Business Laws Model Test Paper - 5 (Qestions) | Mock Tests & Past Year Papers for CA Foundation PDF Download

 Page 1


MODEL TEST PAPER 5 
FOUNDATION COURSE 
PAPER 2: BUSINESS LAWS 
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. 
(Time allowed: 3 Hours) (100 Marks) 
1. (a)  (i) Mr. Chetan was travelling to Manali with his wife by bus of 
Himalayan Travels Pvt. Ltd. Due to some technical default in the 
bus, the driver has to stop the bus in a mid-way in cold night. The 
driver advised the passengers to get to the shelter in the nearest 
hotel which was at a distance of only one kilometer from that place. 
The wife of Mr. Chetan caught cold and fell ill due to being asked 
to get down and she had to walk in cold night to reach hotel. 
Mr. Chetan filed the suit against Himalayan Travels Pvt. Ltd. for 
damages for the personal inconvenience, hotel charges and 
medical treatment for his wife. Explain, whether Mr. Chetan would 
get compensation for which he filed the suit under the Indian 
Contract Act, 1872? (4 Marks) 
(ii) Sahil sells by auction to Rohan a horse which Sahil knows to be
unsound. The horse appears to be sound, but Sahil knows about
the unsoundness of the horse. Is this contract valid in the following
circumstances under the Indian Contract Act, 1872:
(A) If Sahil says nothing about the unsoundness of the horse to
Rohan.
(B) If Sahil says nothing about it to Rohan who is Sahil’s son.
(C) If Rohan says to Sahil “If you do not deny it, I shall assume
that the horse is sound.” Sahil says nothing. (3 Marks) 
(b) (i) ABC Limited has allotted equity shares with voting rights to XYZ 
Limited worth ` 15 Crores during the Financial Year 2023-24. After 
that the total Paid-up Equity Share Capital of ABC Limited is ` 100 
Crores. 
Define the Meaning of Associate Company and comment on 
whether ABC Limited and XYZ Limited would be called Associate 
Company as per the provisions of the Companies Act, 2013?   
(4 Marks) 
(ii) MTK Private Limited is a company registered under the Companies
Act, 2013 on 5
th
 January 2022. The company did not start its
business till 31
s 
July 2024.  Identify under which category MTK
Private Limited company is classified. Explain the definition of the
category of the company in detail.     (3 Marks)
97
Page 2


MODEL TEST PAPER 5 
FOUNDATION COURSE 
PAPER 2: BUSINESS LAWS 
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. 
(Time allowed: 3 Hours) (100 Marks) 
1. (a)  (i) Mr. Chetan was travelling to Manali with his wife by bus of 
Himalayan Travels Pvt. Ltd. Due to some technical default in the 
bus, the driver has to stop the bus in a mid-way in cold night. The 
driver advised the passengers to get to the shelter in the nearest 
hotel which was at a distance of only one kilometer from that place. 
The wife of Mr. Chetan caught cold and fell ill due to being asked 
to get down and she had to walk in cold night to reach hotel. 
Mr. Chetan filed the suit against Himalayan Travels Pvt. Ltd. for 
damages for the personal inconvenience, hotel charges and 
medical treatment for his wife. Explain, whether Mr. Chetan would 
get compensation for which he filed the suit under the Indian 
Contract Act, 1872? (4 Marks) 
(ii) Sahil sells by auction to Rohan a horse which Sahil knows to be
unsound. The horse appears to be sound, but Sahil knows about
the unsoundness of the horse. Is this contract valid in the following
circumstances under the Indian Contract Act, 1872:
(A) If Sahil says nothing about the unsoundness of the horse to
Rohan.
(B) If Sahil says nothing about it to Rohan who is Sahil’s son.
(C) If Rohan says to Sahil “If you do not deny it, I shall assume
that the horse is sound.” Sahil says nothing. (3 Marks) 
(b) (i) ABC Limited has allotted equity shares with voting rights to XYZ 
Limited worth ` 15 Crores during the Financial Year 2023-24. After 
that the total Paid-up Equity Share Capital of ABC Limited is ` 100 
Crores. 
Define the Meaning of Associate Company and comment on 
whether ABC Limited and XYZ Limited would be called Associate 
Company as per the provisions of the Companies Act, 2013?   
