Worked Solution
✓ VerifiedPart (a) - Revocation of Agency
Under the Indian Contract Act, 1872, an agency can generally be revoked by the principal at any time before the agent has acted in reliance on it. However, a critical exception exists: when an agent has an interest in the subject-matter of the agency, the principal cannot revoke the agency without the agent's consent.
In this case, Sunil appointed Rajendra as agent and authorized him to appropriate the loan amount from the sale proceeds. This creates an "agency coupled with an interest" because Rajendra has a personal financial stake in the transaction—he must recover his ₹3 lakh loan from the proceeds. Per Section 203 of the Indian Contract Act, 1872, when such an interest exists, the principal's power to revoke terminates. Even the principal's death or insanity does not revoke such agency.
Conclusion: The revocation of agency by Sunil is UNLAWFUL. Rajendra's interest in appropriating his loan from the proceeds protects the agency against revocation without his consent.
Part (b) - Subsidiary Holding Shares in Holding Company
Under the Companies Act, 1956, specifically Section 97, a subsidiary company is prohibited from holding shares in its holding company. When Anson Limited becomes a subsidiary of Boobun Limited, it must not own equity shares in Boobun Limited due to the risk of circular shareholding and conflicts of interest.
If Anson Limited already held such shares before becoming a subsidiary, it must surrender or dispose of those shares within a specified period. The rationale is to maintain corporate integrity and prevent situations where subsidiary profits could artificially inflate holding company valuations.
Conclusion: Yes, it is necessary for Anson Limited to surrender the equity shares of Boobun Limited following its conversion to subsidiary status, as required by Section 97.
Part (c) - Two Statements on Consumer and Business Philosophy
(i) "Consumer Interest" and "Public Interest" are synonymous - INCORRECT
While related, these are distinctly different concepts. Consumer Interest specifically addresses the welfare of consumers—protection from defective goods, unfair trade practices, misleading advertisements, and unsafe products, as governed by the Consumer Protection Act. Public Interest is broader, encompassing societal welfare beyond consumers, including environmental protection, national security, public health standards, and labor welfare. Public interest may sometimes override consumer interest (e.g., banning a product for environmental reasons despite consumer demand). They are complementary but not synonymous.
(ii) "Iron Law of Responsibility" as stated - INCORRECT
The "Iron Law of Responsibility" (attributed to Keith Davis in business ethics) states that "Whoever does not use power in a manner which society deems responsible will lose it." It emphasizes that business institutions must be socially responsible and serve society's interests, not merely those of their promoters. The statement claims business exists "only because it performs valuable services towards its promoters," which fundamentally contradicts the law's true meaning. Modern business is expected to balance stakeholder interests—employees, customers, suppliers, communities, and shareholders—reflecting the principle that social responsibility is essential for long-term institutional legitimacy.
Part (d) - Factors for Effective Oral Communication
Effective oral communication requires careful attention to multiple dimensions:
Vocal Elements: Clear pronunciation and proper diction ensure the message is understood. Appropriate pace and rhythm prevent monotony and aid comprehension. Proper intonation and stress on key words convey emphasis and emotional intent. Volume and projection must suit the audience size and environment, ensuring audibility without aggression.
Non-Verbal Elements: Body language, facial expressions, and eye contact significantly reinforce verbal messages. They build rapport and credibility with the listener. Appropriate gestures support the message without distraction.
Content and Delivery: Clarity of thought before speaking prevents rambling. Using vocabulary appropriate for the audience level ensures comprehension. Building confidence and credibility through domain knowledge and composed delivery strengthens impact. Avoiding filler words, repetitions, and stammering maintains professional tone.
Interaction Elements: Active listening to responses and feedback allows real-time adjustment. Creating a feedback mechanism ensures understanding and addresses queries. Engaging the audience through questions or interactive elements maintains attention.
Contextual Awareness: Matching communication style to the audience, setting, and purpose maximizes effectiveness. Understanding audience expectations and cultural nuances prevents miscommunication.
Write it like this
1The skeleton
- Label each part clearly (a), (b), (c), (d) with a bold heading — examiners are checking off parts, not reading prose; a missing label means a missed mark even if the content is right.
- For Parts (a) and (b): hit the section number in line 1 — open with 'Under Section 203 of the Indian Contract Act, 1872' or 'Under Section 97 of the Companies Act'; burying the section after two paragraphs kills your presentation marks.
- Use the Fact → Rule → Application → Conclusion format for every legal part — state the given facts briefly, cite the rule, map facts to rule, then give a one-line conclusion in bold; examiners award structured answers over well-written essays.
- For Part (c), lead with 'The statement is INCORRECT' or 'CORRECT' in bold before explaining — if the examiner can't see your verdict in 3 seconds, you're gambling with your marks; explanation alone without a verdict scores partial at best.
- For Part (d), use sub-headings like 'Vocal Elements', 'Non-Verbal Elements', 'Content & Delivery' — a wall of text on oral communication gets half the marks a structured point-wise answer does; the sub-headings signal you know the taxonomy.
- Close every legal part with a one-line Conclusion in bold — examiners are trained to scan for conclusions; if you don't have one, your answer looks incomplete even if everything else is right.
2Examiner-rewarded phrases
3Common trap
The biggest trap in Part (a) is writing the general rule that 'a principal may revoke agency at any time' and then forgetting to explicitly name the exception as 'agency coupled with an interest' — you MUST use that exact phrase or you drop 2-3 marks even if your conclusion is right. For Part (c), students flip-flop on whether the statements are correct or incorrect without committing upfront — always state your verdict first, then justify.