Test duration will be 3 Hours

Mock Test Paper - Series II: January,2025

Date of Paper: 2nd January,7:00
2025PM
10:00 PM
Time of Paper: 10.30 A.M. to 1.30 P.M.
Any PDF submitted
FOUNDATION COURSE after 10:05 pm
shall not be
PAPER – 2: BUSINESS LAWS
accepted
Question No. 1 is compulsory.
Answer any four questions from the remaining five questions.
Wherever necessary, suitable assumptions should be made and disclosed
by way of note forming part of the answer.
Working Notes should form part of the answer.
(Time allowed: 3 Hours) (100 Marks)
1. (a) (i) Mr. A was running an orphanage. His friend Mr. S, a philanthropist
agreed to donate ` 2 lakh for treatment of a child, who was suffering
from cancer. On emergency, Mr. A incurred ` 1.5 lakh on treatment
of child. Now, Mr. S refused to pay. Whether Mr. A can claim ` 1.5
lakh from Mr. S with reference to provisions of the Indian Contract
Act, 1872? (3 Marks)
(ii) Mr. L let out his residential house to Mr. M for ` 50,000 p.m. for a
period of one year. According to the Rent agreement, electricity bill
will be paid by Mr. L. But Mr. L could not pay electricity dues up to
5 months, due to his financial hardships. The Electricity Board sent
the notice of disconnection, if it is not paid within a week's time. To
avoid all this, Mr. M paid the electricity bill of ` 50,000 with penalty.
Later on, L refused to reimburse ` 50,000 and argued that he has
paid bill voluntarily because of his own interest. Decide with
reference to provisions of the Indian Contract Act, 1872 whether
Mr. M is entitled to be reimbursed by Mr. L? (4 Marks)
(b) (i) XYZ Ltd. was incorporated to hold the patent for a new product.
The company is expecting to start its commercial production within
the next two years. In the meanwhile, for timely installation, the
company has placed the purchase order for plant and machinery
with a down payment of ` 1 crore. Referring to the provisions of the
Companies Act, 2013 examine, whether the company can go for
acquiring the status of a dormant company? (4 Marks)
(ii) Mike LLC incorporated in Singapore having an office in Pune, India.
Analyze whether Mike LLC would be called a foreign company as
per the provisions of the Companies Act, 2013? Also explain the
meaning of foreign company. (3 Marks)
(c) State the modes by which a partner may transfer his interest in the firm
in favour of another person under the Indian Partnership Act, 1932. What
are the rights of such a transferee? (6 Marks)

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2. (a) Sony, a friend of Priya wanted to buy her two-wheeler. Priya agreed to
sell her two-wheeler to Sony and it was decided that price of her two-
wheeler will be fixed by Priya's father, who is an auto dealer. Priya
immediately handed over the keys to Sony. However, Priya's father
refused to fix the price as he did not want Priya to sell her vehicle. Priya
expressed her inability to sell the two-wheeler to Sony and asked for
return, but Sony refused to return the same. Explain-
(i) Can Priya take-back the vehicle from Sony?
(ii) Will your answer be different, if Priya had not handed over the
vehicle to Sony? (7 Marks)
(b) Define OPC (One Person Company) and state the rules regarding its
membership. Can it be converted into a non-profit company under
Section 8 or a private company? (7 Marks)
(c) A LLP is a new form of legal business entity with limited liability. It's an
alternative corporate business vehicle that only gives the benefits of
limited liability at low compliance cost but allows its partners the flexibility
of organizing their internal structure as a traditional partnership. Keeping
in view of above, define the following characteristics of LLP.
(i) Body Corporate
(ii) Mutual Agency
(iii) Foreign LLPs
(iv) Artificial legal person (6 Marks)
3. (a) (i) P, Q and R formed a partnership agreement to operate motor buses
along specific routes for a duration of 12 years. After operating the
business for four years, it was observed that the business incurred
losses each year. Despite this, P is determined to continue the
business for the remaining Period. Examine with reference to the
Indian Partnership Act, 1932, can P insist to continue the business?
If so, what options are available to Q and R who are reluctant to
continue operating the business? (4 Marks)
(ii) A and B operate a textile merchant business in partnership. Mr. A
finances the business and is a sleeping partner. In the regular
course of business, B acquires certain fabric goods belonging to C.
However, B is aware that these goods are stolen property. Despite
this knowledge, B proceeds to purchase and sell some of these
stolen goods. Moreover, B records proceeds from these sales in
the firm’s books. Now, A wants to avoid the liability towards C, on
the grounds of misconduct by B. In the light of the provisions of the
Indian Partnership Act, 1932 discuss the liability of A and B towards
C. (3 Marks)
(b) (i) XYZ is a company incorporated under the Companies Act, 2013.
The paid up share capital of the company is held by others as on
31.03.2024 in as under:

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 (1) Government of India 20%
(2) Life Insurance Corporation of India (Public Institution) 8%
(3) Government of Tamil Nadu 10%
(4) Government of Rajasthan 10%
(5) ABC Limited (owned by Government Company) 15%
As per above shareholding, state whether XYZ limited be called a
Government Company under the provisions of the Companies Act,
2013. (4 Marks)
(ii) M and N holding 70% and 30% of the shares in the company. Both
died in an accident. Answer with reference to the provisions of the
Companies Act, 2013, what will be the legal effect on the company
as both the members have died? (3 Marks)
(c) Explain in brief with reference to the provisions of the Indian Contract
Act, 1872, what are the rights enjoyed by Surety against the Creditor,
the Principal Debtor and Co-Sureties? (6 Marks)
4. (a) (i) Mr. J entered into an agreement with Mr. S to purchase his house
for ` 20 lakh, within three months. He also paid ` 50,000/- as token
money. In the meanwhile, in an anti-encroachment drive of the local
administration, Mr. S's house was demolished. When Mr. J was
informed about the incident he asked for the refund of token money.
Referring to the relevant provisions of the Indian Contract Act, 1872
state whether Mr. J is entitled to the refund of the amount paid.
(4 Marks)
(ii) Rama directs Shyam to sell laptops for him and agrees to give
Shyam eleven percent (11%) commission on the sale price fixed by
Rama for each laptop. As Government of India put restrictions on
import of Laptops, Rama thought that the prices of laptops might
go up in near future and he revokes Shyam's authority for any
further sale. Shyam, before receiving the letter at his end sold 5
laptops at the price fixed by Rama. Shyam asked for 11%
commission on the sale of 5 Laptops for ` 1 lakh each. Explain
under the provisions of the Indian Contract Act, 1872:
(1) Whether sale of laptops after revoking Shyam's authority is
binding on Rama?
(2) Whether Shyam will be able to recover his commission from
Rama, if yes, what will be the amount of such commission?
(3 Marks)
(b) What are Inchoate and Ambiguous Instruments under the Negotiable
Instruments Act, 1881? (7 Marks)
(c) Describe in brief about the following Regulatory bodies of the
Government of India:

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 (i) Securities and Exchange Board of India
(ii) Reserve Bank of India
(iii) Insolvency and Bankruptcy Board of India (6 Marks)
5. (a) (i) Ram sells 200 bales of cloth to Shyam and sends 100 bales by lorry
and 100 bales by Railway. Shyam receives delivery of 100 bales
sent by lorry, but before he receives the delivery of the bales sent
by railway, he becomes bankrupt. Ram being still unpaid, stops the
goods in transit. The official receiver, on Shyam’s insolvency claims
the goods. Decide the case with reference to the provisions of the
Sale of Goods Act, 1930. (4 Marks)
(ii) Classify the following transactions according to the types of goods
they are:
(A) A wholesaler of cotton has 100 bales in his godown. He
agrees to sell 50 bales and these bales were selected and set
aside.
(B) A agrees to sell to B one packet of sugar out of the lot of one
hundred packets lying in his shop.
(C) T agrees to sell to S all the apples which will be produced in
his garden this year. (3 Marks)
(b) State the circumstances, in which a Court may, at the suit of the partner,
dissolve a partnership firm under the provisions of the Indian Partnership
Act, 1932. (7 Marks)
(c) In accordance with the provisions of the Indian Contract Act, 1872,
answer the following:
(i) Rights of Bailor against any wrong doer (Third Party)
(ii) Duties of the Pawnee (6 Marks)
6. (a) Referring to the provisions of the Negotiable Instruments Act, 1881,
answer the following in the given scenario:
(i) Aman drew the bill of exchange (the bill) on Baban, who accepted
it, payable to Magan or order. Magan indorsed the bill to Gagan.
Gagan indorsed the bill to Akash to be delivered to him on the next
day. However, on the death of Gagan on the same day, his only
son Ankit delivered the bill to Akash on the next day as intended by
his deceased father. On presenting the bill on the due date, Baban
refused to pay. Explaining the importance of delivery in negotiation,
decide, whether Akash can enforce the payment of the bill against
Baban or the previous parties. (4 Marks)
(ii) Reliable Limited, an Indian company, is a global leader in
Petrochemical products. For payment of the sale price of machinery
imported from Alex Manufacturing Limited, a USA based company
(the exporter), the Indian company drew a bill of exchange on
Manish, a resident of Mumbai (India) who accepted the bill at
Mumbai payable to the exporter in Los Angeles, USA. Decide,
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 whether the bill of exchange is an inland instrument or a foreign
instrument. Assume that the bill of exchange was signed by the
authorised person for the drawer company. (3 Marks)
(b) Answer the following as per the provisions of the Indian Contract Act,
1872:
(i) 'Agent cannot personally enforce, nor be personally bound by,
contracts on behalf of the principal' however there are some
exceptions to this general rule, explain. (4 Marks)
(ii) State the rights of Indemnity-holder when sued. (2 Marks)
OR
(b) What is the meaning of contingent contract? Write briefly its essentials.
Also, explain any three rules relating to enforcement of a contingent
contract. (6 Marks)
(c) J, a wholesaler of premium Basmati rice delivered on approval 100 bags
of rice of 10 kg each to a local retailer, on sale or returnable basis within
a month of delivery. The next day the retailer sold 5 bags of rice to a
regular customer K. A week later K informed the retailer that the quality
of rice was not as per the price.
The retailer now wants to return all the rice bags to J, including the 4
bags not used by K. Can the retailer do so?
Also briefly describe the provisions underlying in this context of the Sale
of Goods Act, 1930, (7 Marks)