(4 Marks) 
(ii) MTK Private Limited is a company registered under the Companies
Act, 2013 on 5
th
 January 2022. The company did not start its
business till 31
s 
July 2024.  Identify under which category MTK
Private Limited company is classified. Explain the definition of the
category of the company in detail.     (3 Marks)
97
(c) (i) What is the difference between partnership and co-ownership as 
per the Indian Partnership Act, 1932? (4 Marks) 
(ii) Discuss the provisions regarding personal profits earned by a
partner under the Indian Partnership Act, 1932?     (2 Marks)
2. (a)  Mr. Manoj was running a shop selling good quality washing machines.
Mr. Vivek came to his shop and asked for washing machine which is 
suitable for washing woollen clothes. Mr. Manoj showed him a particular 
machine which Mr. Vivek liked and paid for it. Later on, when the 
machine was delivered to Mr. Vivek’s house, it was found that it was the 
wrong machine and also unfit for washing woollen clothes. He 
immediately informed Mr. Manoj about the delivery of the wrong 
machine. Mr. Manoj refused to exchange the same, saying that the 
contract was complete after the delivery of the washing machine and 
payment of price. With reference to the provisions of the Sale of Goods 
Act, 1930, discuss whether Mr. Manoj is right in refusing to exchange the 
washing machine. (7 Marks) 
(b) (i) Mr. Sooraj sold his business of cotton production to a cotton 
production company, CPL Private Limited, in which he held all the 
shares except one which was held by his wife. He is also the 
creditor in the company for a certain amount. He also got the 
insurance of the stock of cotton of CPL Private Limited in his own 
name and not in the name of the company. After one month, all the 
stocks of the cotton of CPL Private Limited were destroyed by fire. 
Mr. Sooraj filed the claim for such loss with the Insurance company. 
State with reasons that whether the insurance company is liable to 
pay the claim? (4 Marks) 
(ii) Alfa school is a section 8 company which started imparting
education on 1.4.2015, with the sole objective of providing
education to children of weaker society either free of cost or at a
very nominal fee depending upon the financial condition of their
parents. However, on 31
st
 March 2023, it came to the knowledge of
the Central Government that the said school was operating by
violating the objects of its objective clause due to which it was
granted the status of a section 8 company under the Companies
Act, 2013. Describe what powers can be exercised by the Central
Government against the Alfa School, in such a case? (3 Marks)
(c) What do you mean by Designated Partner? Whether it is mandatory to
appoint Designated partner in a LLP? (6 Marks)
3. (a)  M/s ABC & Associates, a partnership firm with A, B and C as senior
partners engaged in the business of curtain manufacturing and exporting 
to foreign countries.  On 25
th
 August, 2022, they inducted Mr. P, an 
expert in the field of curtain manufacturing as their partner. On 10
th
 
January 2024, Mr. P was blamed for unauthorized activities and thus 
expelled from the partnership by approval of all of the remaining 
partners. 
98
Page 3


MODEL TEST PAPER 5 
FOUNDATION COURSE 
PAPER 2: BUSINESS LAWS 
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. 
(Time allowed: 3 Hours) (100 Marks) 
1. (a)  (i) Mr. Chetan was travelling to Manali with his wife by bus of 
Himalayan Travels Pvt. Ltd. Due to some technical default in the 
bus, the driver has to stop the bus in a mid-way in cold night. The 
driver advised the passengers to get to the shelter in the nearest 
hotel which was at a distance of only one kilometer from that place. 
The wife of Mr. Chetan caught cold and fell ill due to being asked 
to get down and she had to walk in cold night to reach hotel. 
Mr. Chetan filed the suit against Himalayan Travels Pvt. Ltd. for 
damages for the personal inconvenience, hotel charges and 
medical treatment for his wife. Explain, whether Mr. Chetan would 
get compensation for which he filed the suit under the Indian 
Contract Act, 1872? (4 Marks) 
(ii) Sahil sells by auction to Rohan a horse which Sahil knows to be
unsound. The horse appears to be sound, but Sahil knows about
the unsoundness of the horse. Is this contract valid in the following
circumstances under the Indian Contract Act, 1872:
(A) If Sahil says nothing about the unsoundness of the horse to
Rohan.
