Test Series: March, 2022

MOCK TEST PAPER 1

FOUNDATION COURSE
PAPER 2: BUSINESS LAWS AND BUSINESS CORRESPONDENCE AND REPORTING
SECTION A: BUSINESS LAWS
Question No. 1 is compulsory.
Answer any four questions from the remaining five questions.

QUESTIONS
1. (a) Mr. Murti was travelling to Manali with his wife by bus of Himalya Travels Pvt. Ltd. Due to some
technical default in the bus, the driver has to stop the bus in a mid way in cold night. Driver advised
the passenger to get the shelter in nearest hotel which was at a distance of only one kilometre from
that place. The wife of Mr. Murti caught cold and fell ill due to being asked to get down and she
had to walk in cold night to reach hotel. Mr. Murti filed the suit against Himalya Travels Pvt. Ltd.
for damages for the personal inconvenience, hotel charges and medical treatment for his wife.
Explain, whether Mr. Murti would get compensation for which he filed the suit? (4 Marks)
(b) Rohan incorporated a "One Person Company". The memorandum of OPC indicates the name of
his brother Vinod as the nominee of OPC. However, Vinod is starting his new business in abroad
and needs to leave India permanently. Due to this fact, Vinod is withdrawing his consent of
nomination in the said One Person Company. Taking into considerations the provisions of the
Companies Act, 2013 answer the questions given below:-
I. If is it mandatory for Vinod to withdraw his nomination in the said OPC
II. Can Rohan make his 17 year old son as a nominee in such a case. (4 Marks)
(c) "A breach of condition can be treated as a breach of warranty". Explain this statement as per
relevant provisions of the Sale of Goods Act, 1930. (4 Marks)
2. (a) Explain the term Contingent Contract with reference to the Indian Contract Act, 1872 with the help
of an example. Also discuss the rules relating to enforcement of a contingent contract. (7 Marks)
(b) Limited Liability Partnership (LLP) gives the benefits of limited liability of a company on one hand
and the flexibility of a partnership on the other. Discuss. (5 Marks)
3. (a) Define partnership and name the essential elements for the existence of a partnership as per the
Indian Partnership Act, 1932. Explain any two such elements in detail. (3 + 3 = 6 Marks)
(b) Kapil went to a departmental store to purchase a steel pan. He asked the salesman about the area
in departmental store where steel pans are kept. The salesman indicated him the area with
instructions that with steel pans, other metal’s pans were also kept. Kapil wrongfully picked an
aluminium pan in place of steel pan. The salesman watched but said nothing to Kapil. Kapil reached
his house and found that pan was not a steel pan but actually an aluminium pan. Kapil filed a suit
against departmental store for fraud. Discuss, whether Kapil was eligible to file suit for fraud against
departmental store under Indian Contract Act, 1872? (6 Marks)
4. (a) Discuss the rights of an unpaid seller against the buyer under the Sales of Goods Act, 1930.
(6 Marks)
(b) Mr. M is one of the four partners in M/s XY Enterprises. He owes a sum of ` 6 crore to his friend
Mr. Z which he is unable to pay on due time. So, he wants to sell his share in the firm to Mr. Z for
settling the amount.

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 In the light of the provisions of the Indian Partnership Act, 1932, discuss each of the following:
(i) Can Mr. M validly transfer his interest in the firm by way of sale?
(ii) What would be the rights of the transferee (Mr. Z) in case Mr. M wants to retire from the firm
after a period of 6 months from the date of transfer? (6 Marks)
5. (a) Sohan is a trader in selling of wheat. Binod comes to his shop and ask Sohan to show him some
good quality wheat. Binod is satisfied with the quality of wheat. Sohan agrees to sell 100 bags of
wheat to Binod on 10 th June 2021.
The delivery of wheat and the payment was to be made in next three months i.e. by 10 th September
2021 by Binod. Before the goods are delivered to Binod, Sohan gets another customer Vikram in
his shop who is ready to pay higher price for the wheat. Sohan sells the goods of Binod (which
were already lying in his possession even after sale) to Vikram. Vikram has no knowledge that
Sohan is not the owner of goods. With reference to Sale of Goods Act,1930, discuss if such a sale
made by Sohan to Vikram is a valid sale? (6 Marks)
(b) ABC Limited was into sale and purchase of iron rods. This was the main object of the company
mentioned in the Memorandum of Association. The company entered into a contract with Mr. John
for some finance related work. Later on, the company repudiated the contract as being ultra vires.
With reference to the same, briefly explain the doctrine of “ultravires” under the Companies Act,
2013. What are the consequences of ultravires acts of the company? (6 Marks)
6. (a) Explain what is meant by 'Supervening Impossibility' as per the Indian Contract Act, 1872 with the
help of an example. What is the effect of such impossibility? (5 Marks)
(b) Subject to agreement by partners, state the rules that should be observed by the partners in settlin g
the accounts of the firm after dissolution under the provisions of the Indian Partnership Act, 1932.
(4 Marks)
(c) Mr. Raj formed a company with a capital of ` 50,000. He sold his business to another company for
` 40,000. For the payment of sale, he accepted shares worth ` 30,000 (3000 shares of ` 1 each).
The balance 10,000 was considered as loan and Mr. Raj secured the amount by issue of
debentures. His wife and three daughters took one share each. Owing to strike the company was
wound up. The assets of the company were valued at ` 6000. The debts due to unsecured creditors
were ` 8000.
Mr. Raj retained the entire sum of ` 6000 as part payment of loan. To this, the other creditors
objected. Their contention was that a man could not own any money to himself, and the entire sum
of ` 6000 should be paid to them.
Examine the rights of Mr. Raj and other creditors. Who will succeed? (3 Marks)

