Question 1

Mr. Bean is a promoter who has taken a loan on behalf of company but he is neither a director nor a person-in-charge of the company. He sent a cheque from the company's account to discharge its legal liability. Subsequently, the cheque was dishonoured and a complaint was lodged against him. Can he be held liable for an offence under Section 138 of the Negotiable Instruments Act, 1881?

Accepted Answer

**Issue:** Whether Mr. Bean, a promoter who is neither a director nor a person-in-charge of the company, can be held liable for dishonour of a cheque under **Section 138 of the Negotiable Instruments Act, 1881**.

**Relevant Legal Provisions:**

**Section 138** of the NI Act, 1881 makes the drawer of a cheque liable when the cheque is returned unpaid due to insufficiency of funds, provided the cheque was issued for discharge of a legally enforceable debt or liability.

**Section 141** of the NI Act, 1881 extends the liability of an offence under Section 138 to companies. It provides that if the person committing the offence under Section 138 is a company, then **every person who, at the time the offence was committed, was in charge of, and was responsible to the company for the conduct of the business of the company**, as well as the company itself, shall be deemed to be guilty of the offence.

The **proviso to Section 141** further states that where the offence is committed with the consent, connivance, or negligence of any director, manager, secretary, or other officer of the company, such person shall also be deemed to be guilty.

**Analysis:**

In the present case, Mr. Bean is a **promoter** of the company. He took a loan on behalf of the company and sent a cheque drawn on the company's bank account to discharge the company's legal liability. The cheque was subsequently dishonoured.

However, Mr. Bean is **neither a director nor a person-in-charge** of the company.

For a…

Question 2

Rishi Pharmacy Ltd. decided to take up the business of food processing because of the downward trend in pharmacy business. There is no provision in the object clause of the Memorandum of Association to enable the company to carry on such business. State whether its object clause can be amended? Mention briefly the procedure to be adopted for change in the object clause.

Accepted Answer

**Amendment of Object Clause — Rishi Pharmacy Ltd.**

**Whether Object Clause Can Be Amended:**

Yes, the object clause of the Memorandum of Association (MOA) of Rishi Pharmacy Ltd. **can be amended** to include the business of food processing. Under **Section 13 of the Companies Act, 2013**, a company may alter the provisions of its Memorandum of Association by passing a **Special Resolution**. There is no restriction on the nature of new objects that can be added, provided the prescribed procedure is followed.

**Procedure for Alteration of Object Clause:**

**Step 1 — Board Meeting:** The Board of Directors must first convene a Board Meeting to approve the proposed alteration and to recommend it to the shareholders. The Board will also fix the date, time, and venue for the General Meeting.

**Step 2 — Notice of General Meeting:** A notice of the **Extraordinary General Meeting (EGM)** or Annual General Meeting must be sent to all members, directors, and auditors at least **21 clear days** before the meeting, along with an explanatory statement under **Section 102** setting out the reasons for the proposed alteration.

**Step 3 — Passing of Special Resolution:** At the General Meeting, a **Special Resolution** must be passed by the members (i.e., with not less than three-fourths majority of votes cast) to alter the object clause.

**Step 4 — Filing with Registrar of Companies (ROC):** After passing the Special Resolution, the company must file **Form MGT-14** with the **Reg…

Question 3

"A nation or society should satisfy its requirements without jeopardizing the interest of future generations." Comment with reference to Sustainable Development.

Accepted Answer

The statement encapsulates the fundamental principle of **Sustainable Development**, which seeks to balance meeting present-day needs with preserving resources and opportunities for future generations. This concept addresses the critical issue of **intergenerational equity**.

**Definition and Core Principle:**
Sustainable development, as defined by the Brundtland Commission, is development that meets the needs of the present without compromising the ability of future generations to meet their own needs. The given statement directly reflects this definition by emphasizing that current requirements cannot be satisfied at the expense of future interests.

**The Three Pillars of Sustainable Development:**

**Economic Sustainability** ensures long-term economic growth through responsible resource utilization, avoiding depletion of non-renewable resources and preventing unsustainable debt accumulation. **Social Sustainability** focuses on equitable distribution of resources, social welfare, education, healthcare, and quality of life for all sections of society. **Environmental Sustainability** involves protection and conservation of natural resources, ecosystems, biodiversity, and prevention of environmental degradation like pollution, deforestation, and climate change.

**Alignment of the Statement:**
The statement recognizes that development pursued through environmental destruction, resource overexploitation, or social inequality creates liabilities for future generations. True…

Question 4

What is an indemnity bond? Mr. Ajay Sinha has not received a dividend warrant of ₹ 1500 for 150 shares of XYZ Ltd. Draft an indemnity bond, to be given to the company, for seeking release of dividend.