(B) If Sahil says nothing about it to Rohan who is Sahil’s son.
(C) If Rohan says to Sahil “If you do not deny it, I shall assume
that the horse is sound.” Sahil says nothing. (3 Marks) 
(b) (i) ABC Limited has allotted equity shares with voting rights to XYZ 
Limited worth ` 15 Crores during the Financial Year 2023-24. After 
that the total Paid-up Equity Share Capital of ABC Limited is ` 100 
Crores. 
Define the Meaning of Associate Company and comment on 
whether ABC Limited and XYZ Limited would be called Associate 
Company as per the provisions of the Companies Act, 2013?   
(4 Marks) 
(ii) MTK Private Limited is a company registered under the Companies
Act, 2013 on 5
th
 January 2022. The company did not start its
business till 31
s 
July 2024.  Identify under which category MTK
Private Limited company is classified. Explain the definition of the
category of the company in detail.     (3 Marks)
97
(c) (i) What is the difference between partnership and co-ownership as 
per the Indian Partnership Act, 1932? (4 Marks) 
(ii) Discuss the provisions regarding personal profits earned by a
partner under the Indian Partnership Act, 1932?     (2 Marks)
2. (a)  Mr. Manoj was running a shop selling good quality washing machines.
Mr. Vivek came to his shop and asked for washing machine which is 
suitable for washing woollen clothes. Mr. Manoj showed him a particular 
machine which Mr. Vivek liked and paid for it. Later on, when the 
machine was delivered to Mr. Vivek’s house, it was found that it was the 
wrong machine and also unfit for washing woollen clothes. He 
immediately informed Mr. Manoj about the delivery of the wrong 
machine. Mr. Manoj refused to exchange the same, saying that the 
contract was complete after the delivery of the washing machine and 
payment of price. With reference to the provisions of the Sale of Goods 
Act, 1930, discuss whether Mr. Manoj is right in refusing to exchange the 
washing machine. (7 Marks) 
(b) (i) Mr. Sooraj sold his business of cotton production to a cotton 
production company, CPL Private Limited, in which he held all the 
shares except one which was held by his wife. He is also the 
creditor in the company for a certain amount. He also got the 
insurance of the stock of cotton of CPL Private Limited in his own 
name and not in the name of the company. After one month, all the 
stocks of the cotton of CPL Private Limited were destroyed by fire. 
Mr. Sooraj filed the claim for such loss with the Insurance company. 
State with reasons that whether the insurance company is liable to 
pay the claim? (4 Marks) 
(ii) Alfa school is a section 8 company which started imparting
education on 1.4.2015, with the sole objective of providing
education to children of weaker society either free of cost or at a
very nominal fee depending upon the financial condition of their
parents. However, on 31
st
 March 2023, it came to the knowledge of
the Central Government that the said school was operating by
violating the objects of its objective clause due to which it was
granted the status of a section 8 company under the Companies
Act, 2013. Describe what powers can be exercised by the Central
Government against the Alfa School, in such a case? (3 Marks)
(c) What do you mean by Designated Partner? Whether it is mandatory to
appoint Designated partner in a LLP? (6 Marks)
3. (a)  M/s ABC & Associates, a partnership firm with A, B and C as senior
partners engaged in the business of curtain manufacturing and exporting 
to foreign countries.  On 25
th
 August, 2022, they inducted Mr. P, an 
expert in the field of curtain manufacturing as their partner. On 10
th
 
January 2024, Mr. P was blamed for unauthorized activities and thus 
expelled from the partnership by approval of all of the remaining 
partners. 
98
(i) Examine whether action by the partners was justified or not?