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 SECTION-B: BUSINESS CORRESPONDENCE AND REPORTING
Max Marks: 40 Marks
Instructions
The Question paper comprises of 5 questions of 10 Marks each. Question 1 is compulsory. Out of 2
to 5, attempt any three.
1. (a) Read the passage below and answer the questions that follow:
Motivations for ruralism in the under developed countries are understandably different from those
in developed countries. There, it is a sheer physical necessity for the very act of man’s survival. In
the Third World countries, which are predominantly rural, the only lever that can life human life
above its present subhuman level, is rural development. Rural life for such countries has been
stagnating for countries on end. Nothing worthwhile has been done to ameliorate the condition s of
the rural population which is only slightly different from that of their quadruped counterparts.
Ignorance, ill health and poverty have become synonyms of rural life in the undeveloped and
underdeveloped countries. Probably, we need to work on these reasons and help these countries
grow up their economy.
But the worst tragedy is that the concerned human populations have taken this state of affairs for
granted, as something unalterable, something for which there is no remedy. Every ray of hope has
gone out of their lives. There seems to be no motivation. In such countries, rural development is
the inevitable condition of any material or nonmaterial advancement. Also the enlightened sections
of all such countries have been taking ever growing interest in the question of rural development.
This was also part of the legacy of their freedom struggle. In countries like India, it is well known
that attempts at rural development were an inseparable part of the Independence movement.
Leaders like Gandhi ji realised quite well that real India lived in her stagnating villages. Cities,
which were mostly the products of Western colonialism, were just artificial showpieces. Even there,
it was like two worlds. The posh areas, where the affluent few, mostly the products and custodians
of imperial interest lived, were little islands engulfed by the vast majority of people.
(1) What according to the author is the worst tragedy? (1 Mark)
(2) How do you know that rural development was part of India’s freedom struggle? (1 Mark)
(3) Choose a suitable synonym for the word ameliorate as used in the 5 th line, para 1. (1 Mark)
(a) Worsen
(b) Improve
(c) Distance
(d) Make fun of
(4) What have become the common synonyms of rural life in the undeveloped and
underdeveloped countries? (1 Mark)
(5) ‘The posh areas, where the affluent few,’ what does the word ‘affluent’ refer to? Explain in
one line. (1 Mark)
(b) Read the following passage
Nearly 41% of the Indian population is employed in agriculture while its contribution to the GDP is
around 18% . This means that more people are engaged in agriculture and hence the per capita
income decreases. In economic terms, it is known as disguised unemployment where too many
people are filling too few jobs. To address this, we need to shift the excess people from agriculture
to other economic activities. This will translate to job creation that will not be restricted only to large
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 metros but will also make the rural economy self-sufficient and resilient.
Focus on handicrafts, food-processing, MSME and skill development is required. MSME can be
the backbone as well as a stepping stone towards further industrialisation. Paintings, hand -made
soaps, wooden toys, and bamboo products are in huge demand both domestically and
internationally as people shun toxic materials. As for the price, large scale manufacturing and
supply chain management can help reduce the cost.
Migrant labour from eastern India forms the majority of industrial and agricultural labour. As a
result, brain and labour drain in the source regions is affecting development. Reverse migration of
labour will help regenerate agriculture in eastern India. This will require institutional as well as
technological intervention. As landholdings are small, using technology in farming is not
remunerative for small and marginal farmers. The Government should promote cooperative farming
and consolidate landholdings.
(i) Make notes, sub headings, abbreviations, wherever necessary giving a suitable title.
(3 Marks)
(ii) Write a summary (2 Marks)
2. (a) Define effective Communication. List at least 4 characteristics of effective communication .
(2 Marks)
(b) (i) Choose the suitable synonym for the given word: (1 Mark)
Robust
(1) Rude
(2) Wise
(3) Strong
(4) Careless
(ii) Choose the most suitable antonym for the given word: (1 Mark)
Amicable
(1) Hostile
(2) Regretful
(3) Capable
(4) Delicate
(iii) Change the following sentence into indirect speech:
The lawyer said to the accused, ‘You should speak the truth’. (1 Mark)
(c) Write a Précis and also give an appropriate title for the passage given below. (5 marks)
Speech is a great blessing but it can also be a great curse for while it helps us to make our
intentions and desires known to our fellows, it can also, if we use it carelessly, make our attitude
completely misunderstood. A slip of the tongue, the use of an unusual word, or of an am biguous
word, and so on, may create an enemy where we had hoped to win a friend.
Again, different classes of people use different vocabularies, and the ordinary speech of an
educated man may strike an uneducated listener as pompous. Unwittingly, we may u se a word
which bears a different meaning to our listener from what it does to men of our own class. Thus,
speech is not a gift to use lightly without thought, but one which demands careful handling. Only a
fool will express alike to all kinds and conditions of men.

