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MCQ OF CHAPTER -1 & 2

PRELIMINARY
&
INCORPORATION OF COMPANY & MATTERS INCIDENTAL THERETO

CA DEEPIKA RATHI : CORPORATE LAW


Q-1 Rajesh has formed a ‘One Person Company (OPC)’ with his wife Roopali as
nominee. For the last two years his wife Roopali is suffering from terminal illness
and due to this hard fact he wants to change her as nominee. He has a trusted
and experienced friend Ramnivas who could be made nominee or his (Rajesh) son
Rakshak who is of seventeen years of age. Whom should he nominate as
nominee in place of his wife?
(a) Since blood relation can only be appointed as nominee in case of OPC,

Rajesh needs to appoint his son Rakshak.


(b) Rajesh can appoint his friend Ramnivas as nominee in his OPC

(c) Roopali is not agreeable to the proposal of Rajesh and hence, Rajesh cannot

change her as the nominee


(d) Either Rakshak or Mr. Ramnivas can be appointed as nominee
Q-2 A Ltd. is the holding company of B Ltd. Another company C Ltd. is the subsidiary
company of B Ltd. Is there any relationship between A Ltd. and C Ltd.
(a) There is no relationship between A Ltd. and C Ltd.

(b) C Ltd. is deemed to be the subsidiary of A Ltd.

(c) A Ltd. shall be deemed to be the holding company of C Ltd. provided A Ltd.

acquires at least 10% stake in C Ltd.


(d) C Ltd. shall be deemed to be the subsidiary of A Ltd. if the latter company

acquires minimum 10% stake in the former company within six months after
C Ltd. becomes subsidiary of B Ltd.
Q-3 Vinay and Sanjay made a name reservation application accompanied by requisite
fee to the Registrar for forming a new private company. The Registrar accorded its
approval for reservation of most preferred name Vinanjay Softwares Private Ltd.
on 7th July, 2018. By which date necessary documents for incorporation of the
company must be submitted to the Registrar so that the reserved name does not
get lapsed.
(a) Latest by 20th July, 2018

(b) Latest by 27th July, 2018

(c) Latest by 4th August, 2018

(d) Latest by 4th September, 2018


Q-4 Mr. Purshottam Prasad, a business graduate from leading B-School, running the chain of restaurants;
as sole proprietor concern; based in Chennai. Mr. Prasad being dynamic businessman, in order to
develop the business; decided to give corporate form to his business; but concerned with dilution
of the control over business decisions.

Mr. Prasad, during some journey met Mr. Chinmay Dass; who is school days friend of Mr. Prasad and
presently working in one of leading corporate advisory firm. Mr. Prasad seeks advice from Mr. Dass,
regarding conversion of sole proprietorship concern to company and also explain his intention to
keep the entire control in his hand. Mr. Dass told, about new type of company; which can be
formed under Companies Act, 2013; One Person Company (OPC). Mr. Dass quoted section 2 (62),
which define 'one person company' , a company which has only one person as a member.

Mr. Prasad, felt OPC is correct form of business for him, hence promotes an OPC ‘Casa Hangout
Private Limited’ (One Person Company) on 14th September 2019, to which he sold his sole
proprietor business and himself became sole member. Mr. Prasad, appointed his younger son Mr.
Vijay, who was 21 year old then; as Nominee to OPC. Mr. Anand who is old friend of Mr. Prasad was
appointed as director of OPC, Mr. Prasad himself also become director of company.
Mr. Vijay is professional photographer, and for some certification course went to abroad on
23rd October 2019. He came back on 1st of March 2020. He established photo-studio in form of
OPC ‘Best Click (OPC) Private Limited’ on 20th March 2020, in which Mr. Prasad is nominee
and he became sole member. In mean time, Mr. Vijay also gave his consent as nominee to
another OPC in which his elder brother Mr. Shankar is sole member.

Mr. Prasad met an accident on 25th March, 2020, in which he lost his life. Nomination clause
invoked, resultantly Mr. Vijay has to take charge over ‘Casa Hangout (OPC) Private Limited’ (One
Person Company) as member with immediate effect. On 30 th March, 2020 Mr. Shankar was
appointed as new nominee to ‘Casa Hangout (OPC) Private Limited’, who gave written consent
on 31st March 2020. Mr. Shankar who is investment banker by profession, is of opinion that
‘Casa Hangout (OPC) Private Limited’ need to amend its object clause and add ‘carry out
investment in securities of body corporate’ as one of object.

Financial Period closed on 31st March 2020. Financial statements of ‘Casa Hangout (OPC)
Private Limited’, which is not containing cash flow statement; signed by Mr. Anand (who left
as only director after death of Mr. Prasad).
A. With reference to appointment of Mr. Vijay and Mr. Shankar as nominee to ‘Casa Hangout
(OPC) Private Limited’, out of followings, who is eligible to be nominee of OPC?
(i) Any natural person excluding minor

(ii) Any legal person excluding minor

(iii) Any natural person, who is resident of India; but excluding minor

(iv) Any natural person, who is resident as well as citizen of India; but excluding minor

B. Mr. Shankar if wish to withdraw his consent as nominee, can do so; by giving written notice to
(i) Director of OPC and to sole member of company

(ii) Director of OPC and to Registrar of companies

(iii) Sole member of company and to OPC

(iv) Sole member of company and to Registrar of companies


C. With reference to legal position of Mr. Vijay as member/s and nominee/s to various OPCs,
Which of the following statement is correct in reference to ceiling limit in relation to
membership and being nominee to OPC? A person, other than minor; at specific point of
time;
(i) Can be member in any number of OPCs but nominee in one OPC

(ii) Can be member in one OPC and nominee in any number of OPCs

(iii) Can be member in one OPC and nominee in another one OPCs

(iv) Can be member and nominee both in any number of OPCs

d. Which of following statement is correct, in reference to requirement for financial


Statements of ‘Casa Hangout (OPC) Private Limited’
(i) Must be signed by one director

(ii) Must be signed by at-least by two directors

(iii) Must contain cash flow statement as part of financial statements

(iv) None of the above


E. With reference to opinion of Mr. Shankar to add ‘carry out investment in securities of body
corporate’ object, ‘Casa Hangout (OPC) Private Limited’
(i) Can’t carry out non-banking financial investment activities & investment in securities

of body corporate
(ii) Can’t carry out non-banking financial investment, but can invest in securities of body

corporate’
(iii) Can carry-out non-banking financial investment & invest in securities of body corporate’

(iv) None of the above


Q-5 Roma along with her six friends has got incorporated Roma Trading Ltd. in May 2019. She kept the
paid-up share capital at 30 lacs. Further, in April 2020, she noticed that in the last financial year,
the turnover of the company was well below 2 crores. Advise whether the company can be treated
as a ‘small company’.

a) Roma Trading Ltd. is definitely a ‘small company’ since its paid-up capital is much below ` 50
lacs and also its turnover has not exceeded the threshold limit of ` 2 crores
b) The concept of ‘small company’ is applicable only in case of a private limited company/OPC and
therefore, despite meeting the criteria of ‘small company’ it being a public limited company
cannot enjoy benefits of ‘small company’.
c) Unlike a private limited company/OPC which automatically becomes a ‘small company’ as
soon as it meets the criteria of ‘small company’, Roma Trading Ltd. being a public limited
company has to maintain the norms applicable to a ‘small company’ continuously for two years
so that, thereafter, it is treated as a ‘small company’
d) If all the shareholders of Roma Trading Ltd. give an undertaking to the ROC stating that they
will not let the paid share capital and also turnover exceed the limits applicable to a ‘small
company’ in the next two years, then it can be treated as a ‘small company’
Q-6 Ramesh started a new venture of on-line business of supply of grocery items at the doorstep of consumers.
Initially it was having the area of operations of Jaipur City only. He employed some young boys having their own
bikes and allocated the areas which they were accustomed of it, for making delivery of the grocery items as per
their orders. He also got developed a website and Mobile App to receive the orders on-line. His friend Sudhanshu
who is a Chartered Accountant, suggested him to corporatize this business form, from proprietorship business to
a One Person Company (OPC). Ramesh agreed and a OPC was incorporated in the name of “Ask Ramesh4Online
Grocery (OPC) Pvt Ltd.” (for short OPC-1). In this OPC Ramesh became the member and director and Sudha (the
mother of Ramesh) was made as nominee

After a year Ramesh got married with Rachna. Since the business of on-line supply of grocery was on rising trend,
day by day, he thought to start a new business of supply of Milk and Milk Products and another OPC in the name
of “Rachna Milk Products (OPC) Pvt Ltd” (for short OPC-2) was incorporated with the help of his professional
friend Sudhanshu. In this OPC-2, Rachna (his wife) became the member and director and Ramesh was named as
Nominee.
To summarise the position, the information is tabulated as under
Name of OPC Ask Ramesh4Online Grocery (OPC) Rachna Milk Products (OPC)
Pvt Ltd [OPC-1] Pvt Ltd [OPC-2]
Member and Director Ramesh Rachna
Nominee Sudha (Mother of Ramesh) Ramesh (Husbandof Rachna)
After some time, Sudha (the mother of Ramesh) passed away. However, before the death, Sudha had
made a WILL, in which she mentioned that after her demise, her another son Suresh be made
nominee in the OPC-1. When Suresh came to know this fact, he argued with Ramesh to fulfil the wish
of Sudha as per her WILL (Mother of Ramesh and Suresh), but Ramesh denied this and appointed
Rachna (his wife) as nominee.
Aggrieved from the decision of Ramesh for not nominating him (Suresh), Suresh threatened Ramesh
to take appropriate legal action against him for not honouring the WILL of mother Sudha and
consulted his lawyer. Meanwhile due to continuous threatening and hot talks between Suresh and
Ramesh, Rachna became mentally upset and became insane, as certified by the medical doctor, so
lost her capacity to contract. In this situation, Ramesh being the nominee in OPC-2 became member
and director of this OPC-2.
One of the friends of Ramesh advised him to do some charitable work of providing free education to
the girl children of his native village near by Jaipur. Ramesh thought about this proposal and asked
his professional friend Sudhanshu to convert this OPC-2 into Section 8 company
Based on the above facts, answer the following MCQs
1. Since Rachna, being insane, lost the capacity to contract, Ramesh (who was nominee) became
the member of OPC-2. Now who will make nomination for this OPC:
a. Ramesh in the capacity of husband of Rachna can nominate any person as Nominee of
OPC-2
b. Ramesh (who was nominee) of OPC-2 has now become member of this OPC and now as a
member of this OPC he can nominate any person as per his choice as Nominee for this
OPC.
c. When no person is nominated, the Central Govt. will make nomination of such OPC-2.
d. When no person is nominated the Registrar shall order the company to be wound up.

2. Whether conversion of OPC-2 into a company governed by Section 8 is permissible?


a. Yes, OPC can be converted into Section 8 company
b. No, OPC cannot be converted into Section 8 company
c. This OPC-2 can be converted into section 8 company, provided the Central Govt give
license
d. Providing of free education to girl child do not come under the specified objects
mentioned for eligibility incorporation of section 8 company.
3. Ramesh is a member in OPC-1 and became a member in another OPC-2 (on 2nd April, 2020)
by virtue of his being a nominee in that OPC-2. Ramesh shall, by what date, meet the eligibility
criteria that an individual can be a member in only one OPC:
(a) 17th May 2020

(b) 25th August 2020

(c) 26th August 2020

(d) 29th September 2020

4. After the demise of Sudha (the mother of Ramesh), Rachna was nominated by Ramesh for OPC-1
as Nominee. But now Rachna has become insane, so what recourse you will suggest to Ramesh:
(a) Ramesh is required to nominate another person as nominee

(b) Ramesh should wait till Rachna becomes good of her health and able to have the capacity
to contract
(c) Although Rachna has become insane, but if she is able to sign, her nomination in OPC-1

may continue
(d) Sudhanshu (the Chartered Accountant) who helped in incorporation of OPC-1, may act as

legal consultant on behalf of Rachna


Q-7 Shruti, a common friend of Suchitra and Sukanya, got incorporated OPC sometime before and during
a chit-chat with her friends informed them that there is some limit on the maximum capital which
her OPC can have and she would have to convert her OPC either into a private or public limited
company if such limit exceeded. Suchitra and Sukanya who are desirous of forming a private limited
company for carrying on textile trading business, are unsure about the maximum capital which a
private limited company can have. Advise.
(a) A private limited company can have maximum of Rs. One crore as share capital.
(b) A private limited company can have maximum of Rs. Two crores as share capital.
(c) A private limited company can have maximum of Rs. Five crores as share capital.
(d) A private limited company can have unlimited share capital.
Q-8 In Roopali Marketing Company Private Limited (Authorised capital 50,000 shares of Rs. 10 each
and paid-up share capital of Rs. 4,50,000), 1000 shares are jointly held by Abeer and Abheek;
another 800 shares are jointly held by Seema and Srividya; and another 1200 are jointly held by
Ramesh, Raksha and Rajneesh. Further, 42,000 shares are held by 193 individual persons in their
individual capacity. Is it possible for the company to induct more persons?
(a) The company is unable to induct more persons since it already has two hundred individual
members.
(b) The company can induct four more persons as members.
(c) The company can induct another 20 persons (i.e. 10% of two hundred individual members)
after seeking permission from the concerned ROC.
(d) If the company does not want to seek permission of the concerned ROC, it can induct only
10 more persons (i.e. 5% of two hundred individual members).
Q-9 Vinay and Sanjay made a name reservation application accompanied by requisite fee to the
Registrar for forming a new private company. The Registrar accorded its approval for reservation of
most preferred name Vinanjay Softwares Private Ltd. on 7th July, 2018. By which date necessary
documents for incorporation of the company must be submitted to the Registrar so that the
reserved name does not get lapsed.
(a) Latest by 20th July, 2018
(b) Latest by 27th July, 2018
(c) Latest by 4th August, 2018
(d) Latest by 4th September, 2018
Q-10 In Roopali Marketing Company Private Limited (Authorised capital 50,000 shares of Rs. 10 each and
paid-up share capital of Rs. 4,50,000), 1000 shares are jointly held by Abeer and Abheek; another 800
shares are jointly held by Seema and Srividya; and another 1200 are jointly held by Ramesh, Raksha
and Rajneesh. Further, 42,000 shares are held by 193 individual persons in their individual capacity. Is
it possible for the company to induct more persons?
(a) The company is unable to induct more persons since it already has two hundred individual
members.
(b) The company can induct four more persons as members.
(c) The company can induct another 20 persons (i.e. 10% of two hundred individual members) after
seeking permission from the concerned ROC.
(d) If the company does not want to seek permission of the concerned ROC, it can induct only 10 more
persons (i.e. 5% of two hundred individual members.
Q-11 Swastik Private Limited passed a Special Resolution to change its name to Swastik Darshan Private
Limited on 30th May, 2019. Relevant MCA filing was done on due time and then Company got its
new stationery printed on 1st July, 2019. However there was a delay in issue of Certificate and
Company received new certificate on 20th August, 2019 which was issued on 10th August, 2019.
Company wants to enter into a lease agreement for new premise. When they can do such
agreement in new name of the Company?
(a) 30th May, 2019
(b) 1st July, 2019
(c) 20th August, 2019
(d) 10th August, 2019
Q-12 If a company changes its name; which of the following is most accurate:
(a) It is not allowed to use old name in any way
(b) New name should not be identical with old name
(c) Old name should be painted/printed for next 1 year along with new name
(d) Old name should be painted/printed for next 2 years along with new name
Q-13 Abhilasha and Amrita have incorporated a ‘not for profit’ private limited company which is
registered under Section 8 of the Companies Act, 2013. One of their friends has informed them
that their company can be categorized as a ‘small company’ because as per the last profit and loss
account for the year ending 31st March, 2019, its turnover was less than Rs. 2.00 crores and its
paid up share capital was less than Rs. 50 Lacs. Advise.
(a) A section 8 company, which meets the criteria of ‘turnover’ and ‘paid-up share capital’ in the

last financial year, can avail the status of ‘small company’ only if it acquires at least 5% stake in
another ‘small company’ within the immediately following financial year.
(b) If the acquisition of minimum 5% stake in another ‘small company’ materializes in the second

financial year (and not in the immediately following financial year) after meeting the criteria of
‘turnover’ and ‘paid-up share capital’ then with the written permission of concerned ROC, it
can acquire the status of ‘small company’.
(c) The status of ‘small company’ cannot be bestowed upon a ‘not for profit’ company which

is registered under Section 8 of the Companies Act, 2013.


(d) A section 8 company, if incorporated as a private limited company (and not as public limited

company) can avail the status of ‘small company’ with the permission of concerned ROC, after it
meets the criteria of ‘turnover’ and ‘paid-up share capital’.
Q-14 Roma along with her six friends has incorporated Roma Trading Ltd. in May 2019. The paid-up share
capital of the company is ` 30 lacs. Further, in April 2020, she noticed that in the last financial year, the
turnover of the company was well below ` 20 crores. Advise whether the company can be treated as
a ‘small company’.
(a) Roma Trading Ltd. is definitely a ‘small company’ since its paid- up capital is much below ` 2

crores and also its turnover has not exceeded the threshold limit of ` 20 crores.
(b) The concept of ‘small company’ is applicable only in case of a private limited company/OPC and
therefore, despite meeting the criteria of ‘small company’ it being a public limited company it
cannot enjoy benefits of ‘small company’.
(c) Unlike a private limited company/OPC which automatically becomes a ‘small company’ as soon
as it meets the criteria of ‘small company’, Roma Trading Ltd. being a public limited company
has to maintain the norms applicable to a ‘small company’ continuously for two years so that,
thereafter, it willbe treated as a ‘small company’.
(d) If all the shareholders of Roma Trading Ltd. give an undertaking to the ROC stating that they
will not let the paid-up share capital and also turnover exceed the limits applicable to a ‘small
company’ in the next two years, then it can be treated as a ‘small company’.
Q-15 Abhilasha and Amrita have incorporated a ‘not for profit’ private limited company which is
registered under Section 8 of the Companies Act, 2013. One of their friends has informed them
that their company can be categorized as a ‘small company’ because as per the last profit and loss
account for the year ending 31st March, 2019, its turnover was less than 20 crores and its paid up
share capital was less than ` 2 crores. Advise.
(a) A section 8 company, which meets the criteria of ‘turnover’ and ‘paid-up share capital’ in
the last financial year, can avail the status of ‘small company’ only if it acquires at least
5% stake in another ‘small company’ within the immediately following financial year.
(b) If the acquisition of minimum 5% stake in another ‘small company’ materializes in the
second financial year (and not in the immediately following financial year) after meeting
the criteria of ‘turnover’ and ‘paid-up share capital’ then with the written permission of
concerned ROC, it can acquire the statusof ‘small company’.
(c) The status of ‘small company’ cannot be bestowed upon a ‘not for profit’ company which
is registered under Section 8 of the Companies Act, 2013.
(d) A section 8 company, if incorporated as a private limited company (and not as public
limited company) can avail the status of ‘small company’ with the permission of concerned
ROC, after it meets thecriteria of ‘turnover’ and ‘paid-up share capital’.
Q-16 Namita Ceramic Goods Limited having 152 members was incorporated with the main objects of
manufacture of ceramic goods, glazed, unglazed floor and wall tiles, etc. and to carry on trading in
such products. After three years of successful operation, it wants to diversify its business by entering
into the field of manufacturing electronic goods for which it is required to alter its objects clause.
Advise the companyin relation to alteration of Memorandum.
(a) The company can alter its Memorandum of Association by passing an ordinary resolution and
obtaining the confirmation of the Regional Director (RD).
(b) The company can alter its Memorandum of Association by passing a special resolution at the
shareholders’ meeting.
(c) The company can alter its Memorandum of Association in relation to the objects clause by
passing a special resolution at the shareholders’ meeting and obtaining the confirmation of
the Regional Director (RD).
(d) The company can alter its Memorandum of Association in relation to the objects clause by
passing a special resolution at the shareholders’ meeting and simultaneously publishing the
contents of special resolution in two newspapers (one in English and the other one in
vernacular language) circulating in that area
Q-17 Anupam incorporated a ‘One Person Company’ (OPC) with his sister Alpana as the nominee and
about three years have passed satisfactorily. Anupam does a number of charitable works and is
associated with three NGOs. His business under his OPC has also flourished. Now he is planning to
convert the OPC into a Section 8 company (i.e. a company formed with charitable objects). Choose
the correct option.
(a) Since the company belongs to Anupam, he has full discretion to convert the OPC either as a
Section 8 company or as a private or public company
(b) Since the company was formed as a private company, the only option available with
Anupam is to convert it into a public limited company.
(c) There is specific prohibition on converting OPC into a Section 8 company; otherwise it can
be converted into a private or public company without any hindrance.
(d) Since Anupam does a lot of charitable works there is no prohibition on converting his OPC
into a Section 8 company.
Q-18 In view of the fact that a private company enjoys a number of privileges, Orange Pharma Limited
having 20 members is proposing to convert itself into a private company. For this purpose, the
company needs to alter its articles by inserting three restrictive clauses as specified in Section
2(68) and the consequent change in the name of the company requires:
(a) A special resolution and prior approval of the Central Government.
(b) A special resolution prior approval of the National Company Law Tribunal (NCLT).
(c) A special resolution and prior approval of the Registrar of Companies (ROC).
(d) A special resolution and prior approval of the State Government.
Answers
Questions Answers Questions Answers
1 b 8 b
2 b 9 b
3 b 10 b
4. A (iv) 11 d
B (iii) 12 d
C (iii) 13 c
D (i) 14 b
E (i) 15 c
5 b 16 b
6. 1 b 17 c
.2 b 18 a
.3 d
.4 a
7 d
MCQ OF CHAPTER -3

PROSPECTUS AND ALLOTMENT OF SECURITIES

CA DEEPIKA RATHI : CORPORATE LAW


Q-1 Delight Sports Garments Limited is contemplating to raise funds through issue of prospectus in
which, according to the directors, a sum of ` 50 crores should be stated as the minimum amount
that needs to be subscribed by the prospective subscribers. The funds shall be raised in four
instalments consisting of application, allotment, first call and second & final call. Advise the
company by which instalment it should receive the minimum subscription stated in the
prospectus.
(a) Along with amount subscribed as application money.
(b) Along with amount subscribed as final call money.
(c) Along with amount subscribed as first call money.
(d) Along with amount subscribed as second and final call money.
Q-2 Which of the following statement is contrary to the provisions of the Companies
Act, 2013?
(a) A private company can make a private placement of its securities.