Accepted Answer

**Definition of Indemnity Bond:**

An **indemnity bond** is a legal document (deed) executed by one person (the **indemnifier**) in favour of another person or company (the **indemnified / indemnity-holder**), whereby the indemnifier undertakes to make good any loss, damage, or liability that the indemnity-holder may suffer on account of a specified act or event. Under **Section 124 of the Indian Contract Act, 1872**, a contract of indemnity is one by which one party promises to save the other from loss caused by the promisor's own conduct or the conduct of any other person. An indemnity bond is the written, stamped instrument giving effect to such a contract.

In commercial practice, indemnity bonds are commonly used when a share certificate, dividend warrant, fixed deposit receipt, or similar document is lost or not received, and the company is asked to issue a duplicate. The bond protects the company against any future claim by a third party in respect of the original document.

---

**INDEMNITY BOND**

This Indemnity Bond is executed on this **28th day of April, 2026** at **[City]**.

**BY:** Mr. **Ajay Sinha**, son of ________________, residing at ________________ (hereinafter referred to as the **"Indemnifier"**),

**IN FAVOUR OF:** **XYZ Limited**, a company incorporated under the Companies Act, 2013, having its registered office at ________________ (hereinafter referred to as the **"Company"**).

**WHEREAS** the Indemnifier is the registered holder of **150 (One Hundr…

Question 5

'X' agreed to become an assistant for 2 years to 'Y' who was practicing chartered accountant at Jodhpur. It was also agreed that during the term of agreement 'X' will not practice as a chartered accountant on his own account within 20 kms. of the office of 'Y' at Jodhpur. At the end of one year, 'X' left the assistantship of 'Y' and started practice on his own account within the said area of 20 kms. Referring to the provisions of the Indian Contract Act, 1872, decide whether 'X' could be restrained from doing so?

Accepted Answer

**Applicable Provision:** Section 27 of the Indian Contract Act, 1872 deals with agreements in restraint of trade. As a general rule, every agreement by which any one is restrained from exercising a lawful profession, trade, or business of any kind, is to that extent **void**.

**However, a crucial distinction exists** between two types of restrictive covenants:

**1. Restriction during the term of service:** An agreement that restricts an employee from competing with or independently practicing during the subsistence of the employment/service contract is **valid and enforceable**. Such a restriction is not considered a restraint of trade in the prohibited sense — it is merely ancillary to the service agreement and reasonable for protecting the employer's legitimate business interests during the period of service.

**2. Post-service restriction:** An agreement that restricts a person from practicing their profession after the term of service/employment ends is **void** under Section 27 of the Indian Contract Act, 1872, as it amounts to an unlawful restraint of trade.

**Application to the Given Case:**

In the present case, X agreed to serve as assistant to Y (a practicing CA) for **2 years**. The restriction — not to practice as a CA within **20 kms of Y's office at Jodhpur** — was expressly limited to the **duration of the agreement (2 years)**. This is a restriction operative only during the term of service, not beyond it.

X left the assistantship after **1 year**, i.e., …

Question 6

Akshay is an employee in a company. The amount of bonus payable to him during the year 2014-15 is ₹ 1,25,000. The company deducted a sum of ₹ 25,000 against the 'Diwali Bonus' already paid to him during the said year and paid the remaining amount. Akshay files a suit against the company for recovery of the deducted amount. Decide whether Akshay would be given relief by the Court on adjustment of already paid interim bonus on Diwali under the Payment of Bonus Act, 1965?

Accepted Answer

**Issue:** Whether the company is justified in deducting the Diwali Bonus of ₹25,000 already paid to Akshay from the statutory bonus of ₹1,25,000 payable under the **Payment of Bonus Act, 1965**.

**Relevant Provision — Section 17 of the Payment of Bonus Act, 1965:**

Section 17 expressly provides that where, in any accounting year, an employer has paid any **puja bonus or other customary bonus** to an employee, or has paid a part of the bonus payable under the Act to the employee **before the date on which such bonus becomes payable**, the employer shall be entitled to **deduct the amount of bonus so paid** from the amount of bonus payable to that employee under the Act in respect of that accounting year. The employee shall be entitled only to receive the **balance**, if any.

**Application to the Given Case:**

Akshay's statutory bonus for 2014-15 amounts to ₹1,25,000. The company had already paid ₹25,000 as 'Diwali Bonus' (a customary/puja bonus) during the same year. In terms of Section 17, the company is fully entitled to deduct the ₹25,000 already paid from the total bonus payable and pay only the remaining ₹1,00,000 (₹1,25,000 − ₹25,000).

**Conclusion:**

Akshay will **not** be given relief by the Court. The deduction of ₹25,000 made by the company on account of the Diwali Bonus already paid is perfectly valid and permissible under **Section 17 of the Payment of Bonus Act, 1965**. The suit filed by Akshay for recovery of the deducted amount is not maintainable.

Question 7

"Corporate governance is about stakeholders' satisfaction." Comment.

Accepted Answer

The statement is **partially correct but incomplete**. While stakeholder satisfaction is an important aspect of corporate governance, it is not the sole objective or defining characteristic.

