Mittal Commerce Classes

CA Foundation Course (Mock Test Paper – Series : 1)

DATE: 10.04.2024 MAXIMUM MARKS: 100 TIMING: 31/4 Hours

PAPER 2 : BUSINESS LAW

Question No. 1 is Compulsory.
Answer any Five question from the remaining Six questions.
Wherever necessary, suitable assumptions should be made and disclosed by way of note
forming part of the answer. Working Notes should from part of the answer.

Question 1:
(a) What is the procedure of registration of a partnership firm under the Indian
Partnership Act, 1932?
(6 Marks)

(b) Briefly explain the doctrine of “ultravires” under the Companies Act, 2013. What are
the consequences of ultravires acts of the company?
(6 Marks)

(c) What do you understand by Indian Judicial System and what are its various
functions?’
(5 Marks)

(d) Mr. Avinash, owes Mr. Jitesh ₹ 50,000. He (Mr. Avinash) afterwards appoints Mr.
Jitesh as his agent to sell his Flat at Bangalore and after paying himself (ie., Mr.
Jitesh) what is due to him, hand over the balance to Mr. Avinash. Examine, as per
the provisions of the indian Contract Act, 1872, can Mr. Avinash revoke his authority
delegated to Mr. Jitesh?
(3 Marks)

Question 2:
(a) “All contracts are agreements, but all agreements are not contracts”. Comment.
(5 Marks)

(b) Mr. Maganlal sold 10 acres of his agricultural land to Mr. Ramlal on 25th September
2020 for Rs. 25 Lakhs. The Property papers mentioned a condition, amongst other
details, that whosoever purchases the land is free to use 9 acres as per his choice
but the remaining 1 acre has to be allowed to be used by Mr. Khotelal, son of the
seller for carrying out farming or other activity of his choice. On 12th October, 2020,
Mr. Maganlal died leaving behind his son and life. On 15th October, 2020 purchaser
started construction of an auditorium on the whole 10 acres of land and denied any
land to the son.
Now Mr. Khotelal wants to file a case against the purchaser and get a suitable
redressal. Discuss the above in light of provisions of Indian Contract Act, 1872 and
decide upon Mr. Khotelal’s plan of action?
(6 Marks)

(c) Explain Difference between promissory note and bill of exchange?

(5 Marks)

Question 3:
(a) What will be rights with the promisor in following cases? Explain with reasons:

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(a) Mr. Daksh promised to bring back Mr. Yash to life again.
(b) Aksh agreed to sell 50 kgs of apple to Bishan. The loaded truck left for
delivery on 15th March but due to riots in between reached Aksh on 19th
March.
(c) An artist promised to paint on the fixed date for a fixed amount of
remuneration but met with an accident and lost his both hands.
(d) Lakshya entered into contract of import of toys from China. But due to
disturbance in the relation of both the countries, the imports from China were
banned.
(6 Marks)

(b) Mrs. Seeta went to the local rice and wheat wholesale shop and asked for 100 kgs of
Basmati rice. The Shopkeeper quoted the price of the same as Rs. 125 per kg to
which she agreed. Mrs. Seeta insisted that she would like to see the sample of what
will be provided to her by the shopkeeper before she agreed upon such purchase.
The shopkeeper showed her a bowl of rice as sample. The sample exactly
corresponded to the entire lot.
The buyer examined the sample casually without noticing the fact that even though
the sample was that of Basmati Rice but it contained a mix of long and short grains.
The cook on opening the bags complained that the dish if prepared with the rice
would not taste the same as the quality of rice was not as per requirement of the
dish. Now Mrs. Seeta wants to file a suit of fraud against the seller alleging him of
selling mix of good and cheap quality rice. Will she be successful?
Decide the fate of the case and options open to the buyer for grievance redressal as
per the provisions of Sale of Goods Act, 1930?
What would be your answer in case Mrs. Seeta specified her exact requirement as to
length of rice?
(6 Marks)

(c) State with reasons whether each of the following instruments is an Inland
Instrument or a Foreign Instrument as per The Negotiable Instruments Act, 1881:
(i) Dilip draws a Bill of Exchange in Delhi upon Shubham a resident of Jaipur and
accepted to be payable in Thailand after 90 days of acceptance.
(ii) Mangesh draws a Bill of Exchange in Mumbai upon Mahesh a resident of
Australia and accepted to be payable in Chennai after 30 days of sight.
(iii) Raj draws a Bill of Exchange in California upon Vishwas a resident of Jodhpur
and accepted to be payable in Kanpur after 6 months of acceptance.
(iv) Pawan draws a Bill of Exchange in Lucknow upon Dinesh a resident of China
and accepted to be payable in China after 45 days of acceptance.
(4 Marks)

