LEB‐ End Term‐Main‐February‐2015

Answers to the respective Questions are given below in BLUE

LEB EXAMINATION MAIN –FEBRUARY ‐2015

Part A ‐‐40 Marks

Q1. Mr. Mahindra advertised in a prominent news paper that he would be auctioning his furniture and
other electronic items at his residence located in Mumbai. The date of auction was fixed as 21‐12‐2014.
Mr. Rastogi, a dealer in selling furniture at Pune read the advertisement and reached the residence of
Mr. Mahindra at Mumbai on the scheduled date of auction. Mr. Rastogi was informed by the watchman
that the auction was cancelled.

a) Is there a legal remedy for Mr. Rastogi to claim any damages from
Mr. Mahindra?

Answer:

• There is no legal remedy for Rastogi as an auction advertisement is an” Invitation to an offer”
• Since no contract is formed no damamges can be claimed
• Citation of English case

b) Explain the conditions for a valid offer.

• Unconditional
• Legal Capacity
• Communication with an intention to receive the assent

Q2. A, B and C are co‐sureties for an advance of Rs. 30 lakhs given by Laxmi Bank to Mr. Damodar Pittie
who also kept the title deeds of his house with bank as additional security. As the advance became bad
debt, Laxmi Bank filed a suit against borrower and the co‐sureties for recovery of the outstanding
amount of Rs. 24 lakhs.

‘A’ came forward and settled the bank dues by paying the entire amount of Rs.24 lakhs. After
repaying the dues, ‘A’ claimed the delivery of title deeds of the house given as additional security by Mr.
Damodar Pittie. Bank refused to part with the title deeds pertaining to the house of Mr. Pittie. What are
the legal rights and remedies available to ‘A’ against

a) Laxmi Bank

Answer:
•
•

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A is the guarantor for the advance given to Mr. Pittie. A enjoys the right of subrogation to claim
the title deeds mortgaged by damodar pittie in favour of laxmi bank as the outstanding balance
issettled by him.
b) co‐sureties ‘B’ and ‘C’
• Since A has already paid the entire amount outstanding to Laxmi bank he has a right to receive
and seek contribution from co sureties Band C.

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Q3. Unique Service Bank returned the cheque issued by Ms. Swetha, an up‐coming actress for reason of
‘funds not available’. The cheque bouncing was widely reported by the Payee‐‐ Focus Studio who
threatened to launch Criminal proceedings against Ms. Swetha .

It was found later that Bank made a mistake of crediting the proceeds of her collection cheque to some
other account and hence, her cheque for payment got dishonoured. Ms. Swetha’s account was credited
after the enquiry. Ms. Swetha is annoyed at the conduct of the Bank and wants to initiate legal action.

a) Advice Ms. Swetha whether she would be able to succeed legally and with
what relief.

Answer:

• Sweta would be succeed legally against the USBank as her cheque has been wrongfully
dishonoured despite availability of funds to her credit.
• Unique service bank is liable for also exemplary damages.

b) What are the essential conditions precedent, for prosecuting a person in

cheque bouncing case?

• Section 138 of NI Act 1882

Q4. M/s Magic Seeds outsourced cotton seedsfrom Nanded Co‐operative Society of Farmers of
Maharashtra and sold under its brand name ‘Magic’. Several farmers filed consumer complaints in the
district forum against M/s. Magic Seeds in Prakasam district of Andhra Pradesh for supplying defective
seeds.M/s Magic Seeds claimed that it was not a manufacturer and only marketed the seeds and hence
consumer complaint is not maintainable. M/s Magic Seeds also submitted that it had filed a consumer
complaint already against the Nanded Co‐operative Society of Farmers.

Based on the above facts state giving reasons

a) Whether M/s Magic Seeds will succeed as a consumer aginst Nanded Co‐operative Society of
farmers

Answer:
• Magic seeds will not succeed as a consumer because it has outsourced the seeds from
Nanded co operative society and sold under its brand name . Under Con Prot Act
commercial sellers are not covered under the definition of consumers.

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b) Whether Farmers of Prakasam District can succeed against M/s Magic Seeds on their complaint.

• Yes The farmers can succeed because they are consumers and hence covered by the various
provisions of the consumer protection act for filing of a complaint and for redressal against
magic seeds.
• Ms Magic seeds becomes liable for having sold the seeds under its brand name.

PART‐B ‐‐‐60 Marks

Contracts.

Q5. Discuss the essential elements of a contract as per the Indian Contract Act,1872. 10Marks Ans:
Sec 2 (h); Sec10 to Sec 19 , Sec 68 (claim for necessaries supplied for persons incapable of contracting)
of Indian Contract Act 1872

Q6. What is a Mortgage? Discuss briefly various types of Mortgages. 10 Marks

Ans:

• Transfer of Property Act 1882 Sec 58 subsections (a ) to( g)

• Page 159 to 162 of Legal Environment of Business –IUP

Q7. Explain the doctrine of Corporate Veil and the doctrine of indoor management and the exceptions
to them. 10 Marks

Ans: Please refer N D Kapoor Elements of Mercantile Law pages – Chapter 1 on company Law

Page 3 to6 – on Corporate Veil and pages 52 and 53 for Doctrine of Indoor Management.

• Case law of Salmon vs Salmon & Co

• Exceptions : Statutory and Court Directed
• Indoor Management
• Exceptions to doctrine of Indoor Management—(N D Kapoor—pages 52‐53 )
1. Knowledge of irregularity
2. Negligence
3. Forgery
4. Acts outside the scope of apparent authority

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Q 8. Discuss elements and the legal principles governing Insurance Contracts . 10 Marks

Ans: N. D. Kapoor—page 443 to 449

• Nature of Insurance contract –

• Fundamental elements of Insurance –
1. Utmost Good Faith
2. Indemnity
3. Insurable Interest
4. Causa Proxima
5. Risk must attach
6. Mitigation of loss
7. Contribution
8. Subrogation
9. Period of Insurance

Q9 a. Explain Patents and Copyrights and how one differs from the other
5 Marks

Ans:

Please refer IUP –LEB ( page 178to 182/ chapters – V

• Patent meaning / definition

• Nature of patents
• What can be and cannot be patented
• Copy right and its definition / meaning
• Essetnial features of copyright
• The above will clearly bring out the differences between patent and copyrights

b. Discuss various methods of ADR allowed under Indian Law. 5 Marks

Ans:

• Arbitration –Meaning definition , need for it advantages of it and the procedure for arbitration
• Conciliation‐ Meaning definition , need for it advantages of it and the procedure for arbitration
• Mediation ‐ Meaning definition , need for it advantages of it and the procedure for arbitration
• The legal enforceability under the three different systems.

Q10.

a. Discuss briefly the various heads under which the income of a person is computed as per the IT

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Act, 1961? 5 Marks

Ans: Heads of Income as per IT Act Sec
• Income from salaries
• Income from Business / Profession
• Income from Agriculture
• Income from Other sources
• Income from Capital Gains

b. Discuss the concept of Strict and Absolute liability in the context of Environmental Law.
5 Marks Ans: LEB –IUP pages ‐315 to 316
• Meaning of Strict Liability and Absolute Liability
• Rylands vs Fletcher and M C Mehta vs Union of India

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