(b) The company has to pass a special resolution for private placement.

(c) Minimum offer per person should have Market Value of Rs.20,000.

(d) A public company can make a private placement of its securities.

Q-3 A Limited made a public issue of Debentures. The articles of the company
authorises the payment of underwriting commission at 2 per cent of the issue
price. The company has negotiated with the proposed underwriters, Gama
Brokers and has finalised the rate at 2.25 per cent. The amount that the
company is eligible to pay as underwriting commission is:
(a) 5%

(b) 2%

(c) 2.5%

(d) 2.25%
Q-4 Krishna Religious Publishers Limited has received application money of ` 20,00,000 (2,00,000 equity
shares of Rs.10 each) on 10th October, 2019 from the applicants who applied for allotment of
shares in response to a private placement offer of securities made by the company to them.
Select the latest date by which the company must allot the shares against the application money so
received.
(a) 9th November, 2019

(b) 24h November, 2019

(c) 9th December, 2019

(d) 8th January, 2020


Q-5 The paid up share capital of ABC Ltd. Is 5000000 shares of Rs. 200 each. 20% of its paid up
share capital is held by 4 of its promoters, who wants to off load their holding by making an offer
of sale to the public by issuing a prospectus. They want to authorize someone to take all actions
and complete all formalities related to such offer of sale. From the following who can be
authorized by them to do so—
(a) Any person who has agreed to fulfil all the formalities related to such offer of sale
(b) Any one or more director of the company.
(c) Company itself whose shareholding they want to offload.
(d) Any competent officer of the company.
Q-6 Extra Limited is a growing Company and requires additional funds for expansion from time to time.
They are following the same process for making an offer to public and then issue those shares. This is
very time and energy consuming for them. Kindly advise them if there is any way out.
a) During first offer they shall file prospectus with a validity on one year, so subsequent offer issued
during the period of validity of that prospectus, no further prospectus is required;
b) During first offer they shall file prospectus with a validity on two years, so subsequent offer
issued during the period of validity of that prospectus, no further prospectus is required;
c) During first offer they shall file shelf prospectus with a validity on one year, so subsequent offer
issued during the period of validity of that prospectus, no further prospectus is required;
d) During first offer they shall file shelf prospectus with a validity on two years, so subsequent offer
issued during the period of validity of that prospectus, no further prospectus is required.
Q-7 When a copy of the contract for the payment of underwriting commission is required to be
delivered to the Registrar:
(a) Three days before the delivery of the prospectus for registration
(b) At the time of delivery of the prospectus for registration
(c) Three days after the delivery of the prospectus for registration
(d) Five days after the delivery of the prospectus for registration

Q-8 A prospectus which does not include complete particulars of the quantum or price of the
securities included therein is called:
(a) A deemed Prospectus
(b) A Shelf Prospectus
(c) An Abridged Prospectus
(d) A Red Herring Prospectus
Q-9 The minimum amount of subscription in a public issue shall be received within days from the
date of issue of prospectus.
(a) 30
(b) 60
(c) 90
(d) 120
Q-10 An issuing house (share broker) has issued an advertisement in two leading newspapers for
selling a large number of shares allotted to it by a company under a private placement. In which
of the following conditions will the advertisement NOT be deemed to be a prospectus:
(a) Advertisement was given within six months from the date ofallotment
(b) Advertisement was given after six months from the date of allotment and the issuing
house has paid the entire consideration to the company
(c) The issuing house did not pay entire consideration to the company till the date of
allotment
(d) advertisement was given within three month from the date of allotment
Q-11 Which of the following statements is not true?
(a) in case of shares, the rate of underwriting commission to be paidshall not exceed five
percent of the issue price of the share.
(b) underwriting commission should not be more than the ratespecified by the Article of
Association.
(c) in case of debentures, the rate of underwriting commission shallnot exceed five
percent of the issue price of the debentures.
(d) amount of commission may be paid out of profits of thecompany.

Q-12 Which of the following statement is contrary to the provisions of the Companies Act,
2013?
(a) A private company can make a private placement of its securities.
(b) The company has to pass a special resolution for private placement.
(c) Minimum offer per person should have Market Value of ` 20,000.
(d) A public company can make a private placement of its securities.
Q-13 A shelf prospectus filed with the ROC shall remain valid for a period of:
(a) one year from the date of registration
(b) one year from the date of closing of first issue
(c) one year from the date of opening of first issue
(d) Ninety days from the date on which a copy was delivered to ROC

Q-14 Shripad Religious Publishers Limited has received application money of Rs. 20,00,000
(2,00,000 equity shares of Rs.10 each) on 10th October, 2019 from the applicants who applied
for allotment of shares in response to a private placement offer of securities made by the
company to them. Select the latest date by which the company must allot the shares against
the application money so received.
(a) 9
th November, 2019

(b) 24h November, 2019


(c) 9th December, 2019.
(d) 8th January, 2020
Q-15 Being in need of further capital, Rimsi Cotton-Silk Products Limited offered 50 lacs equity shares of `
1 each to 50 identified persons on ‘private placement’ basis and accordingly a letter of offer
accompanied by application the necessary form was sent to them after fulfillment of due formalities
including passing of special resolution. One of the applicants Rajan made a written complaint to the
company highlighting the fact that the offer letter was incomplete as well as illegal, as it did not
contain ‘renunciation clause’ as he wanted to exercise his ‘right of renunciation’ in favour of his
son Uday. By choosing the correct option, advise the company in this matter.
(a) As the ‘Right of Renunciation’ cannot be denied, the company needs to rectify its mistake by
including the same in the offerletter and the application form.
(b) The company is prohibited from providing ‘Right of Renunciation’ so the offer letter and the
application form need not include any such clause.
(c) Instead of absolute prohibition, the company can provide ‘Right of Renunciation’ limited to
twenty five percent of offering.
(d) Instead of absolute prohibition, the company can provide ‘Right of Renunciation’ limited to
fifty percent of offering.
Q-16 Innovative Tech Sol Limited intends to invite subscription for Rs 1.10 crores equity shares of
Rs.10 each on private placement basis. The persons identified as potential subscribers are within
the statutory limit and also include the two other categories to which such statutory limit is not
applicable. One such category is employees of the company who are offered equity shares
under Employees’ Stock Option Scheme. the other excluded category is:
(a) Quality Institutional Buyers
(b) Qualified Institutional Buyers.
(c) Qualificational Institutional Buyers.
(d) Qualified Investing Institutional Buyers.
Q-17 Neptune Metal Tools Limited was incorporated on 2nd December, 2018 with twenty-five subscribers
and authorised capital of ` 50,00,000 (5,00,000 equity shares of ` 10 each). The directors of the
company are in a dilemma whether to issue share certificates to the subscribers in physical form or in
dematerialized form. Advise them correctly on this matter:
a. Being an unlisted company, Neptune may either issue physical share certificates to the subscribers
or alternatively, issue them in dematerialized form.
b. Neptune needs to issue shares to the subscribers only in dematerialized form.
c. A company having more than 100 shareholders needs to issue shares in dematerialized form and
therefore, Neptune may issue physical share certificates to the subscribers.
d. A company having authorised capital of fifty lakhs and above needs to issue shares in dematerialized
form and therefore, Neptune may issue physical share certificates to the subscribers.
Q-18 The amount that an unlisted public company is required to maintain as security deposit,
at all times, with the respective depository when it dematerializes its securities shall be
(a) Equal to not less than one year’s fees payable to the depository
(b) Equal to not less than two years’ fees payable to the depository
(c) Equal to not less than two and a half years’ fees payable to the depository
(d) Equal to not less than three years’ fees payable to the depository

Q-19 Commission is permitted to be paid to any underwriter by the company only in respect of
an offer of securities:
(a) where securities are offered on rights basis
(b) where securities are offered in the form of bonus issue
(c) where securities are offered on private placement basis
(d) where securities are offered to the public for subscription
Q-20 In case of ‘offer of sale of shares by certain members of the company’,which of the following
options is applicable:
(a) The provisions relating to minimum subscription are notapplicable
(b) Entire minimum subscription amount is required to be receivedwithin three days of the
opening date
(c) 25% of the minimum subscription amount is required to be received on the opening date
and the remaining 75% withinthree days thereafter
(d) 50% of the minimum subscription is required to be received by the second day of the
opening date and the remaining 50%within next three days after the second day
Answers
Questions Answers Questions Answers
1 a 15 b
2 c 16 b
3 b 17 b
4 c 15 d
5 c 16 a
6 c 17 b
7 b
8 d
9 a
10 b
11 c
12 c
13 c
14 c
MCQ OF CHAPTER - 4

SHARE CAPITAL AND DEBENTURES

CA DEEPIKA RATHI : CORPORATE LAW


Q-1 A Company limited by shares can issue equity shares with differential voting rights. Which of the
following is not a necessary condition to be fulfilled before issue of such shares:
(a) The articles of association of the company shall authorize issue of shares with
differential rights;
(b) The issue of shares shall be authorized by an ordinary resolution passed at a general
meeting of the shareholders;
(c) The issue of shares shall be authorized by special resolution passed at a general meeting
of the shareholders;
(d) The company shall have consistent track record of distributable profits for the last three
years
Q-2 Sumitra Healthcare and Hospitality Limited had issued 9% non-convertible debentures which
matured four years back. However, 1000 such debentures of ` 100 each are still remaining
unclaimed and unpaid even after the maturity. State the period after which the company needs
to transfer them to Investor Education and Protection Fund (IEPF) if they remain unclaimed and
unpaid.
(a) After the expiry of five years from the maturity date.

(b) After the expiry of six years from the maturity date

(c) After the expiry of seven years from the maturity date

(d) After the expiry of eight years from the maturity date.
Q-3 Such shares which are issued by a company to its directors or employees at a discount or for a
consideration other than cash for working extraordinary hard and achieving desired output is
honoured with:
(a) Equity Shares

(b) Preference Shares

(c) Sweat Equity Shares

(d) Redeemable preference shares


Q-4 Corrupt Limited has received a request from Mr. Suresh for transfer of 100 partly paid equity
shares, to Mr. Ramesh. However, Mr. Ramesh expired in the meantime, but no intimation of the
same has been received by the company. In the given circumstances, advise as per the provisions of
the Companies Act, 2013:
(a) Corrupt Limited will not register the transfer the shares in the name of Mr. Ramesh,
without verification from Mr. Suresh
(b) Corrupt Limited can register the shares in the name of Mr. Ramesh as it is not aware of the
untoward incident.
(c) Corrupt Limited will not register the transfer the shares in the name of Mr. Ramesh,
without verification from Mr. Ramesh
(d) Corrupt Limited will give the shares back to Mr. Suresh
Q-5 The Authorised share capital clause of LMN & Co. ltd. consisted of Preference share capital and
Equity share capital both. With regard to equity share capital, the article of association of the
company has given authorisation to issue differential equity shares. Apart from authorisation by the
Articles, from the following strike out the condition, which is not mandatory to comply with—
(a) Such issue of shares must be authorised by an ordinary resolution passed at a general
meeting of the shareholders or by postal ballot, as the case may be
(b) The company must have consistent track record of distributable profit for the last five years.
(c) The companyhas no subsisting default in the payment of the declared dividend to its
shareholders.
(d) The company has not defaulted in filing financial statements and annual returns for three
financial years immediately preceding the financial year in which it is decided to issue such
shares
Q-6 Prithvi Cements Limited is desirous of issuing debentures carrying voting rights. Which of the
following options is best suited in such a situation:
(a) Prithvi Cements Limited can issue debentures carrying voting rights if an ordinary resolution is
passed permitting such issue.
(b) Prithvi Cements Limited can issue debentures carrying voting rights if a special resolution is
passed permitting such issue.
(c) Prithvi Cements Limited can issue debentures carrying voting rights if it mortgages land and
buildings worth two times the amount of such debentures.
(d) Prithvi Cements Limited cannot issue debentures carrying voting rights.
Q-7 Which of the following statements is not true?
(a) in case of shares, the rate of underwriting commission to be paid shall not exceed five

percent of the issue price of the share.