Question 4:
(a) When does dissolution of a partnership firm take place under the provisions of the
Indian Partnership Act, 1932? Explain.
(5 Marks)

(b) Sound Syndicate Ltd., a public company, its articles of association empowers the
managing agents to borrow both short and long term loans on behalf of the
company, Mr. Andrw, the director of the company, approached Easy Finance Ltd., a
non banking finance company for a loan of Rs. 25,00,000 in name of the company.
The Lender agreed and provided the above said loan. Later on, Sound Syndicate Ltd.
refused to repay the money borrowed on the pretext that no resolution authorizing

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such loan have been actually passed by the company and the lender should have
enquired about the same prior providing such loan hence company not liable to pay
such loan.
Analyse the above situation in terms of the provisions of Doctrine of Indoor
Management under the Companies Act, 2013 and examine whether the contention of
Sound Syndicate Ltd. is correct or not?
(5 Marks)

(c) What are essential features of a contract of guarantee?

(6 Marks)

Question 5:
(a) Mr. Sawant owned a motor car. He approached Mr. Mottu and offered to sell his
motor car or Rs. 3,00,000. Mr. Sawant told Mr. Mottu that the motor car is running
at the rate of 30 KMs per litre of petrol. Both the fuel meter and the speed meter of
the car were working perfectly. Mr. Mottu agreed with the proposal of Mr. Sawant
and took delivery of the car by paying Rs. 3,00,000/- to Mr. Sawant. After 10 days,
Mr. Mottu came back with the car and stated that the claim made by Mr. Sawant
regarding fuel efficiency was not correct and therefore there was a case of
misrepresentation. Referring to the provisions of the Indian Contract Act, 1872,
decide and write whether Mr. Mottu can rescind the contract in the above ground.
(6 Marks)

(b) Classify the following transactions according to the types of goods they are:
(i) Anagad wholesaler of cotton has 100 bales in his godown. He agrees to sell
50 bales and these bales were selected and set aside.
(ii) Anagad agrees to sell to Bushan one packet of sugar out of the lot of one
hundred packets lying in his shop.
(iii) Tarun agrees to sell to Suraj all the apples which will be produced in his
garden this year.
(6 Marks)

(c) Jitendra took his AC to Hitesh, an electrician, for repair. Even after numerous follow
ups by Jitendra, Hitesh didn't return the AC in reasonable time even after repair. In
the meantime, Hitesh's electric shop caught fire because of short circuit and AC was
destroyed. Decide, whether Hitesh will be held liable under the provisions of the
Indian Contract Act, 1872.
(4 Marks)

Question 6:
(a) Ms. Sangita while drafting partnership deed taken care of few important points. What
are those points? She want to know the list of information which must be part of
partnership deed drafted by her. Also, give list of information to be included in
partnership deed?
(6 Marks)

(b) “LLP is an alternative corporate business form that gives the benefits of limited
liability of a company and the flexibility of a partnership”. Explain.
(6 Marks)

(c) Sohan bought 1000 Kg rice from Samar for Rs. 1,50,000 on three months credit. For
this purpose, Sohan issued a promissory note to Samar on the same date payable
after 3 months. On the date of maturity, the promissory note was dishonoured.

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Samar filed suit for the recovery of the amount plus fees of advocate paid by him for
defending the suit. Referring to the provisions of the Negotiable Instruments Act,
1881, what amount could be recovered by Samar from Sohan?
(4 Marks)

Question 7:
(a) Distinguish between contract of insurance and wagering agreement ?
(6 Marks)

(b) Give difference between Sale & Hire Purchase?

(6 Marks)

(c) Avinash Private Limited is a registered company under the Companies Act, 2013 with
paid up capital of Rs. 35 lakhs and turnover of Rs. 2.5 crores. Whether the Avinash
Private Limited can avail the status of a Small Company in accordance with the
provisions of the Companies Act, 2013? Also discuss the meaning of a Small
Company.
(4 Marks)

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