Corporate and Other Laws (Group I) Model Test Paper - 6 (Answers) - CA Intermediate PDF Download

 Page 1


ANSWER OF MODEL TEST PAPER 6 
INTERMEDIATE COURSE: GROUP – I  
PAPER – 2: CORPORATE AND OTHER LAWS 
ANSWER TO PART – I CASE SCENARIO BASED MCQS 
1. (c)
2. (d)
3. (c)
4. (d)
5. (c)
6. (a)
7. (a)
8. (a)
9. (b)
10. (b)
11. (b)
12. (b)
13. (c)
14. (d)
15. (c)
ANSWERS OF PART – II DESCRIPTIVE QUESTIONS 
1. (a) Sweat equity shares of a class of shares already issued.
According to section 54 of the Companies Act, 2013, a company may 
issue sweat equity shares of a class of shares already issued, if the 
following conditions are fulfilled, namely— 
(i) the issue is authorised by a special resolution passed by the
company;
(ii) the resolution specifies the number of shares, the current market
price, consideration, if any, and the class or classes of directors or
employees to whom such equity shares are to be issued;
(iii) where the equity shares of the company are listed on a recognised
stock exchange, the sweat equity shares are issued in accordance
447
Page 2


ANSWER OF MODEL TEST PAPER 6 
INTERMEDIATE COURSE: GROUP – I  
PAPER – 2: CORPORATE AND OTHER LAWS 
ANSWER TO PART – I CASE SCENARIO BASED MCQS 
1. (c)
2. (d)
3. (c)
4. (d)
5. (c)
6. (a)
7. (a)
8. (a)
9. (b)
10. (b)
11. (b)
12. (b)
13. (c)
14. (d)
15. (c)
ANSWERS OF PART – II DESCRIPTIVE QUESTIONS 
1. (a) Sweat equity shares of a class of shares already issued.
According to section 54 of the Companies Act, 2013, a company may 
issue sweat equity shares of a class of shares already issued, if the 
following conditions are fulfilled, namely— 
(i) the issue is authorised by a special resolution passed by the
company;
(ii) the resolution specifies the number of shares, the current market
price, consideration, if any, and the class or classes of directors or
employees to whom such equity shares are to be issued;
(iii) where the equity shares of the company are listed on a recognised
stock exchange, the sweat equity shares are issued in accordance
447
with the regulations made by the Securities and Exchange Board 
in this behalf and if they are not so listed, the sweat equity shares 
are issued in accordance with such rules as prescribed under Rule 
8 of the Companies (Share and Debentures) Rules, 2014,  
 The rights, limitations, restrictions and provisions as are for the time 
being applicable to equity shares shall be applicable to the sweat equity 
shares issued under this section and the holders of such shares shall 
rank paripassu with other equity shareholders. 
 Alpha Limited can issue sweat equity shares by following the conditions 
as mentioned above. It does not make a difference that the company is 
just a few months old. 
 (b) (i) Section 141(3)(c) of the Companies Act, 2013 prescribes that any 
person who is a partner or in employment of an officer or employee 
of the company will be disqualified to act as an auditor of a 
company. Section 141(4) provides where a person appointed as an 
auditor of a company incurs any of the disqualifications mentioned 
in section 141(3) after his appointment, he shall vacate his office 
as such auditor and such vacation shall be deemed to be a casual 
vacancy in the office of the auditor.  
 In the present case, Mr. Prem, an auditor of A Limited, joined as 
partner with consultancy firm where Mr. Ajay has become a partner 
and Mr. Ajay is also the Finance executive of A Limited. Hence, Mr. 
Prem has attracted clause (3)(c) of section 141 and, therefore, he 
shall be deemed to have vacated office of the auditor of A Limited.  
(ii)  As per section 141(3)(d)(i), an auditor is disqualified to be 
appointed as an auditor if he, or his relative or partner holds any 
security of or interest in the company or its subsidiary, or of its 
holding or associate company or a subsidiary of such holding 
company. 
 In the present case, Mr. Tom is holding security of ` 1,00,000 in the 
B Limited, therefore, he is not eligible for appointment as an auditor 
of B Limited.  
