CLAT PG 2024 Question Paper with Solution (Set A) | CLAT PG Mock Test Series 2025 PDF Download

 Page 1


CLAT PG Question Paper with Solution - SET A
Comprehension Passage 1
An unpleasant tussle ensured between the TATA Sons and Cyrus Pallonji Mistry (“CPM”)
in October 2016, when Mistry, who was the sixth chairman of Tata Sons, was ousted from
the position of Executive Chairman of Tata Sons Limited. CPM took over as the chairman
in 2012 after Ratan Tata announced his retirement. Tata Group patriarch Ratan Tata had per-
sonally asked Cyrus Mistry to resign as chairman of Tata Sons as the board had lost faith in
him, but his refusal led to the removal via majority vote. Cyrus Investments Private limited
and Sterling Investment Corporation Private Limited belonged to the Shapoorji Palloni Group
in which CPM held a controlling interest (about 2the nine directors of Tata Sons voted for
CPM’s replacement after Farida Khambata abstained and Mistry was declared ineligible to
vote as he was an interested director. Mistry challenged his removal, accusing the board of
mismanagement and of oppressing minority shareholders. however, the National Company
Law Tribunal (NCLT) rejected his petition. After this Mistry challenged his removal in Na-
tional Company Law Appellate Tribunal (NCLAT). In 2018, NCLAT order restored Mistry as
the group’s executive chairman. Tata Sons challenged that NCLAT order in Supreme Court.
CPM also challenged the order for few more relief. Supreme Court stayed NCLAT’s order re-
instating Cyrus Mistry as the executive chairman of Tata Sons and restoring his directorships
in the holding company as well as three group companies, with a preliminary observation that
the first impression of the order was “not good” and that the tribunal ‘could’ not have given
consequential relief that had not been sought in the first place. Ultimately, the Supreme Court
decided the case in favour of Tata Sons. One of the issues decided by Supreme Court was that
“whether the case was fit to be qualified as a situation of ‘Oppression and Mismanagement’
under Section 241 of the Companies Act, 2013?”. On this issue, the Supreme Court observed
that “unless the removal of a person as a chairman of a company is oppressive or mismanaged
1
Page 2


CLAT PG Question Paper with Solution - SET A
Comprehension Passage 1
An unpleasant tussle ensured between the TATA Sons and Cyrus Pallonji Mistry (“CPM”)
in October 2016, when Mistry, who was the sixth chairman of Tata Sons, was ousted from
the position of Executive Chairman of Tata Sons Limited. CPM took over as the chairman
in 2012 after Ratan Tata announced his retirement. Tata Group patriarch Ratan Tata had per-
sonally asked Cyrus Mistry to resign as chairman of Tata Sons as the board had lost faith in
him, but his refusal led to the removal via majority vote. Cyrus Investments Private limited
and Sterling Investment Corporation Private Limited belonged to the Shapoorji Palloni Group
in which CPM held a controlling interest (about 2the nine directors of Tata Sons voted for
CPM’s replacement after Farida Khambata abstained and Mistry was declared ineligible to
vote as he was an interested director. Mistry challenged his removal, accusing the board of
mismanagement and of oppressing minority shareholders. however, the National Company
Law Tribunal (NCLT) rejected his petition. After this Mistry challenged his removal in Na-
tional Company Law Appellate Tribunal (NCLAT). In 2018, NCLAT order restored Mistry as
the group’s executive chairman. Tata Sons challenged that NCLAT order in Supreme Court.