(b) underwriting commission should not be more than the rate specified by the Article o f
Association.
(c) in case of debentures, the rate of underwriting commission shall not exceed five percent
of the issue price of the debentures.
(d) amount of commission may be paid out of profits of the company.
Q-8 Mr. Hari Dutta is an Operation head of North India region of Hilton Ltd. He was a full- time employee
of the company. Mr. Hari draws a monthly salary of Rs. 1,00,000. On 14th May 2020, Mr. Hari applied
for a loan of Rs. 10,00,000, to buy 1000 fully paid-up equity shares of Rs. 1000 each in Mohan
Limited (holding company of Hilton Ltd). The company refused to grant loan to Mr. Hari saying he is
not eligible for the loan for the said amount of Rs. 10,00,000.
Hilton Ltd. is a listed company, authorized by its articles to purchase its own securities. According to
the balance sheet and Annual statements of the company for the year 2020-21:
 Issued, subscribed and paid-up Share Capital (20,00,000 equity shares of Rs. 100 each, fully
paid-up)
 Free Reserves Rs. 30,00,00,000
 The security premium account Rs. 20,00,00,000
 The secured and unsecured Debt Rs. 50,00,00,000
 Accumulated losses Rs. 50,00,000
The company issued a circular as it wanted to buy back shares worth Rs. 10,00,00,000 from the
funds it has in its free reserve and security premium account. The board of directors passed a
resolution for the same on 28th April, 2021.
The company has filed with the Registrar of Companies a Letter of Offer in e-form SH-8 on 1st May
2021. The company had also filed with the Registrar of Companies, along with the letter of offer, a
declaration of solvency.
The Letter of Offer was dispatched to all the shareholders on 3rd May, 2021. The company announced to
avail the buy back offer latest by 10th May, 2021. Many shareholders who approached the company after the
due date were not considered applicable for this buy back scheme. The shareholders raised strong objection
on giving just 7 days time to avail the offer by the company.
A special resolution has been passed at a general meeting of the company authorizing the buy-back of
shares, which was accompanied by an explanatory statement containing the particulars required to be
mentioned as per the provisions of the Companies Act, 2013.
(i) The company has planned to buy back shares worth rupees 10,00,00,000. What is the maximum amount
of equity shares that the company is allowed to buy back based on the total amount of equity shares?
(a) Rs. 2,00,00,000
(b) Rs. 5,00,00,000
(c) Rs. 7,00,00,000
(d) Rs. 8,00,00 000
(ii) Suppose the company intends to buy back some partly paid equity shares. Which of the following
statement is correct?
(a) The company is allowed to buy back partly paid equity shares
(b) The company is allowed to buy back partly paid equity shares if the total amount of such partly
paid equity shares does not exceed 2% of the total buy back.
(c) The company is allowed to buy back partly paid equity shares but it cannot buy back partly paid
other specified securities.
(d) All the shares or other specified securities for buy back must be fully paid up.
(iii) Some shareholders and officers of the company are of the opinion that it was not
necessary for the company to pass a special resolution in general meeting with respect to
buy back. Choose the correct reasoning:
(a) It was not necessary to pass the special resolution as the approval of Board had already been
granted for such buy back of shares
(b) It was necessary to pass special resolution as the amount of buy back exceeds ten percent of
the total paid up equity share capital and free reserves
(c) It was not necessary to pass the special resolution as the buy back was authorized by the
articles of the company
(d) It was necessary to pass special resolution as the amount of buy back exceeds fifteen
percent of the total paid up equity share capital and free reserves
Q-9 Shares issued by a company to its directors or employees at a discount or for a consideration other
than cash for their providing know-how or making available rights in the nature of intellectual
property rights or value additions, by whatever name called are known as:
(a) Equity Shares
(b) Preference Shares
(c) Sweat Equity Shares
(d) Redeemable preference shares
Q-10 The Articles of Association of a private limited company state that the company may issue
preference shares which will have preference with respect to payment of dividend only but no
preference as to the repayment of capital, in the case of winding up. Is it possible for the
company to issue such preference shares?
(a) No; as per section 43 preference shares should have both preferences.
(b) No; this will become an equity share as per section 43.
(c) Yes; because as per section 43 preference shares should have any one preference.
(d) Yes; because Articles of Association of the company allow issue of such preference shares
and the issuing company is a private limited company.
Q-11 A general meeting of the company is to be held on 30th August, 2020. The company has not paid
dividend in respect of its preference shares for the financial year 2018-19 as well as 2019-20. In
such case preference shareholders:
(a) will not have the right to vote because preferential shareholdershave no right to vote
(b) will have the right to vote because dividend has not been paidfor the last two years
(c) will not have the right to vote because only equity shareholderscan vote in general
meetings
(d) will have right to vote because preference shareholders have theright to vote in general
meetings
Q-12 Where there is a change in the rights of one class of shareholders of acompany that also affects the
rights of another class therein, then:
(a) A special resolution should be passed at a general meeting in thisregard
(b) The company need not to do anything further
(c) the consent in writing of three-fourths of such other class of shareholders shall also be
obtained
(d) A resolution at a joint meeting of both the classes should be passed
Q-13 Rajesh Infrastructure Limited wants to issue preference shares for a period exceeding 20 years for
financing its proposed infrastructure project. On the basis of which statement, company can do
so?
(a) Yes, the company can issue irredeemable preference shares by passing a special resolution
(b) Yes, company can issue preference shares for a period exceeding 20 years with the prior
approval of Central Government
(c) Yes, the company can issue irredeemable preference shares for infrastructure project
(d) Yes, the company can issue preference shares for financing an infrastructure project for a
period exceeding to 20 years.
Q-14 If a company has Authorised Share Capital of Rs. 6,00,000, Paid-up Share Capital of Rs.
5,00,000 and a loan of Rs. 2,00,000 obtained from the State Government. The State
Government has directed the company to convert its loan into equity shares, then such
order shall have the effectof increasing:
(a) The subscribed share capital of the company
(b) The paid-up share capital of the company
(c) The Authorised Share Capital of the company
(d) All of the above
Q-15 A company bought back 10% of its equity shares in August 2020. Due to certain miscalculations
during the first buy-back, it again bought back another 10% equity shares in September 2020. Is
second buy-back valid?
(a) It can do so subject to the fulfilment of other conditions becausemaximum buy-back in a
financial year is up to 25%
(b) It cannot do so because there must be a time gap of 12 monthsbetween two buy-backs
(c) It can buy back shares within one year but the company shouldpass an ordinary
resolution at a meeting of its board
(d) It can buy back shares within one year but the company will haveto pass a special
resolution
Q-16 Swagat Hospitality Limited defaulted in the repayment of last two instalments of term loan
availed from National Commercial Bank. On 30th September, 2019, they cleared all the dues
by repaying it. Whencan it issue equity shares with differential voting rights?
(a) Upon expiry of five years from the date on which the default was made good
(b) Upon expiry of three years from the end of the financial Year inwhich the default was
made good
(c) Upon expiry of five years from the end of the financial Year inwhich the default was
made good
(d) Upon expiry of seven years from the end of the financial Year inwhich the default was
made good
Q-17 Radha, the original allottee of 2000 equity shares in Murti Mechanical Toys Private Limited has
transferred the same to Ruchi. The instrument of transfer dated 21st August, 2020, duly stamped
and signed by Radha was handed over to Ruchi. Advise Ruchi regarding the latest date by which
the instrument of transfer along with share certificates must be delivered to the company, to
register the transfer in its register ofmembers.
(a) 21st August, 2020.
(b) 20th September, 2020
(c) 20th October, 2020.
(d) 19th November, 2020.
Q-18 Shreem Lakshmi Jewellery Store Private Limited was incorporated on 27th August, 2020 with 30
persons as subscribers to the Memorandum of Association and with an Authorised share capital of
Rs. 1 crore divided into equal number of shares of Rs. 100 each. Each subscriber subscribed for Rs.
1.00 lac shares. Advise the company about by what date it needs to deliver the share certificates to
the subscribers.
(a) 17th September, 2020.
(b) 30th September, 2020.
(c) 27th October, 2020.
(d) 27th November, 2020.
Q-19 Keshika, the original allottee and owner of 1000 equity shares of Rs.50 each in Modern Biscuits Private
Limited, wanted to transfer these shares to her younger sister Vanshika by way of gift. She completed
the transfer deed in all respects and delivered the same to the company along with the share
certificates on 17th July, 2020. However, the company di not register the transfer even after the expiry
of more than one month nor did it send any notice of refusal. The lone reminder to the company
remained unanswered. An appeal is to be filed against the company with the National Company Law
Tribunal (NCLT) against this failure to register transfer of the said shares. Who has the right to file the
appeal in this regard?
(a) Keshika, who continues to remain owner and transferor of the said equity shares till they are
registered in the name of Vanshika, has the right to file an appeal with NCLT against the
company.
(b) Vanshika, as transferee and potential owner of equity shares, has the right to file an appeal
with NCLT against the company.
(c) Both Keshika and Vanshika have to file a joint appeal with NCLT against the company, for neither
Keshika nor Vanshika are authorised to file the appeal individually.
(d) As per its discretion, NCLT may allow either Keshika or Vanshika to file an appeal against the
company.
Q-20 Vanita Watches Limited has proposed to issue sweat equity shares to five of its employees for
the ‘value additions’ made by them in term of economic benefits which proved beneficial to the
company. The period for which the employees who have been allotted the said sweat equity shares
cannot transfer them is:
(a) One year from the date of allotment
(b) Three years from the date of allotment
(c) Five years from the date of allotment
(d) Six months from the date of allotment
Q-21 Prithvi Cements Limited is desirous of issuing debentures carrying voting rights. Choose the right
option from the following:
(a) Prithvi Cements Limited can issue debentures carrying voting rights by passing an
ordinary resolution at a general meeting of the company.
(b) Prithvi Cements Limited can issue debentures carrying voting rights by passing a special
resolution at a general meeting of the company.
(c) Prithvi Cements Limited can issue such debentures carrying voting rights only if it
mortgages its land and buildings worth two times the amount of the debentures.
(d) Prithvi Cements Limited cannot issue debentures carrying voting rights.
Q-22 While making an application to the Tribunal for seeking its confirmation in respect of
extinguishing the liability of Rs.3 per equity share, Medhavi Publishers Limited has to file a
certificate along with the application, that the accounting treatment proposed by it for such
reduction of share capital is in conformity with the accounting standards specified in the
prescribed Section. Advise the company as to who can issue suchcertificate?
(a) Any of the directors of the company as authorised by the Boardmay issue such certificate
(b) A practicing company secretary is authorised to issue suchcertificate
(c) The auditor of the company is authorised to issue such certificate
(d) The legal advisor of the company is authorised to issue suchcertificate
Q-23 Raman, the original allottee of 2000 equity shares in ABC Limited has transferred the same to
Ruchi. The instrument of transfer dated 21st August, 2020, duly stamped and signed by Raman was
handed over to Ruchi. Advise Ruchi regarding the latest date by which the instrument of transfer
along with share certificates must be delivered to the company, to register the transfer in its
register of members.
(a) 21st August, 2020.
(b) 20th September, 2020
(c) 20th October, 2020.
(d) 19th November, 2020
Q-24 Goals Limited, a listed company has authorised share capital of Rs. 25,00,000 (issued, subscribed
and paid up capital of Rs. 20,00,000). 21st August, 2020. The company has planned to buy back
shares worth Rs.10,00,000. What is the maximum amount of equity shares that the company is
allowed to buy back based on the total amount of equity shares?
(a) Rs. 2,00,000
(b) Rs. 5,00,000
(c) Rs. 6,25,000
(d) Rs. 8,00,000
Q-25 Shares issued by a company to its directors or employees at a discount or for a consideration
other than cash for their providing know-how or making available rights in the nature of
intellectual property rights or value additions, by whatever name called are known as:
(a) Equity Shares
(b) Preference Shares
(c) Sweat Equity Shares
(d) Redeemable preference shares
Answers
Questions Answers Questions Answers
1 c 13 d
2 c 14 d
3 c 15 b
4 b 16 c
5 b 17 c
6 d 18 c
7 c 19 b
8. i b 20 b
ii d 21 d
iii b 22 c
9 c 23 c
10 d 24 b
11 b 25 c
12 c
MCQ OF CHAPTER - 5

ACCEPTANCE OF DEPOSITS BY COMPANIES

CA DEEPIKA RATHI : CORPORATE LAW


Q-1 DBSL which is an unlisted public company, also accept the deposits from the public as on
1st November 2018, which is due for repayment on 30th September 2023. DBSL also
accepts a LAP (Loan against property) for a term of 10 years from a financial institution on
18th June 2020. Charge was created on that day, but DBSL has neglected to register the
charge with the registrar. Finally, the application for registration of charge is furnished on
18th August 2020.
Question - With reference to deposit accepted by DBSL and its duration, you are required
to identify which of the following statements is correct:
(a) There is no requirement relating to the duration of deposit, DBSL can accept a

deposit for any duration.


(b) Since DBSL is an unlisted company, provision relating to the duration of the deposit

is not applicable.
(c) There is a provision of a minimum duration of six months, but no upper cap to length

is provided. Hence deposit accepted by DBSL is in compliance to provisions of Law.


(d) Acceptance of deposits by DBSL is in violation of provision of law, because the

maximum period of acceptance of deposit cannot exceed thirty -six months.


Q-2 Mr. M. Mishra is a director of Superior Carbonates and Chemicals Limited (SCCL). SCCL was
incorporated by Mr. S. K. Mishra (father of Mr. M. Mishra) on 05th July 1995 as a private company.
SCCL accepts a loan of Rs.1.5 crores from Mr. M. Mishra for short term purpose and the loan is
expected to be repaid after twenty four months. SCCL in its books of account, records the receipt
as a loan under non-current liabilities. At the time of advancing loan, Mr. M. Mishra affirms in
writing that such amount is not being given out of funds acquired by him by borrowing or accepting
loans or deposits from others and complete details of his loan transactions are furnished in the
boards’ report.
Question - With reference to the loan advanced by Mr. M. Mishra to SCCL, state whether the
same is to be classified as a deposit or not?
(a) Deposit, because any sum advanced by the director whether loan or otherwise is

always classified as a deposit.


(b) Deposit, because the tenor of the loan is for a period of more than six months.

(c) Not a deposit, because such amount is recorded as loan in books of account of SCCL.

(d) Not a deposit, because the written declaration is provided by Mr. M. Mishra, who was a

director when the loan was advanced that the loan is not being given out of funds
acquired by him by borrowing or accepting loans or deposits from others.
Q-3 JIWPL received an amount of Rs 25 Crores from Malini Shetty, wife of one of the promoter
directors Mahesh Shetty of JIWPL. Mahesh Shetty wanted to know from Sachin Bhatt any
compliance needed from the perspective of acceptance of deposits. The CS has to ensure -:
(i) That the particulars of amount received are immediately entered in the register of

deposits maintained in such manner and in such format as prescribed;


(ii) To issue immediately a circular to the members of the company with a statement of

deposits accepted as on date with the names of each depositor, amount(s) received as on
date, the due date(s) and the liability(ies) on the due date(s) in respect of each depositor
(iii) That a declaration is to be obtained to the effect that the amount given is not sourced

from borrowed funds or accepting loans or deposits from others and disclose the details in
the Board’s Report;
(iv) To file the particulars of deposits received within 30 days from the date of its receipt with

the Registrar.
Q-4 Amit Limited is accepting deposits of various tenures from its members from time to time. The
current Register of Deposits, maintained at its registered office is complete. State the minimum
period for which it should mandatorily be preserved in good order.
(a) Four years from the financial year in which the latest entry is made in the Register.
(b) Six years from the financial year in which the latest entry is made in the Register.
(c) Eight years from the financial year in which the latest entry is made in the Register.
(d) Ten years from the latest date of entry.

Q-5 Normally no deposits are repayable earlier than ______ from the dateof such deposits or
renewal thereof.
(a) 3 months
(b) 6 months
(c) 12 months
(d) 1 year
Q-6 A reserve account that shall not be used by the company for any purposeother
than repayment of deposits is called:
(a) Debenture redemption reserve account
(b) Deposit repayment reserve account
(c) Capital redemption reserve account
(d) Free reserve account
Q-7 Bhumi Real Estate Developers Limited has accepted deposits from its members. There is no
default in repayment of such deposits on their maturity. The statutory amount to be deposited by
the company on or before 30th April of each year in a specified account opened with its bankers,
till the deposits are fully repaid is:
(a) Not less than 50% of the amount of its deposits maturing duringthe following financial
year.
(b) Not less than 30% of the amount of its deposits maturing duringthe following financial
year.
(c) Not less than 20% of the amount of its deposits maturing duringthe following financial
year.
(d) Not less than 10% of the amount of its deposits maturing duringthe following financial
year.
Q-8 A Limited Company is accepting deposits of various tenures from its members from time to time.
The current Register of Deposits, maintained at its registered office is complete. State the
mandatoryminimum period for which it should be preserved in good order.
(a) Four years from the financial year in which the latest entry ismade in the Register.
(b) Six years from the financial year in which the latest entry is madein the Register.
(c) Eight years from the financial year in which the latest entry ismade in the Register.
(d) Ten years from the latest date of entry.
Q-9 Suneet Spices Limited decides to raise deposits of Rs. 20.00 lacs from its members.
However, it proposes to secure such deposits partially by offering a security worth Rs. 15.00
lacs. Which of the following options best describe such deposits:
(a) Fully secured deposits (except a small portion)
(b) Unsecured deposits
(c) Partially secured deposits
(d) These cannot be classified as deposits
Q-10 What is the maximum tenure for which a company can accept or renew deposits from its
members as well as public?
(a) 12 months
(b) 24 months
(c) 36 months
(d) 48 months
Q-11 Ruchita wants to renew her deposit of ` 5.00 lakh with Kewal Constructions Limited before
the expiry of original period for availing higher rate of interest. The fresh period, for
which Ruchita is required to renew her deposit to be eligible for the higher rate shall be
(a) One and a half times the unexpired period of original deposit.
(b) Double the unexpired period of original deposit.
(c) Six months more in addition to the unexpired period of deposit.
(d) Longer than the unexpired period of deposit.
Answers
Questions Answers Questions Answers
1 d
2 d
3 iii
4 c
5 b
6 b
7 c
8 c

9 b
10 b
11 d
MCQ OF CHAPTER - 6

REGISTRATION OF CHARGES

CA DEEPIKA RATHI : CORPORATE LAW


Q-1 Eztech Machines Limited owns a plot of land which was mortgaged to Urbane Commercial
Bank Limited for raising term loan of ` 2.00 crore. The mortgage was duly registered with
the Central Registry. First loan installment of ` 50.00 lacs was released immediately after
sanction of term loan with the condition that subsequent three installments of `50.00 lacs
shall be released as soon as the earlier released installment is utilized satisfactorily. Is it
necessary either for the company or the bank to register the charge on plot with the
concerned Registrar of Companies (ROC) when the mortgage is registered with the Central
Registry?
(a) It is not necessary either for the bank or the company to register the charge on plot of

land with the concerned Registrar of Companies (ROC) when the mortgage is registered
with the Central Registry.
(b) It is necessary to get the charge on plot on land registered with the concerned Registrar

of Companies (ROC) irrespective of the fact that mortgage is registered with the Central
Registry.
(c) The charge on plot needs to be registered with the concerned Registrar of Companies

(ROC) only when the actual liability of the company with the Bank exceeds ` 1.00 crore.
(d) The charge on plot needs to be registered with the concerned Registrar of Companies

(ROC) only when the term loan sanctioned by the bank to the company exceeds 2.00
crores
Q-2 With a view to augment its production, Surya Techno-Products Limited availed a loan of
50.00 lacs from Shrilaxmi First Bank Limited for purchase of a new machinery by offering its
factory worth 2.25 crores as security. However, the company did not initiate any steps to get
the charge on factory registered in favour of lending banker within the specified time. As
soon as the charge-holder bank came to know about the non-registration of charge with the
ROC, it applied to the Registrar for registration of charge along with the instrument creating
the charge and paid the requisite fees when demanded. Advise the bank whether it can
recover the fees so paid for registration of charge from Surya Techno-Products.
(a) Yes, the bank can recover the fees paid by it for registration of charge.

(b) No, the bank cannot recover the fees paid by it for registration of charge because the bank
is equally responsible for getting the charge registered.
(c) Only when it obtains recovery orders from Regional Director (RD), the bank can recover
the fees paid by it for registration of charge from the company.
(d) Only when it obtains recovery orders from National Company Law Tribunal (NCLT), the
bank can recover the fees paid by it for registration of charge from the company
Q-3 A charge was created by Cygnus Softwares Limited on its office premises to secure a term loan of
1.00 crore availed from Next_Gen Commercial Bank Limited through an instrument of charge
executed by both the parties on 16th February, 2019. Inadvertently, the company could not get
the charge registered with the concerned Registrar of Companies (ROC) within the first statutory
period permitted by law and the default was made known to it by the lending banker with a stern
warning to take immediate steps for rectification. Advise the company regarding the latest date
within which it must register the charge with the ROC so that it is not required to pay a specific type
of fees for charge registration.
(a) With a view to avoid paying a specific type of fees for charge registration, the company
must get the charge registered latest by 27th April, 2019.
(b) With a view to avoid paying a specific type of fees for charge registration, the company
must get the charge registered latest by 17th April, 2019.
(c) With a view to avoid paying a specific type of fees for charge registration, the company
must get the charge registered latest by 2nd May, 2019.
(d) The company cannot now get the charge register as the time prescribed by Law has expired.
Q-4 Cyplish Games and Toys Limited was sanctioned a term loan of ` 60.00 lacs by Zawnn Industrial
Bank Limited on 21st November, 2018. As a security, the company offered its office premises
situated at Bandra, Mumbai and an instrument of charge was executed. However, the company
failed to get the charge registered with the concerned Registrar within the first as well as
second statutory period available as per law. This was adversely commented by the internal
auditors of the bank and therefore, after a strict advisory received from Shahji, the senior
manager of the bank, the company was prompted to take steps for registration of charge. Name
the specific type of fees which the company is now required to pay for registration of charge.
(a) Special Fees.

(b) Ad-valorem Fees.

(c) A Late Registration Fees.

(d) Ad-valorem Duty.


Q-5 DBSL which is an unlisted public company, also accept the deposits from the public as on 1st
November 2018, which is due for repayment on 30th September 2023. DBSL also accepts a LAP
(Loan against property) for a term of 10 years from a financial institution on 18th June 2020. Charge
was created on that day, but DBSL has neglected to register the charge with the registrar. Finally, the
application for registration of charge is furnished on 18th August 2020.
Questions- With reference to application to the registrar for registration of charge by DBSL, which of
the following statements is correct?
(a) The charge cannot be registered now, even if the Registrar permits the same.

(b) The charge can be registered, if registrar permits with payment of ad-valorem fee.

(c) The charge can be registered, if registrar permits but with payment of an additional fee.

(d) The charge can be registered, with payment of a standard fee.


Q-6 Purvi Pvt. Ltd. is maintaining a register of charges along with all other necessary books and
registers. The entry for every creation, modification and satisfaction of charges is being
done properly. The company is also preserving every instrument related to such charges.
From the following for how long the instrument of charges shall be maintained/preserved
by the company---
(a) for minimum 8 years from the date of creation of charge
(b) For minimum 10 years from the date of creation of charge
(c) For minimum 8 years from the date of satisfaction of charge
(d) permanently, without any time limit
Q-7 JIWPL was also sanctioned an additional amount of Rs. 50 Crores for meeting the working capital
needs of the expansion project., which included interchangeable limits of cash credit, foreign
and Inland bills for negotiation and acceptance. The security cover was floating charge on the
book debts, Inventory and other current assets of the expansion project of JIWPL. A floating
Charge, in general is created by way of :
(i) Passing a board resolution

(ii) Signing and acknowledging the Credit Sanction letter

(iii) Mortgage

(iv) Hypothecation or lien.