**Definition and Broader Scope**: Corporate governance refers to the system of principles, practices, and processes by which a company is directed and controlled. It encompasses the framework of rules, relationships, systems, and processes through which companies are directed and managed. According to the Companies Act 2013 and SEBI regulations, corporate governance is multidimensional.

**Role of Stakeholder Satisfaction**: Stakeholders include shareholders, employees, creditors, customers, regulators, and society. While satisfying stakeholder interests is important, corporate governance is not narrowly confined to this objective. Effective governance seeks to **balance the interests** of all stakeholders, not necessarily maximize the satisfaction of each.

**Broader Objectives Beyond Stakeholder Satisfaction**: Corporate governance aims to achieve multiple objectives: (1) **Accountability** - ensuring management is accountable to the board and shareholders; (2) **Transparency** - ensuring transparent disclosure of material information and decision-making processes; (3) **Ethical Conduct** - promoting integrity and ethical behavior at all levels; (4) **Risk Management** - identifying, managing, and mitigating organizational risks; (5) **Compliance** - ensuring adherence to laws, regulat…

Question 8

The Press Release should be written in a journalistic style. Comment on the statement highlighting guidelines for drafting a Press Release.

Accepted Answer

The statement that **a press release should be written in a journalistic style is absolutely correct and fundamental** to effective press communication. A press release serves as an official announcement to the media, and adopting journalistic style ensures it is presented as news rather than marketing material, thereby enhancing its credibility and likelihood of publication.

**Key Guidelines for Drafting a Press Release:**

**1. Journalistic Style and Objectivity** — The release must be written in third person and maintain an objective, factual tone. It should present information as news, not advertising. Use active voice and clear, straightforward language that journalists can easily understand and potentially publish without major revision.

**2. Compelling Headline** — Begin with a clear, concise headline that captures the news angle. The headline should be newsworthy and immediately convey the essence of the announcement, enticing journalists to read further.

**3. Dateline** — Include the location and date at the beginning of the body text (e.g., "New Delhi, 28 April 2026"). This provides context and indicates when the information was released.

**4. Inverted Pyramid Structure** — Organize information with the most important details first, followed by supporting information. Journalists typically read from top to bottom and may edit from the bottom up, so critical information must lead. Answer the **5 Ws (Who, What, When, Where, Why) and How** in the opening paragraph.…

Question 9

Atul Ltd. has passed a resolution in its general meeting regarding accepting deposits from its members. Can this company accept deposits from its members under the Companies Act, 2013? If yes, state the conditions to be fulfilled regarding this.

Accepted Answer

**Acceptance of Deposits by Atul Ltd. from Members under Companies Act, 2013**

**Whether Atul Ltd. can accept deposits from members:**

Yes, Atul Ltd. **can accept deposits from its members**. Under **Section 73(2) of the Companies Act, 2013**, a company (other than a banking company, Non-Banking Financial Company, and such other company as the Central Government may specify) is permitted to accept deposits from its members, provided it complies with the prescribed conditions. Since Atul Ltd. has already passed a **resolution in its general meeting**, it has fulfilled the first and primary requirement. However, passing such a resolution alone is not sufficient — the company must comply with all additional statutory conditions.

**Conditions to be fulfilled under Section 73(2) read with Companies (Acceptance of Deposits) Rules, 2014:**

**(1) Resolution in General Meeting:** The company must pass a resolution in the general meeting authorizing the acceptance of deposits from members. Atul Ltd. has already complied with this condition.

**(2) Issue of Circular to Members:** Before accepting any deposits, the company must issue a **circular** to all its members. The circular must include a statement containing the following information as prescribed under **Rule 4 of the Companies (Acceptance of Deposits) Rules, 2014**:
- Date of board meeting at which resolution was passed
- Financial position of the company (audited balance sheet and profit & loss account)
- Credit rating obt…

Question 10

Mr. A of Alwar engaged Mr. S as his agent to buy a house. Mr. S bought a house for ₹ 40 lakhs in the name of a nominee and then purchased it himself for ₹ 44 lakhs. He then sold the same house to Mr. A for ₹ 46 lakhs. Mr. A later comes to know about the mischief of Mr. S and tries to recover the excess amount paid to Mr. S. Is he entitled to recover any amount from Mr. S? If so, how much? Explain.

Accepted Answer

**Yes, Mr. A is entitled to recover ₹ 6 lakhs from Mr. S.**

**Legal Provisions Applicable:**

This case is governed by **Section 215 and Section 216 of the Indian Contract Act, 1872**, which deal with the consequences when an agent secretly deals on his own account in the business of agency.

**Section 215** provides that if an agent deals on his own account in the business of agency without first obtaining the consent of his principal and disclosing all material circumstances known to him, the principal may repudiate the transaction.

**Section 216** provides that if an agent, without the knowledge of his principal, deals in the business of agency on his own account, the principal is entitled to claim any **benefit** which may have resulted to the agent from the transaction.