CPM also challenged the order for few more relief. Supreme Court stayed NCLAT’s order re-
instating Cyrus Mistry as the executive chairman of Tata Sons and restoring his directorships
in the holding company as well as three group companies, with a preliminary observation that
the first impression of the order was “not good” and that the tribunal ‘could’ not have given
consequential relief that had not been sought in the first place. Ultimately, the Supreme Court
decided the case in favour of Tata Sons. One of the issues decided by Supreme Court was that
“whether the case was fit to be qualified as a situation of ‘Oppression and Mismanagement’
under Section 241 of the Companies Act, 2013?”. On this issue, the Supreme Court observed
that “unless the removal of a person as a chairman of a company is oppressive or mismanaged
1
or done in a prejudicial manner damaging the interests of the company, its members or the
public at large, the NCLT cannot interfere with the removal of a person as a Chairman of a
Company in a petition under Section 241 of the Companies Act, 2013” This case highlighted
the point that “an executive chairman does not have sovereign authority over the company. In
corporate democracy, decision making always remains with the Board as long as they enjoy
the pleasure of the shareholders. Likewise, an executive chairman will continue as long as
he/she enjoys the pleasure of the Board. An assumption by the executive chairman that he/she
would have a free hand in running the affairs of the company is incongruous to corporate
governance and corporate democracy. The Tribunal held that the concept of ‘free hand rule’
is antithesis to collective responsibility and collective decision making”. [Based on Tata Con-
sultancy Services Ltd. v. Cyrus Investment Pvt. Ltd., 2021 SCC 122].
1. The parties in this case approached the Supreme Court of India under which of the
following provisions?
(A) Appeal under Section 423 of the Companies Act, 2013.
(B) A Class Action Suit under Section 245 of the Companies Act, 2013.
(C) Special Leave Petition (SLP) under Article 136 of the Constitution of India.
(D) Appeal under Section 421 of the Companies Act, 2013.
Correct Answer: (A) Appeal under Section 423 of the Companies Act, 2013.
Solution: The appeal under Section 423 of the Companies Act, 2013, allows parties to appeal
to a higher authority, including the Supreme Court. This provision applies in the context of
corporate legal proceedings.
Quick Tip
Section 423 provides a direct route for appeals to the Supreme Court in corporate legal
disputes.
2
Page 3


CLAT PG Question Paper with Solution - SET A
Comprehension Passage 1
An unpleasant tussle ensured between the TATA Sons and Cyrus Pallonji Mistry (“CPM”)
in October 2016, when Mistry, who was the sixth chairman of Tata Sons, was ousted from
the position of Executive Chairman of Tata Sons Limited. CPM took over as the chairman
in 2012 after Ratan Tata announced his retirement. Tata Group patriarch Ratan Tata had per-
sonally asked Cyrus Mistry to resign as chairman of Tata Sons as the board had lost faith in
him, but his refusal led to the removal via majority vote. Cyrus Investments Private limited
and Sterling Investment Corporation Private Limited belonged to the Shapoorji Palloni Group
in which CPM held a controlling interest (about 2the nine directors of Tata Sons voted for
CPM’s replacement after Farida Khambata abstained and Mistry was declared ineligible to
vote as he was an interested director. Mistry challenged his removal, accusing the board of
mismanagement and of oppressing minority shareholders. however, the National Company
Law Tribunal (NCLT) rejected his petition. After this Mistry challenged his removal in Na-
tional Company Law Appellate Tribunal (NCLAT). In 2018, NCLAT order restored Mistry as
the group’s executive chairman. Tata Sons challenged that NCLAT order in Supreme Court.
CPM also challenged the order for few more relief. Supreme Court stayed NCLAT’s order re-
instating Cyrus Mistry as the executive chairman of Tata Sons and restoring his directorships
in the holding company as well as three group companies, with a preliminary observation that
the first impression of the order was “not good” and that the tribunal ‘could’ not have given
consequential relief that had not been sought in the first place. Ultimately, the Supreme Court
decided the case in favour of Tata Sons. One of the issues decided by Supreme Court was that
“whether the case was fit to be qualified as a situation of ‘Oppression and Mismanagement’
under Section 241 of the Companies Act, 2013?”. On this issue, the Supreme Court observed
that “unless the removal of a person as a chairman of a company is oppressive or mismanaged
1
or done in a prejudicial manner damaging the interests of the company, its members or the
public at large, the NCLT cannot interfere with the removal of a person as a Chairman of a
Company in a petition under Section 241 of the Companies Act, 2013” This case highlighted
the point that “an executive chairman does not have sovereign authority over the company. In
corporate democracy, decision making always remains with the Board as long as they enjoy
the pleasure of the shareholders. Likewise, an executive chairman will continue as long as
he/she enjoys the pleasure of the Board. An assumption by the executive chairman that he/she
would have a free hand in running the affairs of the company is incongruous to corporate
governance and corporate democracy. The Tribunal held that the concept of ‘free hand rule’
is antithesis to collective responsibility and collective decision making”. [Based on Tata Con-
sultancy Services Ltd. v. Cyrus Investment Pvt. Ltd., 2021 SCC 122].