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3. (a) What are the barriers in communication? (2 Marks)
(b) (i) Choose the word which best expresses the meaning of the given word. (1 Mark)
Catastrophe
(1) Relevance
(2) Special
(3) Disaster
(4) Award
(ii) Choose the word which best expresses the meaning of the given word (1 Mark)
Ameliorate
(1) Condemn
(2) Improve
(3) Mix
(4) Rescue
(iii) Change the following into indirect speech:
Mother said to Raju, ‘Would you come to the shop with me?’ (1 Mark)
(c) You are a student of Vidyamandir Public School. You School hosted a literary fest ival where other
schools of the city also participated. Events included debates, storytelling, essa y writing etc. Draft
a report stating the details of the events to be published in the School Literary magazine .
(5 Marks)
4. (a) Discuss Formal Communication and its types. (2 Marks)
(b) (i) Change the following sentence into indirect speech (3 Marks)
Rashmi said, ‘These grapes look sweet’
(ii) Change the following sentence into active voice.
Raja Rao will be crowned the king by the people.
(iii) Change the following sentence into passive voice.
Will you accept this offer?
(c) As the Head of the Human Resource (Amit/Amita Khurana) at Surya Private limited, draft a
circular informing all HR personnel of your organization to attend a meeting late evening to
discuss the visit of Managing Director in the company and give necessary suggestions to plan
his itinerary.
OR
You are Raghav/Rashmi, Senior Manager, Aztec Technologies. Write a formal e-mail to
Mr. Ajay Khanna informing him about his selection for ‘Associate Consultant’.
(5 Marks)
5. (a) Explain the term ‘chain of command’ in communication. (2 Marks)
(b) Select the correct meaning of idioms/phrases given below:
(i) Comparing oranges to apples (1 Mark)
(1) Disliking everything
(2) Comparing two different things that cannot be compared

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 (3) To give incorrect answers
(4) Inability to work
(ii) To break the ice (1 Mark)
(1) To hit it hard
(2) To break something expensive
(3) To take risky decisions
(4) To make people comfortable
(iii) Change the sentence into passive voice: (1 Mark)
A little lamb is following Mary.
(iv) Choose the word that best expresses the meaning of the given word: (1 Mark)
Retaliate
(1) Allow
(2) Withdraw
(3) Strike back
(4) Remove
(c) You are Krishna/Kaveri, sales Head of New Zone Machinery, Hyderabad. You wish to thank Agro
Associates, Vijaywada for giving you a bulk order for agriculture machinery. Write a formal letter
dated 13 th April 2022, addressed to Manager, Accounts department. Include a list of items to be
delivered. (Trolley pump, Seed drill, Mini sprayer, Trailer sprayer) (4 Marks)

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 Test Series: March, 2022
MOCK TEST PAPER 1
FOUNDATION COURSE
PAPER 2: BUSINESS LAWS AND BUSINESS CORRESPONDENCE AND REPORTING
SECTION A: BUSINESS LAWS
Question No. 1 is compulsory.
Answer any four questions from the remaining five questions.

