Business Laws Test 2 Second Half May 2024 Test Paper 1704700560 (1)

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CA Final | CA Inter | CA IPCC | CA Foundation Online Test Series
Question Paper
CA Foundation Law Duration: 90

Details: Test-2 Second Half
Marks: 60
Instructions:
 All the questions are compulsory

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Q1. Master Y was introduced to the benefits of partnership in the firm of M/s XYZ &
Associates with the unanimous consent of all the existing partners. However, after reaching
the age of majority, Master Y neglected to provide public notice within the stipulated
timeframe, indicating his decision to either join or decline the partnership. Subsequently,
Mr. P, a creditor who supplied services to M/s XYZ & Associates, initiated legal proceedings
against the firm for the recovery of a debt.
In accordance with the Indian Partnership Act, 1932, elucidate the following:
(i) What will be the extent of Y's liability if he failed to issue a public notice after attaining
majority?
(ii) Is Mr. P entitled to recover his debt from Y?
(6 MARKS)
Q2. Sahil, Amit and Kunal were partners in a firm. The firm is a dealer in office furniture.
They have regular dealings with M/s AB and Co. for the supply of furniture for their
business. On 30th June 2023, one of the partners, Mr. Kunal died in a road accident. The
firm ordered M/s AB and Co. to supply the furniture for their business on 25th May 2023,
when Kunal was also alive.
Now Sahil and Amit continue the business in the firm’s name after Kunal’s death. The firm
did not give any notice about Kunal’s death to the public or the persons dealing with the
firm. M/s AB and Co. delivered the furniture to the firm on 25th July 2023. The fact about
Kunal’s death was known to them at the time of delivery of goods. Afterwards the firm
became insolvent and failed to pay the price of furniture to M/s AB and Co. Now M/s AB and
Co. has filed a case against the firm for recovery of the price of furniture. With reference to
the provisions of Indian Partnership Act, 1932, explain whether Kunal’s private estate is also
liable for the price of furniture purchased by the firm?
(7 MARKS)
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Q3. (i) Subject to agreement by partners, state the rules that should be observed by the
partners in settling the accounts of the firm after dissolution under the provisions of the
Indian Partnership Act, 1932.
(4 MARKS)
(ii) State the legal position of a minor partner under the Indian Partnership Act, 1932 after
attaining majority:
(A) When he opts to become a partner of the same firm.
(B) When he decides not to become a partner.
(4 MARKS)
Q4. Differentiate between a Limited Liability Partnership (LLP) and a Limited Liability
Company (LLC). (Any six points)
(6 MARKS)
Q5. "Define the terms 'Body Corporate' and 'Limited Liability Partnership Agreement' as
per the Limited Liability Partnership Act, 2008. Explain the key inclusions under 'Body
Corporate' and elaborate on the significance of a 'Limited Liability Partnership Agreement' in
determining the relationships and obligations within a Limited Liability Partnership."
(4 MARKS)
Q6. (i) Mr. Sooraj sold his business of cotton production to a cotton production company,
CPL Private Limited, in which he held all the shares except one which was held by his wife.
He is also the creditor in the company for a certain amount. He also got the insurance of the
stock of cotton of CPL Private Limited in his own name and not in the name of the company.
After one month, all the stocks of the cotton of CPL Private Limited were destroyed by fire.
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Mr. Sooraj filed the claim for such loss with the Insurance company. State with reasons that
whether the insurance company is liable to pay the claim?
(3 MARKS)
(ii) Alfa school is a section 8 company which started imparting education on 1.4.2015, with
the sole objective of providing education to children of weaker society either free of cost or
at a very nominal fee depending upon the financial condition of their parents. However, on
31st March 2023, it came to the knowledge of the Central Government that the said school
was operating by violating the objects of its objective clause due to which it was granted the
status of a section 8 company under the Companies Act, 2013. Describe what powers can be
exercised by the Central Government against the Alfa School, in such a case?
(4 MARKS)
Q7. Mr. Rajeev, an assessee, was a wealthy man earning huge income by way of dividend
and interest. He formed three Private Companies and agreed with each to hold a bloc of
investment as an agent for them. The dividend and interest income received by the
companies was handed back to Mr. Rajeev as a pretended loan. This way, Mr. Rajeev
divided his income into three parts in a bid to reduce his tax liability.
Decide, for what purpose the three companies were established? Whether the legal
personality of all the three companies may be disregarded.
(6 MARKS)
Q8. Mr. X, a businessman, is planning to establish a new company and seeks your expertise
in understanding the nuances of capital in the context of Company Law. Provide a
comprehensive explanation of the various classifications of capital & disclosure of these
capital components as per the Companies Act, 2013.
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(5 MARKS)
Q9. What is a cheque under the Negotiable Instruments Act, 1881, and who are the parties
involved? What are the essential elements of a cheque?
(4 MARKS)
Q10. (i) M owes money to N. Therefore, he makes a promissory note for the amount in
favor of N, for safety of transmission he cuts the note in half and posts one half to N. He
then changes his mind and calls upon N to return half of the note which he had sent. N
requires M to send the other half of the promissory note. Decide how rights of the parties
are to be adjusted.
(4 MARKS)
(ii) Rama executes a promissory note in the following form, 'I promise to pay a sum of
Rs.10,000 after three months'. Decide whether the promissory note is a valid promissory
note.
(3 MARKS)
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CATestSeries.

org (Since 2015)

CA Final | CA Inter | CA IPCC | CA Foundation Online Test Series

CA Foundation Law Duration: 90

 All the questions are compulsory

Legal: Material provided by catestseries.org is subject to copyright. No part of this

(ii) Is Mr. P entitled to recover his debt from Y?

(A) When he opts to become a partner of the same firm.

(B) When he decides not to become a partner.

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