1. The parties in this case approached the Supreme Court of India under which of the
following provisions?
(A) Appeal under Section 423 of the Companies Act, 2013.
(B) A Class Action Suit under Section 245 of the Companies Act, 2013.
(C) Special Leave Petition (SLP) under Article 136 of the Constitution of India.
(D) Appeal under Section 421 of the Companies Act, 2013.
Correct Answer: (A) Appeal under Section 423 of the Companies Act, 2013.
Solution: The appeal under Section 423 of the Companies Act, 2013, allows parties to appeal
to a higher authority, including the Supreme Court. This provision applies in the context of
corporate legal proceedings.
Quick Tip
Section 423 provides a direct route for appeals to the Supreme Court in corporate legal
disputes.
2
2. Rule of ‘supremacy of majority’ in governing the affairs of a company has been set-
tled in a very old leading case of Foss v. Harbottle (1843) 2 Hare 461. In India, which
case diluted the majority rule and held that the interest of the company was above the
interest of its shareholders, either majority or minority?
(A) Rajahmundry Electric Supply Corporation Ltd. v. A. Nageshwara Rao
(B) Bagree Cereals v. Hanuman Prasad Bagri
(C) Shanti Prasad Jain v. Kalinga Tubes Ltd.
(D) Needle Industries (India) Ltd. v. Needle Industries Newey (India)
Correct Answer: (D) Needle Industries (India) Ltd. v. Needle Industries Newey (India)
Solution: The correct answer is (D). The Needle Industries case established that the com-
pany’s interest supersedes shareholder interests, protecting minority shareholders’ rights.
Quick Tip
The Needle Industries case is a landmark decision ensuring corporate governance sup-
ports minority rights.
3. While recommending “Separation of the Roles of Non-executive Chairperson and
Managing Director/ CEO,” the Kotak Mahindra Committee quoted the following text:
“given the importance and the particular nature of the chairmen’s role, it should in prin-
ciple be separate from that of the chief executive. If the two roles are combined in one
person, it represents a considerable concentration of power”. This quote refers to which
of the following Committee Report?
(A) Cohen Committee Report
(B) Cadbury Committee Report
(C) Hampel Committee Report
(D) Narayana Murthy Committee Report
3
Page 4


CLAT PG Question Paper with Solution - SET A
Comprehension Passage 1
An unpleasant tussle ensured between the TATA Sons and Cyrus Pallonji Mistry (“CPM”)
in October 2016, when Mistry, who was the sixth chairman of Tata Sons, was ousted from
the position of Executive Chairman of Tata Sons Limited. CPM took over as the chairman
in 2012 after Ratan Tata announced his retirement. Tata Group patriarch Ratan Tata had per-
sonally asked Cyrus Mistry to resign as chairman of Tata Sons as the board had lost faith in
him, but his refusal led to the removal via majority vote. Cyrus Investments Private limited
and Sterling Investment Corporation Private Limited belonged to the Shapoorji Palloni Group
in which CPM held a controlling interest (about 2the nine directors of Tata Sons voted for
CPM’s replacement after Farida Khambata abstained and Mistry was declared ineligible to
vote as he was an interested director. Mistry challenged his removal, accusing the board of
mismanagement and of oppressing minority shareholders. however, the National Company
Law Tribunal (NCLT) rejected his petition. After this Mistry challenged his removal in Na-
tional Company Law Appellate Tribunal (NCLAT). In 2018, NCLAT order restored Mistry as
the group’s executive chairman. Tata Sons challenged that NCLAT order in Supreme Court.