ANSWERS

1. (a) Section 73 of Indian Contract Act, 1872 provides that when a contract has been broken, the party
who suffers by such breach is entitled to receive, from the party who has broken the contract,
compensation for any loss or damage caused to him thereby, which naturally arose in the usual
course of things from such breach, or which the parties knew, when they made the contract, to be
likely to result from the breach of it. But such compensation is not to be given for any remote and
indirect loss or damage sustained by reason of the breach.
In the instant case, Mr. Murti filed the suit against Himalya Travels Pvt. Ltd. for damages for the
personal inconvenience, hotel charges and medical treatment for his wife.
On the basis of above provisions and facts of the case, it can be said that Mr. Murti can claim
damages for the personal inconvenience and hotel charges but not for medical treatment for his
wife because it is a remote or indirect loss.
(b) (A) Yes, it is mandatory for Vinod to withdraw his nomination in the said OPC as he is leaving
India permanently as only a natural person who is an Indian citizen and resident in India or
otherwise and has stayed in India for a period of not less than 120 days during the immediately
preceding financial year shall be a nominee in OPC.
Since Vinod will not satisfy this condition, so he needs to withdraw his nomination.
(B) No, Rohan cannot make his 17 year old son as a nominee of his OPC as no minor shall
become member or nominee of the OPC or can hold beneficial interest.
(c) Section 13 of the Sale of Goods Act, 1930 specifies cases where a breach of condition be treated
as a breach of warranty. As a result of which the buyer loses his right to rescind the contract and
can claim damages only.
In the following cases, a contract is not avoided even on account of a breach of a condition:
(i) Where the buyer altogether waives the performance of the condition. A party may for his own
benefit, waive a stipulation. It should be a voluntary waiver by buyer.
(ii) Where the buyer elects to treat the breach of the conditions, as one of a warranty. That is to
say, he may claim only damages instead of repudiating the contract. Here, the buyer has not
waived the condition but decided to treat it as a warranty.
(iii) Where the contract is non-severable and the buyer has accepted either the whole goods or
any part thereof. Acceptance means acceptance as envisaged in Section 72 of the Indian
Contract Act, 1872.
(iv) Where the fulfilment of any condition or warranty is excused by law by reason of impos sibility
or otherwise.

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2. (a) Definition of ‘Contingent Contract’ (Section 31 of the Indian Contract Act, 1872): A contract
to do or not to do something, if some event, collateral to such contract, does or does not happen.
Example: A contracts to pay B Rs. 1,00,000 if B’s house is burnt. This is a contingent contract.
Rules Relating to Enforcement: The rules relating to enforcement of a contingent contract are
laid down in sections 32, 33, 34, 35 and 36 of the Act.
(i) Enforcement of contracts contingent on an event happening: Where a contract identifies
happening of a future contingent event, the contract cannot be enforced until and unless the
event ‘happens’. If the happening of the event becomes impossible, then the contingent
contract is void.
(ii) Enforcement of contracts contingent on an event not happening: Where a contingent
contract is made contingent on non-happening of an event, it can be enforced only when its
happening becomes impossible.
(iii) A contract would cease to be enforceable if it is contingent upon the conduct of a living
person when that living person does something to make the ‘event’ or ‘conduct’ as
impossible of happening.
(iv) Contingent on happening of specified event within the fixed time: Section 35 says that
Contingent contracts to do or not to do anything, if a specified uncertain event happens within
a fixed time, becomes void if, at the expiration of time fixed, such event has not happened, or
if, before the time fixed, such event becomes impossible.
(v) Contingent on specified event not happening within fixed time: Section 35 also says that
“Contingent contracts to do or not to do anything, if a specified uncertain even t does not
happen within a fixed time, may be enforced by law when the time fixed has expired, and such
event has not happened or before the time fixed has expired, if it becomes certain that such
event will not happen”.
(vi) Contingent on an impossible event (Section 36): Contingent agreements to do or not to
do anything, if an impossible event happens are void, whether the impossibility of the event
is known or not to the parties to the agreement at the time when it is made.
(b) LLP gives the benefits of limited liability of a company and the flexibility of a partnership
Limited Liability: Every partner of a LLP is, for the purpose of the business of LLP, the agent of
the LLP, but not of other partners (Section 26 of the LLP Act, 2008). The liability of the partners
will be limited to their agreed contribution in the LLP, while the LLP itself will be liable for the full
extent of its assets.
Flexibility of a partnership: The LLP allows its members the flexibility of organizing their internal
structure as a partnership based on a mutually arrived agreement. The LLP form enables
entrepreneurs, professionals and enterprises providing services of any kind or engaged in scientific
and technical disciplines, to form commercially efficient vehicles suited to their requirements.
Owing to flexibility in its structure and operation, the LLP is a suitable vehicle for small enterprises
and for investment by venture capital.
3. (a) Definition of Partnership: 'Partnership' is the relation between persons who have agreed to share
the profits of a business carried on by all or any of them acting for all. (Section 4 of the Indian
Partnership Act, 1932)
The definition of the partnership contains the following five elements which must co -exist before a
partnership can come into existence:
1. Association of two or more persons
2. Agreement
3. Business
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 4. Agreement to share Profits
5. Business carried on by all or any of them acting for all
ELEMENTS OF PARTNERSHIP
The definition of the partnership contains the following five elements which must co -exist before a
partnership can come into existence:
1. Association of two or more persons: Partnership is an association of 2 or more persons.
Again, only persons recognized by law can enter into an agreement of partnership. Therefore,
a firm, since it is not a person recognized in the eyes of law cannot be a partner. Again, a
minor cannot be a partner in a firm, but with the consent of all the partners, may be admitted
to the benefits of partnership.
The Partnership Act is silent about the maximum number of partners but Section 464 of the
Companies Act, 2013 read with the relevant Rules has now put a limit of 50 partners in any
association / partnership firm.
2. Agreement: It may be observed that partnership must be the result of an agreement between
two or more persons. There must be an agreement entered into by all the persons concerned.
This element relates to voluntary contractual nature of partnership. Thus, the nature of the
partnership is voluntary and contractual. An agreement from which relationship of Partnership
arises may be express. It may also be implied from the act done by partners and from a
consistent course of conduct being followed, showing mutual understanding between them. It
may be oral or in writing.
3. Business: In this context, we will consider two propositions. First, there must exist a
business. For the purpose, the term 'business' includes every trade, occupation and
profession. The existence of business is essential. Secondly, the motive of the business is
the "acquisition of gains" which leads to the formation of partnership. The refore, there can be
no partnership where there is no intention to carry on the business and to share the profit
thereof.
4. Agreement to share profits: The sharing of profits is an essential feature of partnership.
There can be no partnership where only one of the partners is entitled to the whole of the
profits of the business. Partners must agree to share the profits in any manner they choose.
But an agreement to share losses is not an essential element. It is open to one or more
partners to agree to share all the losses. However, in the event of losses, unless agreed
otherwise, these must be borne in the profit-sharing ratio.
5. Business carried on by all or any of them acting for all: The business must be carried on
by all the partners or by anyone or more of the partners acting for all. This is the cardinal
principle of the partnership Law. In other words, there should be a binding contract of mutual
agency between the partners. An act of one partner in the course of the business of the firm
is in fact an act of all partners. Each partner carrying on the business is the principal as well
as the agent for all the other partners. He is an agent in so far as he can bind the other
partners by his acts and he is a principal to the extent that he is bound by the act of other
partners. It may be noted that the true test of partnership is mutual agency rather than sharing
of profits. If the element of mutual agency is absent, then there will be no partnership.
(b) Section 17 of Indian Contract Act, 1872 defines ‘Fraud’. According to section, “Fraud” means and
includes any of the following acts committed by a party to a contract or by his agent with intent to
deceive or to induce a person to enter into the contract:
(i) the suggestion, as a fact, of that which is not true, by one who does not believe it to be true;
(ii) the active concealment of a fact by one having knowledge or belief of the fact;

