Business Laws Past Year Question Paper (Paper-2) - September 2024 (Answer Key) | Business Laws for CA Foundation PDF Download

 Page 1


PAPER – 2: BUSINESS LAWS  
Question No. 1 is compulsory. 
Attempt any four questions from the remaining five questions. 
Working notes should form part of the Answers 
Question 1 
(a) (i) 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? (3 Marks) 
(ii) Mr. A offered to sell 25 chairs to Mr. B @ ` 1,500 per chair on 
12.02.2024. A promised B that he would keep the offer open till 
15.02.2024. However, on 13.02.2024, he sold those chairs to Mr. C @  
` 1,700 per chair without the knowledge of B. Mr. B communicated the 
acceptance of the above offer on 14.02.2024. 
Advise, with reference to provisions of the Indian Contract Act, 1872 
whether Mr. B can claim damages from Mr. A? (2 Marks) 
(iii) 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? (2 Marks) 
(b) (i) Kamal, a Chartered Accountant started his e-commerce business by 
incorporating a One Person Company (the OPC) on 1
st
 October, 2023. 
He, being a sole member of the OPC named his brother Sudhakar, with 
Page 2


PAPER – 2: BUSINESS LAWS  
Question No. 1 is compulsory. 
Attempt any four questions from the remaining five questions. 
Working notes should form part of the Answers 
Question 1 
(a) (i) 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? (3 Marks) 
(ii) Mr. A offered to sell 25 chairs to Mr. B @ ` 1,500 per chair on 
12.02.2024. A promised B that he would keep the offer open till 
15.02.2024. However, on 13.02.2024, he sold those chairs to Mr. C @  
` 1,700 per chair without the knowledge of B. Mr. B communicated the 
acceptance of the above offer on 14.02.2024. 
Advise, with reference to provisions of the Indian Contract Act, 1872 
whether Mr. B can claim damages from Mr. A? (2 Marks) 
(iii) 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? (2 Marks) 
(b) (i) Kamal, a Chartered Accountant started his e-commerce business by 
incorporating a One Person Company (the OPC) on 1
st
 October, 2023. 
He, being a sole member of the OPC named his brother Sudhakar, with 
 FOUNDATION EXAMINATION: SEPTEMBER 2024 
 
 
SUGGESTED ANSWER 
2 
his consent, as his nominee in the Memorandum of Association of the 
OPC. Now, Kamal intends to replace Sudhakar and to nominate any 
one of the following short- listed friends as a nominee with effect from 
1
st
 January, 2024. 
(1) Robert, an Indian citizen, and a resident in India shifted his 
residence to the USA on 31
st
 May, 2022 and has not returned to 
India till 1
st
 January, 2024. 
(2) Dinkar, an Indian citizen, and non-resident in India came for 
employment in India on 1
st
 April, 2023 and have been continuously 
staying in India since then. 
Referring to the provisions of the Companies Act, 2013, advise Kamal 
regarding eligibility of his short-listed friends to be appointed nominee 
and the procedure to be followed for changing the name of the 
nominee as per the provisions of the Companies Act, 2013. (4 Marks) 
(ii)  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?       (3 Marks) 
(c) Referring to the provisions of the Indian Partnership Act, 1932, answer the 
following: 
(i) "If a partner is otherwise expelled; the expulsion is null and void." 
Discuss. (4 Marks) 
(ii) "The partner who is expelled will cease to be liable to the third party 
for the act of the firm done after expulsion." Analyse. (2 Marks) 
Answer  
(a) (i) According to Section 69 of the Indian Contract Act, 1872, a person who 
is interested in the payment of money which another is bound by law to 
pay, and who therefore pays it, is entitled to be reimbursed by the other.  
In the instant case, Mr. M paid the electricity bill to avoid the 
disconnection that was pending due to Mr. L's failure to fulfil his 
Page 3


PAPER – 2: BUSINESS LAWS  
Question No. 1 is compulsory. 
Attempt any four questions from the remaining five questions. 
Working notes should form part of the Answers 
Question 1 
(a) (i) 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? (3 Marks) 
(ii) Mr. A offered to sell 25 chairs to Mr. B @ ` 1,500 per chair on 
12.02.2024. A promised B that he would keep the offer open till 
15.02.2024. However, on 13.02.2024, he sold those chairs to Mr. C @  
` 1,700 per chair without the knowledge of B. Mr. B communicated the 
acceptance of the above offer on 14.02.2024. 
Advise, with reference to provisions of the Indian Contract Act, 1872 
whether Mr. B can claim damages from Mr. A? (2 Marks) 
(iii) 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? (2 Marks) 
(b) (i) Kamal, a Chartered Accountant started his e-commerce business by 
incorporating a One Person Company (the OPC) on 1
st
 October, 2023. 
He, being a sole member of the OPC named his brother Sudhakar, with 
 FOUNDATION EXAMINATION: SEPTEMBER 2024 
 