**Application to the Given Case:**

Mr. S was appointed as an agent to purchase a house on behalf of Mr. A (his principal). Instead of acting in good faith and solely in the interest of his principal, Mr. S:
1. Purchased the house through a nominee for ₹ 40 lakhs (the true market price).
2. Ostensibly purchased it from the nominee for ₹ 44 lakhs (a fictitious intermediate step).
3. Sold the same house to Mr. A for ₹ 46 lakhs — without disclosing his own interest.

This conduct constitutes a **breach of fiduciary duty** and making of a **secret profit**. An agent must act in the best interest of the principal and cannot make any undisclosed profit from the agency business.

The **actual cost** at which …

Question 11

What do you mean by the "Iron Law of Responsibility"? Mention the resulting benefits which may be acquired by achieving the long term objectives through the business activities.

Accepted Answer

**Iron Law of Responsibility** refers to the principle that business organizations must exercise their power and authority in a manner that society deems responsible and ethical. If corporations fail to use their power responsibly, society will eventually strip them of that power through various regulatory, legal, or social mechanisms. Essentially, it establishes a causal link between responsible corporate conduct and the right to operate and prosper in society.

In other words, companies that ignore social expectations and act irresponsibly will face loss of legitimacy, market access, and operational freedom. This concept underscores that business power carries implicit societal expectations of responsible behaviour.

**Resulting Benefits of Achieving Long-Term Objectives Through Responsible Business Activities:**

**Sustained Competitive Advantage and Profitability:** When businesses operate with integrity and social consciousness, they build a sustainable foundation for growth. Responsible practices create differentiation in the market, attract conscious consumers, and command premium pricing, leading to sustained profitability rather than short-term gains.

**Stakeholder Trust and Loyalty:** Responsible business activities foster trust among all stakeholders—customers, employees, suppliers, and investors. This trust translates into customer loyalty, reduced employee turnover, reliable supplier relationships, and investor confidence, creating a stable ecosystem for long-te…

Question 12

List out the points of difference between Fraud and Misrepresentation.

Accepted Answer

**Fraud** (Section 17, Indian Contract Act, 1872) is a false representation made with the knowledge that it is false, or without belief in its truth, or with intent to deceive. **Misrepresentation** (Section 18, Indian Contract Act, 1872) is a false representation made innocently, where the person believes the statement to be true.

**Key Points of Difference:**

**1. Intent and Knowledge:** Fraud requires the maker to know the statement is false or make it recklessly without caring whether it is true or false. Misrepresentation can be entirely innocent—the person making it genuinely believes it to be true.

**2. Mens Rea (Guilty Mind):** Fraud requires a dishonest intention to deceive. Misrepresentation does not require any guilty mind and involves no element of deception.

**3. Nature of Representation:** In fraud, the false statement is made deliberately and knowingly. In misrepresentation, the statement is made in good faith, though it turns out to be false.

**4. Types:** Fraud is singular in nature—deliberate deceit. Misrepresentation has three classifications: innocent misrepresentation, negligent misrepresentation, and fraudulent misrepresentation.

**5. Remedies Available:** For fraud, the contract is voidable at the option of the innocent party; damages for the tort of deceit can be claimed; and criminal prosecution is possible under the Indian Penal Code. For misrepresentation, the contract is voidable; damages may be awarded depending on the type (particularly for…

Question 13

Mr. Y was working in ABC Limited for the last seven years as an Accounts Executive. He resigned from the services of the Company on 30th April, 2015. His resignation was not accepted by the Company. However, after serving for the notice period, he stopped coming to the Company. After some time he applied for his gratuity. The company refused on the ground that his resignation was not accepted. Discuss the legal position about this in the light of the Payment of Gratuity Act, 1972.

Accepted Answer

**Legal Position under the Payment of Gratuity Act, 1972:**

The issue here is whether Mr. Y is entitled to gratuity when his resignation was not accepted by ABC Limited, yet he completed the notice period and left the organization.

**Relevant Provisions:** Under **Section 4 of the Payment of Gratuity Act, 1972**, gratuity is payable to an employee on the termination of his employment after he has rendered continuous service for not less than **five years**. The term "termination of employment" includes resignation by the employee.

**Key Legal Position:**

**1. Resignation does not require acceptance to be effective:** Under general employment law principles recognized in Indian jurisprudence, once an employee gives a valid resignation and completes the required notice period, the resignation becomes effective irrespective of whether the employer accepts or rejects it. The employer cannot indefinitely withhold acceptance to deny statutory benefits.

**2. Mr. Y has completed the qualifying period:** Mr. Y had worked for **seven years** in ABC Limited, which clearly exceeds the minimum qualifying period of **five years of continuous service** required under Section 4 of the Payment of Gratuity Act, 1972.

