QUESTION
NO. 1 :
( a
) `Amit` stands surety for `Bikram` for any
amount which `Chander` may lend to `Bikram` from time to time during the next three months subject to a
maximum amount of Rs. 1,00,000 ( one lakh only ). One month later `Amit`
revokes the surety, when `Chander` had already lent to `Bikram` Rs. 10,000 (
ten thousand ). Referring to the provisions of the Indian Contract Act, 1872.
Decide :
( i )
Whether `Amit` is discharged from all the liabilities to `Chander` for
any subsequesnt loan given to `Bikram` ? ( ii )
What would be your answer in case `Bikram` makes a default in paying
back to `Chander` the already borrowed
amount of Rs. 10,000 ?
( b
) MNO Private Limited, a subsidiary of PQR Limited decides
to give a loan of Rs. 4,00,000 to the HR ( Human Resourse ) Manager, who is not a Key Managerial Personnel ( KMP ) of
MNO Private Limited drawing salary of Rs. 30,000 per month, to buy 500 partly
paid-up Equity Shares of Rs. 1000 each in MNO Private Limited. Examine the
validity of company`s decision under the provisions of the Companies Act, 2013.
( c
) State with reason whether the
following statements are correct or incorrect: (
i ) Business ethics helps to promote
public reputation.
( ii ) In the long run, those
business entities which responds to society needs favorably will survive.
( d
) State reasons for selecting oral mode
of communication instead of written mode of communication .
---------------------------------------------------------------------------------------------------------------------------------------ANSWER
TO QUESTION NO. 1 ( a ) : REVOCATION OF CONTINUING GUARANTEE ( SECTION
130 AND 131 OF THE INDIAN CONTRACT ACT, 1872.) ( BUSINESS LAWS ) ( 5 MARKS )
:
The
problem as asked in this question is based on the provisions of the Indian
Contract Act, 1872, as contained in Section 130 relating to revocation of a
continuing guarantee as to future transactions
which can be done mainly in the following two ways :
1. BY NOTICE : A continuing guarantee may, at any
time , be revoked by the surety as to future transactions , by notice to the
creditor.
2. BY
DEATH OF THE SURETY : The death of the
surety operates , in the absence of any contract to the contrary, as a
revocation of continuing guarantee so far as regards future transactions (
Section 131 ) .
So far as the transactions before revocation are concerned, the liability of the surety
remains.
Thus,
applying the above provisions of the said Act to the instant case:
( i )
Amit is discharged from all the liabilities to Chander for any
subsequent loan. (
ii ) In the second case, the answer
would differ i.e. Amit is liable to Chander for Rs. 10,000 on default of Bikram
since the loan was taken before the notice of revocation was given to Chander.
---------------------------------------------------------------------------------------------------------------------------------------5
MARKS : BREAK-UP : PROVISIONS – 3 MARKS; FIRST ANSWER – 1 MARK ; SECOND ANSWER
– 1 MARK. TO BE AWARDED TOGETHER. NOTE : MARKS NOT TO BE DEDUCTED ON THE GROUND
THAT THE CANDIDATE DID NOT CITE THE RELEVANT SECTION/S OF THE INDIAN CONTRACT
ACT, 1872.
ANSWER
TO QUESTION NO. 1 ( b ) : RESTRICTIONS
ON PURCHASE BY COMPANY OR GIVING LOANS FOR PURCHASE OF ITS SHARES ( SECTIONS 2 ( 51 ) AND 67 ( 3 ) OF THE
COMPANIES ACT, 2013 ) ( BUSINESS LAWS ) ( 5 MARKS ) :
According to Section 67 ( 3 ) of the Companies Act, 2013 a company is
allowed to give a loan to its employees
subject to the following limitations :-
( a )
The employee must not be a key managerial personnel ; ( b )
The amount of such loan shall not exceed an amount equal to six months`
salary of the employee ; (
c ) The shares to be subscribed must be fully paid shares. Section
2 ( 51 ) of the Companies Act, 2013 defines the
“ Key Managerial Personnel “ ( KMP ) whereby a KMP includes the chief
executive, company secretary, whole time director, chief financial officer or
any other officer who may be prescribed. In
the instant case the HR Manager is not a Key Managerial Personnel of the MNO Private Limited. He is drawing salary of
Rs. 30,000 per month and the loan taken to buy 500 partly paid up equity shares
of Rs. 1000 each in MNO Private Limited.
Keeping in mind the above mentioned
provisions of the Companies Act, 2013 the decision of the company ( MNO Private
Limited ) is not valid due to two reasons :
1. The amount of loan being more
than six months` salary of the HR Manager, which should have restricted the
loan to 1.8 Lakh ;
2. The shares subscribed are partly paid shares whereas the benefit is
available only for subscribing fully paid shares.