 
SUGGESTED ANSWER 
2 
his consent, as his nominee in the Memorandum of Association of the 
OPC. Now, Kamal intends to replace Sudhakar and to nominate any 
one of the following short- listed friends as a nominee with effect from 
1
st
 January, 2024. 
(1) Robert, an Indian citizen, and a resident in India shifted his 
residence to the USA on 31
st
 May, 2022 and has not returned to 
India till 1
st
 January, 2024. 
(2) Dinkar, an Indian citizen, and non-resident in India came for 
employment in India on 1
st
 April, 2023 and have been continuously 
staying in India since then. 
Referring to the provisions of the Companies Act, 2013, advise Kamal 
regarding eligibility of his short-listed friends to be appointed nominee 
and the procedure to be followed for changing the name of the 
nominee as per the provisions of the Companies Act, 2013. (4 Marks) 
(ii)  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?       (3 Marks) 
(c) Referring to the provisions of the Indian Partnership Act, 1932, answer the 
following: 
(i) "If a partner is otherwise expelled; the expulsion is null and void." 
Discuss. (4 Marks) 
(ii) "The partner who is expelled will cease to be liable to the third party 
for the act of the firm done after expulsion." Analyse. (2 Marks) 
Answer  
(a) (i) According to Section 69 of the Indian Contract Act, 1872, a person who 
is interested in the payment of money which another is bound by law to 
pay, and who therefore pays it, is entitled to be reimbursed by the other.  
In the instant case, Mr. M paid the electricity bill to avoid the 
disconnection that was pending due to Mr. L's failure to fulfil his 
 BUSINESS LAWS 
 
SUGGESTED ANSWER 
3 
contractual obligation. Hence, Mr. M is entitled to be reimbursed  
? 50,000 from Mr. L.  
(ii) In terms of Section 5 of the Indian Contract Act, 1872, a proposal can 
be revoked at any time before the communication of its acceptance is 
complete as against the proposer. 
Accordingly, an offer may be revoked by the offeror before its 
acceptance, even though he had originally agreed to hold it open for 
a definite period of time. So long as it is a mere offer, it can be 
withdrawn whenever the offeror desires. 
In the instant case, B cannot claim damages from A because the offer 
made by A is a mere offer and it can be withdrawn whenever A 
desires. 
(iii) The general rule is that an agreement made without consideration is 
void (Section 25 of the Indian Contract Act, 1872).  
However, in the following case, the agreement though made without 
consideration, will be valid and enforceable. 
Charity: If a promisee undertakes the liability on the promise of the 
person to contribute to charity, there the contract shall be valid.  
In the instant case, Mr. A can claim 1.5 lakh from Mr. S. 
(b) (i)  As per Rule 3 of the Companies (Incorporation) Rules, 2014:  
Only a natural person who is an Indian citizen whether resident in 
India or otherwise 
(a)  shall be eligible to incorporate a One Person Company; 
(b)  shall be a nominee for the sole member of a One Person 
Company. 
Here, “resident in India” means a person who has stayed in India for a 
period of not less than one hundred and twenty days during the 
immediately preceding financial year. 
In the instant case,  
(i) Robert cannot be appointed as a nominee in the OPC by Kamal 
as his stay in the preceding F/Y 2022-23 is only for 61 days which 
is less than 120 days. 
Page 4


PAPER – 2: BUSINESS LAWS  
Question No. 1 is compulsory. 
Attempt any four questions from the remaining five questions. 
Working notes should form part of the Answers 
Question 1 
(a) (i) 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? (3 Marks) 
(ii) Mr. A offered to sell 25 chairs to Mr. B @ ` 1,500 per chair on 
12.02.2024. A promised B that he would keep the offer open till 
15.02.2024. However, on 13.02.2024, he sold those chairs to Mr. C @  
` 1,700 per chair without the knowledge of B. Mr. B communicated the 
acceptance of the above offer on 14.02.2024. 
Advise, with reference to provisions of the Indian Contract Act, 1872 
whether Mr. B can claim damages from Mr. A? (2 Marks) 
(iii) 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? (2 Marks) 
(b) (i) Kamal, a Chartered Accountant started his e-commerce business by 
incorporating a One Person Company (the OPC) on 1
st
 October, 2023. 
He, being a sole member of the OPC named his brother Sudhakar, with 
 FOUNDATION EXAMINATION: SEPTEMBER 2024 
 