(c) Under provisions of section 5 of the Foreign Exchange Management Act, 
1999 certain Rules have been made for drawal of Foreign Exchange for 
Current Account transactions. As per these Rules, Foreign Exchange for 
some of the Current Account transactions is prohibited. As regards some 
other Current Account transactions, Foreign Exchange can be drawn 
with prior permission of the Central Government while in case of some 
Current Account transactions, prior permission of Reserve Bank of India 
is required. 
Accordingly, 
(i) It is a current account transaction, where A is required to take 
approval of the Central Government for drawal of foreign exchange 
for remittance of hire charges of transponders.  
448
Page 3


ANSWER OF MODEL TEST PAPER 6 
INTERMEDIATE COURSE: GROUP – I  
PAPER – 2: CORPORATE AND OTHER LAWS 
ANSWER TO PART – I CASE SCENARIO BASED MCQS 
1. (c)
2. (d)
3. (c)
4. (d)
5. (c)
6. (a)
7. (a)
8. (a)
9. (b)
10. (b)
11. (b)
12. (b)
13. (c)
14. (d)
15. (c)
ANSWERS OF PART – II DESCRIPTIVE QUESTIONS 
1. (a) Sweat equity shares of a class of shares already issued.
According to section 54 of the Companies Act, 2013, a company may 
issue sweat equity shares of a class of shares already issued, if the 
following conditions are fulfilled, namely— 
(i) the issue is authorised by a special resolution passed by the
company;
(ii) the resolution specifies the number of shares, the current market
price, consideration, if any, and the class or classes of directors or
employees to whom such equity shares are to be issued;
(iii) where the equity shares of the company are listed on a recognised
stock exchange, the sweat equity shares are issued in accordance
447
with the regulations made by the Securities and Exchange Board 
in this behalf and if they are not so listed, the sweat equity shares 
are issued in accordance with such rules as prescribed under Rule 
8 of the Companies (Share and Debentures) Rules, 2014,  
 The rights, limitations, restrictions and provisions as are for the time 
being applicable to equity shares shall be applicable to the sweat equity 
shares issued under this section and the holders of such shares shall 
rank paripassu with other equity shareholders. 
 Alpha Limited can issue sweat equity shares by following the conditions 
as mentioned above. It does not make a difference that the company is 
just a few months old. 
 (b) (i) Section 141(3)(c) of the Companies Act, 2013 prescribes that any 
person who is a partner or in employment of an officer or employee 
of the company will be disqualified to act as an auditor of a 
company. Section 141(4) provides where a person appointed as an 
auditor of a company incurs any of the disqualifications mentioned 
in section 141(3) after his appointment, he shall vacate his office 
as such auditor and such vacation shall be deemed to be a casual 
vacancy in the office of the auditor.  
 In the present case, Mr. Prem, an auditor of A Limited, joined as 
partner with consultancy firm where Mr. Ajay has become a partner 
and Mr. Ajay is also the Finance executive of A Limited. Hence, Mr. 
Prem has attracted clause (3)(c) of section 141 and, therefore, he 
shall be deemed to have vacated office of the auditor of A Limited.  
(ii)  As per section 141(3)(d)(i), an auditor is disqualified to be 
appointed as an auditor if he, or his relative or partner holds any 
security of or interest in the company or its subsidiary, or of its 
holding or associate company or a subsidiary of such holding 
company. 
 In the present case, Mr. Tom is holding security of ` 1,00,000 in the 
B Limited, therefore, he is not eligible for appointment as an auditor 
of B Limited.  
(c) Under provisions of section 5 of the Foreign Exchange Management Act, 
1999 certain Rules have been made for drawal of Foreign Exchange for 
Current Account transactions. As per these Rules, Foreign Exchange for 
some of the Current Account transactions is prohibited. As regards some 
other Current Account transactions, Foreign Exchange can be drawn 
with prior permission of the Central Government while in case of some 
Current Account transactions, prior permission of Reserve Bank of India 
is required. 
Accordingly, 
(i) It is a current account transaction, where A is required to take 
approval of the Central Government for drawal of foreign exchange 
for remittance of hire charges of transponders.  
448
(ii) Withdrawal of foreign exchange for payment related to call back 
services of telephone is a prohibited transaction. Hence, Mr. B 
cannot obtain US $ 2,000 for the said purpose. 