(ii) What should have the factors to be kept in mind prior expelling a
partner from the firm by other partners according to the provisions
of the Indian Partnership Act, 1932? (7 Marks) 
(b) (i) Powertech Limited was registered as a public company. There are 
230 members in the company as noted below: 
(a) Directors and their relatives 190 
(b) Employees  15 
(c) Ex-Employees (Shares were allotted when
they were employees)  10 
(d) 5 couples holding shares jointly in the name of
husband and wife (5*2)  10 
(e) Others 5 
The Board of Directors of Powertech Limited proposes to convert it 
into a private company. Also advise whether a reduction in the 
number of members is necessary.   (4 Marks) 
(ii) Popular Products Ltd. is company incorporated in India, having a
total Share Capital of ` 20 Crores. The Share capital comprises of
20 Lakh equity shares of ` 100 each. Delight Products Ltd. and
Happy Products Ltd. hold 2,50,000 and 3,50,000 shares
respectively in Popular Products Ltd. Another company, Cheerful
Products Ltd. holds 2,50,000 shares in Popular Products Ltd. Jovial
Ltd. is the holding company for all the above three companies
namely Delight Products Ltd.; Happy Products Ltd. and Cheerful
Products Ltd. Can Jovial Ltd. be termed as a subsidiary company
of Popular Products Ltd.
State the related provision in favour of your answer, if Jovial Ltd.
controls the composition of directors of Popular Products Ltd.
(3 Marks) 
(c) Who is considered as an agent under the Indian Contract Act, 1872, and
what are the duties and obligations associated with this role? (6 Marks)
4. (a)  (i) Mr. Om Kashyap was a big businessman of Pune City having two 
sons and one married daughter. He decided to gift his house to his 
daughter. For this purpose, he called his lawyer at his house and 
made a written document for such gift. The lawyer advised him to 
get the transfer document properly registered. When they both 
were going for registration of document, they met with an accident, 
and both of them died. Later, the daughter found the document and 
claimed the house on the basis of that document.  Explain, whether 
she can get the house as gift under the Indian Contract Act, 1872? 
 (4 Marks) 
99
Page 4


MODEL TEST PAPER 5 
FOUNDATION COURSE 
PAPER 2: BUSINESS LAWS 
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. 
(Time allowed: 3 Hours) (100 Marks) 
1. (a)  (i) Mr. Chetan was travelling to Manali with his wife by bus of 
Himalayan Travels Pvt. Ltd. Due to some technical default in the 
bus, the driver has to stop the bus in a mid-way in cold night. The 
driver advised the passengers to get to the shelter in the nearest 
hotel which was at a distance of only one kilometer from that place. 
The wife of Mr. Chetan caught cold and fell ill due to being asked 
to get down and she had to walk in cold night to reach hotel. 
Mr. Chetan filed the suit against Himalayan Travels Pvt. Ltd. for 
damages for the personal inconvenience, hotel charges and 
medical treatment for his wife. Explain, whether Mr. Chetan would 
get compensation for which he filed the suit under the Indian 
Contract Act, 1872? (4 Marks) 
(ii) Sahil sells by auction to Rohan a horse which Sahil knows to be
unsound. The horse appears to be sound, but Sahil knows about
the unsoundness of the horse. Is this contract valid in the following
circumstances under the Indian Contract Act, 1872:
(A) If Sahil says nothing about the unsoundness of the horse to
Rohan.
(B) If Sahil says nothing about it to Rohan who is Sahil’s son.
(C) If Rohan says to Sahil “If you do not deny it, I shall assume
that the horse is sound.” Sahil says nothing. (3 Marks) 
(b) (i) ABC Limited has allotted equity shares with voting rights to XYZ 
Limited worth ` 15 Crores during the Financial Year 2023-24. After 
that the total Paid-up Equity Share Capital of ABC Limited is ` 100 
Crores. 
Define the Meaning of Associate Company and comment on 
whether ABC Limited and XYZ Limited would be called Associate 
Company as per the provisions of the Companies Act, 2013?   
(4 Marks) 
(ii) MTK Private Limited is a company registered under the Companies
Act, 2013 on 5
th
 January 2022. The company did not start its
business till 31
s 
July 2024.  Identify under which category MTK
Private Limited company is classified. Explain the definition of the
category of the company in detail.     (3 Marks)
97
(c) (i) What is the difference between partnership and co-ownership as 
per the Indian Partnership Act, 1932? (4 Marks) 
(ii) Discuss the provisions regarding personal profits earned by a
partner under the Indian Partnership Act, 1932?     (2 Marks)
2. (a)  Mr. Manoj was running a shop selling good quality washing machines.
