Marks of Short Notes, Distinguish Between, Descriptive & Practical Questions. CS Executive Programme (Module II)

Transcription

1 1 Introduction This Chapter Includes : Company as a business medium; Meaning and definition of term company; Nature and characteristics of a company; Historical evelopment of Concept of Corporate Law in India; evelopment of Company Law in India and England; Highlights of Companies Bill, 2012; Companies vis-a-vis other Forms of business; Concept of Corporate Personality; Lifting of Corporate Veil; Citizenship; Personal liability of directors or members Illegal association. Marks of Short Notes, istinguish Between, escriptive & Practical Questions CS Executive Programme (Module II) OBECTIVE QUESTIONs ec [5] (a) State, with reasons in brief, whether the following statements are correct or incorrect : (i) The property of a company is not the property of the individual members. (ii) The separate personality of a company is a statutory privilege and it must be used for legitimate business purposes only. (2 marks each) Ans:- (i) Correct; (ii) Correct; Q -1.17

2 Q-1.18 SCANNER CS Executive Programme (Module I) Paper une [2] (b) Choose the most appropriate answer from the given options in respect of the following : (i) A company is (a) A voluntary association for profit (b) A compulsory association for profit (c) A statutory association for profit (d) None of the above. (1 mark) Ans: (i) (a); ec [5] (a) State, with reasons in brief, whether the following statements are correct or incorrect: (i) A company, being a body corporate, can sue and be sued in its own name. (2 marks) Ans:- (i) Correct; ec [2] (a) Write the most appropriate answer from the given options in respect of the following: (i) The privilege of doing business under the corporate form of organisation is (a) Limited liability for business debt (b) Unlimited liability for business debt (c) No liability for business debt (d) None of the above. (1mark) (b) Re-write the following sentences after filling-in the blank spaces with appropriate word(s)/figure(s): (i) A company being a legal entity must have a of its own to establish its separate identity. (1mark) Ans:- (a)(i)(a);(b)(i)name; une [3] (b) State, with reasons in brief, whether the following statements are true or false: (ii) Company law in India has been modelled on the US law. (1 mark) Ans:- (ii) False; SHORT NOTES ec [5] (b) Write short notes on the following : (ii) The separate personality of a company is a statutory privilege and it must be used for legitimate business purposes only une [8] Write notes on the following: (i) isadvantages of corporate form of enterprise

3 [Chapter 1] Introduction Q-1.19 ISTINGUISH BETWEEN une [6] istinguish between the following: (i) Company and corporation. Hint:- Applicable Section - 2 (7) of the Companies Act une [3] istinguish between the following : (i) Company and corporation. Hint:- Applicable Sections 2(7) and 3 ESCRIPTIVE QUESTIONS ec [1] {C} Comment on the following : (i) Common seal of a company will have to be affixed on all the letters and documents of the company ec [8] (a) What do you understand by the term 'illegal association'? What are the rights and liabilities of a member of illegal association? (b) An association of 15 members (not being HUF) started banking business without being registered. After one year, six members retired. Thereafter, three members instituted a suit for partition of assets of the association. iscuss the fate of such a suit. Hint:- (a) Applicable Section 11; Case Laws Niraban V. Lalit, I.L. R (1938) Cal and Wilkinson V. Levison (1925) 42 T.L.R.97. (b) Applicable Section 11; Case Law MST Kumarswami Chettiar V. MSM Chinnathambi Chettiar ec [1] {C} Attempt the following : (v) Common seal of a company will have to be affixed on all the letters and documents of the company. iscuss. Hint:- Applicable Sections 48(1), 50(2), 84, and 114 Ans:- This Statement is not correct une [1] {C} Comment on the following : (iii) The competent court of law can entertain a petition for winding-up of an illegal association under company law. (iv) A company can be regarded as having enemy character under certain circumstances. (5 marks each) Hint:- (iii) Applicable Section - 4; Case Law Raghubar ayal V. The Sarafa Chamber and others.(24 Com. Cas. 388) (iv) Applicable Case Law aimler Co. Ltd. V. Continental Tyre and Rubber Co. (Great Britain) Ltd. (1916) 2 A.C. 307, 32 T.L.R. 624

