CA Inter Laws Important Question - Jan 26

Table of Content

Corporate Law

1. Preliminary
2. Incorporation of Company and Matters Incidental Thereto
3. Prospectus and Allotment of Securities
4. Share Capital and Debentures
5. Acceptance of Deposits by Companies
6. Registration of Charges
7. Management & Administration 
8. Declaration & Payment of Dividend
9. Accounts of Companies
10. Audit & Auditors
11. Companies Incorporated Outsite India
12. The Limited Liability Partnership Act, 2008

Other Law

1. The General Clauses Act, 1897 
2. Interpretation of Statutes
3. The foreign Exchange Management Act, 1999

Other Important Questions Blog :

1. Important Question Paper 1 : Advanced Accounting
2. Important Question Paper 3 :Taxation
3. Important Question Paper 4 : Cost & Management accounting
4. Important Question Paper 5 : Auditing and Ethics
5. Important Question Paper 6 : Financial Management and Strategic Management
6. CA Inter Syllabus (New Update)

Corporate Law

Chapter 1: Preliminary

Question : 1

ABC Limited issued equity shares worth ₹1,00,000 (10,000 shares of 10 each) on 1^st April, 2023 which has been fully subscribed, whereby XYZ Limited holds 3,500 equity shares and PQR Limited holds 2,500 equity shares. Prior to the issue of equity shares, ABC Limited already hold 20% of the equity shares of MNP Limited. Further, XYZ Limited holds 10% of MNP Limited’s equity shares as a trustee. MNP Limited controls the composition of the Board of Directors of XYZ Limited and PQR Limited on 01.07.2023, Examine with reference to the relevant provisions of the Companies Act, 2013 —  

(i) Whether ABC Limited is a subsidiary of MNP Limited ?

(i) Whether ABC Limited and XYZ Limited have the right to vote on the Annual General Meeting of MNP Limited held on 30^th September, 2023 ?  

Solution:

Chapter 2: Incorporation of Company and Matters Incidental Thereto

Question : 3

One of the matters contained in the articles of Dhimaan Foundation, incorporated as a limited company under section 8 of the Companies Act, 2013, was altered by passing a special resolution in its general meeting and thereafter, intimation for the same was given to Registrar of Companies.

However, such alteration in the articles was opposed by Dhwaj & Co., a partnership firm which is its member, that there such alteration was not valid.

Advise, as per the provisions of the Companies Act, 2013, whether the contention of Dhwaj & Co. was valid and whether it can be a member in such company?

Solution:

Chapter 3: Prospectus and Allotment of Securities

Question : 4

Comment on the following:

1. Disclosure required to be made on the face of the Prospectus.

2. Conditions in regard to Experts' Statement.

3. Date of publication of prospectus.

Solution:

Question : 5

Raman being a Chartered Accountant was engaged in providing services to clients to arrange loans and other money to satisfy their working capital requirements through various banks.

Y Limited, which was in need of money could not succeed in getting it because of poor financials. They approached for assistance from Raman, who offered to charge commission of 5% and provided them surety to arrange funds through some nationalized Banks, through falsification of balance sheet and Profit and loss of company.

Y Limited decide to go ahead with the proposal of Raman and thus they succeed in obtaining loan from Banks worth of ₹ 10 Cr.

Later on Credit Manager of Bank, while going though website of Ministry of Corporate affairs shocked, when he happen to see the balance sheet submitted by Y limited to Registrar of companies as it was completely different from one being offered to bank for obtaining credit facilities.

After getting into investigation, the whole fraud came out and banker want to punish all those involved in said transactions, Guide the course of action available to banker

Solution:

Chapter 4: Share Capital and Debentures 

Question : 6

SAB Health Products Limited issued equity shares worth ₹ 5,00,00,000 (5,00,000 equity shares of ₹ 100 each) and it was fully subscribed and partly paid at ₹ 50 each. The company made a call to all its subscribers to pay a sum of ₹ 30 for each share held by them. Mr. GH, a subscriber to the shares of a company, holding 10,000 shares, paid all the money due on the shares held by him in advance. Later, Mr. GH claimed interest on the money advanced by him and also dividend in respect of the advance money paid. Is his claim justified? Another shareholder Mr. LK holding 15,000 shares did not pay the first call. So, the directors called upon him to pay the entire amount due by him in respect of the shares held by him. Referring to the provisions of the Companies Act, 2013 and Rules made there under, examine whether the directors of SAB Health Products Limited permitted to do so ?