Mr. Vivek came to his shop and asked for washing machine which is 
suitable for washing woollen clothes. Mr. Manoj showed him a particular 
machine which Mr. Vivek liked and paid for it. Later on, when the 
machine was delivered to Mr. Vivek’s house, it was found that it was the 
wrong machine and also unfit for washing woollen clothes. He 
immediately informed Mr. Manoj about the delivery of the wrong 
machine. Mr. Manoj refused to exchange the same, saying that the 
contract was complete after the delivery of the washing machine and 
payment of price. With reference to the provisions of the Sale of Goods 
Act, 1930, discuss whether Mr. Manoj is right in refusing to exchange the 
washing machine. (7 Marks) 
(b) (i) Mr. Sooraj sold his business of cotton production to a cotton 
production company, CPL Private Limited, in which he held all the 
shares except one which was held by his wife. He is also the 
creditor in the company for a certain amount. He also got the 
insurance of the stock of cotton of CPL Private Limited in his own 
name and not in the name of the company. After one month, all the 
stocks of the cotton of CPL Private Limited were destroyed by fire. 
Mr. Sooraj filed the claim for such loss with the Insurance company. 
State with reasons that whether the insurance company is liable to 
pay the claim? (4 Marks) 
(ii) Alfa school is a section 8 company which started imparting
education on 1.4.2015, with the sole objective of providing
education to children of weaker society either free of cost or at a
very nominal fee depending upon the financial condition of their
parents. However, on 31
st
 March 2023, it came to the knowledge of
the Central Government that the said school was operating by
violating the objects of its objective clause due to which it was
granted the status of a section 8 company under the Companies
Act, 2013. Describe what powers can be exercised by the Central
Government against the Alfa School, in such a case? (3 Marks)
(c) What do you mean by Designated Partner? Whether it is mandatory to
appoint Designated partner in a LLP? (6 Marks)
3. (a)  M/s ABC & Associates, a partnership firm with A, B and C as senior
partners engaged in the business of curtain manufacturing and exporting 
to foreign countries.  On 25
th
 August, 2022, they inducted Mr. P, an 
expert in the field of curtain manufacturing as their partner. On 10
th
 
January 2024, Mr. P was blamed for unauthorized activities and thus 
expelled from the partnership by approval of all of the remaining 
partners. 
98
(i) Examine whether action by the partners was justified or not?
(ii) What should have the factors to be kept in mind prior expelling a
partner from the firm by other partners according to the provisions
of the Indian Partnership Act, 1932? (7 Marks) 
(b) (i) Powertech Limited was registered as a public company. There are 
230 members in the company as noted below: 
(a) Directors and their relatives 190 
(b) Employees  15 
(c) Ex-Employees (Shares were allotted when
they were employees)  10 
(d) 5 couples holding shares jointly in the name of
husband and wife (5*2)  10 
(e) Others 5 
The Board of Directors of Powertech Limited proposes to convert it 
into a private company. Also advise whether a reduction in the 
number of members is necessary.   (4 Marks) 
(ii) Popular Products Ltd. is company incorporated in India, having a
total Share Capital of ` 20 Crores. The Share capital comprises of
20 Lakh equity shares of ` 100 each. Delight Products Ltd. and
Happy Products Ltd. hold 2,50,000 and 3,50,000 shares
respectively in Popular Products Ltd. Another company, Cheerful
Products Ltd. holds 2,50,000 shares in Popular Products Ltd. Jovial
Ltd. is the holding company for all the above three companies
namely Delight Products Ltd.; Happy Products Ltd. and Cheerful
Products Ltd. Can Jovial Ltd. be termed as a subsidiary company
of Popular Products Ltd.
State the related provision in favour of your answer, if Jovial Ltd.
controls the composition of directors of Popular Products Ltd.
(3 Marks) 
(c) Who is considered as an agent under the Indian Contract Act, 1872, and
what are the duties and obligations associated with this role? (6 Marks)
4. (a)  (i) Mr. Om Kashyap was a big businessman of Pune City having two 
sons and one married daughter. He decided to gift his house to his 
daughter. For this purpose, he called his lawyer at his house and 
made a written document for such gift. The lawyer advised him to 
get the transfer document properly registered. When they both 
were going for registration of document, they met with an accident, 
and both of them died. Later, the daughter found the document and 
claimed the house on the basis of that document.  Explain, whether 
she can get the house as gift under the Indian Contract Act, 1872? 