Q-8 The instrument creating a charge or modification thereon shall be preserved for a
period of ______years from the date of satisfaction of charge by the company.
(a) 5
(b) 7
(c) 8
(d) 15

Q-9 An interest or lien created on the property or assets of a company or any of its undertakings or both as
security is known as:
(a) Debt
(b) Charge
(c) Liability
(d) Hypothecation
Q-10 Any person acquiring property, on which charge is registered undersection 77, shall be
deemed to have notice of the charge from:
(a) the expiry of thirty days of such charge
(b) the date of application for registration of the charge
(c) the date of acquiring the property
(d) the date of such registration

Q-11 An interest or lien created on the property or assets of a company orany of its undertakings
or both as security is known as:
(a) Debt
(b) Charge
(c) Liability
(d) Hypothecation
Q-12 A charge was created by Cygnus Softwares Limited on its office premises to secure a term loan
of Rs.1.00 crore availed from Next Gen Commercial Bank Limited through an instrument of
charge executed by both the parties on 16th February, 2019. Inadvertently, the company
could not get the charge registered with the concerned Registrar of Companies (ROC) within
the first statutory period permitted by law and the default was made known to it by the
lending banker with a stern warning to take immediate steps for rectification. The latest date
within which the company must register the charge with the ROC so as to avoid paying ad
valorem fees for registration of the charge is
(a) 27th April, 2019.
(b) 17th April, 2019
(c) 2nd May, 2019.
(d) 16th June 2019
Answers
Questions Answers Questions Answers
1 b
2 a
3 b
4 b
5 b
6 c
7 iv
8 c
9 b
10 d
11 b
12 b
MCQ OF CHAPTER - 7

MANAGEMENT & ADMINISTRATION

CA DEEPIKA RATHI : CORPORATE LAW


Q-1 All the 40 members of Taxila Traders Limited have valid voting rights. Due to some urgency,
its directors are desirous of convening Annual General Meeting (AGM) at a shorter notice
than statutorily required. Is it possible for them to do so?
(a) Taxila Traders Limited cannot convene AGM at shorter notice than statutorily

required.
(b) Taxila Traders Limited can convene AGM at shorter notice than statutorily required, if

consent in writing or by electronic mode is accorded by all the forty members who
are entitled to vote at the AGM.
(c) Taxila Traders Limited can convene AGM at shorter notice than statutorily required if

consent in writing or by electronic mode is accorded by at least 38 members who are


entitled to vote at the AGM.
(d) Taxila Traders Limited can convene AGM at shorter notice than statutorily required if

consent in writing or by electronic mode is accorded by at least 36 members who


are entitled to vote at the AGM.
Q-2 GHWX Private Limited was incorporated in the year 2009. The registered office of the company GHWX
Private Limited was situated in city T of state V. The Board of Directors of GHWX Private Limited comprised
of five directors namely Mr. K, Mr. N, Mr. R, Mr. U and Mr. W.
During the financial year beginning on 01/04/2018 and ending on 31/03/2019 the second meeting of
Board of Directors of GHWX Private Limited was held on 7 September, 2018.
Out of 5 directors, Mr. K, Mr. N, Mr. R and Mr. W were present for the said meeting. During the meeting of
Board of Directors a resolution on one of the important matters was passed. While three directors namely
Mr. K, Mr. N and Mr. R agreed with the resolution and voted in favour of resolution, however, Mr. W did
not agree with the resolution and voted against the resolution.

The minutes of the second meeting of Board of Directors of GHWX Private Limited held on 7 September,
2018 were prepared and they were entered in Minutes Book of meeting of Board of Directors of GHWX
Private Limited. One of the director Mr. K was of the opinion that minutes of second meeting of Board of
Directors of GHWX Private Limited must be prepared and entered in Minute Book of meeting of Board of
Directors of GHWX Private Limited by end of October, 2018. The remaining four directors namely Mr. N, Mr.
R, Mr. U and Mr. W did not agree with the opinion of Mr. K because they thought that it was not within
the time limit as prescribed by the law.
One of the directors, Mr. N. opined that minute books of meetings of Board of Directors of GHWX
Private Limited for the years starting with 2009 to 2015 should be shredded to ruins as these papers
were taking a lot of space. He further added that since the Companies Act, 2013 is silent as to
maintaining the minute book of meetings of Board of Directors, it is not necessary to maintain such
minute books.
The Board of Directors of GHWX Private Limited did not decide any place where minute book of
meetings of Board of Directors of GHWX Private Limited will be kept.
Keeping the provisions of the Companies Act, 2013, in mind answer the following multiple choice questions:

(A) The second meeting of Board of Directors of GHWX Private Limited was held on 7 September, 2018 for the
financial year 2018-19. The minutes of second meeting of Board of Directors of GHWX Private Limited for
financial year 2018 -19 must contain:
(a) Name of director Mr. U who was absent from the meeting of Board of Directors held on 7
September, 2018.
(b) Names of all the directors Mr. K, Mr. N, Mr. R, Mr. U and Mr. W comprising Board of Directors of
GHWX Private Limited.
(c) Name of one director Mr. U who was absent and atleast one director who was present in the
meeting of Board of Directors held on 7 September, 2018.
(d) Names of directors Mr. K, Mr. N, Mr. R and Mr. W who were present in the meeting of Board of
Directors held on 7 September, 2018.
(B) In case of the resolution talked in the case study, the minutes of second meeting of
Board of Directors of GHWX Private Limited for financial year 2018 -19 held on 7
September, 2018 must contain:
(a) Name of any two directors who were present in meeting and voted in the resolution.

(b) Name of director Mr. W who voted against the resolution.

(c) Name of directors Mr. K, Mr. N and Mr. R who voted in favour of the resolution

(d) Names of all the directors Mr. K, Mr. N, Mr. R, Mr. U and Mr. W who all had the right to

attend the meeting and vote in the resolution.


(c ) The opinion of one of the director, Mr. K was that minutes of second meeting of Board
of Directors of GHWX Private Limited for financial year 2018-19 must be prepared and
entered in minutes book of meeting of Board of Directors of GHWX Private Limited by
the end of October, 2018 is incorrect. The opinion of Mr. K is incorrect because:
(a) Minutes of second meeting of Board of Directors of GHWX Private Limited for financial

year 2018-19 must be entered in minute book of meeting of Board of Directors within
thirty days of the conclusion of meeting on 7 September, 2018.
(b) Minutes of second meeting of Board of Directors of GHWX Private Limited for the

financial year 2018-19 must be entered in minute book of meeting of Board of Directors
within sixty days of the conclusion of meeting on 7 September, 2018.
(c) Minutes of second meeting of Board of Directors of GHWX Private Limited for the

financial year 2018-19 must be entered in minute book of meeting of Board of Directors
within ninety days of the conclusion of meeting on 7 September, 2018.
(d) Minutes of second meeting of Board of Directors of GHWX Private Limited for financial

year 2018-19 must be entered in minute book of meeting of Board of Directors within
one twenty days of the conclusion of meeting on 7 September, 2018.
Q-3 The minute book of General meetings of Alpha Limited will be kept at:
(a) That place where members of Alpha Limited will decide.

(b) That place where all employees of Alpha Limited will decide.

(c) Registered office of the company Alpha Limited.

(d) That place where senior officials of Alpha Limited will decide.
Q-4 Red Flag Ltd., which has its registered office at Delhi and having 12500 members is holding its Annual
General Meeting in Ashoka Hotel. Despite swanky arrangements most of the members did not turn up
and quorum was not present within half an hour of the schedule time of the meeting, as a result
meeting was adjourned. However, due to heavy booking schedule, hotel authorities could not make
available, for adjourned meeting, sufficient space in the same hall where meeting was originally
called but allowed conduct of meeting in a different hall on a different floor next week at same time.
Please advise the option available to board:
(a) The meeting stands adjourned automatically to the same place and time next week as per

provisions of law. There is no alternate but to hold meeting in the same hall,
(b) As same banquet hall is not available meeting can be held at different place as may be decided

appropriate by the Board,


(c) As the same hall is not available to conduct meeting after one week, a fresh notice of 21 days is

needed for a different location,


(d) As the same hall is not available to conduct the meeting, the company needs to conduct meeting

electronically through internet and give sufficient notice to shareholders,


Q-5 Board of Directors of DCL raised INR 80 lakhs from Srikant Finance Services after passing a board
resolution and out of this amount, INR 60 lakhs was used to pay a legitimate liability of DCL by
the directors. DCL is a widely held company with around 5600 members as per the members
register. The 21st AGM of DCL is convened on 1st September 2020. A total of 34 members
attended the meeting out of which 7 members attended through proxy. 6 of such members are
represented by single proxy, Mr. Das. The articles of DCL is silent about the quorum.
Question - Regarding the validity of the 21st Annual General Meeting of DCL, which of the
following statements is correct?
(a) The meeting doesn’t have a quorum, because 30 members need to be present

in person at the meeting.


(a) The meeting is valid and has a quorum because 30 members are present at meeting either

personally or through a proxy.


(b) The meeting is valid and has a quorum, because only 5 members are required to be

present, either personally or through a proxy, if the number of members as on the date of
the meeting is more than five thousand but not more than ten thousand
(c) The meeting is valid and has a quorum, because only 15 members are required to be

present, either personally or through a proxy, if the number of members as on the date of
the meeting is more than five thousand but not more than ten thousand
Q-6 DBSL convene its 7th AGM on 10th September 2020 at the registered office of the company.
Notice for same was served on 21st August 2020. 78% of members gave consent to
convening AGM at shorter notice due to ambiguity and possibility of another lockdown starting
from 11th September 2020 on account of the second wave of COVID-19.
Question - Considering the provision relating to length of Notice for AGM, pick out the right
option:
(a) Notice served by DBSL is not valid, because notice given within a shorter duration has to

be consented to by all the members entitled to vote at AGM.


(b) Notice served by DBSL is not valid, because notice given within a shorter duration has to

be consented to by at-least 95% of members entitled to vote thereat.


(c) Notice served by DBSL is valid because the shorter length has been consented to by 75% of

members entitled to vote thereat.


(d) Notice served by DBSL is not valid, because notice given within a shorter length duration

needs has to by at-least 50% of the members entitled to vote at AGM that too in writing.
Q-7 SCCL has registered office in Paonta-sahib (Himachal Pradesh) and corporate office is situated in
Dehradun (Uttarakhand) but around 15% of members whose name is entered in members
register are residents of Nainital (Uttarakhand). SCCL has a liaison Office at Nainital. Management
of the company is willing to place, the Register of Members at the Nainital Liaison Office.
Question - Pick the right statement regarding SCCL’s willingness to keep and maintain the register
of members at the Nainital liaison office.
(a) Register of members shall be kept at either registered office or within the same city that too

after passing the resolution, hence SCCL is not correct in placing it at the Nainital liaison
office
(b) Register of members cannot be kept at any other place by SCCL, without passing an

ordinary resolution
(c) Register of members can be kept at Nainital liaison office, after passing a special resolution,

because more than 1/10th of the total members entered in the register of members reside
there
(d) Register of members cannot be kept at Nainital liaison office, even after passing a special

resolution, because less than 1/5th of the total members entered in the register of members
reside there
Q-8 Annual general meeting need to be called by giving 21 days’ clear notice. However it can be called
on a shorter notice if members entitled to vote in that meeting give their consent in writing or by
electronic mode. In such case, how many members have to give their consents?
(a) 75% of members entitled;
(b) 90% of members entitled;
(c) 91% of members entitled;
(d) 95% of members entitled;

Q-9 Supertech Computers Pvt. Ltd has 120 members. It sends notice to all of them. 20 members did not
attend the meeting. Out of remaining 100 members, 20 members abstained from voting. Advice
the company, how many members should vote in favour of resolution, if it has to be passed as a
Special Resolution?
(a) 60 Votes
(b) 80 Votes
(c) 41 votes
(d) 20 votes
Q-10 The Annual General meeting of Tirupati Limited was scheduled for 28th December,
2017. Mr. Ananat, shareholder of Tirupati Limited has desired to inspect inspection
of proxies lodged with the company. The notice for inspection should be given at
least before the meeting:
(a) 24 hours
(b) 1 day
(c) 2 days
(d) 3 days
Q-11 ABC Infrastructures Limited is a listed company quoted at National Stock Exchange. The company
closed its Register of Members in June and August, 2017 for 12 and 21 days respectively. The CFO
of company has informed the company secretary to consider closing of register in December for
another 15 days for some strategic reasons. Referring to the provisions of Companies Act, 2013,
examine the validity of above action of the company.
(a) Valid, as the closure of register of members by company each time is not exceeding 30 days.

(b) Invalid, as company cannot go for closure of Register of members more than twice in a year.

(c) Invalid, as the period of closing register of members exceeding 30 days in a year.

(d) Invalid, as the period of closing the Register of members by the company is exceeding 45

days in a year.
Q-12 The registered office of JIWPL is located in Manipal. Out of the company’s 180 Members, 20
members, who are entered in the register of members (ROM) reside in Mangaluru, a nearby city.
These members requested the company for some reasons to maintain the Register of members
(ROM) in the company’s liaison office in Mangaluru, instead of Manipal henceforth.
(i) The ROM shall be maintained only at the registered office in Manipal and
maintaining in a place other than the registered office is not permitted under the
Companies Act 2013 and the relevant Rules there under
(ii) By passing a Special Resolution in a General Meeting, the ROM can be maintained in
Mangaluru.
(iii) The Board of Directors by passing a Board Resolution in one of its meetings, may direct
the Company Secretary to maintain the ROM in Mangaluru.
(iV) If more than 1/3rd of the members, whose names are entered in the ROM request for
the change, then only the ROM can be maintained at Mangaluru after passing a Special
Resolution in a General Meeting.
Q-13 Which one of the following requires ordinary resolution?
(a) to change the name of the company
(b) to alter the articles of association
(c) to reduce the share capital
(d) to declare dividends.
Q-14 Neha is a director of Primus Limited. She intends to participate in the board meeting
through video conferencing and has intimated the same to the chairperson at the
beginning of calendar year. Advise, Neha for how long such declaration shall be valid.
(a) 1 month

(b) 6 month

(c) 1 year

(d) She has to furnish declaration for each meeting separately


Q-15 Ramola Textiles is a listed public company with the share capital of ten crores. The share value of
the share is ₹ 100/share. The company has maintained the following registers:
(a) Register of Members indicating separately for each class of equity and preference shares
held by each member residing in or outside India
(b)Register of Debenture-holder
The company has a registered office in Ahemdabad (Gujarat) and its Corporate office is
situated in Mumbai. Around 17% of members who are equity share holders and 10% of the
members who are preferential shareholders resides in Jaipur (Rajasthan). So out of these
members 9% equity share holders and 5% preferential share holder made an application
addressed to the company to shift its register of members to its liaison office in Jaipur. The
company refused the request of the members by quoting that the register can only be
maintained at registered office of the company.
Mr. Raheem, a shareholder of the company, wants to sell all his shares in the company and
wants to settle abroad. Mr. Raheem sold his equity shares to Mr. Ram on 7 th May 2021. After
completing all the formalities of transfer of shares Mr. Raheem left India on 10th May 2021.
After three days span Mr. Ram figured out that his name was still not registered in company
Register of Members (ROM). The Annual General Meeting was scheduled to be held on 25th
May 2021. So, Mr. Ram wrote an e-mail to the company regarding addition of his name in
ROM. But finally, after no response from the company, Mr. Ram approached the Tribunal to
get his name registered in ROM. The Tribunal passed the order on 20th May 2021 to enter
Mr. Ram’s name in register of members of the company.
In the Annual General Meeting (AGM) the company declared to pay 10% dividend to all its
shareholders out of the profits which it earned in previous financial year. Mr. Krish, a
member of the company is holding 1000 equity shares in the company. Two years back Mr.
Krish jointly bought fully paid 1000 equity shares of the company, with Mr. Azim, who is also
a member of the company holding 1000 equity shares. Mr Krish needs to pay final call of ₹
20 per share.
After the Annual General Meeting a report on the meeting including the confirmation to the
effect that the meeting was convened, held and conducted as per the provisions of the Act and
the rules made thereunder is required to be filed. A copy of the report was filed with the
Registrar in Form No. MGT-15 with prescribed fees.

(i) The Tribunal passed an order dated 20.05.2021. Latest by what date should the
entry of Mr. Ram’s name be made in the register of members?
(a) 25.05.2021
(b) 27.05.2021
(c) 30.05.2021
(d) 31.05.2021
(ii) Suppose the Chairman of the company after two days of AGM went abroad for next 31
days.Due to the unavailability of the Chairman, within time period prescribed for submission
of copy of report of AGM with the registrar, the report as required was signed by two
Directors of the company, of which one was additional Director of the company. Comment
on the signing of this report of AGM.
(a) Yes, the signing is in order as the report can be signed by any director in the absence of
Chairman.
(b) No, the signing is not in order as only the Chairman is authorised to sign the report
(c) Yes, the signing is in order, as in the absence of Chairman at least two directors should
sign the report.
(d) No, the signing is not in order, since in case the Chairman is unable to sign, the report
shall be signed by any two directors of the company, one of whom shall be the Managing
director, if there is one and company secretary of the company.
(iii) According to the provision of Companies Act, 2013, till what date the company should
submit report of AGM to the registrar?
(a) 04.06.2021
(b) 09.06.2021
(c) 24.06.2021
(d) 25.06.2021
Q-16 The Annual General Meeting (AGM) of ALL- WELL Limited was held on 31.8.2021. Suppose the
Chairman of the company after two days of AGM went abroad for next 31 days. Due to the
unavailability of the Chairman, within time period prescribed for submission of copy of report of
AGM with the registrar, the report as required was signed by two Directors of the company, of
which one was additional Director of the company. Comment on the signing of this report of AGM.
(a) Yes, the signing is in order as the report can be signed by any director in the absence of
Chairman.
(b) No, the signing is not in order as only the Chairman is authorised to sign the report
(c) Yes, the signing is in order, as in the absence of Chairman at least two directors should sign the
report.
(d) No, the signing is not in order, since in case the Chairman is unable to sign, the report shall be
signed by any two directors of the company, one of whom shall be the Managing director, if
there is one and company secretary of the company.
Q-17 The Annual General Meeting of Brother Limited was held on 25th May 2021. According to
the provisions of Companies Act, 2013, till what date the company should submit report of
AGM to the registrar?
(a) 04.06.2021
(b) 09.06.2021
(c) 24.06.2021
(d) 25.06.2021

Q-18 Gama Limited’s General Meetings are held at its registered office situated in Delhi. The minute
book of General meetings of Gama Limited will be kept at:
(a) That place where members of Gama Limited will decide.
(b) That place where all employees of Gama Limited will decide.
(c) Registered office of the company Gama Limited.
(d) That place where senior officials of Gama Limited will decide.
Q-19 Which one of the following transactions requires the passing of anordinary resolution?
(a) To change the name of the company
(b) To alter the articles of association
(c) To reduce the share capital
(d) To declare dividends.

Q-20 A resolution shall be a special resolution when the votes cast in favour of the resolution
by members are not less than the number of votes, if any, cast against the resolution.
(a) Twice
(b) Three times
(c) Three fourth of
(d) Two third of
Q-21 Every listed company shall file with the Registrar a copy of the report on each annual
general meeting within of the conclusion of the annual general meeting.
(a) 7 days
(b) 30 days
(c) 60 days
(d) 90 days

Q-22 The AGM shall be called by giving 21 clear days’ notice. However, it can be called by giving
shorter notice if members entitled to vote at that meeting give their consent in writing or by
electronic mode. In suchcases how many members have to give their consent?
(a) 75% of members entitled
(b) 90% of members entitled
(c) 91% of members entitled
(d) 95% of members entitled
Q-23 The Annual General Meeting of Yellow Limited was held on 25th June 2022. According to
the provisions of Companies Act, 2013, till what date the company should submit report
on AGM to the registrar?
(a) 30.06.2022
(b) 10.07.2022
(c) 24.07.2022
(d) 25.07.2022
Q-24 The Annual General Meeting (AGM) of Green Limited was held on 31.8.2022. Suppose
the Chairman of the company after two days of AGM went abroad for next 31 days. Due
to the unavailability of the Chairman, within time period prescribed for submission of
copy of report of AGM with the registrar, the report as required was signed by two
Directors of the company, of which one was additional Director of the company.
Comment on the signing of this report of AGM.
(a) Yes, the signing is in order as the report can be signed by any director in the
absence of Chairman.
(b) No, the signing is not in order as only the Chairman is authorised to sign the
report
(c) Yes, the signing is in order, as in the absence of Chairman at least two directors
should sign the report.
(d) No, the signing is not in order, since in case the Chairman is unable to sign, the
report shall be signed by any two directors of the company, one of whom shall
be the Managing director, if there is one and company secretary of the company.
Q-25 Yellow Limited’s General Meetings are held at its registered office situated in Kochi. The
minute book of General meetings of Yellow Limited will be kept at:
(a) That place where members of Yellow Limited will decide.
(b) That place where all employees of Yellow Limited will decide.
(c) Registered office of the company Yellow Limited.
(d) That place where senior officials of Yellow Limited will decide.