 In all the cases, where remittance of Foreign Exchange is allowed, either 
by general or specific permission, the remitter has to obtain the Foreign 
Exchange from an Authorised Person. 
2. (a) Rule 2(1)(c) of the Companies (Acceptance of Deposit) Rules, 2014, 
states various amounts received by a company which will not be 
considered as deposits. As per rule 2(1)(c)(x) any amount received from 
an employee of the company not exceeding his annual salary under a 
contract of employment with the company in the nature of non-interest-
bearing security deposit is not considered as deposit. 
 In the instant case, ` 5,30,000 was received by PQR Trading Private 
Limited as a non-interest-bearing security deposit, from its employee, 
Mr. Romit, who draws an annual salary of ` 5,00,000 under a contract of 
employment.  
 Accordingly, amount of ` 5,30,000 received from Mr. Romit, will be 
considered as deposit in terms of sub-clause (x) of Rule 2(1)(c) of the 
Act, as the amount received from Mr. Romit is more than his annual 
salary of ` 5,00,000. 
(b) As per section 2(43) of the Companies Act, 2013, free reserves means 
such reserves which, as per the latest audited balance sheet of a 
company, are available for distribution as dividend: 
 Provided that— 
(i) any amount representing unrealised gains, notional gains or 
revaluation of assets, whether shown as a reserve or otherwise, or 
(ii) any change in carrying amount of an asset or of a liability 
recognized in equity, including surplus in profit and loss account on 
measurement of the asset or the liability at fair value, 
 shall not be treated as free reserves. 
 (c) (i)  Movable Property  
 According to section 3(36) of the General Clauses Act, 1897, 
‘Movable Property’ shall mean property of every description, except 
immovable property. 
 Thus, any property which is not immovable property is movable 
property. Debts, share, electricity are moveable property. 
(ii) Oath  
 According to section 3(37) of the General Clauses Act, 1897, ‘Oath’ 
shall include affirmation and declaration in the case of persons by 
law allowed to affirm or declare instead of swearing. 
3. (a) As per section 8 of the Companies Act, 2013, the Central Government 
(ROC in its behalf) may grant a licence (to operate as a non profit 
organisation) if it is proved to the satisfaction that a person or an 
449
Page 4


ANSWER OF MODEL TEST PAPER 6 
INTERMEDIATE COURSE: GROUP – I  
PAPER – 2: CORPORATE AND OTHER LAWS 
ANSWER TO PART – I CASE SCENARIO BASED MCQS 
1. (c)
2. (d)
3. (c)
4. (d)
5. (c)
6. (a)
7. (a)
8. (a)
9. (b)
10. (b)
11. (b)
12. (b)
13. (c)
14. (d)
15. (c)
ANSWERS OF PART – II DESCRIPTIVE QUESTIONS 
1. (a) Sweat equity shares of a class of shares already issued.
According to section 54 of the Companies Act, 2013, a company may 
issue sweat equity shares of a class of shares already issued, if the 
following conditions are fulfilled, namely— 
(i) the issue is authorised by a special resolution passed by the
company;
(ii) the resolution specifies the number of shares, the current market
price, consideration, if any, and the class or classes of directors or
employees to whom such equity shares are to be issued;
(iii) where the equity shares of the company are listed on a recognised
stock exchange, the sweat equity shares are issued in accordance
447
with the regulations made by the Securities and Exchange Board 
in this behalf and if they are not so listed, the sweat equity shares 
are issued in accordance with such rules as prescribed under Rule 
8 of the Companies (Share and Debentures) Rules, 2014,  
 The rights, limitations, restrictions and provisions as are for the time 
being applicable to equity shares shall be applicable to the sweat equity 
shares issued under this section and the holders of such shares shall 
rank paripassu with other equity shareholders. 
 Alpha Limited can issue sweat equity shares by following the conditions 
as mentioned above. It does not make a difference that the company is 
just a few months old. 
 (b) (i) Section 141(3)(c) of the Companies Act, 2013 prescribes that any 
person who is a partner or in employment of an officer or employee 
of the company will be disqualified to act as an auditor of a 
company. Section 141(4) provides where a person appointed as an 
auditor of a company incurs any of the disqualifications mentioned 
in section 141(3) after his appointment, he shall vacate his office 
as such auditor and such vacation shall be deemed to be a casual 
vacancy in the office of the auditor.  
