactions with a customer of equal to or above Rs. 10 lakhs,
carried out in a single operation or in several operations that appear to be linked
d) they engage in sale or purchase of precious metal/precious stones and having annual
turnover of Rs. 20 lakhs or above
Answer – (c)
Summary: As per PMLA, person carrying on designated business shall include dealers in precious
metals/ precious stones if they engage in any cash transactions with a customer of equal to or above
Rs. 10 lakhs, carried out in a single operation or in several operations that appear to be linked

65
Chapter 12: The Insolvency and Bankruptcy Code, 2016

Category A
Question:122 [Section:32 (IBC)]
An application under Section 9 of the IBC, 2016 was filed by the Raheja Portland Cement Limited
in the capacity as operational creditor against the corporate debtor Makhija Builders and
Developers Limited. The application was admitted by the order of the NCLT – Mumbai (NCLT,
Mumbai) after giving a reasonable opportunity of being heard to Makhija Builders and Developers
Limited and Mr. Ritesh was appointed as Interim Resolution Professional (IRP). However, Mr.
Sanskar and Mr. Satvik, 2 of the directors of Makhija Builders and Developers Limited, were
suspicious about the claims filed by Raheja Portland Cement Limited since they were much more
than what was due to the company and therefore, they are desirous of making an appeal against the
order of the NCLT, Mumbai. You, as a legal advisor, are required to advise them as to the maximum
time within which an appeal against the order of the NCLT, Mumbai, can be filed by them with the
National Company Law Appellate Tribunal (NCLAT).
a) Appeal against the order passed by NCLT, Mumbai under Section 9 of the IBC, 2016, within a
period of 45 days from the date of order.
b) Appeal against the order passed by NCLT, Mumbai under Section 9 of the IBC, 2016, within a
c) Appeal against the order passed by NCLT, Mumbai under Section 9 of the IBC, 2016, within a
d) Appeal against the order passed by NCLT, Mumbai under Section 9 of the IBC, 2016, within a
Answer – (b)
Summary: Under IBC, an appeal against the order passed by NCLT, shall be filed within a period of
30 days from the date of order.
Question:123 [Section: 38 of IBC]

Shivdeep submitted his claim as an operational creditor to the liquidator of Chiranjeevi Food
Products Limited which is under liquidation. After submission of his claim, Shivdeep is desirous
of altering it. Out of the following four options, which one correctly indicates the time period within
which he can alter his claim after its submission.
a) Shivdeep can alter his claim within 5 days of its submission to the liquidator of Chiranjeevi
Food Products Limited.
b) Shivdeep can alter his claim within 10 days of its submission to the liquidator of Chiranjeevi
c) Shivdeep can alter his claim within 14 days of its submission to the liquidator of Chiranjeevi
d) Shivdeep can alter his claim within 30 days of its submission to the liquidator of Chiranjeevi
Answer – (c)
Summary: As per Sec 38 of IBC, Creditor may vary or withdraw his claims within 14 days of
submission of such claim

66
Question:124 [Section: Applicability of IBC to NBFCs]

New Era Financial Services Limited of New Delhi, registered with Reserve Bank of India as Non-
banking Financial Company (NBFC), has defaulted in the payment of dues to its catering contractor,
Samarth Sweets, a partnership concern owned by two real brothers Swarn and Shivi. From the
following four options, select the one which indicates whether Samarth Sweets being catering
contractor can initiate insolvency resolution process under the IBC, 2016, against the company in
the capacity as an operational creditor:
a) The catering contractor Samarth Sweets in the capacity as operational creditor is entitled to
initiate insolvency process against New Era Financial Services Limited.
b) The catering contractor Samarth Sweets in the capacity as operational creditor is not entitled
to initiate insolvency process against New Era Financial Services Limited because ‘financial
service providers’ are excluded.
c) The catering contractor Samarth Sweets in the capacity as operational creditor is not entitled
to initiate insolvency process against New Era Financial Services Limited since it is a
partnership concern and not a limited company.
d) Since ‘catering service provider’ is an excluded service, the catering contractor Samarth
Sweets in the capacity as operational creditor is not entitled to initiate insolvency process
against New Era Financial Services Limited.
Answer – (b)
Summary: CIRP cannot be initiated against a Financial Service Provide (e.g. NBFC). However, CG
has notified that it may be initiated against NBFC having total asset of >= Rs. 500 crores.
Note – in this question, it is assumed that such NBFC has asset size < Rs. 500 crores
Category B
Question:125 [IBC]
Aakansha Plastics Limited, having registered office at Bhatinda, Punjab, was formed in the year
2005. On March 31, 2021, its paid-up share capital was Rs. 5 crores; Amount due from Debtors viz.
Shilpa Furnitures Private Limited and Shobhna Traders & Co. Rs. 4 crores; Secured loans obtained
from Crescent Bank Limited Rs. 6 crores; Amount due to creditors, namely, Sambhav & Sons and
Satyadev Suppliers Private Limited Rs. 3 crores. The performance of the company decreased
sharply due to stiff competition, wrong planning and mismanagement and it came on the verge of
insolvency. Choose from the following alternatives as to who is the corporate debtor:
a) Shilpa Furnitures Private Limited and Shobhna Traders & Co.
b) Aakansha Plastics Limited.
c) Sambhav & Sons and Satyadev Suppliers Private Limited.
d) Crescent Bank Limited.
Answer – (b)
Summary: Under IBC, Corporate debtor means a corporate person who owes a debt to any person
Question:126 [Section: 56 of IBC]