Q-26 The AGM shall be called by giving 21 clear days’ notice. However, it can be called by giving
shorter notice if members entitled to vote at that meeting give their consent in writing or by
electronic mode. In such cases how many members have to give their consent?
(a) 75% of members entitled
(b) 90% of members entitled
(c) 91% of members entitled
(d) 95% of members entitled
Answers
Questions Answers Questions Answers Questions Answers
1 c 13 d 25 c
2. A d 14 c 26 d
B b 15 .i c
C a .ii d
3 c .iii c
4 b 16 d
5 a 17 c
6 b 18 c
7 c 19 d
8 d 20 b
9 a 21 b
10 d 22 d
11 d 23 d
12 ii 24 d
MCQ OF CHAPTER - 8

DECLARATION AND PAYMENT OF DIVIDEND

CA DEEPIKA RATHI : CORPORATE LAW


Q-1 Mr. B R Mohanty, around two-decade back; along with two of his elder brothers and few friends, who
are pharma and chemical engineers by profession promoted two companies; first being Well-Mount
Limited (WML) dealing in wellness products and pharmaceuticals ; whereas other is Tex-Mount
Limited (TML) dealing in textile products. During these two decades, both WML and TML has grown
magnificently as both the sectors expanded beyond imagination. Both companies went public and
stock of same listed on leading stock exchanges of countries.
TML did well in the past and emerged as a major export unit but in recent years the textile sector
witness stiff competition due to new entrants. The increased cost of the workforce and other input
materials is also made sector unprofitable and recent lockdown hit the sector further adversely.
TML’s bottom line for the current financial year is red. TML was declaring dividends since the very first
year of operation and willing to continue the tradition considering dividend as signalling effect to an
investor for valuation purpose. Rate of dividend for the recent five years was 9%, 10%, 8%, 5% and 2%
(9% being five years ago and 2% being the previous year) respectively. The management at TML
decided to declare dividends out of the profit of previous years. TML deals in export hence came
under the scanner of enforcement authority, who seek financial statements and books of accounts of
TML for scrutiny for the last 10 preceding financial years. In response to notice, TML furnish financial
statements and books of accounts for last 8 immediately preceding financial years only, stating as per
its Article of Association; TML is required to maintain and keep the books of accounts for 8
immediately preceding financial years only and that too without any record of vouchers pertaining
to such accounts.
WML is doing well, it seizes outbreak of COVID-19 as a business opportunity and registers
significant growth in both top and bottom line. For the past many years, WML declare a dividend at
a constant rate of 20%. During the financial year 2019-20, WML earns a profit of 580 Crores.
Board of directors of WML declares 25% dividend without transferring any % to reserve on 15th
June, 2020. On 14th July, 2020 some of the amount remaining unpaid, due to operation of law;
has been transferred to unpaid dividend account on 20th July, 2020. CA. Dev was appointed as
auditor under section 139 of Companies Act, 2013 of WML in individual capacity during 17th
AGM for against the financial year 2018-19.

A. In case of TML, which of the following statements are correct regarding the declaration of
dividend?
(i)TML can’t declare the dividend because it earns a loss in the current financial year.
(ii)TML can declare the dividend but only up to 9%
(iii)TML can declare the dividend but only up to 5%
(iv)TML can declare the dividend but only up to 6.8%
B. CA. Dev, who is the auditor of WML have to vacate the office of the auditor in
and can be reappointed again only in
(i)22nd AGM and 27th AGM
(ii)27th AGM and 32nd AGM
(iii)22nd AGM and 23rd AGM
(iv)22nd AGM and can’t be re-appointed again.
C. In case of WML, which of the following statements is correct regarding the
declaration of dividend?
(i)WML can’t declare the dividend at a rate more than 20%
(ii)WML can declare the dividend out current year’s profit but it needs to transfer sum
equal to 20% to reserve first.
(iii)WML can declare the dividend out current year’s profit but it needs to transfer sum
equal to 10% of paid-up share capital to reserve first.
(iv)WML can declare the dividend out of current years’ profit without transferring any % to
reserve.
D. In case of TML, regarding maintenance and keeping the books of account; which of the
following statements hold truth?
(i)TML needs to maintain and keep the books of account for 10 preceding financial
years, hence TML violate the law.
(ii)TML doesn’t violate the provision of law because it keeps the books of account for
8 immediate preceding financial years.
(iii)TML violate the provision of law because it keeps the books of account for 8
immediately preceding financial years without keeping relevant vouchers in the
record pertaining to such books of account.
(iv)TML doesn’t violate the provision of law because it is complying to its Article of
Association.
E. Regarding declaration and distribution of dividend by WML, which of the
following statements is correct from the view of the timeline?
(i)WML violates the law, because some of the dividend remain unpaid; irrespective
of reason for non-payment
(ii)WML violates the law, because unpaid dividend need to transfer to unpaid
dividend account by 19th July 2020.
(iii)WML doesn’t violate the law, because an unpaid dividend transferred to unpaid
dividend account prior to 21st July 2020.
(iv)WML doesn’t violate the law, because an unpaid dividend can be transferred to
unpaid dividend account at any time within 90 days from the date of declaration.
Q-2 Shreyas Mechanics Limited owns a plot of land which was purchased long before. As the property
rates are going up, it is decided to revalue the plot at fair value which is moderately ten times the
original price, thus resulting in a revaluation profit of Rs. 20,00,000. The Board of Directors is
keen to utilize Rs. 20,00,000 along with free reserves of Rs. 24,00,000 for declaration of dividend
at the forthcoming Annual General Meeting (AGM) to be held on 28th September, 2019.
Advise the company.
(a) Rs. 20,00,000 are to be excluded from the distributable profits as the same cannot be utilized

towards declaration of dividend.


(b) Only 25% of Rs. 20,00,000 can be utilized as distributable profits towards declaration of

dividend.
(c) Up to 50% of Rs. 20,00,000 can be utilized as distributable profits towards declaration of
dividend.
(d) Up to 60% of Rs. 20,00,000 can be utilized as distributable profits towards declaration of
dividend.
Q-3 Mr. Ajay is also director of Padmani Silk Limited (PSL). PSL was established around 25 years back
as a private company operating as a micro business with 10 employees in a three- room building.
During these years, the company grew exceptionally and went public and was also listed on SME
exchange. PSL declares the interim dividend out of the previous year’s undistributed profit on
31st August 2020 on the occasion of the 25th anniversary of the company. PSL deposited the
amount of said dividend in a separate bank account with a NBFC on 4th of September, 2020.
Question -Regarding compliance for declaration and distribution of Interim dividend by PSL,
which of the following statements is correct?
(a) There is a violation of the provisions because interim dividend can only be

declared out of current year’s profits.


(a) There is no violation at all, and all the provisions prescribed by law have been complied

with.
(b) There is a violation because the bank account shall be designated and shall be one of

existing banks account of company.


(c) There is a violation because the bank account shall be opened with scheduled banks only.
Q-4 In how many days from the date of declaration of interim dividend, it shall be deposited in a
separate bank account
(a) 5 days
(b) 7 days
(c) 15 days
(d) 21 days

Q-5 After Declaration of dividend it should be paid within


(a) 14 days

(b) 21 days
(c) 30 days
(d) 45 days
Q-6 ABC Ltd., a listed company proposed a dividend @ 15% on equity shares for the financial
year ended on 31st March 2018. The Annual General Meeting (AGM) of the company was
held on 15 th July 2018 and the proposed dividend was approved and declared in the
same. Due to some technical issues, dividend on 600 shares neither be paid within the time
limit prescribed by the Act nor was transferred to unpaid dividend account. In such a
situation which regulatory authority can take action against the company and its officers in
default?
(a) Central Government
(b) SEBI
(c) Tribunal
(d) Investor Education and Protection Fund Authority
Q-7 The Board of Directors of Vidyut Limited are contemplating to declare interim dividend in the last
week of July, 2021 but the company has incurred loss during the current financial year up to the
end of June, 2021. However, it is noted that during the previous five financial years i.e., 2016-17,
2017-18, 2018-19, 2019-20 and 2020-21, the company had declared dividend at the rate of 8%, 9%,
12%, 11% and 10% respectively. Advise the Board as to the maximum rate at which they can
declare interim dividend despite incurring loss during the current financial year.
(a) Maximum at the rate of 10%.
(b) Maximum at the rate of 11%.
(c) Maximum at the rate of 10.5%.
(d) Maximum at the rate of 11.5%.
Q-8 Amount to be transferred to reserves out of profits before any declaration of dividend is
___________
(a) 5%
(b) 7.5%
(c) 10%
(d) at the discretion of the company.
Q-9 Mr. Guru bought 40,000 shares of Real Consultancy Services (RCS) of face value 10 each out of his
savings. On such shares, the final call of Rs. 2 is due but unpaid by Mr. Guru. In the meantime, RCS
declared dividend at a rate of 15%. Regarding un-paid call money by Mr. Guru, in light of dividend
due to him from RCS, state which of following the statements is correct?
(a) Dividend cannot be adjusted against the unpaid call money
(b) The dividend of Rs. 48,000 can be adjusted against unpaid call money
(c) The dividend of Rs. 48,000 can be adjusted against unpaid call money, only if consent is
given by Mr. Guru.
(d) The dividend of Rs. 64,000 can be adjusted against unpaid call money, even if consent is not
given by Mr. Guru.

Q-10 When the dividend is declared at the Annual General Meeting of the company, it is known as ….
(a) Final Dividend

(b) Interim Dividend


(c) Dividend on preference shares
(d) Scrip Divided
Q-11 Dividend once declared, should be paid within days from the date of declaration
(a) 14 days
(b) 21 days
(c) 30 days
(d) 45 days

Q-12 Which of the following amount need not be credited to Investor Education and Protection
Fund Account (IEPF)?
(a) Amount in unpaid dividend account (UDA) of company
(b) Amount of matured deposits with the company
(c) Profit on sale of asset
(d) Amount of matured debentures with the company.
Q-13 Amount to be transferred to reserves out of profits before any declaration of
dividend is ___________
(a) 5%
(b) 7.5%
(c) 10%
(d) at the discretion of the company.
The authorised and paid-up share capital of Avantika Ayurvedic Products Limited is Rs.50.00 lacs
Q-14
divided into 5,00,000 equity shares of Rs.10 each. At its Annual General Meeting (AGM) held on
24th September, 2019, the company declared a dividend of Rs.2 per share by passing an ordinary
resolution. Mention the latest date by which the amount of dividend must be deposited in a
separate account maintained with a scheduled bank
(a) Latest by 29th September, 2019
(b) Latest by 4th October, 2019
(c) Latest by 9th October, 2019
(d) Latest by 24th October, 2019
Q-15 The Directors of Silver tongue Solutions Limited proposed dividend at 18% on equity shares
for the financial year 2018-2019. The same was approved at the Annual general body meeting
held on 30th September 2019. Mr. Jagan was the holder of 2000 equity of shares on 31st
March, 2019, but he transferred the shares to Mr. Rajiv on 8th August 2019. Mr. Rajiv has sent
the shares together with the instrument of transfer to the company for registration of the
shares in his favour only on 25th September 2019. The registration of the transfer of shares is
pending on 30th September 2019. With respect to the dividend declared the correct action to
be taken by the company is:
(a) Pay the dividend to Mr. Jagan
(b) Pay the dividend to Mr. Rajiv
(c) Transfer the dividend in relation to such shares to the Unpaid Dividend Account
(d) Transfer the dividend in relation to such shares to the Investor Education and Protection
Fund.
Q-16 The Board of Directors of Jip Rise Pharmaceuticals Limited wish to declare interim dividend
in the last week of July, 2018. The company has incurred a loss during the current financial
year up to the end of June, 2018. However, it is noted that during the previous five financial
years i.e., 2013-14, 2014-15, 2015-16, 2016-17 and 2017-18, the company had declared
dividend at the rate of 8%, 9%, 12%, 11% and 10% respectively. Advise the Board as to the
maximum rate at which they can declare interim dividend despite incurring loss during the
current financial year.
(a) 10%.
(b) 11%.
(c) 10.5%.
(d) 11.5%.
Q-17 Amount to be transferred to reserves out of profits before any declaration of dividend is
(a) 5%.
(b) 7.5%.
(c) 10 %.
(d) at the discretion of the company

Q-18 When the dividend is declared at the Annual General Meeting of the company, it is
known as ….
(a) Final Dividend
(b) Interim Dividend
(c) Dividend on preference shares
(d) Scrip Divided
Answers
Questions Answers Questions Answers
1. A (iii) 11 c
B (i) 12 c
C (iv) 13 d
D (iii) 14 a
E (iii) 15 c
2 a 16 b
3 d 17 d
4 a 18 a
5 c
6 b
7 b
8 d
9 b
10 a
MCQ OF CHAPTER - 9

ACCOUNTS OF COMPANIES

CA DEEPIKA RATHI : CORPORATE LAW


A private company by the name of Neha Pvt. Limited was incorporated in the year 2002.
Q-1 The registered office of the company Neha Pvt. Limited was situated in city K of state Y.
During the financial year beginning on 01/04/2018 and ending on 31/03/2019 the
turnover of the company Neha Pvt. Limited was Rs. 1010 crore. The net profit of the
company Neha Pvt. Limited for the financial year 2018-19 was 4 crore.
The Board of Directors of Neha Pvt. Limited consisted of only two directors namely Mr. M
and Mr. N. Mr. M and Mr. N were the only directors of company Neha Pvt. Limited since
its incorporation in the year 2002.
Mr. M one of the two directors of Neha Pvt. Limited was of the opinion that no Corporate
Social Responsibility Committee of the Board was required to be formed as for the
financial year 2019 – 20 due to the reason that net profit of the company Neha Pvt.
Limited for financial year 2018-19 was Rs. 4 crore which was less than 5 crore.
Mr. N the other director of Neha Pvt. Limited was not having the same opinion as
Mr. M. He was of the opinion that Corporate Social Responsibility Committee of the Board
must be formed for the company Neha Pvt. Limited.
The net profit of the company Neha Pvt. Limited for the financial year 2015-16, 2016-17
and 2017-18 were Rs.1 crore, Rs.2 crore and Rs.3 crore respectively.
Keeping the basic provisions of Companies Act in mind answer the following
multiple choice questions:

(A) Mr. M one of the director of Neha Pvt. Limited was of the opinion that no Corporate
Social Responsibility Committee of Board was required to be formed for financial year
2019-20 but Mr. N other director was of opinion that it was required to be formed.
According to your understanding which one of the two director is right and why:
(a) Mr. M because net profit of Neha Pvt. Limited for financial year 2018-19 was

less than Rs. 5 crore.


(b) Mr. N because turnover of Neha Pvt. Limited for financial year 2018-19 was

more than Rs. 1,000 crore.


(c) Mr. N because net profit of Neha Pvt. Limited for financial year 2018-19 was

more than Rs. 2 crore.


(d) Mr. M because turnover of Neha Pvt. Limited for financial year 2019-19 was less

than Rs. 1,500 crore.


(B) The company Neha Pvt. Limited must give preference to spend the
amount of contribution towards Corporate Social Responsibility in area of:
(a) City O of State Y

(b) City A of State Z

(c) City G of State Z

(d) City K of State Y

(C) According to law Corporate Social Responsibility Committee shall consist of three or
more directors, so for company Neha Pvt. Limited the Corporate Social Responsibility
Committee will:
(a) Not be formed as it has only two directors namely Mr. M and Mr. N

(b) Be formed only after appointing one more director apart from Mr. M and Mr. N

(c) Be formed with two directors only namely Mr. M and Mr. N

(d) Be formed only after appointing two more directors apart from Mr. M and Mr. N
(D) The company Neha Pvt. Limited shall spend during financial year 2018-19 on Corporate
Social
Responsibility an amount of atleast:
(a) Rs. 0.04 crore

(b) Rs. 0.12 crore

(c) Rs. 0.18 crore

(d) Rs. 0.06 crore


Q-2 G Ltd. (a company having CSR Committee as per the provision of Section 135 of the Companies
Act, 2013) decides to spend and utilize half of the amount of Corporate Social Responsibility
on the activities for the benefit of all the employees of G Limited and the remaining half of the
amount of Corporate Social Responsibility on the activities for the benefit of family members
of employees of G Limited As per the provision of Companies Act, 2013 this would mean
that:-
(a) This is the total amount spent on Corporate Social Responsibility activities by G Limited

for that financial year


(b) No amount spent on Corporate Social Responsibility activities by G Limited for that

financial year
(c) Half amount spent on Corporate Social Responsibility activities by G Limited for that

financial year
(d) Half amount spent on Corporate Social Responsibility activities and remaining half

amount spent on Other Activities by G Limited for that financial year


Q-3 One Person Company shall file a copy of the duly adopted financial statements to the
Registrar in:
(a) 30 days of the date of meeting in which it was adopted

(b) 90 days of the date of meeting in which it was adopted

(c) 90 days from the closure of the financial statement

(d) 180 days from the closure of the financial statement


Q-4 Mr. Ajay hails from a farming family and carries on the business of cultivation and milling of
paddy. He is also the sole member of New-Deal Limited (NDL), a one person company. NDL is
operated as rice sheller and also deals in trading of high quality basmati rice. Mr. Ajay’s father is
operating as a nominee for the purposes of this OPC. The accounts department of NDL
prepared and published only Profit and Loss Account and Balance Sheet as a financial
statement and did not prepare cash flow statements and explanatory notes to accounts. A
statement of changes in equity is not required in the case of NDL.
Question- Which of the following statements is correct, with reference to the requirement
for financial Statements of ‘New Deal Limited’ (One Person Company)
(a) NDL fails to meet the requirement because its financial statement do not include

explanatory notes to accounts


(b) NDL fails to meet the requirement because its financial statements do not include cash

flow statement
(c) NDL fails to meet the requirement because its financial statements do not include

explanatory notes to account and cash flow statement


(d) NDL has complied with the requirements related to financial statements
Q-5 Amex limited is a public company having a net- worth of Rs. 950 crores, turnover of 200 crores (the
company is just 5 years since the date of its incorporation) during the immediately preceding
financial year, has to constitute a Corporate Social Responsibility (CSR) Committee. It has 9 Directors
(A, B, C, D, E, F, G, H and I). Further, Mr. F, G, H and I are independent directors. Out of the following
statements which statement is correct:
(a) CSR committee may constitute of A, B and C
(b) CSR committee may constitute of A, B and D
(c) CSR committee may constitute of A, F and G
(d) There is no need to constitute a CSR committee as the turnover is just 200 crores during the
immediately preceding financial year
Q-6 Excellent Art Private Limited, has a paid up capital of Rs.50 crore, Turnover of Rs.25 crore and
borrowing of Rs.25 crore and outstanding deposits of Rs.30 crore. Decide if the Company needs to
comply with internal audit requirements under the Act?
(a) No. The provisions of Internal audit are not applicable on private companies.
(b) Yes. Company is having Paid up capital of Rs.50 Crore and outstanding deposits more than
Rs.25 crore.
(c) No. Because the borrowings are less than Rs.100 crore and Turnover is less than Rs.200
crore
(d) None of the above
Q-7 From the following information in respect of BMR Consultants Pvt. Ltd., compute the
amount company is required to contribute on account of CSR:

Financial Year Net Profit (in Lacs)


2015-16 15
2016-17 50
2017-18 70

(a) Nil. If in any of the three financial years company has incurred losses, then
company is not required to spend amount towards CSR but explain the reason
for not spending the amount.
(b) Rs. 2.4 Lacs
(c) Rs.80000/-
(d) Rs. 2.1 Lacs
Q-8 A company can re- open / recast its book of accounts on an application to Tribunal made by:
(a) Registrar

(b) Member
(c) Board of Directors
(d) Income –tax authorities
Q-9 ABC Ltd., a pharmaceutical company was having its manufacturing plant in Solan, Himachal
Pradesh. The address of its registered office as informed to the Registrar of Companies was of one of
its Director’s office, situated at Mumbai, Maharashtra. To comply with the provisions of the
Companies Act, 2013 it was keeping all its books of accounts, other relevant papers and financial
statements at its registered office. After sometime Directors of the company found it difficult to
maintain such books etc.at the registered office, so in a duly convened meeting of the Board of the
Directors, it was decided that the books of accounts and other relevant papers be kept at the office
situated in Solan. Within which time period the Registrar must be given notice about such decision
of the board –
(a) Within 30 days from the date of taking such decision by the board.