**3. Company's refusal is not tenable:** The company's ground for refusal — that his resignation was not accepted — is not a valid legal ground to deny gratuity. The Payment of Gratuity Act is a **beneficial social security legislation**, and its provisions must be interpret…

Question 14

Explain the concept of "Dormant Company" as envisaged in the Companies Act, 2013.

Accepted Answer

A **dormant company** under the Companies Act, 2013, is a company that has been incorporated but has not commenced business operations or has ceased business operations altogether. As per **Section 455 of the Companies Act, 2013**, a company is deemed dormant in two scenarios: (1) a company incorporated but not commencing business within one year from the date of incorporation, or (2) a company that has not conducted any business or activity for two or more consecutive financial years.

**Key Characteristics:**

**Applicability Criteria:** Only unlisted private or public companies can obtain dormant status by applying to the Registrar of Companies. The company must have minimal liabilities—generally limited to incorporation costs only. Listed companies and companies with outstanding liabilities are ineligible.

**Exemptions from Compliance:** A dormant company is exempted from holding Board meetings and passing Board resolutions (Section 92), thereby eliminating the burden of maintaining statutory minutes and records. Under **Section 92A of the Companies Act, 2013**, the company is exempted from filing financial statements, balance sheet, and profit and loss account with the Registrar of Companies, provided the dormant status is maintained throughout the financial year. This substantially reduces the compliance burden and associated costs.

**Revival and Return to Active Status:** The dormant status is automatically lost when the company commences or resumes business operatio…

Question 15

What are the safeguards created by the profession, legislation or regulation about accounting and finance which may eliminate or reduce the threats relating to unethical behaviour?

Accepted Answer

Safeguards against unethical behavior in accounting and finance exist at multiple levels:

**Professional Safeguards:**

**Code of Conduct for Chartered Accountants** - The ICAI's Code of Conduct prescribes ethical principles including integrity, objectivity, independence, and due care that all members must follow. Violations trigger disciplinary consequences.

**Professional Standards** - Accounting Standards (AS), Auditing Standards (SA), and Ind AS establish minimum requirements for quality, consistency, and transparency in financial reporting and audit work. These standards reduce scope for manipulation and unethical practices.

**Disciplinary Procedures** - The Chartered Accountants Act, 1949 establishes investigation and disciplinary mechanisms. Section 21 and 22 provide for action against errant members, including suspension, cancellation of membership, or fines, creating accountability.

**Peer Review and Quality Control** - Quality review mechanisms and peer monitoring ensure compliance with professional standards and ethical requirements.

**Continuing Professional Education** - Mandatory CPE requirements keep members updated on evolving ethical standards and professional requirements.

**Professional Indemnity Insurance** - This requirement ensures accountability and incentivizes ethical conduct.

**Legislative and Regulatory Safeguards:**

**Auditor Independence Requirements** - Section 139 and 141 of the Companies Act, 2013 restrict provision of non-audit service…

Question 16

State, giving reasons, whether the following statements are correct or incorrect

Accepted Answer

**Statement (i): INCORRECT**

According to Section 4 of the Negotiable Instruments Act, 1881, a Promissory Note is defined as an instrument in writing containing an **unconditional undertaking** to pay a certain sum of money. The promise must be unconditional, not conditional. If the promise is subject to any condition, it ceases to be a valid Promissory Note.

**Statement (ii): INCORRECT**

Per Section 5 of the Negotiable Instruments Act, 1881, a Bill of Exchange must be **in writing**. The definition explicitly mandates that it be drawn in writing. A Bill of Exchange that is not in writing is invalid.

**Statement (iii): CORRECT**

Section 21 of the Companies Act, 2013 clearly provides that a subsidiary company cannot purchase or hold shares of its holding company (with limited exceptions under specific circumstances). This restriction is to prevent circular flow of capital and maintain corporate structure integrity. Therefore, the statement is correct.

**Statement (iv): INCORRECT**

Per Section 103 of the Companies Act, 2013, the quorum for a general meeting shall be **one-tenth of the total number of members, or one hundred members, whichever is lesser, and in any case not less than five members**. The statement creates a fixed rule of 5 members, but this is only the minimum threshold. For a public company with, say, 100 members, the quorum would be 10 (one-tenth of 100). For 1000 members, it would be 100. The actual quorum depends on the number of members and is not uni…

Question 17

State the documents and information for registration of One Person Company (OPC) required to be filed with the Registrar of Companies.

Accepted Answer

**Registration of One Person Company (OPC) – Documents and Information Required to be Filed with the Registrar of Companies**

Under the **Companies Act, 2013** read with the **Companies (Incorporation) Rules, 2014**, the following documents and information are required to be filed with the **Registrar of Companies (ROC)** for registration of a One Person Company:

**1. Form SPICe+ (Simplified Proforma for Incorporating Company Electronically Plus)**
The application for incorporation of an OPC is made through **Form SPICe+**, which is an integrated web form covering name reservation, incorporation, DIN allotment, PAN/TAN, EPFO/ESIC registration, etc.