Ruby Petals Limited, a small company, files an application with the NCLT stating that the fast track
corporate insolvency resolution process against it cannot be completed within the prescribed
period of 90 days. On being satisfied, NCLT orders to extend the period of such process by 30
67
days. However, Ruby Petals Limited again initiates an application for further extension of time
period of insolvency process by another 10 days. From the four options given below which one, do
you think, is applicable in such a situation:
a) NCLT can extend the period of fast track corporate insolvency resolution process against Ruby
Petals Limited by another 10 days since total extension does not exceed 45 days.
b) NCLT can extend the period of fast track corporate insolvency resolution process against Ruby
Petals Limited by another 10 days if the corporate debtor deposits Rs 50,000 as penalty.
c) NCLT can extend the period of fast track corporate insolvency resolution process against Ruby
Petals Limited by another 10 days if the corporate debtor deposits Rs 1,00,000 as penalty.
d) NCLT cannot extend the period of fast track corporate insolvency resolution process against
Ruby Petals Limited by another 10 days since such extension shall not be granted more than
once.
Answer – (d)
Summary: NCLT can extend the period of fast track CIRP only once for upto 45 days.

Munikh Hospitality Services Limited was admitted in the Corporate Insolvency Resolution Process
(CIRP) under Section 7 of the IBC. The Resolution Professional (RP) Mr. Somesh, after his
appointment, conducted a meeting of Committee of Creditors (CoC) but the same was adjourned
due to the lack of quorum. At the appointed date and time, when the adjourned meeting was
resumed, a resolution was passed by the CoC members present, representing 51% of the voting
rights, for liquidation of Munikh Hospitality Services Limited, the Corporate Debtor, before the
completion of the CIRP. You, as a qualified CA comprising the team of RP, are required to advise
whether the resolution of liquidation passed by certain members of CoC representing 51% of the
voting rights is valid or not considering the applicable provisions of the IBC, 2016.
a) The resolution of liquidation of Munikh Hospitality Services Limited passed by certain
members of CoC representing 51% of the voting rights is not valid since the resolution has not
been approved by minimum of 90% of the voting shares of the creditors.
b) The resolution of liquidation of Munikh Hospitality Services Limited passed by certain
members of CoC representing 51% of the voting rights is not valid since the resolution has not
been approved by minimum of 66% of the voting shares of the creditors.
c) The resolution of liquidation of Munikh Hospitality Services Limited passed by certain
members of CoC representing 51% of the voting rights is not valid since such resolution cannot
be passed before the completion of the CIRP.
d) The resolution of liquidation of Munikh Hospitality Services Limited passed by certain
members of CoC representing 51% of the voting rights is valid since the same has been passed
by the majority of creditors.
Answer – (b)
Summary: Under IBC, the resolution for liquidation of the CD has to be approved by minimum of
66% of the voting shares of the creditors.

68
Chapter 13: The Arbitration and Conciliation Act, 1996
Category A
Question:128 [Arbitration]
Mrs. Komal and Mr. Rajesh entered into an arbitration agreement in writing for the disputes
that might arise in future in relation to their business transactions. Due to certain fault on
the part of Mr. Rajesh, a dispute arose and came before the arbitrator for settlement.
Before the conclusion of the arbitration proceedings, Mrs. Komal expired. Mr. Rajesh shed
of the disputed liabilities on the plea that arbitration agreement had come to an end with the
expiry of the other party. In the given situation, which option out of the four given below is
appropriately applicable:
(a) The arbitration agreement between Mrs. Komal and Mr. Rajesh gets terminated due to the
expiry of Mrs. Komal.
(b) The arbitration agreement between Mrs. Komal and Mr. Rajesh shall remain enforceable and
can be continued by the legal representatives of Mrs. Komal.
(c) Since the arbitration agreement between Mrs. Komal and Mr. Rajesh was made privately
between themselves, it will get terminated with the expiry of Mrs. Komal.
(d) Both (a) & (c).
Answer – (b)
Summary: Arbitration Agreement is NOT discharged by death of parties. It shall be enforceable
by or against Legal Representative.
Category B
Question :129 [Arbitration]
Mr. Abhilash, Mr. Benjamin and Mr. Chandan are partners in a partnership firm named M/s.
Abenchan Agro Products & Co. An agreement in writing was reached among the partners to refer
any business dispute among them to an arbitrator. In spite of this written agreement, Mr. Benjamin
files a suit against Mr. Abhilash and Mr. Chandan disputing certain decisions in a Magistrate Court.
Out of the following options, select the one which correctly depicts as to the admission of the suit
filed by Mr. Benjamin against Mr. Abhilash and Mr. Chandan by the Magistrate Court in the light
of the Arbitration and Conciliation Act, 1996.
a) The suit filed by Mr. Benjamin against Mr. Abhilash and Mr. Chandan can be admitted by the
Magistrate Court, since the said Court has jurisdiction over the disputed matter and it
overpowers arbitration agreement.
b) The suit filed by Mr. Benjamin against Mr. Abhilash and Mr. Chandan can be admitted by the
Magistrate court, only in the case of challenge to the Arbitral Award in appeal.
c) The suit filed by Mr. Benjamin against Mr. Abhilash and Mr. Chandan can be admitted by the
Magistrate court only if both Mr. Abhilash and Mr. Chandan mutually agree for filing of such
suit by Mr. Benjamin.
d) The suit filed by Mr. Benjamin against Mr. Abhilash and Mr. Chandan cannot be admitted by
the Magistrate Court since the jurisdiction of the said Court is ousted because of existence
of a valid arbitration agreement.
Answer – (d)
Summary: In case of existence of valid arbitration agreement, no suits can be filed with courts