 In the present case, Mr. Prem, an auditor of A Limited, joined as 
partner with consultancy firm where Mr. Ajay has become a partner 
and Mr. Ajay is also the Finance executive of A Limited. Hence, Mr. 
Prem has attracted clause (3)(c) of section 141 and, therefore, he 
shall be deemed to have vacated office of the auditor of A Limited.  
(ii)  As per section 141(3)(d)(i), an auditor is disqualified to be 
appointed as an auditor if he, or his relative or partner holds any 
security of or interest in the company or its subsidiary, or of its 
holding or associate company or a subsidiary of such holding 
company. 
 In the present case, Mr. Tom is holding security of ` 1,00,000 in the 
B Limited, therefore, he is not eligible for appointment as an auditor 
of B Limited.  
(c) Under provisions of section 5 of the Foreign Exchange Management Act, 
1999 certain Rules have been made for drawal of Foreign Exchange for 
Current Account transactions. As per these Rules, Foreign Exchange for 
some of the Current Account transactions is prohibited. As regards some 
other Current Account transactions, Foreign Exchange can be drawn 
with prior permission of the Central Government while in case of some 
Current Account transactions, prior permission of Reserve Bank of India 
is required. 
Accordingly, 
(i) It is a current account transaction, where A is required to take 
approval of the Central Government for drawal of foreign exchange 
for remittance of hire charges of transponders.  
448
(ii) Withdrawal of foreign exchange for payment related to call back 
services of telephone is a prohibited transaction. Hence, Mr. B 
cannot obtain US $ 2,000 for the said purpose. 
 In all the cases, where remittance of Foreign Exchange is allowed, either 
by general or specific permission, the remitter has to obtain the Foreign 
Exchange from an Authorised Person. 
2. (a) Rule 2(1)(c) of the Companies (Acceptance of Deposit) Rules, 2014, 
states various amounts received by a company which will not be 
considered as deposits. As per rule 2(1)(c)(x) any amount received from 
an employee of the company not exceeding his annual salary under a 
contract of employment with the company in the nature of non-interest-
bearing security deposit is not considered as deposit. 
 In the instant case, ` 5,30,000 was received by PQR Trading Private 
Limited as a non-interest-bearing security deposit, from its employee, 
Mr. Romit, who draws an annual salary of ` 5,00,000 under a contract of 
employment.  
 Accordingly, amount of ` 5,30,000 received from Mr. Romit, will be 
considered as deposit in terms of sub-clause (x) of Rule 2(1)(c) of the 
Act, as the amount received from Mr. Romit is more than his annual 
salary of ` 5,00,000. 
(b) As per section 2(43) of the Companies Act, 2013, free reserves means 
such reserves which, as per the latest audited balance sheet of a 
company, are available for distribution as dividend: 
 Provided that— 
(i) any amount representing unrealised gains, notional gains or 
revaluation of assets, whether shown as a reserve or otherwise, or 
(ii) any change in carrying amount of an asset or of a liability 
recognized in equity, including surplus in profit and loss account on 
measurement of the asset or the liability at fair value, 
 shall not be treated as free reserves. 
 (c) (i)  Movable Property  
 According to section 3(36) of the General Clauses Act, 1897, 
‘Movable Property’ shall mean property of every description, except 
immovable property. 
 Thus, any property which is not immovable property is movable 
property. Debts, share, electricity are moveable property. 
(ii) Oath  
 According to section 3(37) of the General Clauses Act, 1897, ‘Oath’ 
shall include affirmation and declaration in the case of persons by 
law allowed to affirm or declare instead of swearing. 
3. (a) As per section 8 of the Companies Act, 2013, the Central Government 
(ROC in its behalf) may grant a licence (to operate as a non profit 
organisation) if it is proved to the satisfaction that a person or an 
449
association of persons proposed to be registered under the Companies 
Act, 2013, as a limited company: 
-  has in its objects the promotion of commerce, art, science, sports, 
education, research, social welfare, religion, charity, protection of 
environment or any such other object; 
-  intends to apply its profits (if any) or other income in promoting its 
objects; and 
-  intends to prohibit payment of any dividend to its members.  