CPM also challenged the order for few more relief. Supreme Court stayed NCLAT’s order re-
instating Cyrus Mistry as the executive chairman of Tata Sons and restoring his directorships
in the holding company as well as three group companies, with a preliminary observation that
the first impression of the order was “not good” and that the tribunal ‘could’ not have given
consequential relief that had not been sought in the first place. Ultimately, the Supreme Court
decided the case in favour of Tata Sons. One of the issues decided by Supreme Court was that
“whether the case was fit to be qualified as a situation of ‘Oppression and Mismanagement’
under Section 241 of the Companies Act, 2013?”. On this issue, the Supreme Court observed
that “unless the removal of a person as a chairman of a company is oppressive or mismanaged
1
or done in a prejudicial manner damaging the interests of the company, its members or the
public at large, the NCLT cannot interfere with the removal of a person as a Chairman of a
Company in a petition under Section 241 of the Companies Act, 2013” This case highlighted
the point that “an executive chairman does not have sovereign authority over the company. In
corporate democracy, decision making always remains with the Board as long as they enjoy
the pleasure of the shareholders. Likewise, an executive chairman will continue as long as
he/she enjoys the pleasure of the Board. An assumption by the executive chairman that he/she
would have a free hand in running the affairs of the company is incongruous to corporate
governance and corporate democracy. The Tribunal held that the concept of ‘free hand rule’
is antithesis to collective responsibility and collective decision making”. [Based on Tata Con-
sultancy Services Ltd. v. Cyrus Investment Pvt. Ltd., 2021 SCC 122].
1. The parties in this case approached the Supreme Court of India under which of the
following provisions?
(A) Appeal under Section 423 of the Companies Act, 2013.
(B) A Class Action Suit under Section 245 of the Companies Act, 2013.
(C) Special Leave Petition (SLP) under Article 136 of the Constitution of India.
(D) Appeal under Section 421 of the Companies Act, 2013.
Correct Answer: (A) Appeal under Section 423 of the Companies Act, 2013.
Solution: The appeal under Section 423 of the Companies Act, 2013, allows parties to appeal
to a higher authority, including the Supreme Court. This provision applies in the context of
corporate legal proceedings.
Quick Tip
Section 423 provides a direct route for appeals to the Supreme Court in corporate legal
disputes.
2
2. Rule of ‘supremacy of majority’ in governing the affairs of a company has been set-
tled in a very old leading case of Foss v. Harbottle (1843) 2 Hare 461. In India, which
case diluted the majority rule and held that the interest of the company was above the
interest of its shareholders, either majority or minority?
(A) Rajahmundry Electric Supply Corporation Ltd. v. A. Nageshwara Rao
(B) Bagree Cereals v. Hanuman Prasad Bagri
(C) Shanti Prasad Jain v. Kalinga Tubes Ltd.
(D) Needle Industries (India) Ltd. v. Needle Industries Newey (India)
Correct Answer: (D) Needle Industries (India) Ltd. v. Needle Industries Newey (India)
Solution: The correct answer is (D). The Needle Industries case established that the com-
pany’s interest supersedes shareholder interests, protecting minority shareholders’ rights.
Quick Tip
The Needle Industries case is a landmark decision ensuring corporate governance sup-
ports minority rights.
3. While recommending “Separation of the Roles of Non-executive Chairperson and
Managing Director/ CEO,” the Kotak Mahindra Committee quoted the following text:
“given the importance and the particular nature of the chairmen’s role, it should in prin-
ciple be separate from that of the chief executive. If the two roles are combined in one
person, it represents a considerable concentration of power”. This quote refers to which
of the following Committee Report?
(A) Cohen Committee Report
(B) Cadbury Committee Report
(C) Hampel Committee Report
(D) Narayana Murthy Committee Report
3
Correct Answer: (B) Cadbury Committee Report
Solution: The Cadbury Committee Report is well-known for advocating the separation of
roles between Chairperson and CEO to prevent excessive concentration of power, promoting
stronger corporate governance.
Quick Tip
Separating key roles like Chairperson and CEO strengthens accountability and checks
on power.