 
SUGGESTED ANSWER 
2 
his consent, as his nominee in the Memorandum of Association of the 
OPC. Now, Kamal intends to replace Sudhakar and to nominate any 
one of the following short- listed friends as a nominee with effect from 
1
st
 January, 2024. 
(1) Robert, an Indian citizen, and a resident in India shifted his 
residence to the USA on 31
st
 May, 2022 and has not returned to 
India till 1
st
 January, 2024. 
(2) Dinkar, an Indian citizen, and non-resident in India came for 
employment in India on 1
st
 April, 2023 and have been continuously 
staying in India since then. 
Referring to the provisions of the Companies Act, 2013, advise Kamal 
regarding eligibility of his short-listed friends to be appointed nominee 
and the procedure to be followed for changing the name of the 
nominee as per the provisions of the Companies Act, 2013. (4 Marks) 
(ii)  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?       (3 Marks) 
(c) Referring to the provisions of the Indian Partnership Act, 1932, answer the 
following: 
(i) "If a partner is otherwise expelled; the expulsion is null and void." 
Discuss. (4 Marks) 
(ii) "The partner who is expelled will cease to be liable to the third party 
for the act of the firm done after expulsion." Analyse. (2 Marks) 
Answer  
(a) (i) According to Section 69 of the Indian Contract Act, 1872, a person who 
is interested in the payment of money which another is bound by law to 
pay, and who therefore pays it, is entitled to be reimbursed by the other.  
In the instant case, Mr. M paid the electricity bill to avoid the 
disconnection that was pending due to Mr. L's failure to fulfil his 
 BUSINESS LAWS 
 
SUGGESTED ANSWER 
3 
contractual obligation. Hence, Mr. M is entitled to be reimbursed  
? 50,000 from Mr. L.  
(ii) In terms of Section 5 of the Indian Contract Act, 1872, a proposal can 
be revoked at any time before the communication of its acceptance is 
complete as against the proposer. 
Accordingly, an offer may be revoked by the offeror before its 
acceptance, even though he had originally agreed to hold it open for 
a definite period of time. So long as it is a mere offer, it can be 
withdrawn whenever the offeror desires. 
In the instant case, B cannot claim damages from A because the offer 
made by A is a mere offer and it can be withdrawn whenever A 
desires. 
(iii) The general rule is that an agreement made without consideration is 
void (Section 25 of the Indian Contract Act, 1872).  
However, in the following case, the agreement though made without 
consideration, will be valid and enforceable. 
Charity: If a promisee undertakes the liability on the promise of the 
person to contribute to charity, there the contract shall be valid.  
In the instant case, Mr. A can claim 1.5 lakh from Mr. S. 
(b) (i)  As per Rule 3 of the Companies (Incorporation) Rules, 2014:  
Only a natural person who is an Indian citizen whether resident in 
India or otherwise 
(a)  shall be eligible to incorporate a One Person Company; 
(b)  shall be a nominee for the sole member of a One Person 
Company. 
Here, “resident in India” means a person who has stayed in India for a 
period of not less than one hundred and twenty days during the 
immediately preceding financial year. 
In the instant case,  
(i) Robert cannot be appointed as a nominee in the OPC by Kamal 
as his stay in the preceding F/Y 2022-23 is only for 61 days which 
is less than 120 days. 
 FOUNDATION EXAMINATION: SEPTEMBER 2024 
 
