SVKM'S NMIMS

ANIL SURENDRA MODE SCHOOL 0F COMMERCE

AcademicYear:2017-18
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Program B.B.A. Year: 11 Semester: IV

Subject: Business Law . Batch: 2016-19

Date : 23 April 2018 Time:1.00 pin to 3.00 pin(2 HFs.)

Marks: 60 No. of pages:

FINAL EXAMINATION

Instructions: Candidates should reed carefully the instructions printed on the question paper
and on the cover of the answer book,`whch is provided for their use.
Note:
1) All the Questions are compulsory.
2) Answer to each new question to be started on a fresh page.
`al 3) Clearly mention the Question Number before attempting the answer.
4) Figures in brackets on the right hand side indicate full marks.
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O.A. PROBLEMBASED OUESTloN: (5 * 3 = 15 Marks)

1. Mr. A & Mr. a two close friends are living as neighbours in the Spring Enclave
Apartment in Juliu, Mumbai, with flat numbers 401 & 402 respectively, since the past
2 years. Mr. 8 was facing some financial constraints due to loss in his business and
therefore was unable to pay his rent for the past 3 months. He was repeatedly receiving
calls from his landiord, forcing him to pay the due rents otherwise he will have to vacate
the flat. He shared his problem with Mr. A, who eventually paid off all the dues on part
of Mr. 8, just to avoid any further struggle between Mr. 8 and his landlord. But, one
day when Mr. A asked for reimbursement, Mr. 8 refused to pay stating that what A
did was a gratuitous act and hence 8 has no obligation to pay him back. Decide the
Case.

2. Ms. C purchases a tin of disinfectant powder from Mr. A. Mr. A knows that the lid of
the tin is defective and if it is opened without special care it may be dangerous, but tells
nothing to Ms. C. C opens the tin the normal way whereupon the disinfectant powder
flies into her eyes and causes injury. Ms. C ffled a suit against the seller. Decide the
Case.

3. BIueBird Airlines Pvt. Ltd., an airline company in India, issued a prospectus stating
that the company had permission to operate the Munbal - Srinagar flights in the
country, which would be one of its kind. In fact the company had no such permission

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 to operate flights for the said route, as the right to use the same was subject to the

approval and consent of the Ministry of Civil Aviation. The company applied honestly

believing that they would get permission because it was a mere formality. In fact, after

the prospectus was issued in public, the permission for the same was refused by the

Ministry and the company ended up in liquidation. The shareholders who had purchased

the shares of the company on the faith of the prospectus sued the directors. Decide the

Case.

4. Mr. Aditya, an entrepreneur is willing to start a business with his friends. On

consultation, he along with his 2 friends cane to the conclusion that they will be

adopting the Limited liability Parfuership fonn of business structure. Upon submitting
relevant documents to the ROC for the puxpose of registration of their LLP, the ROC,

on further in-depth investigation cane to know that, Mr. Aditya was declared insolvent
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7 years back, one of his friend Mr. Aakash is a wilful defaulter, who has made
deliberate defaults in payment of his credit towards his creditors and another ffiend Mr.
Avinash has been convicted of theft and robbery in a series of occasions and has also
been to jail for more than 2 years. Assume yourself to be the ROC and determine
the eligibility of all the partners individually and the LLP as a whole, keeping in
consideration the LLP Act.

5. The object clause of the company DFL Ltd. provided that it was formed "fo deve/ap
and sale Of residehiial, commercial and retail properties, and to acquire plot Of lands

and to carry on construction business, which includes plotted developmerit, houses,

villas and apartments Of vctrying sizes and ihiegrated townships with a fiocus on the

fez.gfe-e7£d /2#%ry rest.c7e##.c}/ cJei;eJoj7"e72fr. " The company entered into a contract with
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Mr. Rajeev for financing the construction of his villa in Noida sector, UP. Later on the
company itself repudiated the contract in middle, arguing that their act is zj/givcz 1/z.res the

MOA. Mr. Rajeev ffled a suit for damages for the breach of contract. Decide the case .

0.B. ANALYTICAlj ouESTloNS: (3 * 5 = 15 Marks)

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1. Four friends A, 8, C & D entered into a partnership form of business for producing
sugar. But none of them took the initiative to have the firm registered. Mr. A, one of
the partners, was considered an-exp-ert in the job as he had previously worked as a
manager in various sugar mills. Thus he was intrusted with the duty of purchasing
sugarcanesandforprocessingthem.HoweverA,ontheotherhandhimselfwasawhole

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 seller of sugar canes which was unknown to the other co-partners, thereby supplied to

the firln sugar canes from his own shop at a price higher than the market price and in

return earned personal profits. When the matter came to light other partners filed a suit
against Mr. A for carrying out a fraudulent activity and for carrying out a competing
business against the firm.

Decide the case based on the Laws of Partnership and also explain the effects of
non-registration of the partnership firffi.
2. ABC Company Limited at a general meeting of members of the company passes an
ordinary resolution to buy-back 30% of its equity share capital. The articles of the

company empower the company for buy-back of shares. The company further decides
that payment for. -buy-back be made out of the proceeds of the company's earlier issue
E= of equity shares. Explaining the provisions of the Companies Act, examine:
a) Explain the sources and conditions of the bay-back of shares.
b) Would your answer be still the same in case the company, instead of 30%
decides to bay-back only 20% of its equity share capital?
3. IDIDI, an Indian banker, with One other person purchased an island containing

phosphate mines for Rs.`700 Crore. h order to obtain profit on 1.esale they formed a
company. The object of the company was to purchase the lease of the island and work
the mines. IDIDI named five directors who were, in terms of alficles of association,
empowered to adopt and to carry into effects the contract for the purchase by the
company of the island. Of the five dii.ectors two were abroad, and the 1.emaining three
were undei. the complete control of IDIDI. These three directors purchased the island
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of the company at a price of Rs.1400 Croi-e. Many people subscribed the shares. At an
Amual general meeting some person raised an objection about this purchase and the
matter was put to an investigation whereupon the truth was revealed. The promoters
were sued for refund for the profit made.

What is the legal position, dnty and liabilities of a promoter while promoting a
company? Whether IDIDI is liable to refund the profits made by him in the
transaction?

. C. SHORTNOTES: (Any 2 out of 3) (2 * 5 = 10 Marks)

1) RIBhts of an unpaid seller.

2) Designated partners in a Limited Liability partnership.
3) Provisions relating to the "Payment of Gratuity" under the payment of Gratuity Act,
1972.

.D. LONG ANSWER UESTIONS: (Any 2 out of 3) (2 * 10 -20)

1) State briefly the various modes by which a contract may be discharged.

2) In the light of section 125 of the companies Act 2013, explain the objective,
Utilisation & Administration of the Investoi. Education and Provident Fund.
3) What are the ways by which an LLp is dissolved?

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