(b) Within 15 days from the date it starts maintaining its books of accounts at the office situated
at Solan.
(c) Within 30 days from the date it starts maintaining its books of accounts at the office
situated at Solan.
(d) Within 7 days from the date of taking such decision by the board.
Q-10 Feel Rich Co. Ltd. Having its registered office at New Delhi, is a subsidiary of a German company
named Richman Company limited. The financial year of the parent/holding company ends on
31st December every year. The subsidiary company intends to follow a different financial year
for consolidation of its accounts with its parent company, situated outside India. For doing so it
is required to take prior permission of the competent authority. For the purpose from the
following who will be this competent authority---
(a) Registrar of Companies at New Delhi

(b) Tribunal
(c) Ministry of Corporate Affairs
(d) SEBI
Q-11 Vishal Crockery Limited was incorporated on 24th September, 2010 under the jurisdiction of Registrar
of Companies, Rajasthan with its registered office located in Jaipur and its manufacturing units spread
out in Mumbai, Kanpur, Delhi and Ludhiana. Under the dynamic leadership of Hans Rajpal, the
Chairman and Managing Director (CMD) of the company, it could easily be ascertained that the
company had reached the new heights of success. The directors of the company numbered eight
including CMD of which two were the independent directors.
The turnover of the company for the Financial Year 2018-2019 was Rs. 750.00crores – a whopping
rise of more than 20% from the previous year and net profit stood at a prestigious figure of Rs.
6.60crores – also increased by Rs. 1.80 crores as compared to the net profit of previous year. The
company had a net worth of Rs. 250.00 crores; and it was noticed that the net worth had also
registered a northern trend by more than 15%. The authorised and paid-up share capital of the
company was Rs. 8.00 crores. Keeping in view the applicability of forming a CSR Committee for the
current financial year 2019-20, a CSR Committee was formed with four directors as members of which
one was the independent member. The Committee was, among others, given the responsibility to
formulate and recommend to the Board, a Corporate Social Responsibility Policy which shall indicate
the activities to be undertaken by the company as specified in Schedule VII
The company plans to diversify its business by adding another segment to manufacture steel
utensils and therefore, is desirous to shift its registered office to Mumbai from the present one at
Jaipur which will help the company in easing out the new business. Another strategically important
segment which the company tapped earlier and now wishes to engage itself on a large scale relates
to manufacturing of stationery items.
The company hopes that with the shifting of registered office to Mumbai, it shall be able to target
international markets to export its quality products. As on date, the export turnover of the
company is not that much significant. The directors, Janardan Mittal (Finance) and Ratish Jain
(Marketing), however, have in-depth knowledge of export markets, particularly those existing in UK
and Singapore, where they can place their products successfully and achieve laurels for the
company in terms of wealth maximisation.
During the current Financial Year 2019-20, the company under the CSR activities provided ample
support for improvement of infrastructure in schools established at Mumbai, Kanpur, Delhi and
Ludhiana. Not only this, the company contributed towards establishment of Digital Smart
Classroom, Libraries and computer labs in these cities. The company also deployed mobile medical
units equipped with medical facilities and qualified doctors. In addition to this, a large number of
public health and sanitation activities had been initiated under Swachh Bharat Abhiyan. The total
amount spent on these activities was, till date, almost equal to the minimum spendable amount
and it is hoped
that as the current Financial Year 2019-20 approaches its end, the total spending on CSR
activities will certainly exceed the budgeted figure.

(A) Which of the following criterion prompted Vishal Crockery Limited to mandatorily form a
Corporate Social Responsibility (CSR) Committee for the current financial year?
(i) The net profit had increased to Rs. 6.60crores and it was more by Rs. 1.80 crores in

comparison to previous year’s net profit.


(ii) The turnover was Rs. 750.00 crores which was increased by more than 20% as compared to

the previous year.


(iii) The net worth was Rs. 250.00 crores which when compared to the previous year had

registered an increase by more than 15%.


(iv) The paid-up share capital was Rs. 8.00 crores.
(B) What is the minimum amount (in percentage form) that Vishal Crockery Limited is required to
spend during the Financial Year 2019-20 on the CSR activities after it formed a Corporate Social
Responsibility Committee.
(i) Minimum 2% of the average net profits made during the two immediately preceding

financial years.
(ii) Minimum 2% of the average net profits made during the three immediately preceding

financial years.
(iii) Minimum 2.5% of the average net profits made during the two immediately preceding

financial years.
(iv) Minimum 2.5% of the average net profits made during the three immediately preceding

financial years.
(c ) In the given case scenario, Vishal Crockery Limited decided to undertake CSR activities at
its own. In case, it had decided to engage an external Section 8 company for undertaking
its CSR activities and such charitable company is not established by Vishal nor it is
established by the Central/State Government or by any entity established under an Act of
Parliament or a State Legislature, then what should be the established track which this
Section 8 company should have in undertaking similar programs or projects which Vishal
Crockery Limited wants it to accomplish?
(i) Track record of minimum one year

(ii) Track record of minimum two years

(iii) Track record of minimum three years

(iv) None of the above


Q-12 Which of the non financial matter, Statutory auditor is required to report in his report:
(a) Whether employees appointed during the period covered by audit meet the requisite
educational/professional qualification at the time of appointment.
(b) Whether every page of minute book of General meetings bears full signature of Chairman
as per provisions of Companies Act, 2013.
(c) Whether the incorporation documents are managed properly.
(d) Whether any director is disqualified from being appointed as a director under section
164(2).
Q-13 Krishnakant Limited was incorporated on 24th September, 2010 under the jurisdiction of
Registrar of Companies, Rajasthan with its registered office located in Jaipur and its
manufacturing units spread out in Mumbai, Kanpur, Delhi and Ludhiana. Under the dynamic
leadership of Hans Rajpal, the Chairman and Managing Director (CMD) of the company, the
company had reached new heights of success. The directors of the company numbered eight
including CMD out of which two were the independent directors.
The turnover of the company for the Financial Year 2019-2020 was Rs. 750.00 crores – a
whopping rise of more than 20% from the previous year and the net profit stood at an
impressive figure of Rs. 6.60 crores – an increase of Rs. 1.80 crores as compared to the net
profit of the previous year. The company had a net worth of Rs. 250.00 crores; and it was noticed
that the net worth had also registered a northern- western trend by more than 15%. The
authorised and paid-up share capital of the company was Rs. 8.00 crores. Keeping in view the
applicability of forming a CSR Committee for the current financial year 2020-21, a CSR
Committee was formed with four directors as members of which one was an independent
director. The Committee was, among other objectives, given the responsibility of formulating
and recommending to the Board, a Corporate Social Responsibility Policy which would
indicate the activities to be undertaken by the company within the framework specified in
Schedule VII.
As the company has huge profits it has proposed a dividend @ 10% for the year 2019-20 out of
the profits of current year.
The company plans to diversify its business by adding another segment to manufacture steel
utensils and therefore, is desirous of shifting its registered office to Mumbai from Jaipur which will
help the company in carrying on the new business for effectively. Another strategically important
segment which the company tapped earlier and now wishes to engage itself in on a large scale
relates to manufacturing of stationery items.
During the current Financial Year 2020-21, the company provided ample support for improvement of
infrastructure in schools established at Mumbai, Kanpur, Delhi and Ludhiana as part of its CSR
activities. In addition, the company contributed towards establishment of Digital Smart Classroom,
Libraries and computer labs in these cities. The company also deployed mobile medical units
equipped with medical facilities and qualified doctors. In addition to this a large number of public
health and sanitation activities had been initiated under Swachh Bharat Abhiyan. The total amount
spent on these activities was, till date, almost equal to the minimum amount prescribed and it is
hoped that as the current Financial Year 2020-21 approaches its end, the total spending on CSR
activities will certainly exceed the budgeted figure.
(i) Which of the following factors would have prompted Krishnakant Limited to mandatorily form a
Corporate Social Responsibility (CSR) Committee for the current financial year?
(a) The net profit had increased to Rs. 6.60 crores and it was more by Rs. 1.80 crores in

comparison to previous year’s net profit.


(a) The turnover was Rs. 750.00 crores which was an increase of more than 20% as compared to

the previous year.


(b) The net worth was Rs. 250.00 crores which when compared to the previous year had

registered an increase by more than 15%.


(c) The paid-up share capital was Rs. 8.00 crores.

(ii) What is the minimum amount (in percentage) that Krishnakant Limited is required to spend
during the Financial Year 2020-21 on the CSR activities?
(a) 2% of the average net profits made during the two immediately preceding financial years.

(b) 2% of the average net profits made during the three immediately preceding financial years.

(c) 2.5% of the average net profits made during the two immediately preceding financial years.

(d) 2.5% of the average net profits made during the three immediately preceding financial years.
(iii) In the given case scenario, Krishnakant Limited decided to undertake CSR activities on its own. In
case, it had decided to engage an external Section 8 company for undertaking its CSR activities
and such charitable company is not established by Krishnakant Limited nor it is established by the
Central/State Government or by any entity established under an Act of Parliament or a State
Legislature, then what should be the established track which this Section 8 company should have in
undertaking similar programs or projects which Krishnakant Limited wants it to accomplish?
(a) Track record of minimum one year

(b) Track record of minimum two years

(c) Track record of minimum three years

(d) Track record of minimum four years


Q-14 During the half year ended September 2020, the board of directors (BOD) of Gold Leaf
Limited has made an application to the Tribunal for revision in the accounts of the company
for the financial year ended on March 2018. Further during the year ended March 2021, the
BOD has again made an application to the Tribunal for revision in the board’s report
pertaining to the year ended March 2020. You are required to state the validity of the acts of
the Board of directors.
a. The act of the BOD is valid only to the extent of application made for revisions in
accounts as board’s report are not eligible for revision.
b. The act of the BOD is valid as application made for revision in the accounts and board’s
report pertains to two different financial year.
c. The act of the BOD is invalid as the law provides for only one time application to be made
in a financial year for revision of accounts and boards report.
d. The act of the BOD is invalid as to the application made for revision in accounts pertains
to a period beyond 2 years immediately preceding the year 2021. The application
made for revision in the Board report is however valid in law.
Q-15 One Person Company shall file a copy of the duly adopted financial statements to the
Registrar in:
(a) 30 days of the date of meeting in which it was adopted.

(b) 90 days of the date of meeting in which it was adopted.


(c) 90 days from the closure of the financial year.
(d) 180 days from the closure of the financial year.
Q-16 Shri Limited (a company having CSR Committee as per the provision of Section 135 of the
Companies Act, 2013) decides to spend and utilize the amount of Corporate Social Responsibility
on the activities for the benefit of all the employees of Shri Limited. As per the provision of
Companies Act, 2013 this would mean that:-
(a) This is the total amount spent on Corporate Social Responsibility activities by Shri Limited for
that financial year
(b) No amount spent on Corporate Social Responsibility activities by Shri Limited for that financial
year
(c) Only Half of the total amount spent, shall be considered to be spent on Corporate Social
Responsibility activities by Shri Limited for that financial year
(d) Only the amount that has been spent on the employees having salary of Rs. 20,000 per month
or less, shall be considered be considered to be spent on Corporate Social Responsibility
activities by Shri Limited for that financial year.
Q-17 CSR Committee of the Board of shall consist of:
(a) Directors forming 1/3rd of the total no of directors.
(b) At least 2 directors out of which one shall be independentdirector.
(c) 3 or more directors out of which one shall be managing director.
(d) 3 or more directors, out of which at least 1 director shall be anindependent
director.

Q-18 Provisions of CSR are applicable to:


(a) Companies with net worth of Rs.250 crore or more but less than500 crore.
(b) Companies with turnover of Rs.1000 crore or more.
(c) Companies with net profit of Rs. 1 crore or more but less than Rs. 5 crore in any
financial year
(d) Companies having aggregate outstanding loans and depositsexceeding Rs. 50 crore
or more in any financial year.
Q-19 One Person Company shall file a copy of the duly adopted financial
statements to the Registrar within:
(a) 30 days of the date of meeting at which it was adopted.
(b) 90 days of the date of meeting at which it was adopted.
(c) 90 days from the closure of the financial year.
(d) 180 days from the closure of the financial year.
Rema formed and occupied the office of director in Rem Stationers (OPC) Private Limited which
Q-20
deals in manufacturing and trading of various items of stationery. Rema noticed a changed
provision which mandates that from the Financial Year 2020-21 onwards, an OPC shall file its
Annual Return in MGT - 7A. Rema is also one of the directors in another company which too is
required to file its Annual Return in MGT - 7A. Which is that ‘other company’ where Rema also
occupies the office of director in addition to OPC.
(a) That other company is a ‘small company’ where Rema also occupies the office of director
in addition to OPC.
(b) That other company is an ‘associate company’ where Rema alsooccupies the office of
director in addition to OPC.
(c) That other company is a ‘subsidiary company’ where Rema alsooccupies the office of
director in addition to OPC.
(d) That other company is a ‘dormant company’ where Rema alsooccupies the office of
director in addition to OPC.
Q-21 Ayush Power Limited has reported a net profit of ` 6 crore, ` 7.5 crore and ` 3 crore for the financial
year(s) ended on March 2017, March 2018 and March 2019 respectively. The board’s report of the
company for the year ended March 2020 did not disclose the composition of the CSR Committee on the
grounds that company is not required to constitute CSR committee as net profit during the immediately
preceding financial year is less than the statutory requirements laid down in section 135. You are
required to examine in the given scenario whether the act of non-composition and non- disclosure of
the composition of CSR committee in the Board’s Report is valid in law?
(a) No, the act of the company is not valid in law as every company is required to constitute a CSR
committee and disclose the constitution of same in the board’s report in every financial year
irrespective of the profits earned by the company.
(b) Yes, the act of the company is valid in law as the net profit of the company is less than ` 5 crore in
the immediately preceding financial year.
(c) No, the act of the company is not valid in law as composition and disclosure of composition of CSR
Committee will be required only if the profits of the company are not less than ` 5 crore for a
consecutive period of 3 financial years.
(d) The act of the company is valid only to the extent of non- disclosure of the composition of CSR
committee as the net profit of the company is less than ` 5 crore in the immediately preceding
financial year.
Q-22 During the half year ended September 2019, the board of directors (BOD) of Vidyut
Manufacturing Limited has made an application to the Tribunal for revision in the accounts
of the company for the financialyear ended as on March 2017. Further during the year
ended March2020, the BOD has again made an application to the Tribunal for revision in the
board’s report pertaining to the year ended March 2019. You are required to state the validity
of the acts of the Board of directors.
(a) The act of the BOD is valid only to the extent of application made for revisions in accounts
as board’s report are not eligible for revision.
(b) The act of the BOD is valid as the applications made for revisionin the accounts and
board’s report pertain to two different financial years.
(c) The act of the BOD is invalid as the law provides for only one time application to be
made in a financial year for revision of accounts and boards report.
(d) The act of the BOD is invalid as the application made for revisionin accounts pertains to a
period beyond 2 years immediately preceding the year 2020. The application made for
revision inthe Board report is however valid in law.
Q-23 Adani Enterprises Limited has its shares listed on a recognized stock exchange in India. During the
current financial year ending on 31st March 2020, the securities and exchange board of India
(SEBI) has found some irregularities in the filings made by the company. Accordingly, SEBI
proposes to make an application to the Tribunal for reopening of the books of accounts of the
Company. You, as an expert, are called upon by SEBI to advise with which last financial year for
reopening of books of accounts an application can be made?
(a) 2015-2016
(b) 2013-2014
(c) 2010-2011
(d) 2011-2012
Q-24 Ganesh Company Ltd, a public company incorporated under the Companies Act, 2013 has
Mr. Jay- Director, Mr. Sagar – Independent Director, Mr. Abhishek – Nominee Director and
Mr. Yash – Whole time director. Mr. Abhishek wants to inspect the books of account of
Shankar Company Limited, the subsidiary of Ganesh Company Limited. You are required to
state whether Mr. Abhishek is eligible to inspect the booksof accounts of Ganesh
Company Limited?
(a) Yes, Mr. Abhishek can inspect the books of account of Shankar Company limited only
on authorization of the public financial institution on whose behalf he has been so
appointed in theboard of the Ganesh Company Ltd.
(b) No. Mr. Abhishek being a nominee director can only inspect the books of account of
Ganesh Company Ltd and not its subsidiary company.
(c) Yes, Mr. Abhishek can inspect the books of account of Shankar Company limited only
on authorization by way of resolution ofthe board of directors.
(d) Yes, Mr. Abhishek can inspect the books of account of Shankar Company limited only
on authorization by way of resolution of the members holding not less than 25% of
the paid up share capital of the company.
Q-25 As per the provisions of the Companies Act, 2013, which of the following statement is
correct with respect to the surplus arising out of the CSR activities
(a) The surplus cannot exceed five percent of total CSR expenditure of the company for
the financial year.
(b) The surplus shall not form part of the business profit of a company.
(c) The surplus cannot exceed 10 percent of total CSR expenditure of the company for
the financial year.
(d) The surplus shall form part of the business profit of a company
Q-26 ABC Limited has its shares listed on a recognized stock exchange in India. During the current
financial year ending on 31st March 2021, the securities and exchange board of India (SEBI) has
found some irregularities in the filings made by the company. Accordingly, SEBI proposes to make
an application to the Tribunal for reopening of the books of accounts of the Company. You, as an
expert, are called upon by SEBI to advise with which last financial year for reopening of books of
accounts an application can be made?
(a) 2016-2017
(b) 2014-2015
(c) 2011-2012
(d) 2012-2013
Q-27 The financial statement in relation to a dormant company may not include:
(a) balance sheet
(b) cash flow statement
(c) applicable explanatory note
(d) profit and loss account
Q-28 During the half year ended September 2021, the board of directors (BOD) of New Era Limited has
made an application to the Tribunal for revision in the accounts of the company for the financial
year ended on March 2019. Further during the year ended March 2022, the BOD has again made
an application to the Tribunal for revision in the board’s report pertaining to the year ended March
2021. You are required to state the validity of the acts of the Board of directors:
(a) The act of the BOD is valid only to the extent of application made for revisions in accounts
as board’s report are not eligible for revision.
(b) The act of the BOD is valid as application made for revision in the accounts and board’s
report pertains to two different financial year.
(c) The act of the BOD is invalid as the law provides for only one time application to be made
in a financial year for revision of accounts and boards report.
(d) The act of the BOD is invalid as to the application made for revision in accounts pertains to
a period beyond 2 years immediately preceding the year 2022. The application made for
revision in the Board report is however valid in law.application made for revision in the
Board report is however valid in law.
Q-29 One Person Company shall file a copy of the duly adopted financial statements to the Registrar
in:
(a) 30 days of the date of meeting in which it was adopted.
(b) 90 days of the date of meeting in which it was adopted.
(c) 90 days from the closure of the financial year.
(d) 180 days from the closure of the financial year.
Answers
Questions Answers Questions Answers Questions Answers
1. A b .B ii 22 b
B d .C iii 23 d
C c 12 d 24 c
D a 13. i a 25 b
2 b ii b 26 d
3 d iii c 27 b
4 a 14 b 28 b
5 c 15 d 29 d
6 c 16 b
7 c 17 b
8 d 18 d
9 d 19 d
10 b 20 a
11. A i 21 b
MCQ OF CHAPTER - 10

AUDIT AND AUDITORS

CA DEEPIKA RATHI : CORPORATE LAW


Q-1 Which of the following is a prohibited services to be rendered by the auditor of the
Company
(a) design and implementation of any financial information system

(b) making report to the members of the company on the accounts examined by
him
(c) compliance with the auditing standards
(d) Reporting of fraud against the company by officers or employees to the Central
Government
2. For appointing an auditor other than the retiring auditor,
(a) Special notice is required.