 
SUGGESTED ANSWER 
4 
(ii) Dinkar can be appointed as a nominee in the OPC by Kamal as he 
is an Indian Citizen and non-resident in India.  
Alternative Answer as follows:  
As per Rule 3 of the Companies (Incorporation) Rules, 2014: 
Only a natural person who is an Indian citizen whether resident in 
India or otherwise and has stayed in India for a period of not less 
than 120 days during the immediately preceding financial year 
• shall be eligible to incorporate a OPC;  
• shall be a nominee for the sole member of a OPC. 
In the instant case,  
(i) Robert cannot be appointed as a nominee in the OPC by Kamal 
as his stay in the preceding F/Y 2022-23 is only for 61 days which 
is less than 120 days. 
(ii) Dinkar cannot be appointed as a nominee in the OPC by Kamal 
as he has not stayed in the preceding F/Y 2022-23 for a single 
day. 
Procedure for changing the nominee: The member of OPC may at 
any time change the name of nominee by giving notice to the 
company and the company shall intimate the same to the Registrar. 
Any such change in the name of the person shall not be deemed to 
be an alteration of the memorandum. 
(ii) According to Section 455 of the Companies Act, 2013, where a 
company is formed and registered under this Act for a future project 
or to hold an asset or intellectual property and has no significant 
accounting transaction, such a company or an inactive company may 
make an application to the Registrar in such manner as may be 
prescribed for obtaining the status of a dormant company.  
In the instant case, XYZ Ltd. has made a significant accounting 
transaction (down payment of ?1 crore for plant and machinery), it 
does not meet the criteria of a dormant company under Section 455 
of the Companies Act, 2013. 
Therefore, XYZ Ltd. cannot acquire the status of dormant company. 
Page 5


PAPER – 2: BUSINESS LAWS  
Question No. 1 is compulsory. 
Attempt any four questions from the remaining five questions. 
Working notes should form part of the Answers 
Question 1 
(a) (i) 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? (3 Marks) 
(ii) Mr. A offered to sell 25 chairs to Mr. B @ ` 1,500 per chair on 
12.02.2024. A promised B that he would keep the offer open till 
15.02.2024. However, on 13.02.2024, he sold those chairs to Mr. C @  
` 1,700 per chair without the knowledge of B. Mr. B communicated the 
acceptance of the above offer on 14.02.2024. 
Advise, with reference to provisions of the Indian Contract Act, 1872 
whether Mr. B can claim damages from Mr. A? (2 Marks) 
(iii) 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? (2 Marks) 
(b) (i) Kamal, a Chartered Accountant started his e-commerce business by 
incorporating a One Person Company (the OPC) on 1
st
 October, 2023. 
He, being a sole member of the OPC named his brother Sudhakar, with 
 FOUNDATION EXAMINATION: SEPTEMBER 2024 
 
 
SUGGESTED ANSWER 
2 
his consent, as his nominee in the Memorandum of Association of the 
OPC. Now, Kamal intends to replace Sudhakar and to nominate any 
one of the following short- listed friends as a nominee with effect from 
1
st
 January, 2024. 
(1) Robert, an Indian citizen, and a resident in India shifted his 
residence to the USA on 31
st
 May, 2022 and has not returned to 
India till 1
st
 January, 2024. 
(2) Dinkar, an Indian citizen, and non-resident in India came for 
employment in India on 1
st
 April, 2023 and have been continuously 
staying in India since then. 
Referring to the provisions of the Companies Act, 2013, advise Kamal 
regarding eligibility of his short-listed friends to be appointed nominee 
and the procedure to be followed for changing the name of the 
nominee as per the provisions of the Companies Act, 2013. (4 Marks) 
(ii)  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?       (3 Marks) 
(c) Referring to the provisions of the Indian Partnership Act, 1932, answer the 
following: 
(i) "If a partner is otherwise expelled; the expulsion is null and void." 
Discuss. (4 Marks) 
(ii) "The partner who is expelled will cease to be liable to the third party 
for the act of the firm done after expulsion." Analyse. (2 Marks) 
Answer  
(a) (i) According to Section 69 of the Indian Contract Act, 1872, a person who 
is interested in the payment of money which another is bound by law to 
pay, and who therefore pays it, is entitled to be reimbursed by the other.  
In the instant case, Mr. M paid the electricity bill to avoid the 
disconnection that was pending due to Mr. L's failure to fulfil his 
 BUSINESS LAWS 
 