4 Q-1.20 SCANNER CS Executive Programme (Module I) Paper une [1] {C} Comment on the following: (ii) A shareholder who holds 99% of the share capital of a company can be held liable for the acts of the company. Hint:- Applicable Case Law:- Salomon V. Salomon and Co. Ltd (1897) A.C une [5] (d) Two or more Hindu joint families decided to form partnership and carry out a non-banking business. Total number of major members in the partnership is 25 and 4 are minors. oes it contravene provisions of the section 11? Explain. Hint:- Applicable Sub-Sections- 11(1), 11(2) and 11(3); Ans:- Yes PRACTICAL QUESTIONS une [5] (b) Rani is a wealthy lady enjoying large dividend and interest income. She has formed three private companies and agreed with each of them to hold a block of investment as an agent for it. Income received was credited in the accounts of the company but the company handed back the amount to her as a pretended loan. This way, she divided her income in three parts in a bid to reduce her tax liability. iscuss the legality of the purpose for which the three companies were formed. (c) Carefree is an officer of Cosy Cosy Ltd., who is authorised to sign on behalf of the company any contract, bill of exchange, hundi, promissory note, cheque, or order for money or goods. In these circumstances, Carefree signs a cheque on behalf of the company without mentioning the name of the company. Who is liable to the holder in such a case? Hint:- (b) Applicable Case Law Sir inshaw Manakjee Petit, A.I.R 1927; Bombay 371; (c) Applicable Section 147 (4) (c) of the Companies Act, Ans:- (b) Carefree is personally liable. Space to write important points for revision CS Inter Gr. II SHORT NOTES ec [8] (a) Write short notes on the following : (i) Perpetual succession (iv) Illegal association ec [8] (a) Write short notes on the following : (iv) Illegal association. Hint:- Applicable Section 11; Case Law Kumara Swamy Cettair Vs. ITO (1957) ITR 457].

5 [Chapter 1] Introduction Q-1.21 ISTINGUISH BETWEEN une [1] {C} istinguish between the following : (iv) 'Company' and 'partnership'. ESCRIPTIVE QUESTIONS ec [1] {C} Comment on the following statement: (i) No member can claim himself to be the owner of the company's property during its existence or in its winding-up. Hint:- Applicable Section 34(2); Case Laws Gramaphone & Typewriter Co. V. Stanley and Perumal (R.T.) Vs. H. ohn eavin ec [5] (b) Explain the concept of 'corporate entity' and specify three circumstances under which corporate veil can be lifted. Hint:- Applicable Case Laws Gilford Motor Co. V. Horne; Re. R. G. Films Ltd.; Connors Bros. Vs. Connors; aimler Co. Ltd. Vs. Continental Tyre & Rubber Co.; Commissioner of Income-tax Vs. Meenakshi Mills Ltd.; Re. Sir inshaw Manakjee Petit une [1] {C} Comment on the following statement: (i) Perpetual succession is one of the important characteristics of a company. Hint:- Applicable Section 34(2) ec [1] {C} Comment on the following statement: (iv) The term `corporate veil' cannot give protection always. Hint:- Applicable Case Laws Gilford Motor Co. Vs. Horne; Re. R.G. Films Ltd.; Connors Bros. Vs. Connors; aimler Co. Ltd. Vs. Continental Tyre & Rubber Co.; Commissioner of Income Tax Vs. Meenakshi Mills Ltd.; The Workmen Employed in Associated Rubber Industries Ltd., Bhavnagar Vs. The Associated Rubber Industries Ltd., Bhavnagar and Another ec [7] (a) What is `illegal association'? (3 marks) (b) What are the consequences of carrying on business by an illegal association? Hint:- (a) Applicable Section 11; Case Law Badri Prasad Vs. Nagarmal; (b) Applicable Sections 11(4) & (5) une [1] {C} Comment on the following statement: (i) The fundamental attribute of a corporate personality is that the company is a legal entity distinct from its members. Hint:- Applicable Case Laws Tata Engineering and Locomotive Company Limited Vs. State of Bihar, Salomon Vs. Salomon & Co. Ltd.