**2. Memorandum of Association (MOA)**
The MOA of the OPC, duly signed by the **sole member** in the presence of a witness. It must be in the form as prescribed (Form INC-33 for electronic MOA). It must state that the company is a One Person Company.

**3. Articles of Association (AOA)**
The AOA of the OPC, duly signed by the sole member in the presence of a witness (Form INC-34 for electronic AOA).

**4. Nominee's Consent – Form INC-3**
A written **consent of the nominee** (who shall become the member of the OPC in case the sole member dies or becomes incapacitated) must be filed in **Form INC-3**, along with the nominee's **PAN card** and **Aadhaar** details. This is a unique requirement for OPC, as every OPC must have a nominee at the time of incorporation.

**5. Declaration by First Directors/Subscriber – Form INC-9**
An aff…

Question 18

PQR Ltd. wants to hold its Annual General Meeting on 15th September, 2016. Draft a notice for calling Annual General Meeting of its shareholders to discuss the matters relating to ordinary business.

Accepted Answer

**NOTICE OF ANNUAL GENERAL MEETING**

**PQR LIMITED**

NOTICE is hereby given that the Annual General Meeting of the Members of PQR Limited will be held on 15th September, 2016 at [_____ hours] at the Registered Office of the Company situated at [_____ address], to transact the following ordinary business:

**ORDINARY BUSINESS:**

1. To receive, consider and adopt the Audited Balance Sheet as at 31st March, 2016 and the Statement of Profit and Loss for the year ended on that date, together with the Reports of the Board of Directors and the Auditors thereon.

2. To declare dividend on equity shares for the financial year ended 31st March, 2016.

3. To appoint a Director in place of [_____ name], who retires by rotation and, being eligible, offers himself for re-appointment.

4. To appoint Auditor(s) and fix their remuneration, in place of the retiring Auditor(s).

5. Any other business that may be transacted with the permission of the Chairman and the members present.

**NOTES:**

A member entitled to attend and vote at the meeting is entitled to appoint one or more proxies in his place. The proxy need not be a member of the Company. Proxy forms must be deposited at the Registered Office not less than 48 hours before the commencement of the meeting.

This notice is issued in compliance with Section 101 of the Companies Act, 2013, and is sent to all members, directors, auditors and other prescribed persons at least 21 clear days before the date of the meeting.

The Register of …

Question 19

State in brief the guidelines for managing ethics and to prevent the need for whistle-blowing in the work place.

Accepted Answer

**Guidelines for Managing Ethics and Preventing Whistle-blowing:**

To create an ethical workplace and minimize the need for formal whistle-blowing mechanisms, organizations should implement the following guidelines:

**1. Establish Clear Code of Conduct and Ethics Policy** – Organizations must formulate a comprehensive Code of Conduct that clearly defines ethical standards, prohibited practices, conflicts of interest, and consequences of violations. This should be communicated to all employees and stakeholders.

**2. Foster Ethical Culture from Top Management** – The tone from leadership is critical. Senior management must demonstrate commitment to ethics through their own conduct, decisions, and communication. This creates an environment where ethical behavior is valued and expected at all levels.

**3. Implement Robust Internal Grievance Redressal Mechanism** – Establish accessible and confidential channels for employees to report concerns directly to management, HR, ethics committees, or ombudsmen without fear. This allows issues to be resolved internally before escalating to formal whistle-blowing.

**4. Conduct Regular Training and Awareness Programs** – Provide ethics training to all employees covering company policies, legal compliance, prevention of corruption, prevention of sexual harassment, and professional conduct. Regular awareness sessions reinforce ethical values.

**5. Ensure Transparent Governance and Communication** – Maintain transparency in organizational…

Question 20

Swad Papad Udyog is a co-operative society registered under the Co-operative Societies Act, 1912, employing 40 persons and working without the aid of power. With reference to the provisions of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, state whether the provisions of this Act are applicable on it?

Accepted Answer

**Applicability of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 to Swad Papad Udyog**

As per **Section 1(3)(a) of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952**, the Act applies to every establishment which is a **factory** engaged in any industry specified in **Schedule I** of the Act, in which **20 or more persons are employed**.

However, for **Co-operative Societies**, a special threshold is prescribed under the Act and its Schedule. The relevant entry specifies that co-operative societies are covered under the Act subject to the following conditions:

**(a) Co-operative societies working WITH the aid of power** — the Act applies if **20 or more persons** are employed.

**(b) Co-operative societies working WITHOUT the aid of power** — the Act applies only if **50 or more persons** are employed.

**Application to Swad Papad Udyog:**

Swad Papad Udyog is a co-operative society registered under the Co-operative Societies Act, 1912, which employs **40 persons** and works **without the aid of power**.

Since the society works without power, the applicable threshold is **50 or more persons**. In this case, only 40 persons are employed, which is **less than 50**.