4. Which of the following statements is true regarding the share qualification require-
ment under section 244 for applying for relief from oppression/mismanagement under
section 241 of the Companies Act, 2013 (in the case of a company having a share capital)?
(A) Members not less than 100 members of the company or 10% of the total number of its
members, whichever is less, or any member or members holding not less than 10% of the
issued share capital of the company.
(B) Members not less than 100 members of the company and 10% of the total number of its
members or members holding not less than 10% of the issued share capital of the company.
(C) Not less than 20% of the total number of its members.
(D) Members not less than 50 members of the company and 5% of the total number of its
members or members holding not less than 5% of the issued share capital of the company.
Correct Answer: (A)
Solution: Under section 244 of the Companies Act, 2013, the qualification requirement al-
lows members holding at least 10% of the issued share capital to seek relief from oppres-
sion/mismanagement.
4
Page 5


CLAT PG Question Paper with Solution - SET A
Comprehension Passage 1
An unpleasant tussle ensured between the TATA Sons and Cyrus Pallonji Mistry (“CPM”)
in October 2016, when Mistry, who was the sixth chairman of Tata Sons, was ousted from
the position of Executive Chairman of Tata Sons Limited. CPM took over as the chairman
in 2012 after Ratan Tata announced his retirement. Tata Group patriarch Ratan Tata had per-
sonally asked Cyrus Mistry to resign as chairman of Tata Sons as the board had lost faith in
him, but his refusal led to the removal via majority vote. Cyrus Investments Private limited
and Sterling Investment Corporation Private Limited belonged to the Shapoorji Palloni Group
in which CPM held a controlling interest (about 2the nine directors of Tata Sons voted for
CPM’s replacement after Farida Khambata abstained and Mistry was declared ineligible to
vote as he was an interested director. Mistry challenged his removal, accusing the board of
mismanagement and of oppressing minority shareholders. however, the National Company
Law Tribunal (NCLT) rejected his petition. After this Mistry challenged his removal in Na-
tional Company Law Appellate Tribunal (NCLAT). In 2018, NCLAT order restored Mistry as
the group’s executive chairman. Tata Sons challenged that NCLAT order in Supreme Court.
CPM also challenged the order for few more relief. Supreme Court stayed NCLAT’s order re-
instating Cyrus Mistry as the executive chairman of Tata Sons and restoring his directorships
in the holding company as well as three group companies, with a preliminary observation that
the first impression of the order was “not good” and that the tribunal ‘could’ not have given
consequential relief that had not been sought in the first place. Ultimately, the Supreme Court
decided the case in favour of Tata Sons. One of the issues decided by Supreme Court was that
“whether the case was fit to be qualified as a situation of ‘Oppression and Mismanagement’
under Section 241 of the Companies Act, 2013?”. On this issue, the Supreme Court observed
that “unless the removal of a person as a chairman of a company is oppressive or mismanaged
1
or done in a prejudicial manner damaging the interests of the company, its members or the
public at large, the NCLT cannot interfere with the removal of a person as a Chairman of a
Company in a petition under Section 241 of the Companies Act, 2013” This case highlighted
the point that “an executive chairman does not have sovereign authority over the company. In
corporate democracy, decision making always remains with the Board as long as they enjoy
the pleasure of the shareholders. Likewise, an executive chairman will continue as long as
he/she enjoys the pleasure of the Board. An assumption by the executive chairman that he/she
would have a free hand in running the affairs of the company is incongruous to corporate
governance and corporate democracy. The Tribunal held that the concept of ‘free hand rule’
is antithesis to collective responsibility and collective decision making”. [Based on Tata Con-
sultancy Services Ltd. v. Cyrus Investment Pvt. Ltd., 2021 SCC 122].
1. The parties in this case approached the Supreme Court of India under which of the
following provisions?
(A) Appeal under Section 423 of the Companies Act, 2013.
(B) A Class Action Suit under Section 245 of the Companies Act, 2013.
(C) Special Leave Petition (SLP) under Article 136 of the Constitution of India.
(D) Appeal under Section 421 of the Companies Act, 2013.
Correct Answer: (A) Appeal under Section 423 of the Companies Act, 2013.