(b) Validity of Resolution passed in the EGM called by the 
Requisitionists 
 As per section 100(2) of the Companies Act, 2013, read with Rule 17 of 
the Companies (Management and Administration) Rules, 2014, the 
Board shall on the requisition of, in the case of company having a share 
capital, such number of members who hold, on the date of receipt of 
requisition, at least 1/10th of such paid-up capital of the company as on 
that date carries the right of voting, shall call for the meeting. 
 The requisition made under sub-section (2) shall set out the matters for 
the consideration of which the meeting is to be called and shall be signed 
by the requisitionists and sent to the registered office of the company. 
 The Board must, within 21 days from the date of receipt of a valid 
requisition, proceed to call a meeting on a day not later than 45 days 
from the date of receipt of such requisition. 
 If the Board does not, within 21 days from the date of receipt of a valid 
requisition in regard to any matter, proceed to call a meeting for the 
consideration of that matter on a day not later than 45 days from the date 
of receipt of such requisition, the meeting may be called and held by the 
requisitionists themselves within a period of three months from the date 
of the requisition. [Sub-Section 4].  
 Sub-section (5) of Section 100 provides that the requisitionists shall call 
and hold the meeting in the same manner in which the meeting is called 
and held by the Board. 
 Sub-section (6) of Section 100 any reasonable expenses incurred by the 
requisitionists in calling a meeting under sub-section (4) shall be 
reimbursed to the requisitionists by the company and the sums so paid 
shall be deducted from any fee or other remuneration under section 197 
payable to such of the directors who were in default in calling the 
meeting. 
 In the given case, meeting called by requisitionists to pass the resolution 
to remove the Managing Director in the said meeting can be said to be 
valid as the requisition moved from Mr. Jai and Mr. Narayan holding  
` 60,000 (each holding ` 30,000) equity share capital (1/10th of 
1,00,000) is in compliance with the legal requirement and will be binding 
on the company, its officers and members provided if all the conditions 
for a valid meeting are satisfied. 
450
Page 5


ANSWER OF MODEL TEST PAPER 6 
INTERMEDIATE COURSE: GROUP – I  
PAPER – 2: CORPORATE AND OTHER LAWS 
ANSWER TO PART – I CASE SCENARIO BASED MCQS 
1. (c)
2. (d)
3. (c)
4. (d)
5. (c)
6. (a)
7. (a)
8. (a)
9. (b)
10. (b)
11. (b)
12. (b)
13. (c)
14. (d)
15. (c)
ANSWERS OF PART – II DESCRIPTIVE QUESTIONS 
1. (a) Sweat equity shares of a class of shares already issued.
According to section 54 of the Companies Act, 2013, a company may 
issue sweat equity shares of a class of shares already issued, if the 
following conditions are fulfilled, namely— 
(i) the issue is authorised by a special resolution passed by the
company;
(ii) the resolution specifies the number of shares, the current market
price, consideration, if any, and the class or classes of directors or
employees to whom such equity shares are to be issued;
(iii) where the equity shares of the company are listed on a recognised
stock exchange, the sweat equity shares are issued in accordance
447
with the regulations made by the Securities and Exchange Board 
in this behalf and if they are not so listed, the sweat equity shares 
are issued in accordance with such rules as prescribed under Rule 
8 of the Companies (Share and Debentures) Rules, 2014,  
 The rights, limitations, restrictions and provisions as are for the time 
being applicable to equity shares shall be applicable to the sweat equity 
shares issued under this section and the holders of such shares shall 
rank paripassu with other equity shareholders. 
 Alpha Limited can issue sweat equity shares by following the conditions 
as mentioned above. It does not make a difference that the company is 
just a few months old. 
 (b) (i) Section 141(3)(c) of the Companies Act, 2013 prescribes that any 
person who is a partner or in employment of an officer or employee 
of the company will be disqualified to act as an auditor of a 
company. Section 141(4) provides where a person appointed as an 
auditor of a company incurs any of the disqualifications mentioned 
in section 141(3) after his appointment, he shall vacate his office 
as such auditor and such vacation shall be deemed to be a casual 
vacancy in the office of the auditor.  