69
Question:130 [Category B] [Arbitration]

The Arbitral award against Mr. X was rendered on 1st January 2021. Mr. X, the party wants to
challenge the award. It can be challenged latest by :
a) 31st March 2021
b) 30th April 2021
c) 30th June 2021
d) Arbitral award is final and cannot be further challenged
Answer – (a)
Summary: Challenge of Arbitral Award - Challenge to be made within 3 months of receipt of award by
the party. (Max. extension – 30 days)
Question:131 [Category C] [Arbitration]

Under which circumstances the arbitration process comes to an end as per the Arbitration and
Conciliation Act, 1996:
a) When Arbitrator denies to pass final award
b) When arbitrator fails to pass the award within 12 months
c) When the parties decide to no longer continue with issue.
d) Where the parties decide to refer the matter before the court.
Answer – (b)
Summary: When arbitrator fails to pass award within 12 months, the arbitration process comes to an
end

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The Ultimate Solution – MCQ Booklet (By Shubham Singhal AIR 4)

Upcoming Live Batch – Question Bank Summary Notes

The Ultimate Solution – MCQ Booklet (By Shubham Singhal AIR 4)

Chapter 1 – Appointment and Qualification of Directors

The Ultimate Solution – MCQ Booklet (By Shubham Singhal AIR 4)

Question:3 [Section:168(1) + Rule 15]

The Ultimate Solution – MCQ Booklet (By Shubham Singhal AIR 4)

Question:10 [Section: 149(1),Rule3 ]

The Ultimate Solution – MCQ Booklet (By Shubham Singhal AIR 4)

The Ultimate Solution – MCQ Booklet (By Shubham Singhal AIR 4)

Question :13 [Section:161(1)]

Question :15 [Section:149(3)]

The Ultimate Solution – MCQ Booklet (By Shubham Singhal AIR 4)

Chapter 2: Appointment and Remuneration of Managerial Personnel

Question :18 [Section:186]

Question:21 [Rule 3 (Meeting of board & its powers)]

The Ultimate Solution – MCQ Booklet (By Shubham Singhal AIR 4)

Question:23 [Section: 177(8)]

Question:24 [Section: 173(2)]

The Ultimate Solution – MCQ Booklet (By Shubham Singhal AIR 4)

Question:26 [Section 174(3)]

The Ultimate Solution – MCQ Booklet (By Shubham Singhal AIR 4)

The Ultimate Solution – MCQ Booklet (By Shubham Singhal AIR 4)

The Ultimate Solution – MCQ Booklet (By Shubham Singhal AIR 4)

Question:32 [Category B] [Section:180]

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The Ultimate Solution – MCQ Booklet (By Shubham Singhal AIR 4)

Chapter 3: Meetings of Board and its Powers

Question:34 [Section: 196 and 203]

The Ultimate Solution – MCQ Booklet (By Shubham Singhal AIR 4)

Question:36 [ Section: 203]

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The Ultimate Solution – MCQ Booklet (By Shubham Singhal AIR 4)

The Ultimate Solution – MCQ Booklet (By Shubham Singhal AIR 4)

Chapter 4: Inspection, Inquiry and Investigation

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The Ultimate Solution – MCQ Booklet (By Shubham Singhal AIR 4)

Question:47 [Section: 223]

The Ultimate Solution – MCQ Booklet (By Shubham Singhal AIR 4)

c) CG is not empowered to pass order of investigation in case of non-government companies and

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Chapter 5: Compromises, Arrangements and Amalgamations

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Question:57 [Section: 235(4)]

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The Ultimate Solution – MCQ Booklet (By Shubham Singhal AIR 4)

Question:61 [Section: 230]

The Ultimate Solution – MCQ Booklet (By Shubham Singhal AIR 4)

Question:63 [Section: 230]

Question:64 [Category B] [Section:239]

The Ultimate Solution – MCQ Booklet (By Shubham Singhal AIR 4)

Question:65 [Category B] [Section:233]

The Ultimate Solution – MCQ Booklet (By Shubham Singhal AIR 4)

Chapter 6: Prevention of Oppression and Mismanagement

Question:67 [Section: 244]