Solution: The appeal under Section 423 of the Companies Act, 2013, allows parties to appeal
to a higher authority, including the Supreme Court. This provision applies in the context of
corporate legal proceedings.
Quick Tip
Section 423 provides a direct route for appeals to the Supreme Court in corporate legal
disputes.
2
2. Rule of ‘supremacy of majority’ in governing the affairs of a company has been set-
tled in a very old leading case of Foss v. Harbottle (1843) 2 Hare 461. In India, which
case diluted the majority rule and held that the interest of the company was above the
interest of its shareholders, either majority or minority?
(A) Rajahmundry Electric Supply Corporation Ltd. v. A. Nageshwara Rao
(B) Bagree Cereals v. Hanuman Prasad Bagri
(C) Shanti Prasad Jain v. Kalinga Tubes Ltd.
(D) Needle Industries (India) Ltd. v. Needle Industries Newey (India)
Correct Answer: (D) Needle Industries (India) Ltd. v. Needle Industries Newey (India)
Solution: The correct answer is (D). The Needle Industries case established that the com-
pany’s interest supersedes shareholder interests, protecting minority shareholders’ rights.
Quick Tip
The Needle Industries case is a landmark decision ensuring corporate governance sup-
ports minority rights.
3. While recommending “Separation of the Roles of Non-executive Chairperson and
Managing Director/ CEO,” the Kotak Mahindra Committee quoted the following text:
“given the importance and the particular nature of the chairmen’s role, it should in prin-
ciple be separate from that of the chief executive. If the two roles are combined in one
person, it represents a considerable concentration of power”. This quote refers to which
of the following Committee Report?
(A) Cohen Committee Report
(B) Cadbury Committee Report
(C) Hampel Committee Report
(D) Narayana Murthy Committee Report
3
Correct Answer: (B) Cadbury Committee Report
Solution: The Cadbury Committee Report is well-known for advocating the separation of
roles between Chairperson and CEO to prevent excessive concentration of power, promoting
stronger corporate governance.
Quick Tip
Separating key roles like Chairperson and CEO strengthens accountability and checks
on power.
4. Which of the following statements is true regarding the share qualification require-
ment under section 244 for applying for relief from oppression/mismanagement under
section 241 of the Companies Act, 2013 (in the case of a company having a share capital)?
(A) Members not less than 100 members of the company or 10% of the total number of its
members, whichever is less, or any member or members holding not less than 10% of the
issued share capital of the company.
(B) Members not less than 100 members of the company and 10% of the total number of its
members or members holding not less than 10% of the issued share capital of the company.
(C) Not less than 20% of the total number of its members.
(D) Members not less than 50 members of the company and 5% of the total number of its
members or members holding not less than 5% of the issued share capital of the company.
Correct Answer: (A)
Solution: Under section 244 of the Companies Act, 2013, the qualification requirement al-
lows members holding at least 10% of the issued share capital to seek relief from oppres-
sion/mismanagement.
4
Quick Tip
Knowing share qualification requirements can help in understanding shareholder rights
in company law.
5. Statement I: Power to grant relief from oppression/mismanagement, previously vested
by section 402 of the 1956 Act in High Courts, has now been transferred to the National
Company Law Tribunal by section 242 of the 2013 Act.
Statement II: Section 242 does not empower the National Company Law Appellate Tri-
bunal to grant relief by way of prevention of apprehended mismanagement of the com-
pany due to material change in its management or control.
Which of the statements is/are correct?
(A) Statement I is untrue
(B) Statement II is untrue
(C) Both statements I and II are untrue
(D) Both statements I and II are true
Correct Answer: (B)
Solution: Statement I is correct. However, Statement II is incorrect as Section 242 does allow
NCLT to grant relief for apprehended mismanagement, making option (B) correct.
Quick Tip
Understanding jurisdiction changes is crucial for navigating corporate law reforms.
Comprehension Passage
Alastair Hudson in his book ‘Securities Law’ First Edition (Sweet Maxwell), 2008 at page
342, refers to ‘Restricted Offers’ and noticed that there is no contravention of Section 85 of
5