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 (iii) a promise made without any intention of performing it;
(iv) any other act fitted to deceive;
(v) any such act or omission as the law specially declares to be fraudulent.
It was also explained that mere silence is not fraud. Silence amounts to fraud where (a) there is a
duty to speak or (b) where silence is equivalent to speech.
On the basis of provisions of Section 17 and the facts given above, it was not the duty of salesman
to inform Mr. Kapil about his mistake. Hence, there was no fraud and Kapil was not eligible to file
suit for fraud against departmental store under Indian Contract Act, 1872.
4. (a) The right against the buyer are as follows:
1. Suit for price (Section 55 of the Sale of Goods Act, 1930)
(a) Where under a contract of sale, the property in the goods has passed to the buyer and
the buyer wrongfully neglects or refuses to pay for the goods according to the terms of
the contract, the seller may sue him for the price of the goods. [Section 55(1)]
(b) Where under a contract of sale, the price is payable on a certain day irrespective of
delivery and the buyer wrongfully neglects or refuses to pay such price, the seller may
sue him for the price although the property in the goods has not passed and the goods
have not been appropriated to the contract. [Section 55(2)].
2. Suit for damages for non-acceptance (Section 56): Where the buyer wrongfully neglects
or refuses to accept and pay for the goods, the seller may sue him for damages for non -
acceptance.
3. Repudiation of contract before due date (Section 60): Where the buyer repudiates the
contract before the date of delivery, the seller may treat the contract as rescinded and sue
damages for the breach. This is known as the ‘rule of anticipatory breach of contract’.
4. Suit for interest [Section 61]: Where there is specific agreement between the seller and the
buyer as to interest on the price of the goods from the date on which payment becomes due,
the seller may recover interest from the buyer. If, however, there is no specific agreement to
this effect, the seller may charge interest on the price when it becomes due from such day as
he may notify to the buyer.
In the absence of a contract to the contrary, the Court may award interest to the seller in a
suit by him at such rate as it thinks fit on the amount of the price from the date of the tender
of the goods or from the date on which the price was payable.
(b) According to Section 29 of the Indian Partnership Act, 1932,
(1) A transfer by a partner of his interest in the firm, either absolute or by mortgage, or by the
creation by him of a charge on such interest, does not entitle the transferee, during the
continuance of the firm, to interfere in the conduct of business, or to require accounts, or to
inspect the books of the firm, but entitles the transferee only to receive the share of p rofits of
the transferring partner, and the transferee shall accept the account of profits agreed to by
the partners.
(2) If the firm is dissolved or if the transferring partner ceases to be a partner, the transferee is
entitled as against the remaining partners to receive the share of the assets of the firm to
which the transferring partner is entitled, and, for the purpose of ascertaining that share, to
an account as from the date of the dissolution.
In the light of facts of the question and provision of law:
(i) Yes, Mr. M can validly transfer his interest in the firm by way of sale.

