Mittal Commerce Classes
CA Foundation Course (Mock Test Paper – Series : 2)
DATE: 08.05.2024 MAXIMUM MARKS: 100 TIMING: 31/4 Hours
PAPER 2 : BUSINESS LAW
Question No. 1 is Compulsory.
Answer any four question from the remaining five questions.
Wherever necessary, suitable assumptions should be made and disclosed by way of note
forming part of the answer. Working Notes should from part of the answer.
Question 1:
(a) (i) P sells by auction to Q a horse which P knows to be unsound. The horse
appears to be sound but P knows about the unsoundness of the horse. Is this
contract valid in the following circumstances:
(a) If P says nothing about the unsoundness of the horse to Q.
(b) If P says nothing about it to Q who is P’s daughter who has just come
of age.
(c) If Q says to P “If you do not deny it, I shall assume that the horse is
sound.” P says nothing.
(ii) Comment on the following statements:
(a) Acceptance must be absolute and unqualified.
(b) Acceptance must be in the prescribed mode.
(7 Marks)
(b) Delta school started imparting education on 1.4.2010, 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
30th March 2018, 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 Delta
School, in such a case?
(7 Marks)
(c) What is dissolution of firm? Distinguish between dissolution of firm and dissolution of
partnership?
(6 Marks)
Question 2:
(a) Kamal Cloth House, a firm dealing with the wholesale and retail buying and selling of
various kinds of clothes, customized as per the requirement of the customers. They
dealt with Silk, Organdie, cotton, khadi, chiffon and many other different varieties of
cloth.
Mrs. Seema, a customer came to the shop and asked for specific type of cloth
suitable for making a saree for her daughter’s wedding. She specifically mentioned
that she required cotton silk cloth which is best suited for the purpose.
The Shop owner agreed and arranged the cloth pieces cut into as per the buyers’
requirements.
When Seema went to the tailor for getting the saree stitched, she found that seller
has supplied her cotton organdie material, cloth was not suitable for the said
purpose. It has heavily starched and not suitable for making the saree that Seema
desired for. The Tailor asked Seema to return the cotton organdie cloth as it would
not meet his requirements.
(GCF-15, GCF-16, VCF-5 & ACF-6, DCF-9, DCF-10 & DRIVE) 1|Page
Mittal Commerce Classes
The Shop owner refused to return the cloth on the plea that it was cut to specific
requirements of Mrs. Seema and hence could not be resold.
With reference to the doctrine of "Caveat Emptor' explain the duty of the buyer as
well as the seller. Also explain whether Mrs. Seema would be able to get the money
back or the right kind of cloth as per the requirement?
(7 Marks)
(b) Explain Doctrine of Indoor Management and also give its exception limitations?
(7 Marks)
(c) Give differences between LLP and Limited Liability Company?
(6 Marks)
Question 3:
(a) Bishan Private Limited and its subsidiary Kaluram Private Limited are holding 90,000
and 70,000 shares respectively in Parvesh Private Limited. The paid-up share capital
of Parvesh Private Limited is Rs. 30 Lakhs (3 Lakhs equity shares of Rs. 10 each fully
paid). Analyse with reference to provisions of the Companies Act, 2013 whether
Parvesh Private Limited is a subsidiary of Bishan Private Limited. What would be your
answer if Kaluram Private Limited a holding 1,60,000 shares in Parvesh Private
Limited and no shares are held by Bishan Private Limited in Parvesh Private Limited?
(7 Marks)
(b) P.Q.R. and S are the partners in M/S PQRS & Co. a partnership firm which deals in
trading of Washing Machines of various brands.
Due to the conflict of views between partners, P & Q decided to leave the partnership
firm and started competitive business on 31st July, 2019, in the name of M/S PQ &
Co. Meanwhile, R & S have continued using the property in the name of M/S PQRS &
Co. in which P & Q also has a share.
Based on the above facts, explain in detail the rights of outgoing partners as per the
Indian Partnership Act, 1932 and comment on the following :
(i) Rights of P & Q to start a competitive business.
(ii) Rights of P & Q regarding their share in property of M/S PQRS & Co.
(7 Marks)
(c) Give doctrine of privity of contract and give exceptions also?
(6 Marks)
Question 4:
(a) (i) Mr. Sethi (an industrialist) has been fighting a long-drawn litigation with Mr.
Pawan (another industrialist). To support his legal campaign, Mr. Sethi enlists
the services of Mr. Vijay, a legal expert stating that an amount of Rs. 5 lakhs
would be paid, if Mr. Vijay does not take up the case of Mr. Pawan. Mr. Vijay
agrees, but at the end of the litigation, Mr. Sethi refused to pay. Decide
whether Mr. Vijay can recover the amount promised by Mr. Sethi under the
provisions of the Indian Contract Act, 1872.