**Conclusion:** The provisions of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 are **NOT applicable** to Swad Papad Udyog, as it does not satisfy the minimum employment threshold of 50 persons required for co-operative societies working without…

Question 21

Briefly explain the law relating to "Resolutions requiring Special Notice" under the Companies Act, 2013. Mention the resolutions that require "Special Notice" under the Act.

Accepted Answer

**Special Notice** is a statutory procedure under the Companies Act, 2013 that requires intimation to the company of intention to propose certain important resolutions at a general meeting, enabling the company to give adequate notice to members before the meeting.

**Procedure for Special Notice:**

A member intending to propose a resolution requiring special notice must give notice to the company **not less than 14 days before** the date of the meeting at which the resolution is to be proposed. The company must then communicate this notice to members **at least 14 days before** the meeting along with the notice of the meeting or with the agenda. This ensures transparency and allows all members to evaluate the proposal before voting.

**Resolutions Requiring Special Notice (Section 115, Companies Act, 2013):**

1. **Removal of a Director before expiration of term** (Section 169) – Any resolution to remove a director before completion of his term requires special notice.

2. **Removal of an Auditor before expiration of term** (Section 140) – A resolution to remove an auditor before expiration of his term of office requires special notice.

3. **Appointment of a Director to fill vacancy caused by removal** (Section 169) – When a director is removed, the appointment of his successor requires special notice.

4. **Appointment of an Auditor to fill vacancy caused by removal** (Section 140) – When an auditor is removed, the appointment of his successor requires special notice.

5.…

Question 22

Explain the term 'Paralanguage' relating to non-verbal communication.

Accepted Answer

**Paralanguage** refers to the vocal elements accompanying speech that communicate meaning beyond the actual words spoken. It encompasses how something is said rather than what is said, forming a critical component of non-verbal communication.

**Definition and Scope:** Paralanguage includes vocal variations such as tone of voice, pitch, volume, rate of speech (pace), intonation patterns, stress or emphasis on specific words, pauses, silence duration, breathiness, and voice quality. These elements modify and reinforce the verbal message, often conveying the speaker's emotions, attitudes, and confidence levels.

**Relationship to Non-Verbal Communication:** Non-verbal communication comprises all communication that does not involve words—including body language, facial expressions, gestures, eye contact, posture, and paralanguage. Paralanguage is distinguished from other non-verbal elements as it is directly tied to speech production. While gestures and expressions are visual, paralanguage is auditory yet non-verbal.

**Key Elements of Paralanguage:**

**Tone of Voice** — Conveys emotion and attitude. The same sentence "That's great" can express genuine enthusiasm or sarcasm depending on tone.

**Pitch and Volume** — Higher pitch may indicate excitement or anxiety; louder volume may suggest confidence or aggression, while softer speech may indicate uncertainty or respect.

**Rate of Speech** — Fast speech may indicate nervousness or enthusiasm; slow speech may suggest seriousne…

Question 23

Distinguish between a Wagering Contract and a Contingent Contract.

Accepted Answer

**Wagering Contract** is an agreement between two parties where both stake something of value on an uncertain event, with neither party having any direct interest in the event beyond the bet itself. For example, if A bets B ₹1,000 that it will rain tomorrow, neither has any real stake in whether it rains—they are purely gambling on the outcome.

**Contingent Contract** is a contract where the liability or performance of one or both parties is conditional upon the happening or non-happening of some event collateral to the contract. For example, if A agrees to pay B ₹10,000 if B's house is damaged by fire, B has a direct interest in the subject matter of the contract.

**Key Distinctions:**

**Nature of Interest**: In a wagering contract, both parties are indifferent to the event itself and have no direct interest beyond the bet. In a contingent contract, at least one party has a direct vested interest in the event.

**Consideration**: Wagering contracts lack genuine consideration as both parties are equally uncertain about the outcome and neither has any real stake. Contingent contracts have valid consideration as they are made for genuine commercial purposes.

**Enforceability**: Wagering agreements are void under **Section 30 of the Indian Contract Act, 1872**, as they are considered void bets. Contingent contracts are enforceable if the conditions specified in **Sections 31-34** are satisfied.

**Purpose and Intention**: Wagering contracts are purely for gambling and bettin…

Question 24

P Ltd. issued and published its prospectus to invite the investors to purchase its shares. The said prospectus contained a false statement. Mr. X purchased some partly paid shares of the company in good faith from the Stock Exchange. Subsequently, the company was wound up and the name of Mr. X was included in the list of contributories.

Accepted Answer

**(i) Liability of Mr. X to pay the unpaid amount:**

**Yes, Mr. X is liable** to pay the unpaid amount on the partly paid shares. Under **Section 2(26) of the Companies Act, 2013**, a **contributory** means every person liable to contribute to the assets of a company in the event of its being wound up. The liability of a contributory is attached to the **shares themselves**, not to the manner in which they were acquired.