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 (ii) On the retirement of the transferring partner (Mr. M), the transferee (Mr. Z) will be entitled,
against the remaining partners:
(a) to receive the share of the assets of the firm to which the transferring partner was
entitled, and
(b) for the purpose of ascertaining the share,
he is entitled to an account as from the date of the dissolution.
So, in this case on Mr. M’s retirement, Mr. Z would be entitled to receive the value of Mr. M’s
share to the extent of Rs. 6 crore in the firm’s assets.
5. (a) The given question deals with the rule related to transfer of title of goods. Section 27 of the Sale
of Goods Act ,1930 specify the general rule " No man can sell the goods and give a good title
unless he is the owner of the goods". The latin maxim " NEMO DET QUOD NON HABET". However,
there are certain exceptions to this rule. One of the exceptions is given in Section 30 (1) of Sale of
Goods Act,1930 wherein the sale by seller in possession of goods even after sale is made , is held
to be valid. If the following conditions are satisfied, then it amounts to a valid sale although the
seller is no more the owner of goods after sale.
(i) A seller has possession of goods after sale
(ii) with the consent of the other party (i.e. buyer)
(iii) the seller sells goods (already sold) to a new buyer
(iv) the new buyer acts in good faith
(v) The new buyer has no knowledge that the seller has no authority to sell.
In the given question, the seller Sohan has agreed to sell the goods to Binod, but delivery of the
goods is still pending. Hence Sohan is in possession of the goods and this is with the consent of
buyer i.e. Binod. Now Sohan sell those goods to Vikram, the new buyer. Vikram is buying the goods
in good faith and also has no knowledge that Sohan is no longer the owner of goods.
Since all the above conditions given under Section 30 (1) of Sale of Goods Act, 1930 are satisfied,
therefore the sale made by Sohan to Vikram is a valid sale even if Sohan is no longer the owner of
goods.
(b) Doctrine of ultra vires: The meaning of the term ultra vires is simply “beyond (their) powers”. The
legal phrase “ultra vires” is applicable only to acts done in excess of the legal powers of the doers.
This presupposes that the powers in their nature are limited. It is a fundame ntal rule of Company
Law that the objects of a company as stated in its memorandum can be departed from only to the
extent permitted by the Act, thus far and no further. In consequence, any act done or a contract
made by the company which travels beyond the powers not only of the directors but also of the
company is wholly void and inoperative in law and is therefore not binding on the company. On this
account, a company can be restrained from employing its fund for purposes other than those
sanctioned by the memorandum. Likewise, it can be restrained from carrying on a trade different
from the one it is authorised to carry on.
The impact of the doctrine of ultra vires is that a company can neither be sued on an ultra vires
transaction, nor can it sue on it. Since the memorandum is a “public document”, it is open to public
inspection. Therefore, when one deals with a company one is deemed to know about the powers
of the company. If in spite of this you enter into a transaction which is ultra vires the company , you
cannot enforce it against the company.
An act which is ultra vires the company being void, cannot be ratified even by the unanimous
consent of all the shareholders of the company.
Hence in the given case, ABC Limited cannot enter into a contract outside the purview of its object
clause of memorandum of association as it becomes ultra vires and thus null and void.
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6. (a) According to Section 56 of the Indian Contract Act, 1872, the impossibility of performance may be
of the two types, namely (a) initial impossibility, and (b) subsequent impossibility.
Subsequent impossibility is also known as Supervening impossibility i.e. becomes
impossible after entering into contract. When performance of promise become impossible or
illegal by occurrence of an unexpected event or a change of circumstances beyond the
contemplation of parties, the contract becomes void e.g. change in law etc. In other words,
sometimes, the performance of a contract is quite possible when it is made. But subsequently,
some event happens which renders the performance impossible or unlawful. Such impossibility is
called the subsequent or supervening. It is also called the post-contractual impossibility.
Example: ‘A’ and ‘B’ contracted to marry each other. Before the time fixed for the marriage, ‘A’
became mad. In this case, the contract becomes void due to subsequent impossibility, and thus
discharged.
Effect of impossibility: The effect of such impossibility is that it makes the contract void, and the
parties are discharged from further performance of the contract.
(b) Mode of Settlement of partnership accounts: As per Section 48 of the Indian Partnership Act,
1932, in settling the accounts of a firm after dissolution, the following rules shall, subject to
agreement by the partners, be observed:-
(i) Losses, including deficiencies of capital, shall be paid first out of profits, next out of capital,
and, lastly, if necessary, by the partners individually in the proportions in which they were
entitled to share profits;
(ii) The assets of the firm, including any sums contributed by the partners to make up deficiencies
of capital, must be applied in the following manner and order:
(a) in paying the debts of the firm to third parties;
(b) in paying to each partner rateably what is due to him from capital;
(c) in paying to each partner rateably what is due to him on account of capital; and
(d) the residue, if any, shall be divided among the partners in the proportions in which they
were entitled to share profits.
(c) Separate Legal Entity: Corporate Veil refers to a legal concept whereby the company is identified
separately from the members of the company.
The term Corporate Veil refers to the concept that members of a company are shielded from liability
connected to the company’s actions. If the company incurs any debts or contravenes any laws, the
corporate veil concept implies that members should not be liable for those errors. In other words,
they enjoy corporate insulation.
Thus, the shareholders are protected from the acts of the company. The leading case law of
Saloman Vs Saloman and Company Limited, laid the foundation of concept of corporate veil or
independent corporate personality. A company is a person distinct and separate from its members.
Based on the above discussion and provisions, Mr. Raj was entitled to the assets of the company
as he was a secured creditor of the company and the contention of the creditors that Mr. Raj and
the company are one and same person is wrong.