(b) Ordinary notice is required.


(c) Neither ordinary nor special notice is required
(d) Approval of Central Government is required.
Q-3 The word ‘firm’ for the purpose of Section 139 shall include-
(a) An individual auditor

(b) LLP
(c) An individual auditor and LLP both
(d) A company
4. The auditor of a Government Company shall be appointed or re-appointed
by-
(a) The Central Government
(b) Comptroller and Auditor General of India (CAG).
(c) Central Government on the advice of Comptroller and AuditorGeneral
of India.
(d) Chairman of the Board of Directors
Q-5 The word ‘firm’ for the purpose of Section 139 shall include-
(a) An individual auditor
(b) LLP
(c) Both an individual auditor and LLP
(d) A company
Q-6 Birthday Card Limited, a listed company can appoint or re-appoint, Mishra &
Associates (a firm of Chartered Accountants), as their statutory auditors forAn
individual auditor
(a) One year only
(b) One term of 3 consecutive years only
(c) One term of 4 consecutive years only
(d) Two terms of 5 consecutive years
Q-7 Every company shall, at the first annual general meeting, appoint an individual or
a firm as an auditor who shall hold office from the conclusion of that meeting till
the conclusion of its:
(a) Second annual general meeting
(b) Fourth annual general meeting
(c) Sixth annual general meeting
(d) Eight annual general meeting
Answers
Questions Answers
1 a
2 a
3 b
4 b
5 b
6 d
7 c
MCQ OF CHAPTER – 11-14

OTHER LAWS

CA DEEPIKA RATHI : CORPORATE LAW


Q-1 Aman contracts to indemnify Megha against the consequences of any
proceedings which Chandar may take against Megha in respect of a sum of Rs.
15000/- advanced by Chandar to Megha. Now, Megha who is called upon to
pay the sum of money to Chandar but she fails to do so. Now, as per the
provisions of the Indian Contract Act, 1872, advise the future
course of action to be taken by Chandar.
(a) Chandar can recover the amount only from Megha

(b) Chandar can recover the full amount from Aman

(c) Chandar cannot recover the amount from Aman

(d) Chandar can recover at least 10% of the total amount from Megha
Q-2 A draws a bill on B for Rs. 500 payable to the order of A. B accepts the bill, but
subsequently dishonours it by non-payment. A sues B on the bill. B proves that it
was accepted for value as to Rs. 400, and as an accommodation to the plaintiff as to
the residue. Thus, as per the provisions of the Negotiable Instruments Act, 1881, A
can only recover the following amount:
(a)Rs.900
(b) Rs.500
(c)Rs.400
(d) Rs.100
Q-3 R purchases some goods on credit from S, payable within 3 months. After 2
months, R makes out a blank cheque in favour of S, signs and delivers it to S
with a request to fill up the amount due, as R does not know the exact
amount payable by him. S fills up fraudulently the amount larger than the
amount payable by R and endorses the cheque to C in full payment of S's own
due. R's cheque is dishonoured. Referring to the provisions of the Negotiable
Instruments Act, 1881, C:
(a) Can claim the full amount from R

(b) Can claim the full from S

(c) Cannot claim the amount either from R or S

(d) Can claim from S only the exact amount that was due from R to S
Q-4 A is residing in Delhi and has a house in Mumbai. A appoints B by a power
of attorney to take care of his house. State the nature of agency created
between A and B:
(a) Implied agency

(b) Agency by ratification

(c) Agency by necessity

(d) Express agency


Q-5 A guarantee which extend to a series of transactions is called
(a) Special Guarantee
(b) Continuing Guarantee
(c) Specific Guarantee
(d) None of the above

Q-6 An aid that expresses the scope, object and purpose of the Act
(a) Title of the Act
(b) Heading of the Chapter
(c) Preamble
(d) Definitional sections
Q-7 Vishal lends a horse to Preet. The horse is vicious, which is known to Vishal but he does
not disclose the fact to Preet. The horse runs away. Preet is thrown and injured. As per
the provisions of the Contract Act, 1872, which is the correct statement:
(a) Preet is responsible for his injury.

(b) Though the horse belonged to Vishal but he cannot be held responsible

(c) Vishal is responsible to Preet for damage sustained

(d) No one can be held responsible for the damage sustained as no one can take guarantee

for the horse


Q-8 As per the Indian Contract Act, 1872, any guarantee which has been obtained by the
means of misrepresentation made by the creditor concerning a material part of the
transaction, is:
(a) Valid

(b) Invalid

(c) outside the ambit of the Indian Contract Act, 1872

(d) not revocable if the damage sustained is less than 10% of the amount for which the

guarantee is given
Q-9 Ronak and Bhowmik are brothers and they are engaged in the business of dairy. Ronak is having 10 cows.
The monthly revenue and expenses of the cows is tabulated as under:
S.No. Particulars (Rs.)
1. Revenue: 3,00,000
(25 litres per cow per day) *(10 cows) * (Sale Price ` 40 per litre) * (30 days in a
month) = 3,00,000.
2. Expenses: (1,30,000)
i. For feeding: (300 per cow per day) *(10 cows) * (30 days in a month) = 90,000
ii. Medical Expenses (Salary to a Veterinary Doctor per month: 10,000
iii.Labour’s Salary: (2 person *10,000) = 20,000
iv. Petrol Exp. for milk delivery van: Lump sum = 10,000
Total Exp= 90,000+10,000+20,000+10,000 =1,30,000
3. Savings per month 1,70,000
4. Yearly savings = 1,70,000*12 months 20,40,000
5. Salary to Bhowmik for looking after Ronak’s Diary business: (1,20,000)
10,000*12 = 1,20,000
6. Less: Contingency Expenditure (20,000)
7. Net Revenue to be collected (after a year) 19,00,000
Ronak’s son Chirag is doing Engineering in Dairy Science from Denmark and is in Final Year. He learnt a
lot by his engineering education and want to invite his father to know the technical aspects of dairy
business. Chirag insisted his parents to come to Denmark and stay for a year to learn the nitty gritty of
the dairy business and also enjoy the life in travelling nearby places.
Ronak, talked to his brother Bhowmik and explained his plan to visit to Denmark for a year and
requested to take care of his cows. The labourers are engaged for the maintenance of cows and
delivery of the milk, and Bhowmik is just to have a watch over it, collect the revenues etc. and take care
of the cows, till he returns back from Denmark. Ronak also offered Bhowmik that for taking care of his
dairy business, he will pay to him Rs 10000 per month. Ronak also told Bhowmik that the cows are
covered under the Insurance Policy, for which he has already paid advance premium and also shared
the Insurance Policy with Bhowmik. However, Ronak did not disclosed that one cow is under sickness, it
very often falls sick and needs to be taken care. Bhowmik agreed and the cows were shifted to
Bhowmik’s Dairy Farm House.
Ronak and his wife went to Denmark to stay with their son and to understand the dairy business there
and to visit the near places.
Bhowmik was now looking after the dairy business of Ronak along with his dairy business. During the
year, 2 cows gave the birth to 2 calves. One cow, which often used to fall ill, had also influenced the
other cows, as a result, one cow of Bhowmik, and one cow of Ronak which remained in close contact
with this sick cow, also fell sick. All the three cows (2 of Ronak and 1 of Bhowmik) died.
When the insurance claim was lodged, the insurance company refused to pass on the claim on the
following reasons:
 One cow of Ronak which was running sick was not insured.
 Post mortem Report of another two cows (one of Ronak and another of Bhowmik) revealed that these
two cows were in close touch of the sick cow and due to infections, these two cows also died.
When Ronak returned back to India, he demanded his cows back. Bhowmik returned 8 cows (10-2)
but did not returned calves. Bhowmik informed Ronak that due to one sick cow (of Ronak) his cow
also became sick and died and no insurance claim was admitted.
Based on the above facts, answer the following MCQs:
1. What was the fault on the part of Ronak (bailor) in this case?

(a) Ronak has not taken the Insurance Policy of the sick cow.

(b) Ronak have not informed the continuous sickness of his cow, to Bhowmik

(c) Ronak has left the cows to his brothers and went to Denmark to enjoy the travelling and

tourism.
(d) Ronak, before going to Denmark, should have sold this sick cow.
2. Can Bhowmik claim damages for loss of his cow, which died, since this cow,
remained in the close contact of the sick cow of Ronak:
(a) Ronak is not liable for such loss.

(b) Bhowmik should himself take care of his cow.

(c) Ronak is liable to pay the price of the deceased cow of Bhowmik, since this cow died on

account close contact of sick cow of Ronak.


(d) Bhowmik should be vigilant in taking care of the cows.

3. Whether Bhowmik is responsible to give delivery of two calves which took birth during the year,
when Ronak was on his tour to Denmark:
(a) Bhowmik is not bound to give delivery of two calves, since he has already lost his own cow due

to mistake of not disclosing the sickness of Ronak’s cow by him (Ronak).


(b) Bhowmik is duty bound to hand over the delivery of two calves.

(c) Ronak should not insist for delivery of the calves.

(d) Bhowmik can keep the calves with him as the calves were born when the cows

were in Bhowmik’s custody.


4. Bhowmik returns only 8 cows, since 2 cows of Ronak died. Whether Ronak is entitled to claim
damages for 2 cows:
(a) Ronak is not entitled to claim damages.

(b) Ronak is entitled to claim damages only, if he can prove that Bhowmik has not taken care of

the cows as a prudent person, not taken the medical help of the doctor etc.
(c) Bhowmik should morally paid the loss of cows to his brother Ronak

(d) Bhowmik should not claim his salary, since Ronak has already suffered the loss of two cows.
Q-10 When there is a conflict between two or more statute or two or more parts of a statute and both of
them need to be honoured, then which rule of interpretation is to be applied
(a) Rule of Harmonious construction

(b) Rule of Literal construction

(c) Rule of Beneficial construction

(d) Rule of exceptional construction

Q-11 While drawing a bill of exchange, a person whose name is given in addition to the drawee who can
be resorted in case of need, is called
(a) Acceptor

(b) Acceptor for honour

(c) Drawee in case of need

(d) Drawer
Q-12 Days of grace provided to the Instruments at maturity is (as per the provisions of the
Negotiable Instruments Act, 1881)—
(a) 1 day

(b) 2 days

(c) 3 days

(d) 5 days

Q-13 Which of the following is not an Immovable Property (as per the provisions of the General
Clauses Act, 1897):
(a) Land
(b) Building
(c) Timber
(d) Machinery permanently attached to the land
Q-14 Aman contracts to indemnify Megha against the consequences of any proceedings which Chandar
may take against Megha in respect of a sum of Rs. 15000/- advanced by Chandar to Megha. Now,
Megha who is called upon to pay the sum of money to Chandar but she fails to do so. Now, as per
the provisions of the Indian Contract Act, 1872, advise the future course of action to be taken by
Chandar.
(a) Chandar can recover the amount only from Megha
(b) Chandar can recover the full amount from Aman
(c) Chandar cannot recover the amount from Aman
(d) Chandar can recover at least 10% of the total amount from Megha
Q-15 L made an offer to MD of a company. MD accepted the offer though he had no authority to do so.
Subsequently L withdrew the offer but the company ratified the MD’s acceptance. State which of
the statement given hereunder is correct:
(a) L was bound with the offer
(b) An offer once accepted cannot be withdrawn
(c) Both option (a) & (b) is correct
(d) L is not bound to an offer.
Q-16 The date of maturity of a bill payable hundred days after sight and which is presented for
sight on 4th May, 2017, is (as per the provisions of the Negotiable Instruments Act, 1881):
(a) 13 August, 2017
(b) 14 August, 2017
(c) 15 August, 2017
(d) 16 August, 2017

Q-17 A draws a bill on B. B accepts the bill without any consideration. The bill is transferred to C
without consideration. C transferred it to D for value. Decide as per the provisions of the
Negotiable Instruments Act, 1881-
(a) D can sue only A
(b) D can sue A or B only
(c) D can sue any of the parties A, B or C
(d) D cannot sue any of the parties A, B or C
Q-18 An aid that expresses the scope, object and purpose of the Act—
(a) Title of the Act
(b) Heading of the Chapter
(c) Preamble
(d) Definitional sections

Q-19 As per the Negotiable Instruments Act, 1881, when the day on which a promissory note or bill
of exchange is at maturity is a public holiday, the instrument shall be deemed to be due on
the…….. .
(a) said public holiday

(b) 5 days succeeding public holiday


(c) next succeeding business day
(d) next preceding business day
Q-20 An internal aid that may be added to include something within the section or to
exclude something from it, is—
(a) Proviso
(b) Explanation
(c) Schedule
(d) Illustrations

Q-21 Validity period for the presentment of cheque in bank is—


(a) 3 months
(b) 6 months
(c) 1 year
(d) 2 years
Q-22 Mr. A died at the age of 72 leaving behind some movable and immovable properties to be
distributed between his two sons C& D, as per his registered will. His Will clearly mentioned that all
the immovable property should go to C and all the movable property should go to D.Both the
brothers divided the property as per will except below mentioned properties, because they could
not establish which property should go to whom. Kindly help them by ticking the property/ies
which should go to D (as per the provisions of the general Clause Act, 1897):
(a) Standing crop in the fields

(b) Cut crop, ready to sell


(c) Tube well in the agriculture land
(d) Sandal wood tree
Q-23 Anand is a goldsmith, who makes gold jewellery as per customer’s requirement. Brijesh along with
his friend Ramesh, who was also a friend of Anand, approached Anand for making bangles for his
wife. Anand agreed to give delivery within 7 days from the day Brijesh gives him gold for making
bangles. Brijesh gave him bangles on 2nd February 2018. The bangle making charges were Rs.
5000/-, which Brijesh agreed to pay at the time of delivery of the bangles. Anand delivered the
bangles on 6 th February 2018, but Brijesh said that he will pay the making charges after some
time. Anand agreed to that. In spite of repeated reminders Brijesh did not pay his making charges.
In this situation from the following what remedy is available to Brijesh—
(a) He can sue Ramesh for his making charges because Anand was accompanied by him

(b) He can sue Anand for his overdue making charges.


(c) He can visit Anand’s place and can take away anything, which is similar in value to the
bangle making charges.
(d) He can retain the goods, as he has the right of particular lien, he however does not have the
right to sue Anand or Ramesh
Q-24 A good friend of Mr. A, Mr. D is a property dealer in Delhi and works for many renowned
registered real estate developers. As Mr. D is doing very well in his work, Mr. A also wanted to
work as a property dealer or property agent. Mr. X, a real estate developer of Delhi, appointed
Mr. D as his agent for selling flats in his upcoming project, and asked him to name some other
person to work for him, for his another project. At this time he introduced Mr. A to Mr. X,
saying that he is also in the same field for last 10 years, although Mr. A did not had any
experience in this field. Going by his words, Mr. X instructed to appoint Mr. A also for his other
ventures. From the following, Mr. A will be treated as --
(a) Agent of Mr. X
(b) Sub-agent of Mr. D
(c) Substituted agent of Mr. X
(d) Sub- agent of Mr. X
Q-25 A draws a cheque in favour of M, a minor. M endorses the same in favour of X. The
cheque is dishonoured by the bank on grounds of inadequate funds. As per the
provisions of Negotiable Instruments Act, 1881:
(a) M is liable to X
(b) X can proceed against A
(c) No one is liable in this case
(d) M can proceed against A
Q-26 Which of the following is not an Immovable Property?
(a) Land
(b) Building
(c) Timber
(d) Machinery permanently attached to the land

Q-27 As per the Negotiable Instruments Act, 1881, when the day on which a promissory note
or bill of exchange is at maturity is a public holiday, the instrument shall be deemed to
be due on the…….. .
(a) said public holiday
(b) 5 days succeeding public holiday
(c) next succeeding business day
(d) next preceding business day
Q-28 Rule of Beneficial construction is also known as—
(a) Purposive construction
(b) Mischieve Rule
(c) Heydons’s Rule
(d) All of the Above
Q-29 Formal legal document which creates or confirms a right or record a fact is a—
(a) Document
(b) Deed
(c) Statute
(d) Instrument
Q-30 A negotiable instrument drawn in favor of a minor is
(a) Void
(b) void but enforceable
(c) Valid
(d) none of the above
Q-31 The preamble is most important in any legislation, it:
(a) Provides definitions in the Act.
(b) Expresses scope, object and purpose of the Act.
(c) Provides summary of the entire Act.
(d) None of the above.

Q-32 Atul contracts to indemnify Neha against the consequences of any proceedings which Chirag
may take against Neha in respect of a sum of Rs. 15000/- advanced by Chirag to Neha. Now,
Neha who is called upon to pay the sum of money to Chirag but she fails to do so. Now, as per
the provisions of the Indian Contract Act, 1872, advise the future course of action to be taken
by Chirag.
(a) Chirag can recover the amount only from Neha
(b) Chirag can recover the full amount from Atul
(c) Chirag cannot recover the amount from Atul
(d) Chirag can recover at least 10% of the total amount from Neha
Q-33 Mr. Vishal parks his car at a parking lot, locks it, and keeps the keys with himself. Which of
the following statement is correct in this regard?
(a) This is a case of bailment
(b) The parking people has possession of the car of Mr. Vishal
(c) The parking people has custody of car of Mr. Vishal
(d) This is the case of mortgage

Q-34 M drew a cheque amounting to Rs. 2 lakh payable to N and subsequently delivered to him.
After receipt of cheque N endorsed the same to C but kept it in his safe locker. After
sometime, N died, and P found the cheque in N’s safe locker. State the nature of the
Instrument as amounting to endorsement under the Negotiable Instrument Act,1881.
(a) Yes its an endorsement, as P becomes the holder of the cheque that he found in the N’s
safe locker.
(b) No, its not an endorsement, as P does not become the holder of the cheque
(c) Yes, its an endorsement, as P was a ultimate custodian of the cheque
(d) No, its not an endorsement, as N endorsed it to C and not to the P.
Q-35 Where ‘A’ obtains housing loan from LIC Housing and if ‘B’ promises to pay LIC Housing in the event
of ‘A’ failing to repay, it is a _______ _
(a) Contract of Indemnity
(b) Contract of Guarantee.
(c) Quasi Contract
(d) Contingent Contract

Q-36 A hires a carriage of B. The carriage is unsafe though B is not aware of it and A is injured
(a) B is responsible to A for the injury
(b) B is not responsible to A for the injury
(c) No one is responsible to each other
(d) None of the above
Q-37 ____ __ __ _ _ is the cardinal rule of construction that words, sentences and phrases of a
statute should be read in their ordinary, natural and grammatical meaning so that they may
have effect in their widest amplitude
(a) Rule of Literal Construction

(b) Rule of Harmonious Construction

(c) Rule of Beneficial Construction


(d) Rule of Exceptional Construction

Q-38 Where an act or omission constitutes an offence under two or more enactments, then the
offender shall be liable to be prosecuted and punished under
(a) Under either or any of those enactments
(b) Twice for the same offence
(c) Either a. or b. as per the discretion of the court
(d) none of these
Q-39 If X bails his ornaments to Y and specifically instructs Y to keep them in a bank, but Y keeps these
ornaments in his own locker at his house along with his own ornaments. After two days, all the
ornaments are lost/stolen in a riot then who will be responsible for the loss?
(a) X would be responsible for his loss
(b) Y would be responsible for the loss to X
(c) Both X and Y will share the loss equally
(d) Y will not be responsible for the loss to X

Q-40 With regards to the contract of agency, which of the following statement is incorrect?
(a) A person who is a major can appoint minor as an agent.
(b) If an agent happens to be a person incapable of contracting, the principal cannot hold
the agent liable.
(c) No consideration is necessary to create an agency.
(d) The acceptance of the office by an agent is not a sufficient consideration for the
appointment.
Q-41 Mr. Aylam issued a cheque amounting to INR 25,000 dated 2nd February 2020 to Mr. Gandhi
which was deposited by Mr. Gandhi on 16th March 2020 in his bank account. The said cheque got
dishonored on 17th March 2020 by the bank citing insufficient funds in the account of Mr. Aylam.
Then Mr. Gandhi demanded the payment from Mr. Aylam by issuing the notice on 31st March
2020 which was received by Mr. Aylam on 2nd April 2020. Assuming that Mr. Aylam failed to
make the payment within stipulated time, what is the last date by which Mr. Gandhi should have
made a complaint in the court?
(a) 17th May 2020
(b) 2nd May 2020
(c) 17th April 2020
(d) 30th April 2020
Q-42 What among the following could be considered in the term ‘Immovable Property’ as defined
under section 3(26) of the General Clauses Act, 1897?
(i) The soil for making bricks
(ii) Right to catch fish
(iii) Right to drain water
(iv) Doors and Windows of the house
(a) Only (i) and (iv)
(b) Only (i), (ii) and (iv)
(c) Only (i) and (ii)
(d) Only (ii), (iii) and (iv)
Q-43 Mr. Sharad has recently shifted from Delhi to Noida. During the shifting some of the furniture
was damaged. Mr. Sharad gave the items to Asian Arts, Greater Noida for repair, refabrication,
and painting, etc. Asian Arts deals in the sale of furniture and repair thereof. It was decided
that the whole work will be done on a lumpsum amount of Rs. 50,000. In between this period,
the workshop at Asian Arts caught fire and there was no fault of the proprietors. Goods bailed
by Mr. Sharad along with another furniture destroyed in this fire incident. Mr. Sharad has lost
furniture due to fire at workshop of Asian Arts. What is the correct statement considering
there was no specific contract?
(a) Asian Arts is liable, because fire took place at his place

(b) Asian Arts is liable, because bailment is on going

(c) Asian Arts is not liable because risk of any loss during bailment is need to bear by bailor.