 (4 Marks) 
99
(ii) Due to urgent need of money amounting to ` 3,00,000, Pawan
approached Raman and asked him for the money. Raman lent the
money on the guarantee of Suraj and Tarun. Pawan makes default
in payment and Suraj pays full amount to Raman. Suraj, afterwards,
claimed contribution from Tarun but Tarun refused to contribute on
the basis that there is no contract between Suraj and him. Examine
referring to the provisions of the Indian Contract Act, 1872, whether
Tarun can escape from his liability.  (3 Marks)
(b) State the Difference between promissory note and bill of exchange.”
 (7 Marks) 
(c) What do you understand by Law? Also, elaborate the procedure for
making a law.   (6 Marks)
5. (a)  Simran went to a Jewellery shop and asked the salesgirl to show her
diamond bangles with Ruby stones. The Jeweller told her that we have 
a lot of designs of diamond bangles but with red stones if she chooses 
for herself any special design of diamond bangle with red stones, they 
will replace red stones with Ruby stones. But for the Ruby stones they 
will charge some extra cost. Simran selected a beautiful set of designer 
bangles and paid for them. She also paid the extra cost of Ruby stones. 
The Jeweller requested her to come back a week later for delivery of 
those bangles. When she came after a week to take delivery of bangles, 
she noticed that due to Ruby stones, the design of bangles has been 
completely disturbed. Now, she wants to terminate the contract and thus, 
asked the Jeweller to give her money back, but he refused for the same. 
Answer the following questions as per the Sale of Goods Act, 1930. 
(i) State with reasons whether Simran can recover the amount from
the Jeweller.
(ii) What would be your answer if Jeweller says that he can change the
design, but he will charge extra cost for the same? (7 Marks) 
(b) (i) Subject to agreement by partners, state the rules that should be 
observed by the partners in settling the accounts of the firm after 
dissolution under the provisions of the Indian Partnership Act, 
1932. (4 Marks) 
(ii) State the legal position of a minor partner under the Indian
Partnership Act, 1932 after attaining majority:
(A) When he opts to become a partner of the same firm.
(B) When he decides not to become a partner. (3 Marks) 
(c) How is a contract is discharged under the Indian Contract Act, 1872 and
what are the different ways in which the obligations created by a contract
can come to an end?  (6 Marks) 
6. (a)  (i) M owes money to N. Therefore, he makes a promissory note for 
the amount in favor of N, for safety of transmission he cuts the note 
in half and posts one half to N. He then changes his mind and calls 
100
Page 5


MODEL TEST PAPER 5 
FOUNDATION COURSE 
PAPER 2: BUSINESS LAWS 
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. 
(Time allowed: 3 Hours) (100 Marks) 
1. (a)  (i) Mr. Chetan was travelling to Manali with his wife by bus of 
Himalayan Travels Pvt. Ltd. Due to some technical default in the 
bus, the driver has to stop the bus in a mid-way in cold night. The 
driver advised the passengers to get to the shelter in the nearest 
hotel which was at a distance of only one kilometer from that place. 
The wife of Mr. Chetan caught cold and fell ill due to being asked 
to get down and she had to walk in cold night to reach hotel. 
Mr. Chetan filed the suit against Himalayan Travels Pvt. Ltd. for 
damages for the personal inconvenience, hotel charges and 
medical treatment for his wife. Explain, whether Mr. Chetan would 
get compensation for which he filed the suit under the Indian 
Contract Act, 1872? (4 Marks) 
(ii) Sahil sells by auction to Rohan a horse which Sahil knows to be
unsound. The horse appears to be sound, but Sahil knows about
the unsoundness of the horse. Is this contract valid in the following
circumstances under the Indian Contract Act, 1872:
(A) If Sahil says nothing about the unsoundness of the horse to
Rohan.
(B) If Sahil says nothing about it to Rohan who is Sahil’s son.
(C) If Rohan says to Sahil “If you do not deny it, I shall assume
that the horse is sound.” Sahil says nothing. (3 Marks) 
(b) (i) ABC Limited has allotted equity shares with voting rights to XYZ 
Limited worth ` 15 Crores during the Financial Year 2023-24. After 
that the total Paid-up Equity Share Capital of ABC Limited is ` 100 
Crores. 