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 SECTION-B: BUSINESS CORRESPONDENCE AND REPORTING
ANSWER
1. (a) Reading Comprehension
(1) According to the author, the worst tragedy is that the concerned human population has taken
the current state of affairs as granted. According to them, rural life cannot be ameliorated or
altered.
(2) According to the passage, rural development was an inseparable part of the Independence
movement. Leaders like Gandhi ji realized quite well that real India lived in her stagnating
villages.
(3) Option b
(4) Ignorance, ill health and poverty have become synonyms of rural life in the un developed and
underdeveloped countries.
(5) The word ‘affluent’ refers to the rich and the wealthy people.
(b) Title: The problem of disguised unemployment
(1) Too much employment in agriculture
1.1 41% Indian ppln in agric.
1.2 More the ppl, less the per capita income
1.3 Need to shift to hmn resources to othr activities
1.4 Make rural sec self suffcnt
(2) Need to focus on othr skills
2.1 Handicrafts, food processing, MSME sec; need to be grown
2.2 Hnd made toys, bamboo prdcts, hnd made soaps in demand
2.3 Large scale manfctrng, spply chn mgmnt will lead to reductn in cost
(3) Eastern India: hub for agricultural and industrial labr
3.1 Need for reverse migrtn
3.2 Need for techn. intrventn
3.3 Govt. needs to promote coop frmng and consoldt land hldngs
Key:
Ppln: population
Agric: agriculture
Ppl: people
Hmn: human
Othr: other
sec: sector
Suffcnt: sufficient
Hnd: hand
Prdcts: products
Manfctrng: manufacturing
Sply chn: supply chain
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 Mgmnt: management
Reductn: reduction
Lbr: labour
Migrtn: migration
Techn: technological
Intrvntn: intervention
coop: cooperative
Frmng: farming
Consoldt: consolidate
Hldngs: holdings
Summary:
With nearly 41 % people employed in agriculture, there seems to be disguised unemployment
where too many people are filling too few jobs. The focus needs to shift towards other skilled
activities like making wooden toys, handmade soaps, bamboos products which have a domestic
as well international demand. Moreover, eastern India having a concentration of agricultural and
industrial labour, there should be plans of having reverse migrations and an intervention of
technology. Last, but not the least government should promote cooperative farming and
consolidate land holdings for the betterment of the region.
2. (a) When the right message is conveyed at the right time to the right person in a clear and coherent
manner, it is said to be Effective communication.
Four characteristics
Clarity: The message written or spoken should be stated clearly. Communication should not have
ambiguity.
Conciseness: Brevity is the essence of communication. Message conveyed should be short, brief
and to the point.
Coherence: communication should involve a logical flow of ideas, where there is a smooth shift
from one idea to another.
Completeness: Good communication conveys the whole idea, without leaving gaps. All relevant
information should be given at the same time to make it complete.
(b) (i) Option 3
(ii) Option 1
(iii) The lawyer ordered the accused to speak the truth
(c) Think before you speak! Or Mind your words!
Speech can be a blessing or a curse depending on how we use it. A wrong choice of word can
make a foe instead of a friend. A strong vocabulary might imply something different to our listener
based on classes and knowledge of words. Hence, speech is a special gift to be used wisely. Only
a fool would use words alike in front of all men and in all situations.
3. (a) There are multiple barriers in the communication process.
Physical Barriers, which are result of our surroundings. Like noise, lack of infrastructure, old
technologies.
Language Barriers which result from lack of knowledge of a particular language. It leads to
unfamiliar expressions, ambiguous words.