 In the present case, Mr. Prem, an auditor of A Limited, joined as 
partner with consultancy firm where Mr. Ajay has become a partner 
and Mr. Ajay is also the Finance executive of A Limited. Hence, Mr. 
Prem has attracted clause (3)(c) of section 141 and, therefore, he 
shall be deemed to have vacated office of the auditor of A Limited.  
(ii)  As per section 141(3)(d)(i), an auditor is disqualified to be 
appointed as an auditor if he, or his relative or partner holds any 
security of or interest in the company or its subsidiary, or of its 
holding or associate company or a subsidiary of such holding 
company. 
 In the present case, Mr. Tom is holding security of ` 1,00,000 in the 
B Limited, therefore, he is not eligible for appointment as an auditor 
of B Limited.  
(c) Under provisions of section 5 of the Foreign Exchange Management Act, 
1999 certain Rules have been made for drawal of Foreign Exchange for 
Current Account transactions. As per these Rules, Foreign Exchange for 
some of the Current Account transactions is prohibited. As regards some 
other Current Account transactions, Foreign Exchange can be drawn 
with prior permission of the Central Government while in case of some 
Current Account transactions, prior permission of Reserve Bank of India 
is required. 
Accordingly, 
(i) It is a current account transaction, where A is required to take 
approval of the Central Government for drawal of foreign exchange 
for remittance of hire charges of transponders.  
448
(ii) Withdrawal of foreign exchange for payment related to call back 
services of telephone is a prohibited transaction. Hence, Mr. B 
cannot obtain US $ 2,000 for the said purpose. 
 In all the cases, where remittance of Foreign Exchange is allowed, either 
by general or specific permission, the remitter has to obtain the Foreign 
Exchange from an Authorised Person. 
2. (a) Rule 2(1)(c) of the Companies (Acceptance of Deposit) Rules, 2014, 
states various amounts received by a company which will not be 
considered as deposits. As per rule 2(1)(c)(x) any amount received from 
an employee of the company not exceeding his annual salary under a 
contract of employment with the company in the nature of non-interest-
bearing security deposit is not considered as deposit. 
 In the instant case, ` 5,30,000 was received by PQR Trading Private 
Limited as a non-interest-bearing security deposit, from its employee, 
Mr. Romit, who draws an annual salary of ` 5,00,000 under a contract of 
employment.  
 Accordingly, amount of ` 5,30,000 received from Mr. Romit, will be 
considered as deposit in terms of sub-clause (x) of Rule 2(1)(c) of the 
Act, as the amount received from Mr. Romit is more than his annual 
salary of ` 5,00,000. 
(b) As per section 2(43) of the Companies Act, 2013, free reserves means 
such reserves which, as per the latest audited balance sheet of a 
company, are available for distribution as dividend: 
 Provided that— 
(i) any amount representing unrealised gains, notional gains or 
revaluation of assets, whether shown as a reserve or otherwise, or 
(ii) any change in carrying amount of an asset or of a liability 
recognized in equity, including surplus in profit and loss account on 
measurement of the asset or the liability at fair value, 
 shall not be treated as free reserves. 
 (c) (i)  Movable Property  
 According to section 3(36) of the General Clauses Act, 1897, 
‘Movable Property’ shall mean property of every description, except 
immovable property. 
 Thus, any property which is not immovable property is movable 
property. Debts, share, electricity are moveable property. 
(ii) Oath  
 According to section 3(37) of the General Clauses Act, 1897, ‘Oath’ 
shall include affirmation and declaration in the case of persons by 
law allowed to affirm or declare instead of swearing. 
3. (a) As per section 8 of the Companies Act, 2013, the Central Government 
(ROC in its behalf) may grant a licence (to operate as a non profit 
organisation) if it is proved to the satisfaction that a person or an 
449
association of persons proposed to be registered under the Companies 
Act, 2013, as a limited company: 
-  has in its objects the promotion of commerce, art, science, sports, 
education, research, social welfare, religion, charity, protection of 
environment or any such other object; 
-  intends to apply its profits (if any) or other income in promoting its 
objects; and 
-  intends to prohibit payment of any dividend to its members.  