Define the Meaning of Associate Company and comment on 
whether ABC Limited and XYZ Limited would be called Associate 
Company as per the provisions of the Companies Act, 2013?   
(4 Marks) 
(ii) MTK Private Limited is a company registered under the Companies
Act, 2013 on 5
th
 January 2022. The company did not start its
business till 31
s 
July 2024.  Identify under which category MTK
Private Limited company is classified. Explain the definition of the
category of the company in detail.     (3 Marks)
97
(c) (i) What is the difference between partnership and co-ownership as 
per the Indian Partnership Act, 1932? (4 Marks) 
(ii) Discuss the provisions regarding personal profits earned by a
partner under the Indian Partnership Act, 1932?     (2 Marks)
2. (a)  Mr. Manoj was running a shop selling good quality washing machines.
Mr. Vivek came to his shop and asked for washing machine which is 
suitable for washing woollen clothes. Mr. Manoj showed him a particular 
machine which Mr. Vivek liked and paid for it. Later on, when the 
machine was delivered to Mr. Vivek’s house, it was found that it was the 
wrong machine and also unfit for washing woollen clothes. He 
immediately informed Mr. Manoj about the delivery of the wrong 
machine. Mr. Manoj refused to exchange the same, saying that the 
contract was complete after the delivery of the washing machine and 
payment of price. With reference to the provisions of the Sale of Goods 
Act, 1930, discuss whether Mr. Manoj is right in refusing to exchange the 
washing machine. (7 Marks) 
(b) (i) Mr. Sooraj sold his business of cotton production to a cotton 
production company, CPL Private Limited, in which he held all the 
shares except one which was held by his wife. He is also the 
creditor in the company for a certain amount. He also got the 
insurance of the stock of cotton of CPL Private Limited in his own 
name and not in the name of the company. After one month, all the 
stocks of the cotton of CPL Private Limited were destroyed by fire. 
Mr. Sooraj filed the claim for such loss with the Insurance company. 
State with reasons that whether the insurance company is liable to 
pay the claim? (4 Marks) 
(ii) Alfa school is a section 8 company which started imparting
education on 1.4.2015, with the sole objective of providing
education to children of weaker society either free of cost or at a
very nominal fee depending upon the financial condition of their
parents. However, on 31
st
 March 2023, it came to the knowledge of
the Central Government that the said school was operating by
violating the objects of its objective clause due to which it was
granted the status of a section 8 company under the Companies
Act, 2013. Describe what powers can be exercised by the Central
Government against the Alfa School, in such a case? (3 Marks)
(c) What do you mean by Designated Partner? Whether it is mandatory to
appoint Designated partner in a LLP? (6 Marks)
3. (a)  M/s ABC & Associates, a partnership firm with A, B and C as senior
partners engaged in the business of curtain manufacturing and exporting 
to foreign countries.  On 25
th
 August, 2022, they inducted Mr. P, an 
expert in the field of curtain manufacturing as their partner. On 10
th
 
January 2024, Mr. P was blamed for unauthorized activities and thus 
expelled from the partnership by approval of all of the remaining 
partners. 
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(i) Examine whether action by the partners was justified or not?
(ii) What should have the factors to be kept in mind prior expelling a
partner from the firm by other partners according to the provisions
of the Indian Partnership Act, 1932? (7 Marks) 
(b) (i) Powertech Limited was registered as a public company. There are 
230 members in the company as noted below: 
(a) Directors and their relatives 190 
(b) Employees  15 
(c) Ex-Employees (Shares were allotted when
they were employees)  10 
(d) 5 couples holding shares jointly in the name of
husband and wife (5*2)  10 
(e) Others 5 
The Board of Directors of Powertech Limited proposes to convert it 
into a private company. Also advise whether a reduction in the 
number of members is necessary.   (4 Marks) 
(ii) Popular Products Ltd. is company incorporated in India, having a
total Share Capital of ` 20 Crores. The Share capital comprises of
20 Lakh equity shares of ` 100 each. Delight Products Ltd. and
Happy Products Ltd. hold 2,50,000 and 3,50,000 shares
respectively in Popular Products Ltd. Another company, Cheerful
Products Ltd. holds 2,50,000 shares in Popular Products Ltd. Jovial
Ltd. is the holding company for all the above three companies
namely Delight Products Ltd.; Happy Products Ltd. and Cheerful
Products Ltd. Can Jovial Ltd. be termed as a subsidiary company
of Popular Products Ltd.