6 Q-1.22 SCANNER CS Executive Programme (Module I) Paper ec [1] {C} Comment on the following: (i) The striking features of a company such as limited liability, distinct legal personality, perpetual succession and easy transferability of shares make it the best form of business organisation une [1] {C} Comment on the following statements: (iii) A company being an artificial person cannot be treated as a citizen under the Constitution of India. Hint:- Applicable Case Laws State Trading Corporation of India Ltd. Vs. C.T.O. (1969) SC 605; R.C. Cooper Vs. Union of India (1970) S.C.R. 530; Bennett Coleman and Co. & Others Vs. Union of India and Others (1973) 2 S.C.R une [5] (a) A company is a separate person from its members. Explain the circumstances under which the court may disregard the company s corporate personality ec [1] {C} Explain the following: (ii) A company as a partner ec [2] (a) What are the features of a corporate form of business enterprise? (c) What do you mean by 'lifting of corporate veil'? Hint:- Applicable Case Law BSN (UK) Ltd. Vs. anardan Mohandas Rajan Pillai (1996) 86 Comp. Cas. 371 (Bom) ec [1] {C} Attempt the following : (iv) "Company has an independent existence apart from its members." Comment. Hint:- Applicable Case Law Salomon vs. Salomon & Co. Ltd. it becomes a separate entity distinct from its member une [3] (a) Explain. lifting of corporate veil. Hint:- Applicable Case Laws Gilford Motor Co. Vs. Horne; Re, R.G. Films Ltd; Connors Bros. Vs. Connors; aimler Co. Ltd. Vs. Continental Tyres & Rubber Co; Commissioner of Income Tax Vs. Meenakshi Mills Ltd; Sir inshaw Manakjee Petit ec [1] {C} Comment on any four of the following : (i) Prof. Grower rightly said, Members may come and go, but the company can go on for ever ec [7] (a) What is corporate veil? State the circumstances when it can be lifted. Hint:- Applicable Case Laws Salomon Vs. Salomon & Col. Ltd; (1897) A.C. 22 Gilford Motor Co. Vs. Horne, (1993) 1 Ch. 935, ones Vs. Lipman, (1962) I.W.L.R. 832., Connors Bros Vs. Connors (1940) 4 All E.R. 179, aimler Co. Ltd. v. Continental Tyre & Rubber Co; (1916) 2A.C 307, Commissioner of Income Tax Vs. Meenakshi Mills Ltd;

7 [Chapter 1] Introduction Q-1.23 A.I.R 1967 S.C. 819) Re : Sir inshaw Manakjee Petit, The workmen Employed in Associated Rubber Industries Limited, Bhavnagar Vs. The Associated Rubber Industries Ltd., Bhavnagar and another; A.I.R 1986 SC une [6] (b) Two companies are incorporated with the same set of shareholders. Are they same or distinct under the Companies Act, 1956? iscuss. (c) The entire assets of a company are acquired by another company. Will it constitute taking over the management of the company? Why? (4 marks each) Hint:- (b) Applicable Case Laws Patinson V. Bindya ebi AIR 1933 Pat 196 ; [Theory of Corporate Veil; Saloman v. Saloman and Co.Ltd.] (c) Applicable Case Laws Gopalpur Tea Company V. Peshok Tea Company Ltd. (1982) 52 Comp. Cases 239, 241(Cal) PRACTICAL QUESTIONS ec [4] (c) irectors of a public limited company accepted a bill of exchange on behalf of the company. But the word `limited' was omitted from the name of the company at the time of acceptance. Who can be held liable for the payment of the bill? Ans:- irectors. Space to write important points for revision Repeatedly Asked Questions No. Question Frequency 1 Explain the concept of 'corporate entity' and specify three circumstances under which corporate veil can be lifted ec [5] (b), 99 - ec [1] (iv),2003-ec [2](c), 06 - une [3] (a), 07 - ec [7] (a) 5 Times 2 What is `illegal association'? ec [7] (a), ec [8](a) (iv), ec [8] (a) (iv) 3 Times 3 istinguish between the Company and corporation une [6] (i), 11 - une [3] (i) 2 Times

8 Q-1.24 SCANNER CS Executive Programme (Module I) Paper - 1 Table Showing Marks of Compulsory Questions Year escriptive Total