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 Emotional Barriers which result from feelings of anger, fear of criticism, ridicule, distrust, jealousy
etc.
Cultural Barriers, which result from diversity in culture, traditions where gestures and expressions
have different meanings in different cultures and communities.
(b) (i) Option 3
(ii) Option 2
(iii) Mother asked Raju if he would come to the shop with her.
(c) Report writing
Vidyamandir School hosts literary festival
By Abhishek Verma
Vidyamandir School, New Delhi hosted its third literary festival on 15 th March, 2022. The Chief
Guest for the event was famous writer Ms Arundhati Roy. The event started by lightning of the lamp
and a beautiful Saraswati Vandana sung by the school students.
The festival included various events like debates, declamations, poetry recitation and storytel ling.
Ten other schools from the city participated in this event and students displayed their talent and
expertise.
The storytelling event was a hit amongst the jury and the audience. It involved use of creative,
handmade props, voice modulations and background music and a lot of humour. The other event
which got adrenaline rushing was the debate competition. The strong vocabulary, the emphatic
phrases swayed the audience and earned the appreciation of the judges.
Ms. Roy gave an inspiring speech and thanked for letting her be a part of this creative event. The
event ended with a vote of thanks given by the school Principal and the Head girl.
4. (a) A communication that involves certain rules, principles and conventions and is primarily used in
offices, businesses is known as Formal Communication.
Its three types:
(1) Vertical: Information flows upwards and downwards as per its importance. Decisions are made
at the top level while instructions are passed to the lower levels
(2) Horizontal : Communication between two employees at the same level , in an organization.
(3) Diagonal: Cross functional communication between employees at different levels of the
organizational hierarchy.
(b) (i) Rashmi said that those grapes look sweet.
(ii) The people will crown Raja Rao the king
(iii) Will this offer be accepted by you?
(c) Circular No. XXV
Agenda for the MD’s visit
14th March, 2022
For all HR personnel
This is to inform you that all employees of the Human Resource division have to be present
for a meeting today at 7.30 pm, in the Seminar Room (2 nd floor). This is in regard with the visit
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 of our Managing Director (MD) in the coming week. We would appreciate suggestions to plan
his itinerary and discuss the agendas to be shared with him.
Attendance is compulsory.

Amita Khurana,
Head, HR
Surya Pvt. Ltd
OR
Email
To: ajaykhanna@abc.com
CC/BCC: rohit@aztectechnolgies.com
Sub: Appointment Letter for ‘Associate Consultant’
Dear Mr. Ajay,
We are pleased to inform you that you have been selected for the post of ‘Associate
Consultant’ at Aztec Technologies.
We request you to collect your appointment letter in three days of receiving this email. It would
be advisable to bring along a few documents mentioned in the attachment. (Originals only).
In case you accept the offer, please write a short acceptance reply to confirm the same. For
better understanding of the job responsibilities, we have planned an Orientation Programme
on 25th March, 2022 at the Head Office. Details will be shared soon.
Our HR team would get in touch with you for further details. Looking forward to have you on
board!

Regards,
Rashmi,
Aztec Technologies
5. (a) The communication pattern that follows the chain network from senior to junior is known as the
Chain of Command. The communication starts at the top, like from the CEO, and makes it way
down to different levels of employees. It involves organizational hierarchy.
(b) (i) Option 2
(ii) Option 4
(iii) Mary is being followed by a lamb.
(iv) Option 3
(c) Vijaywada
13th April, 2022

Mr. AABC,
Manager,
Accounts Department
Agro Associates
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 Dear Sir/Madam,
I would like to take the opportunity to thank you for giving us yet another opportunity to serve your
demands for machinery and other equipment. It has always been a pleasure working your
organization.
I would like to inform you that the 100 units of machinery ordered, will be delivered as per the
mutually decided date. We would also provide a free service for the next one year, taking care of
any product damage.
The order dated 1 st March, 2022 includes:
(1) Trolley pump (30 units)
(2) Speed drill (25 units)
(3) Mini sprayer (25 units)
(4) Trailer sprayer (20 units)
For any other query regarding the machinery ordered and its functioning, please feel free to contact
me. My team would be happy to serve you better each time. You can also call at our toll free
number 1800000010 for any clarifications.

Thanking you!

Yours Sincerely,
Krishna,
Sales Head
New Zone Machinery,
Hyderabad

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