State the related provision in favour of your answer, if Jovial Ltd.
controls the composition of directors of Popular Products Ltd.
(3 Marks) 
(c) Who is considered as an agent under the Indian Contract Act, 1872, and
what are the duties and obligations associated with this role? (6 Marks)
4. (a)  (i) Mr. Om Kashyap was a big businessman of Pune City having two 
sons and one married daughter. He decided to gift his house to his 
daughter. For this purpose, he called his lawyer at his house and 
made a written document for such gift. The lawyer advised him to 
get the transfer document properly registered. When they both 
were going for registration of document, they met with an accident, 
and both of them died. Later, the daughter found the document and 
claimed the house on the basis of that document.  Explain, whether 
she can get the house as gift under the Indian Contract Act, 1872? 
 (4 Marks) 
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(ii) Due to urgent need of money amounting to ` 3,00,000, Pawan
approached Raman and asked him for the money. Raman lent the
money on the guarantee of Suraj and Tarun. Pawan makes default
in payment and Suraj pays full amount to Raman. Suraj, afterwards,
claimed contribution from Tarun but Tarun refused to contribute on
the basis that there is no contract between Suraj and him. Examine
referring to the provisions of the Indian Contract Act, 1872, whether
Tarun can escape from his liability.  (3 Marks)
(b) State the Difference between promissory note and bill of exchange.”
 (7 Marks) 
(c) What do you understand by Law? Also, elaborate the procedure for
making a law.   (6 Marks)
5. (a)  Simran went to a Jewellery shop and asked the salesgirl to show her
diamond bangles with Ruby stones. The Jeweller told her that we have 
a lot of designs of diamond bangles but with red stones if she chooses 
for herself any special design of diamond bangle with red stones, they 
will replace red stones with Ruby stones. But for the Ruby stones they 
will charge some extra cost. Simran selected a beautiful set of designer 
bangles and paid for them. She also paid the extra cost of Ruby stones. 
The Jeweller requested her to come back a week later for delivery of 
those bangles. When she came after a week to take delivery of bangles, 
she noticed that due to Ruby stones, the design of bangles has been 
completely disturbed. Now, she wants to terminate the contract and thus, 
asked the Jeweller to give her money back, but he refused for the same. 
Answer the following questions as per the Sale of Goods Act, 1930. 
(i) State with reasons whether Simran can recover the amount from
the Jeweller.
(ii) What would be your answer if Jeweller says that he can change the
design, but he will charge extra cost for the same? (7 Marks) 
(b) (i) Subject to agreement by partners, state the rules that should be 
observed by the partners in settling the accounts of the firm after 
dissolution under the provisions of the Indian Partnership Act, 
1932. (4 Marks) 
(ii) State the legal position of a minor partner under the Indian
Partnership Act, 1932 after attaining majority:
(A) When he opts to become a partner of the same firm.
(B) When he decides not to become a partner. (3 Marks) 
(c) How is a contract is discharged under the Indian Contract Act, 1872 and
what are the different ways in which the obligations created by a contract
can come to an end?  (6 Marks) 
6. (a)  (i) M owes money to N. Therefore, he makes a promissory note for 
the amount in favor of N, for safety of transmission he cuts the note 
in half and posts one half to N. He then changes his mind and calls 
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upon N to return half of the note which he had sent. N requires M 
to send the other half of the promissory note. Decide how rights of 
the parties are to be adjusted. (4 Marks) 
(ii) Rama executes a promissory note in the following form, 'I promise
to pay a sum of `10,000 after three months'. Decide whether the
promissory note is a valid promissory note. (3 Marks)
(b) What constitutes a contingent contract under the Indian Contract Act,
1872, and what are its essential elements?  (6 Marks)
(c) Describe in brief the rights of the buyer against the seller in case of
breach of contract of Sale under the Sale of Goods Act, 1930.
 (7 Marks) 
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