Solution:

Question : 7

London Limited, at a general meeting of members of the company, passed an ordinary resolution to buy-back 30 percent of its equity share capital. The articles of the company empower the company for buy-back of shares. Explaining the provisions of the Companies Act, 2013, examine:  

(A) Whether company's proposal is in order?

(B) Would your answer be still the same in case the company, instead of 30 percent, decides to buy-back only 20 per cent of its equity share capital?

Solution:

Question : 8

Trident Energy Systems Ltd. is a company in which Solaris Electric Ltd. holds 57% of the paid-up share capital, making Trident Energy Systems Ltd. a subsidiary of Solaris Electric Ltd. One of the shareholders of Solaris Electric Ltd. creates a charitable trust and donates 7% of his shares in Solaris Electric Ltd. along with ₹ 92 crore to the trust. He appoints Trident Energy Systems Ltd. as the trustee of this charitable trust. All the assets of the trust, including the shares, are held in the name of Trident Energy Systems Ltd.

Examine whether Trident Energy Systems Ltd. can legally hold shares in Solaris Electric Ltd. in this manner. Give your answer as per the provisions of the Companies Act, 2013.

Solution:

Chapter 5: Acceptance of Deposits by Companies 

Question : 8

The following are the extracts from the financial statements of BUI Private Limited, which is neither a start-up nor it is an associate or subsidiary company of any other company. 

The company has never failed to file the Annual Return and Financial Statements with the Registrar. The company has already successfully repaid all the monies which were accepted earlier in the form of deposits along with due interest. Since the company was successful in implementation of its housing project by utilizing the money accepted in the form of deposits, the Board was interested to accepting deposits once more and take up another housing project in NOIDA since the members of the company were having sufficient surplus money which they wanted to invest in the company to start the project. However, their condition was that the same will be provided by them if the company accepts them in the form of deposits and the applicable provisions of the Companies Act, 2013 and Rules made thereunder are strictly complied with. But, the Board of Directors of BUI Private Limited were not in support of depositing any amount in any Deposit Repayment Reserve Account for the purpose of repayment of the said deposits, since the repayment was to be made out of the amount received from the customers who were going to book for the flats in the housing project. Two proposals came for review to the Board, out of which only one proposal was to be selected. The Board wanted you to advise them in choosing the appropriate deposit scheme. 

Proposal 1 - Acceptance of Deposits of ₹ 20,00,00,000, to be repaid with interest @ 7% per annum; 
Proposal 2 - Acceptance of Deposits of ₹ 14,00,00,000, to be repaid with interest @ 8% per annum. 

Referring to the applicable provisions of the Companies Act, 2013, the Rules made thereunder and the notifications issued in this respect, advise the Board stating the justification in support of your advice. 

Solution:

Chapter 6: Registration of Charges 

Question : 9

DN Limited hypothecated its plant to a Nationalised Bank and availed a term loan. The Company registered the charge with the Registrar of Companies. The Company settled the term loan in full, The Company requested the Bank to issue a letter confirming the settlement of the term loan. The Bank did not respond to the request. State the relevant provisions of the Companies Act, 2013 to register the satisfaction of charge in the above circumstance.

State the time frame up to which the Registrar of Companies may allow the Company to intimate satisfaction of charges.

Solution:

Chapter 7: Management & Administration 

Question : 10

M/s. Techno Ltd. maintains its Register of Members at its registered office in Mumbai. A group of members residing in Kolkata want to keep the register of members at Kolkata.

(i) Explain with provisions of Companies Act, 2013, whether the company can keep the Registers and Returns at Kolkata.

(ii) Does Mr. Ranjit, Director (but not a shareholder) of the company, have the right to inspect the Register of Members?

Solution:

Question : 11

Due to heavy rains and floods, Chennai Handloom Limited was unable to convene annual general meeting upto 30th September, 20X1. The company has not filed the annual financial statements, or the annual return as the directors of the company are of the view that since the annual general meeting did not take place, the period of 60 days for filing of annual return is not applicable and thus, there is no contravention of Section 92 of the Companies Act, 2013. Discuss whether the contention of directors is correct.

Solution:

Chapter 8: Declaration & Payment of Dividend 

Question : 12

Star Ltd. declared and paid dividend in time to all its equity holders for the financial year 2018-19, except in the following two cases:

a) Mrs. Sheela, holding 250 shares had mandated the company to directly deposit the dividend amount in her bank account. The company, accordingly remitted the dividend but the bank returned the payment on the ground that there was difference in surname of the payee in the bank records. The company, however, did not inform Mrs. Sheela about this discrepancy.

b) Dividend amount of INR 50,000 was not paid to the successor of Late Mr. Mohan, in view of the court order restraining the payment due to family dispute about succession. You are required to analyse these cases with reference to provisions of the Companies Act, 2013 regarding failure to distribute dividends.