SUGGESTED ANSWER 
3 
contractual obligation. Hence, Mr. M is entitled to be reimbursed  
? 50,000 from Mr. L.  
(ii) In terms of Section 5 of the Indian Contract Act, 1872, a proposal can 
be revoked at any time before the communication of its acceptance is 
complete as against the proposer. 
Accordingly, an offer may be revoked by the offeror before its 
acceptance, even though he had originally agreed to hold it open for 
a definite period of time. So long as it is a mere offer, it can be 
withdrawn whenever the offeror desires. 
In the instant case, B cannot claim damages from A because the offer 
made by A is a mere offer and it can be withdrawn whenever A 
desires. 
(iii) The general rule is that an agreement made without consideration is 
void (Section 25 of the Indian Contract Act, 1872).  
However, in the following case, the agreement though made without 
consideration, will be valid and enforceable. 
Charity: If a promisee undertakes the liability on the promise of the 
person to contribute to charity, there the contract shall be valid.  
In the instant case, Mr. A can claim 1.5 lakh from Mr. S. 
(b) (i)  As per Rule 3 of the Companies (Incorporation) Rules, 2014:  
Only a natural person who is an Indian citizen whether resident in 
India or otherwise 
(a)  shall be eligible to incorporate a One Person Company; 
(b)  shall be a nominee for the sole member of a One Person 
Company. 
Here, “resident in India” means a person who has stayed in India for a 
period of not less than one hundred and twenty days during the 
immediately preceding financial year. 
In the instant case,  
(i) Robert cannot be appointed as a nominee in the OPC by Kamal 
as his stay in the preceding F/Y 2022-23 is only for 61 days which 
is less than 120 days. 
 FOUNDATION EXAMINATION: SEPTEMBER 2024 
 
 
SUGGESTED ANSWER 
4 
(ii) Dinkar can be appointed as a nominee in the OPC by Kamal as he 
is an Indian Citizen and non-resident in India.  
Alternative Answer as follows:  
As per Rule 3 of the Companies (Incorporation) Rules, 2014: 
Only a natural person who is an Indian citizen whether resident in 
India or otherwise and has stayed in India for a period of not less 
than 120 days during the immediately preceding financial year 
• shall be eligible to incorporate a OPC;  
• shall be a nominee for the sole member of a OPC. 
In the instant case,  
(i) Robert cannot be appointed as a nominee in the OPC by Kamal 
as his stay in the preceding F/Y 2022-23 is only for 61 days which 
is less than 120 days. 
(ii) Dinkar cannot be appointed as a nominee in the OPC by Kamal 
as he has not stayed in the preceding F/Y 2022-23 for a single 
day. 
Procedure for changing the nominee: The member of OPC may at 
any time change the name of nominee by giving notice to the 
company and the company shall intimate the same to the Registrar. 
Any such change in the name of the person shall not be deemed to 
be an alteration of the memorandum. 
(ii) According to Section 455 of the Companies Act, 2013, where a 
company is formed and registered under this Act for a future project 
or to hold an asset or intellectual property and has no significant 
accounting transaction, such a company or an inactive company may 
make an application to the Registrar in such manner as may be 
prescribed for obtaining the status of a dormant company.  
In the instant case, XYZ Ltd. has made a significant accounting 
transaction (down payment of ?1 crore for plant and machinery), it 
does not meet the criteria of a dormant company under Section 455 
of the Companies Act, 2013. 
Therefore, XYZ Ltd. cannot acquire the status of dormant company. 
 BUSINESS LAWS 
 
SUGGESTED ANSWER 
5 
(c) (i) If a partner is otherwise expelled, the expulsion is null and void. 
According to Section 33 of the Indian Partnership Act, 1932  
(i) the power of expulsion must have existed in a contract between 
the partners;  
(ii) the power has been exercised by a majority of the partners; and  
(iii) it has been exercised in good faith.  
If all these conditions are not present, the expulsion is not deemed to 
be in bona fide interest of the business of the firm. 
The test of good faith as required under Section 33(1) includes three 
things:  
(i) The expulsion must be in the interest of the partnership.  
(ii) The partner to be expelled is served with a notice.   
(iii)  He is given an opportunity of being heard.  
Hence, it is correct to say that, if a partner is otherwise expelled, the 
expulsion is null and void.  
(ii) “The partner who is expelled will cease to be liable to the third 
party for the act of the firm done after expulsion” 
According to Section 32(3) of the Indian Partnership Act, 1932, 
notwithstanding the expulsion a partner from a firm, he and the 
partners continue to be liable as partners to third parties for any act 
done by any of them which would have been an act of the firm if 
done before the expulsion, until public notice is given of the 
expulsion.  
However, an expelled partner is not liable to any third party who 
deals with the firm without knowing that he was a partner. 
Hence, the statement given is partially correct. 
Question 2 
(a) (i) M/s RK Traders (Buyer) made a contract with M/s CK Traders (Seller) 
for purchase of 2000 kg of basmati rice specifically grown in 
Chhattisgarh State should be packed in pink colour bags of 25 kg each 
to identify the place of origin by specifying the mode of packing of