(d) Asian Arts is not liable because fire is not due to any negligence of their part.
Q-44 Validity period for the presentment of cheque in bank is—
(a) 3 months
(b) 6 months
(c) 1 year
(d) 2 years

Q-45 A contracts to save B against the consequences of any proceedings, which C may take
against B in respect of a certain sum of 500 rupees. This is a:
(a) Contract of guarantee

(b) Quasi contract

(c) Contract of indemnity

(d) Void contract


Q-46 In a company if any change of right of one class also affects the right of other class, then:
(a) A resolution should be passed in general meeting in this case
(b) Company need not to do anything else
(c) Written consent of three fourth majority of that other class should be obtained
(d) A resolution in joint meeting of both the classes should be passed

Q-47 A is residing in Delhi and has a house in Mumbai. A appoints B by a power of attorney to
take care of his house. State the nature of agency created between A and B:
(a) Implied agency

(b) Agency by ratification

(c) Agency by necessity

(d) Express agency


Q-48 A negotiable instrument that is payable to order can be transferred by:
(a) Simple delivery
(b) Indorsement and delivery
(c) Indorsement
(d) Registered post

Q-49 A negotiable instrument drawn in favour of a minor is


(a) Void
(b) Void but enforceable
(c) Valid
(d) Quasi contract
Q-50 The Rule in Heydon’s case is also known as—
(a) Purposive construction
(b) Mischief Rule
(c) Golden Rule
(d) None of the Above

Q-51 Pick the odd one out of the following aids to interpretation—
(a) Preamble
(b) Marginal Notes
(c) Proviso
(d) Usage
Q-52 Where an act of parliament does not expressly specify any particular day as to the
day of coming into operation of such Act, then it shall come into operation on the
day on which
(a) It receives the assent of the President

(b) It receives the assent of the Governor General

(c) It is notified in the official gazette

(d) It receives assent of both the houses of Parliament


Atul want to wear a new coat for his seminar which is to be held (after 15 days). He
Q-53 bought cloth material from the market to make a new coat. Atul gives material to
Babu, a tailor, to make the coat. Babu promised Atul to deliver the coat within the
stipulated time of one week. Atul paid 10% advance so that he stitches his coat on
priority basis. After one week when Atul went to the tailor he was shocked to see that
the coat is still unstitched. The tailor demanded two more days time from Atul to stitch
the coat, but Atul refused and asked the tailor to return his piece of cloth. Tailor
retained the cloth and asked Atul to pay the price, as he already did the cutting of the
cloth.
Yash, Atul's friend left his car at the company’s authorised showroom for servicing. As
Yash house is located in the remote area of the city, so he instructed the manager of
the showroom to park the vehicle at Atul’s residence. So as per Yash’s instructions the
car was sent to Atul house after servicing. The worker of the showroom parked the car
outside Atul’s residence and handed over the key to Atul's servant. Next day when
Yash went to pick up his car he found that somebody has hit the car while it was
parked there.
Yash found a mobile phone and a branded pen lying on the road outside Atul’s residence. Yash
tried to enquire about the real owner. He took the phone and pen with him and kept it in the
drawer of his study table. Next day, Yash’s wife came to the room searching for a pen, she
saw the pen and took the pen and went out. Unfortunately, Yash’s wife lost the pen. After two
days the real owner, approached him (Yash), Yash humbly delivered his phone and apologized
for the loss of pen.

(i) According to the provisions of the Indian Contract Act, 1872, do you think the
tailor has a right of lien over the cloth?
(a) Yes, he is entitled to retain the coat until he is paid.
(b) No, he has not completed the work within the agreed time
(c) Yes, in case of particular lien he can retain the cloth.
(d) No, but he is not required to return the advance amount
(ii) Referring to the provision of the Indian Contract Act, 1872, what are the repercussions, when
Yash found goods belonging to another and takes them into his custody? Choose the correct
statement.
(a) He becomes subjected to the same responsibility as of a bailee.
(b) merely possession of the goods does not make him a bailee
(c) No act is done by owner for placing the goods in the possession of Yash, so he cannot
be treated as bailee.
(d) In the absence of any express or implied contract, absolves Yash’s liabilities as bailee
Q-54 A negotiable instrument drawn in favour of a minor is
(a) Void ab initio
(b) Void but enforceable
(c) Valid
(d) Quasi contract

Q-55 According to the rule, the words of the statute are to be given their plain and ordinary
meaning. —
(a) Literal rule
(b) Golden rule
(c) Natural rule
(d) Mischief rule
Q-56 When there is a conflict between two or more statues or two or more parts of a statute
then which rule is applicable:
(a) Welfare construction
(b) Strict construction
(c) Harmonious construction
(d) Mischief Rule

Q-57 As per the provisions of the General Clauses Act, 1897, where an act or omission
constitutes an offence under two or more enactments, then the offender shall be
liable to be prosecuted and punished u nder:
(a) Under either or any of those enactments
(b) Twice for the same offence
(c) Either (a) or (b) as per the discretion of the court
(d) Under the cumulative effect of both the enactments
Q-58 Where an act of parliament does not expressly specify any particular day as to the day of
coming into operation of such Act, then it shall come into operation on the day on which:
(a) It receives the assent of the President
(b) It receives the assent of the Governor General
(c) It receives assent of both the houses of Parliament
(d) It receives assent of the Prime Minister

Q-59 The date of maturity of a bill payable hundred days after sight and which is presented for
sight on 4th May, 2021, is:
(a) 13 August, 2021
(b) 14 August, 2021
(c) 15 August, 2021
(d) 16 August, 2021
Q-60 A bill of exchange is due on 2nd January, 2021. How many days of grace shall be provided to
this bill of exchange due at maturity:
(a) 1 day

(b) 2 days

(c) 3 days

(d) 5 days

Q-61 Vinod, a transporter was transporting tomatoes of Avinash from his (Avinash’s) farm to the
market. However, due to heavy rains, Vinod was stuck for three days and thus he sold the
tomatoes below the market rate in the nearby market where he was stranded fearing that the
tomatoes may perish. Choose the correct option in the light of the provisions of the Indian
Contract Act, 1872.
(a) Avinash will succeed in recovering losses of tomatoes from Vinod
(b) Avinash will not succeed in recovering losses of tomatoes from Vinod
(c) Vinod can sell the tomatoes only at a price higher than the market rate
(d) Avinash is liable to compensate Vinod as his truck was stuck for three days and hence, he
(Vinod) could not complete the deliveries of other clients and thus he (Vinod) suffered loss
Q-62 Mr. Vishal parks his car at a parking lot, locks it, and keeps the keys with himself.
Which of the following statement is correct in this regard:
(a) This is a case of bailment
(b) The parking people has possession of the car of Mr. Vishal
(c) The parking people has custody of car of Mr. Vishal
(d) This is the case of mortgage

Q-63 is the cardinal rule of construction that words, sentences and phrases of a statute should be read
in their ordinary, natural and grammatical meaning so that they may have effect in their widest
amplitude.
(a) Rule of Literal Construction

(b) Rule of Harmonious Construction


(c) Rule of Beneficial Construction
(d) Rule of Exceptional Construction
Q-64 What among the following could be considered in the term ‘Immovable Property’ as defined
under section 3(26) of the General Clauses Act, 1897?
(i) The soil for making bricks
(ii) Right to catch fish
(iii) Right to drain water
(iv) Doors and Windows of the house
(a) Only (i) and (iv)
(b) Only (i), (ii) and (iv)
(c) Only (i) and (ii)
(d) Only (ii), (iii) and (iv)
Q-65 Kirtee Agarwal and Kishan Shaw are two friends studying in the Mumbai City College. They both are pursuing
Bachelor of Commerce (Hons) and are in their Semester V. Kirtee Agarwal is also pursing Chartered Accountancy
Course. She has completed her Foundation Level and is presently preparing for the Intermediate Level. On the
other hand, Kishan Shaw is interested in Fashion Designing and is preparing to become a fashion designer after
completing B.COM (Hons).
One fine morning over a cup of tea both Kirtee and Kishan heard two persons promising to financially help each
other. One person named Mr. P promised the other Mr. Q, that he will pay him a certain sum of money on the
76th Independence Day of India. To this Mr. Q asked Mr. P to pay this sum to Mr. R (friend of Mr. Q). After a
moment’s thought Mr. P changed his mind and promised to pay a reduced sum of money to Mr. R along with an
I-Pad.
Over hearing this conversation both Kirtee and Kishan started discussing over Promissory Notes. Since Kirtee is a
CA Student she shared her knowledge about Promissory notes and explained Kishan about Section 4 of the
Negotiable Instrument Act, 1881.
Having heard the details Kishan was curious in his mind regarding Promissory Notes. He had the following
questions for which he needed answers. Considering the above data and assuming you are Kirtee, answer the
following questions of Kishan:
(i) Kishan asks, ‘If Mr. P promises Mr. Q that he will pay Rs. 4,00,000. However, he will
pay the sum to Mr. Q on the 76th Independence day of India’. Will this promise
constitute a valid Promissory Note?
(a) No. This is not a valid promissory note as it is conditional and promissory note
should be unconditional.
(b) No. This is not a valid promissory note as there is no express of promise. It is a
mere statement.
(c) Yes. This is a valid promissory note as the event stated in the promise is bound
to happen.
(d) Yes. This is a valid promissory note as there is a promise to pay irrespective of
the promise being conditional or unconditional.
(ii) Kishan asked, ‘when Mr. P promises to pay a friend of Mr. Q, Rs 2,00,000 along with an I-
Pad, on his birthday’. Will that be a valid Promissory Note?
(a) No. It is not a valid Promissory note as the order to pay must consist of money only.
(b) No. It is not a valid promissory note as there is no clarity on which birthday the
payment will be made. It is a promise for an indefinite period.
(c) Yes. It is a valid promissory note as the maker and payee are certain, definite and
different person.
(d) Yes. It is a valid promissory note as there is an express promise to pay Rs 2,00,000
along with I Pad on friend’s birthday.
Q-66 ………………. interpretation concerns itself with “what the law says” and ………. interpretation, seeks to
ascertain “what the law means”.
a. Grammatical, Logical
b. Legal, usual
c. Usual, legal
d. Logical, grammatical

Q-67 Arvind lends money to Mamta against the security of jewellery deposited by Mamta with Arvind. Arvind gave
this jewellery to his friend Vinayak who had a safe locker at his home. Who is the pawnor in the given case?
(a) Arvind
(b) Mamta
(c) Vinayak
(d) Both Arvind and Vinayak
Q-68 Pick the odd one out of the following aids to interpretation
(a) Preamble
(b) Marginal Notes
(c) Proviso
(d) Usage

Q-69 The Rule in Heydon’s case is also known as—


(a) Purposive construction
(b) Mischief Rule
(c) Golden Rule
(d) None of the Above
Q-70 The date of maturity of a bill payable hundred days after sight and which is presented for sight on 4th May,
2021, is
a. 13 August, 2021
b. 14 August, 2021
c. 15 August, 2021
d. 16 August, 2021

Q-71 Where an act of parliament does not expressly specify any particular day as to the day of coming into
operation of such Act, then it shall come into operation on the day on which:
(a) It receives the assent of the President
(b) It receives the assent of the Governor General
(c) It receives assent of both the houses of Parliament
(d) It receives assent of the Prime Minister
Q-72 As per the provisions of the General Clauses Act, 1897, where an act or omission constitutes an offence
under two or more enactments, then the offender shall be liable to be prosecuted and punished under:
(a) Under either or any of those enactments
(b) Twice for the same offence
(c) Either (a) or (b) as per the discretion of the court
(d) Under the cumulative effect of both the enactments

Q-73 When there is a conflict between two or more statues or two or more parts of a statute then which rule is
applicable
(a) Welfare construction
(b) Strict construction
(c) Harmonious construction
(d) Mischief Rule
Q-74 According to the………….., the words of the statute are to be given their plain and ordinary meaning. Under
either or any of those enactments
(a) Literal rule
(b) golden rule
(c) natural rule
(d) mischief rule

Q-75 Mr. A issued a cheque amounting to Rs.25,000 dated 2nd February 2020 to Mr. G which was deposited by Mr. G
on 16th March 2020 in his bank account. The said cheque was returned unpaid on 17th March 2020 by the
bank of Mr. A citing insufficient funds in the account of Mr. A. Mr. G demanded the payment from Mr. A by
issuing the notice on 31st March 2020 which was received by Mr. A on 2nd April 2020. Assuming that Mr. A
failed to make the payment within stipulated time, what is the last date by which Mr. G should have made a
complaint in the court?
(a) 17th May 2020
(b) 2nd May 2020
(c) 17th April 2020
(d) 30th April 2020
Q-76 The preamble is most important in any legislation, it:
(a) Provides definitions in the Act.
(b) Expresses scope, object and purpose of the Act.
(c) Provides summary of the entire Act.
(d) provides side notes often found at the side of a section.

Q-77 Which of the following is an essential characteristic of a promissory note:


(a) There must be an order to pay certain sum
(b) It must be payable to bearer
(c) It must be signed by the Payee
(d) It must contain an unconditional undertaking
Q-78 A negotiable instrument drawn in favour of a minor is
(a) Void ab initio
(b) Void but enforceable
(c) Valid
(d) Quasi contract

Q-79 An internal aid that may be added to include something within the section or to exclude something from
it, is—
(a) Proviso
(b) Explanation
(c) Schedule
(d) Illustrations
Q-80 According to ________ rule of interpretation, meaning of words should be known from its accompanying or
associated words.
(a) Mischief rule
(b) Primary Rule
(c) Noscitur a Sociis
(d) Golden Rule

Q-81 When the law is clear and unambiguous the court shall construe the meaning of a provision based on strict
…………
(a) grammatical meaning
(b) logical meaning
(c) alternative interpretation
(d) hypothetical meaning
Q-82 As per the provisions of the General Clauses Act, 1897, where an act or omission constitutes an offence under two
or more enactments, then the offender shall be liable to be prosecuted and punished under:
(a) Under either or any of those enactments
(b) Twice for the same offence
(c) Either (a) or (b) as per the discretion of the court
(d) Under the cumulative effect of both the enactments

Q-83 Any instrument is at maturity on the ……. day after the day on which it is expressed to be payable.
(a) first
(b) second
(c) Third
(d) fourth
Q-84 An instrument which is vague and cannot be clearly identified either as a bill of exchange, or as apromissory note, is
called as:
(a) Bearer instrument
(b) Ambiguous instrument
(c) Order instrument
(d) Inland instrument

Q-85 When there is a conflict between two or more statues or two or more parts of a statute then which rule is
applicable:
(a) Welfare construction
(b) Strict construction
(c) Harmonious construction
(d) Mischief Rule
Q-86 A promissory note dated 31st August, 2022, is made payable three months after date. What will the maturity
date for this instrument?
(a) 30th October, 2022
(b) 31st October, 2022
(c) 2nd December, 2022
(d) 3rd December, 2022

Q-87 ………is the cardinal rule of construction that words, sentences and phrases of a statute should be read in their
ordinary, natural and grammatical meaning so that they may have effect in their widest amplitude.
(a) Rule of Literal Construction
(b) Rule of Harmonious Construction
(c) Rule of Beneficial Construction
(d) Rule of Exceptional Construction
Q-88 What among the following could be considered in the term ‘Immovable Property’ as defined under
section 3(26) of the General Clauses Act, 1897?
(i) The soil for making bricks
(ii) Right to catch fish
(iii) Right to drain water
(iv) Doors and Windows of the house
(a) Only (i) and (iv)
(b) Only (i), (ii) and (iv)
(c) Only (i) and (ii)
(d) Only (ii), (iii) and (iv)
Q-89 ……………means that when two or more words that are susceptible of analogous meaning, are coupled together
they are understood to be used in their cognate sense.
(a) Noscitur a Sociis
(b) Contemporanea Expositio
(c) prima facie
(d) absoluta sententia expositore non indiget

Q-90 Pick the odd one out of the following aids to interpretation:
(a) Preamble
(b) Marginal Notes
(c) Proviso
(d) Usage
Q-91 Order Instrument is an instrument which is payable to a person or payable to a person or his order or
payable to order of a person or where the last indorsement is in full, such instrument can be negotiated by
………………….
(a) Simple delivery
(b) Indorsement and delivery
(c) Indorsement
(d) Registered post

Q-92 A bill of exchange is due on 2nd January, 2022. How many days of grace shall be provided to this bill of exchange
due at maturity:
(a) 1 day
(b) 2 days
(c) 3 days
(d) 5 days
Answers
Questions Answers Questions Answers Questions Answers Questions Answers
1 b 12 c 26 c 40 d
2 c 13 c 27 d 41 a
3 b 14 b 28 d 42 b
4 d 15 d 29 d 43 c
5 b 16 b 30 c 44 a
6 c 17 c 31 b 45 a
7 c 18 c 32 b 46 c
8 b 19 c 33 c 47 d
9. 1 b 20 b 34 b 48 b
2 c 21 a 35 b 49 c
3 b 22 b 36 a 50 b
4 b 23 b 37 a 51 d
10 a 24 a 38 a 52 a
11 d 25 b 39 b 53. i b
Answers
Questions Answers Questions Answers Questions Answers Questions Answers
. ii a 66 a 80 c
54 c 67 b 81 a
55 a 68 d 82 a
56 c 69 b 83 c
57 a 70 b 84 b
58 a 71 a 85 c
59 b 72 a 86 d
60 c 73 c 87 a
61 b 74 a 88 b
62 c 75 a 89 a
63 a 76 b 90 d
64 b 77 a 91 b
65 .i c 78 c 92 c
.ii a 79 b

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