Solution:

Chapter 9: Accounts of Companies 

Question : 13

The Income Tax Authority (the statutory body) has gathered some information and is of the view that there has been a manipulation of accounts of FGH Ltd, reflecting an incorrect financial position of the company. The statutory body intends to get the accounts reopened to reflect correct financial position of the company. In light of the Companies Act, 2013 elucidate-

(i) the statutory provisions governing the issue of re-opening of accounts by the Income-Tax Authority.

(ii) The voluntary revision of financial statements or board's report by the directors. 

(iii) For how many preceding financial years the board of directors may revise the financíal statements? 

Solution:

Question : 14

The registered office of the Bharat Ltd. is situated in a classified backward area of Maharashtra. The Board wants to keep its books of account at its corporate office in Mumbai, which is conveniently located. The Board seeks your advice about the feasibility of maintaining the accounting records at a place other than the registered office of the company. Please advise.

Solution:

Question : 15

Natraj Limited is an unlisted Public company, having paid up share capital of ₹ 80 crores during the preceding financial year 20X1-X2. The turnover of the company was ₹ 110 crores for the same period. Referring to the provisions of the Companies Act, 2013, discuss the answer:

Is it mandatory for the above company to appoint an internal auditor for the financial year 20X2-X3?

Solution:

Chapter 10: Audit & Auditors 

Question : 16

Mr. Yash is a partner and in charge of PQR firm. The firm is appointed as an auditor firm of A. K. Company limited (listed company). Mr. Yash retires from PQR firm and after some time join Gupta & Gupta firm as a partner, on 20/05/X1. In the general meeting of the company held on 15/06/X1, the company appointed Gupta & Gupta firm as next auditor of the company. Do you think the company has adhered to the provision of appointing Gupta & Gupta as auditor for the company, under the Company Act 2013? Explain.

Solution:

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Question : 17

HD Software Limited is engaged in the business of providing software services. The company appointed its statutory auditors (not the first auditor). The Board of directors of the company informed the auditor that the fees shall be fixed by the Board of directors only. 

But the auditor objected to the same. Now the directors have approached you to advise them whether they can solely fix the remuneration of the auditor. 

Solution:

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Chapter 11: Companies Incorporated Outsite India 

Question : 18

ABC Inc., a company based in USA, develops cyber security software and sells it to its Indian clients.

ABC Inc. has entered into a service agreement with PQR Private Limited, a company incorporated in India. PQR Private Limited provides support to the Indian customers for the software installation and after-sale services.

PQR Private Limited also holds 50% of shares of ABC Inc.

Explain whether ABC Inc. is required to comply with the provisions of Chapter XXII of the Companies Act, 2013.

Solution:

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Question : 19

Beauty Cosmetics, a company incorporated in Korea has established its branch office in Chennai for conducting its business in India,

The structure of paid-up share capital of Beauty Cosmetics as at 31/03/2024 is as below :

The Company does not have any Preference Share Capital.

Equity share capital held by Mr. L, an Indian citizen: 10%

Equity share capital held by Mr. R, an Indian Citizen: 20%

Equity share capital held by Fairess Cosmetics Limited, an Indian company: 20%

You being a Chartered Accountant are asked to explain with reference to the provisions of the Companies Act, 2013

(i) whether Beauty Cosmetics shall be deemed to be a Foreign Company or an Indian Company for the business carried on by it in India and

(ii) for the business carried on by it in India, will it be required to comply with the relevant provisions of the Companies Act, 2013 as if it is an Indian Company ?

Solution:

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Question : 20

ABC Ltd., a foreign company having its Indian principal place of business at Kolkata, West Bengal is required to deliver various documents to Registrar of Companies under the provisions of the Companies Act, 2013. You are required to state, where the said company should deliver such documents.

Solution:

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Chapter 12: The Limited Liability Partnership Act, 2008

Question : 21

Define the term ‘Small limited liability partnership’ as per the provisions of the Limited Liability Partnership Act, 2008.

Solution:

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Question : 22

A, B, C and D are the partners of Alpha LLP and have equal shore in the profits and losses of the LLP. A hus made an agreement to transfer 70% of his share in the profits of Alpha LLP to his daughter X.

X wanted to nocess information about the truding transactions of Alpha LLP claiming that she is entitled to the information as she receives a percentage of profits from the LLP. The partners refused to grant her access. Does X. have any remedy against the denial necording to the provisions of the Limited Liability Partnership Aet, 2008 7 Are the partners correct in denying access to X.