(b) Validity of Resolution passed in the EGM called by the 
Requisitionists 
 As per section 100(2) of the Companies Act, 2013, read with Rule 17 of 
the Companies (Management and Administration) Rules, 2014, the 
Board shall on the requisition of, in the case of company having a share 
capital, such number of members who hold, on the date of receipt of 
requisition, at least 1/10th of such paid-up capital of the company as on 
that date carries the right of voting, shall call for the meeting. 
 The requisition made under sub-section (2) shall set out the matters for 
the consideration of which the meeting is to be called and shall be signed 
by the requisitionists and sent to the registered office of the company. 
 The Board must, within 21 days from the date of receipt of a valid 
requisition, proceed to call a meeting on a day not later than 45 days 
from the date of receipt of such requisition. 
 If the Board does not, within 21 days from the date of receipt of a valid 
requisition in regard to any matter, proceed to call a meeting for the 
consideration of that matter on a day not later than 45 days from the date 
of receipt of such requisition, the meeting may be called and held by the 
requisitionists themselves within a period of three months from the date 
of the requisition. [Sub-Section 4].  
 Sub-section (5) of Section 100 provides that the requisitionists shall call 
and hold the meeting in the same manner in which the meeting is called 
and held by the Board. 
 Sub-section (6) of Section 100 any reasonable expenses incurred by the 
requisitionists in calling a meeting under sub-section (4) shall be 
reimbursed to the requisitionists by the company and the sums so paid 
shall be deducted from any fee or other remuneration under section 197 
payable to such of the directors who were in default in calling the 
meeting. 
 In the given case, meeting called by requisitionists to pass the resolution 
to remove the Managing Director in the said meeting can be said to be 
valid as the requisition moved from Mr. Jai and Mr. Narayan holding  
` 60,000 (each holding ` 30,000) equity share capital (1/10th of 
1,00,000) is in compliance with the legal requirement and will be binding 
on the company, its officers and members provided if all the conditions 
for a valid meeting are satisfied. 
450
(c) Sometimes an explanation is added to a section of an Act for the purpose 
of explaining the main provisions contained in that section. If there is 
some ambiguity in the provisions of the main section, the explanation is 
inserted to harmonise and clear up the ambiguity in the main section. 
Something may be added to or something may be excluded from the 
main provision by insertion of an explanation. But the explanation should 
not be construed to widen the ambit of the section. 
4. (a) According to section 127 of the Companies Act, 2013, in case a company 
fails to pay declared dividends or fails to post dividend warrants within 
30 days of declaration, following punishments are applicable:  
(i)  Every director of the company shall be punishable with 
imprisonment of up to two years, if he is knowingly a party to the 
default. And, he shall also be liable to pay minimum fine of ` 1,000 
for every day during which such default continues. 
(ii)  The company shall be liable to pay simple interest at the rate of 
18% p.a. during the period for which such default continues. 
(b) Financial Year: According to section 2(1)(l) of the Limited Liability 
Partnership Act, 2008, “Financial year”, in relation to a Limited Liability 
Partnership (LLP), means the period from the 1st day of April of a year 
to the 31st day of March of the following year.  
 However, in the case of a LLP incorporated after the 30th day of 
September of a year, the financial year may end on the 31st day of March 
of the year next following that year.  
(c) Normally a Proviso is added to a section of an Act to except something 
or qualify something stated in that particular section to which it is added. 
A proviso should not be, ordinarily, interpreted as a general rule. Usually, 
a proviso is embedded in the main body of the section and becomes an 
integral part of it.   
 The effect of the proviso is to qualify the preceding enactment which is 
expressed in terms which are too general.  
 It is a cardinal rule of interpretation that a proviso or exception to a 
particular provision of a statute only embraces the field which is covered 
by the main provision. It carves out an exception to the main provision 
to which it has been enacted as a proviso and to no other. (Ram Narain 
Sons Ltd. vs. Assistant Commissioner of Sales Tax, AIR 1955 SC 765). 
5. (a) According to section 24(3), where a person has ceased to be a partner 
of a LLP (hereinafter referred to as “former partner”), the former partner 
is to be regarded (in relation to any person dealing with the LLP) as still 
being a partner of the LLP unless:  
(a) the person has notice that the former partner has ceased to be a 
partner of the LLP; or  
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