(3 Marks)
(ii) Mr. Yash aged 21 years, lost his mental balance after the death of his parents
in an accident. He was left with his grandmother aged 85 years, incapable of
walking and dependent upon him. Mr. Mahesh their neighbour, out of pity,
started supplying food and other necessaries to both of them. Mr. Yash and
his grandmother used to live in the house built by his parents. Mr. Mahesh
(GCF-15, GCF-16, VCF-5 & ACF-6, DCF-9, DCF-10 & DRIVE) 2|Page
Mittal Commerce Classes
also provided grandmother some financial assistance for her emergency
medical treatment. After supplying necessaries to Mr. Yash for four years, Mr.
Mahesh approached the former asking him to payback Rs. 15 Lakhs inclusive
of Rs. 7 Lakhs incurred for the medical treatment of the lady (grandmother).
Mr. Yash pleaded that he has got his parent's jewellery to sell to a maximum
value of Rs. 4 Lakhs, which may be adjusted against the dues. Mr. Mahesh
refused and threatened Mr. Yash of legal suit to be brought against for
recovering the money.
Now, you are to decide upon based on the provisions of the Indian Contract
Act, 1872:
(i) Will Mr. Mahesh succeed in filing the suit to recover money? Elaborate
the related provisions?
(ii) What is the maximum amount- of money that can be recovered by Mr.
Mahesh?
(iii) Shall the provisions of the above act also apply to the medical
treatment given to the grandmother?
(4 Marks)
(b) What are Essential Characteristics of Negotiable Instruments?
(7 Marks)
(c) Explain the Types of laws in the Indian Legal System?
(6 Marks)
Question 5:
(a) Ashok Ltd. sells its products through some agents and it is not the custom in their
business to sell the products on credit. Mr. Rinku, one of the agents sold goods of
Ashok Ltd. to M/s. Pari Pvt. Ltd. (on credit) which was insolvent at the time of such
sale. Ashok Ltd. sued Mr. Rinku for compensation towards the loss caused due to
sale of products to M/s. Pari Pvt. Ltd. Will Ashok Ltd. succeed in its claim?
(3 Marks)
(b) (i) What is implied authority of a partner? What acts are covered in implied
authority of a partner?
(3 Marks)
(ii) What are acts beyond implied authority of partner?
(4 Marks)
(c) (i) What are types of guarantees?
(3 Marks)
(ii) Give distinction between a contract of indemnity and a contract of guarantee?
(3 Marks)
(d) Rachna went to a jewellery shop and asked the shopkeeper to show the gold bangles
with white polish. The shopkeeper informed that he has gold bangles with lots of
designs but not in white polish rather if Rachna select gold bangles in his shop, he
will arrange white polish on those gold bangles without any extra cost. Rachna select
a set of designer bangles and pay for that. The shopkeeper requested Rachna to
come after two days for delivery of those bangles so that white polish can be done
on those bangles. When Rachna comes after two days to take delivery of bangles,
(GCF-15, GCF-16, VCF-5 & ACF-6, DCF-9, DCF-10 & DRIVE) 3|Page
Mittal Commerce Classes
she noticed that due to white polishing , the design of bangles has been disturbed.
Now, she wants to avoid the contract and asked the shopkeeper to give her money
back but shopkeeper has denied for the same.
(a) State with reasons whether Rachna can recover the amount under the
Sale of Goods Act, 1930.
(b) What would be your answer if shopkeeper says that he can repair those
bangles but he will charge extra cost for same?
(4 Marks)
Question 6:
(a) Chaman drew a cheque in favour of Raman. After having issued the cheque; Chaman
requested Raman not to present the cheque for payment and gave a stop payment
request to the bank in respect of the cheque issued to Raman. Decide, under the
provisions of the Negotiable Instruments Act, 1881 whether the said acts of Chaman
constitute an offence?
(7 Marks)
(b) A, who is an agent of a buyer, had obtained the goods from the Railway
Authorities and loaded the goods on his truck. In the meantime, the Railway
Authorities received a notice from B, the seller for stopping the goods in transit as
the buyer has become insolvent. Referring to the provisions of Sale of Goods Act,
1930, decide whether the Railway Authorities can stop the goods in transit as
instructed by the seller?
(7 Marks)
(c) Explain Pledge by Non-Owners?
(6 Marks)
__**__
(GCF-15, GCF-16, VCF-5 & ACF-6, DCF-9, DCF-10 & DRIVE) 4|Page