Solution:

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Other Law

Chapter 1: The General Clauses Act, 1897

Question : 23

Purva Buildcon Ltd. (PBL) is a public company having two subsidiary companies namely Arihant Cements Ltd. (ACL) and Siddharth Bricks Ltd. (SBL). Purva is a Chief Financial Officer of PBL.

Ashish and Mrinal, who were the CFO’s of ACL and SBL resigned from their respective companies and Purva was offered to take charge of the office of CFO in ACL and SBL, which she accepted.

ADVICE:

Whether Purva can be designated as CFO simultaneously in two subsidiaries (i.e. in SBL and ACL) besides being CFO of PBL? Examine the matter with reference to the provisions contained in the Companies Act, 2013 as well as in the General Clauses Act, 1897.

Solution:

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Question : 24

The Companies Act, 2013 provides that the amount of dividend remained unpaid/unclaimed on expiry of 30 days from the date of declaration of dividend shall be transferred to unpaid dividend account within 7 days from the date of expiry of such period of 30 days. If the expiry date of such 30 days is 30.10.2019, decide the last date on or before which the unpaid/unclaimed dividend amount shall be required to be transferred to a separate bank account in the light of the relevant provisions of the General Clauses Act, 1897?

Solution:

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Question : 25

Ajit was supposed to submit an appeal to High Court of Kolkata on 30th March, 2020, which was the last day on which such appeal could be submitted. Unfortunately, on that day High Court was closed due to total Lockdown all over India due to Covid-19 pandemic. Examine the remedy available to Ajit under the provisions of the General Clauses Act, 1897. 

Solution:

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Chapter 2: Interpretation of Statutes

Question : 26

Whether lllustrations will have effect of modifying the language of the section in connection with Interpretation of Statutes ? Explain with the help of an example.

Solution:

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Question : 27

Ms. Mona employed in X-One Corporation, adopted a three-month-old baby applied for maternity leave under her company’s policy, which provided 26 weeks of paid maternity leave. However, her employer rejected the request, stating that maternity leave applies only to biological mothers as per the law. Mona approached the court against the company decision. In related to the above case, explain how the Rule of Beneficial Construction can be applied and interpreted as a welfare legislation? 

Solution:

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Chapter 3: The foreign Exchange Management Act, 1999

Question : 28

Mr. V is a person of Indian origin who had moved to USA along with his wife in the year 1998 and had been living there until 2024. He was holding joint bank accounts with his wife in USA since 1998. On the demise of his wife on 17th November, 2024, he had returned permanently to India on 24th November, 2024. He also inherited his wife’s money after her death, which got transferred to his bank account in USA. After few days of his return to India, he has paid premium from his bank account in USA of his insurance policy, which he had taken when he was in USA.

Referring to the provisions of the Foreign Exchange Management Act, 1999, examine whether Mr. V is permitted to carry out the above transactions.

Solution:

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Question : 29

Referring to the provisions of the Foreign Exchange Management Act, 1999, state the meaning of the term "current account transaction".

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Question : 30

Mitali Diamonds Ltd, is a company engaged in the business of cutting, polishing and trading of diamonds in and outside India. The company exports the diamonds to USA. For the last five financial years, the foreign exchange carned by the company in exporting the diamond are as under :

FY 2023-24	: USD 1,25,000
FY 2022-23	: USD 1,10,000
FY 2021-22	: USD 95,000
FY 2020-21	: USD 98,000
FY 2019-20	: USD 93,000

The Company wants to give donation of USD 10,000 to an institution situated in USA which provides technical support and training in the field of cutting and polishing of raw diamonds. This will help the company in guiding its own employees, posted in USA to get the requisite training.

Referring to the provisions of the Foreign Exchange Management Act, 1999, state whether the Company can give donation to such institution in USA ?

Solution:

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Question : 31

Ms. Rose was an Indian citizen who got a job in a software company in the USA. She went to USA and stayed there for 12 years. During her stay, she purchased a house in USA for her residence. Then due to some personal issues she moved back to India and joined a software company in India. As she had moved back to India, she let out her house in USA and deposited the rent in her account in USA. Out of that amount, she purchased another house in USA.

Based on the above facts, answer the following referring to the provisions of the Foreign Exchange Manugement Act, 1999,

(i) Whether Ms. Rose can purchase the house in USA and continue to retain it even after returning to India ?

(ii) Whether Ms. Rose can purchase another house in USA after returning to India ?

Solution:

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