The fact that Mr. X purchased the shares from the Stock Exchange (secondary market) and acted in **good faith** does not absolve him of the liability to pay the unpaid calls. Once his name is included in the list of contributories, he must pay the outstanding amount on the partly paid shares. The false statement in the prospectus does not affect his obligation as a shareholder of partly paid shares.

**Therefore, Mr. X is liable to pay the unpaid amount on the partly paid shares.**

**(ii) Whether Mr. X can sue the directors for damages:**

**No, Mr. X cannot sue the directors** to recover damages under **Section 35 of the Companies Act, 2013**. Section 35 provides the right to claim compensation for loss or damage sustained by reason of any untrue statement included in a prospectus. This right is available only to a person who has **subscribed for any securities of a company** on the basis of the prospectus.

In the present case, Mr. X did **not subscribe to the shares directly from the company** on the basis of the prospectus. He purchased the partly paid…

Question 25

Objectives of the Central Consumer Protection Council in India are to promote and protect the rights of consumers. Elucidate the rights of consumers in relation to Competition Law in India.

Accepted Answer

The Central Consumer Protection Council, now replaced by the Central Consumer Protection Authority (CCPA) under the Consumer Protection Act, 2019, aims to promote and protect consumer rights. In relation to Competition Law, consumers are vested with the following significant rights:

**Right to Protection from Cartels and Anti-competitive Agreements:**
Section 3 of the Competition Act, 2002 prohibits agreements that cause or are likely to cause an appreciable adverse effect on competition. This protects consumers from price-fixing cartels, bid-rigging, market allocation, and collusive practices that artificially inflate prices. Consumers have the right to fair market pricing determined by genuine competitive forces.

**Right to Protection from Abuse of Dominant Position:**
Section 4 of the Competition Act, 2002 safeguards consumers from exploitative conduct by dominant enterprises, including excessive pricing, refusal to supply essential commodities, predatory pricing, and discriminatory treatment. Consumers have the right to access goods and services at reasonable rates without facing monopolistic exploitation.

**Right to Freedom of Choice and Market Access:**
Consumers possess the right to participate in competitive markets with multiple suppliers and brands. Competition law prevents exclusive dealing, territorial restrictions, and tied selling that limit consumer choices. This ensures consumers can make informed purchasing decisions from genuine alternatives.

**Right to …

Question 26

What are the functions of inter-personal communication?

Accepted Answer

**Interpersonal communication** is the exchange of information, ideas, and feelings between two or more individuals. It serves several important functions:

**1. Information/Data Exchange Function:** The primary function is to transmit and share information, facts, opinions, and ideas between individuals. This enables people to convey messages, provide feedback, and ensure mutual understanding of facts and concepts necessary for organizational functioning.

**2. Emotional and Social Function:** Interpersonal communication facilitates the expression of feelings, emotions, and personal concerns. It helps build relationships, establish trust, show empathy, and create a sense of belonging. This function is crucial for maintaining team cohesion and a positive work environment.

**3. Motivational and Influencing Function:** Through interpersonal communication, individuals can motivate, persuade, and influence the behavior and attitudes of others. This involves encouraging performance, inspiring action, and facilitating behavioral change through logical reasoning and emotional appeal.

**4. Control and Coordination Function:** Interpersonal communication helps establish procedures, clarify roles, define expectations, and coordinate activities. Managers use this function to direct subordinates, establish authority structures, and ensure alignment of efforts toward organizational goals.

**5. Problem-Solving and Decision-Making Function:** Communication enables individuals to collecti…

Question 27

Explain the factors that influence Ethical Communication.

Accepted Answer

**Ethical communication** is influenced by multiple interconnected factors that shape how professionals communicate responsibly and truthfully:

**Personal Values and Moral Framework** – An individual's personal ethics, upbringing, religious beliefs, and moral convictions form the foundation of ethical communication. These intrinsic values guide individuals to choose honesty over deception and integrity over expediency, regardless of external pressures.

**Organizational Culture and Environment** – The ethical climate within an organization significantly determines communication standards. Organizations that prioritize ethics, demonstrate ethical leadership, and reward transparent communication foster ethical practices among employees. Conversely, organizations tolerating unethical shortcuts create environments where ethical communication deteriorates.

**Professional Standards and Code of Conduct** – Professional bodies like ICAI establish codes of conduct, standards of practice, and ethical guidelines. For chartered accountants, adherence to the Code of Ethics binds members to principles of integrity, objectivity, independence, and professional competence, directly influencing ethical communication.

**Legal and Regulatory Framework** – Laws, regulations, and statutory requirements establish the legal boundaries within which communication must occur. Compliance with the Companies Act, Income Tax Act, Fraud Regulations, and Securities Laws shapes the nature and content of pr…

CA Inter Corp Laws

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Write it like this

1The skeleton

2Examiner-rewarded phrases

3Common trap

Worked Solution

Write it like this

1The skeleton

2Examiner-rewarded phrases

3Common trap