---------------------------------------------------------------------------------------------------------------------------------------5
MARKS : BREAK-UP : PROVISIONS – 3 MARKS ; ANSWER – 2 MARKS. TO BE AWARDED
TOGETHER. NOTE : MARKS NOT TO BE DEDUCTED ON THE GROUND
THAT THE CANDIDATE DID NOT CITE THE
RELEVANT SECTIONS OF THE COMPANIES ACT, 2013.
IMPORTANT NOTE : THIS QUESTION, IN TERMS OF SECTION 67 ( 3 ) ( C ) CONTAINS SEVERAL ISSUES TO BE
EXAMINED UNDER VARIOUS PROVISIONS OF THE COMPANIES ACT, 2013 AND HENCE TOO
COMLICATED AND CRITICAL FOR THE CANDIDATES
, KEEPING IN MIND THE LEVEL OF KNOWLEDGE. THE QUESTION MIGHT HAVE
CONFUSED THE CANDIDATES. IN VIEW OF THIS, GENERAL ANSWER GIVEN BY THE CANDIDATES MAY BE GIVE DUE
WEIGHTAGE. NOTE : DEFINITION OF “KMP”
NEED NOT BE GIVEN BY THE CANDIDATES.
ANSWER
TO QUESTION NO. 1 ( C ) ( i ) : STATEMENT
; CORRECT / INCORRECT ( ETHICS ) ( 3
MARKS ) : CORRECT : Ethics helps to promote a strong
public image. An organization that pays attention to its ethics can portray a
strong and positive image to the public. People see such organizations as valuing people more than profit and
striving to operate with the integrity and honour.
---------------------------------------------------------------------------------------------------------------------------------------3
MARKS : BREAK-UP : CORRECT ANSWER – 1 MARK ; REASON – 2 MARKS. TO BE AWARDED
TOGETHER.
ANSWER
TO QUESTION NO. 1 ( c ) ( ii ) :
STATEMENT : CORRECT / INCORRECT (
ETHICS ) ( 2 MARKS ) :
CORRECT
: Society gives business its license to exist and this
can be amended or revoked at any time if it fails to live up to society`s expectations.
Therefore, if a business intends to retain
its existing role and power, it must respond to society`s needs
constructively.
---------------------------------------------------------------------------------------------------------------------------------------2 MARKS : BREAK-UP : CORRECT ANSWER – 1 MARK ;
REASON – 1 MARK. TO BE AWARDED TOGETHER. NOTE : TOTAL OF MARKS AWARDED IN
PART ( c ) ( i ) AND IN PART ( c ) ( ii ) BE GIVEN AT THE END AND BE POSTED ON
THE COVER PAGE OF THE ANSWER-BOOK.
NOTE :
ANSWER GIVEN IN GENERAL MAY ALSO BE GIVEN DUE CREDIT WHILE AWARDING MARKS.
ANSWER
TO QUESTION NO. 1 ( d ) :
REASONS FOR
SELECTING ORAL MODE OF COMMUNICATION ( COMMUNICATION ) ( 5 MARKS ) : Oral
communication is a face to face communication with others. Oral communication
is characterized by seven Cs – Candidness,
Clarity, Completeness, Conciseness, Concreteness, Correctness and Courtesy.
These act as principles for selecting the mode of communication. In addition to
the above seven principle, oral communication has its own benefits as under :
* More personal and informal; *
Make immediate impact ; * Provides opportunity for interaction and feed back ; *
Helps us to correct ourselves ; *
Better for conveying feelings and
emotions ;
*
More effective because one can understand the message better by observing
facial expressions, eye contact, tone of voice , gestures, postures etc. of the
sender. It
is said that it does not matter what you say, what matters is how you say it.
Your way of saying includes your choice of words, your confidence and
sincerity.
---------------------------------------------------------------------------------------------------------------------------------------5
MARKS : TO BE AWARDED ON THE BASIS OF OVERALL PERFORMANCE .
QUESTION
NO. 2 : (
a ) ( i ) State with reasons whether the following
persons are entitled to receive bonus under the Payment of Bonus Act, 1965: ( I )
A retrenched employee. ( II
) A dismissed employee reinstated with
back wages.
( ii ) Mr. X was an employee of Green
Sugars Ltd. The whole of undertaking of Green Sugars Ltd. was taken over by a
new company named Modern Sugars Ltd. The services of Mr. X remained continuous in the new company. After
serving for one year Mr. X met with an accident and became permanently
disabled. Mr. X applied to the new company for the payment of Gratuity. The new
company refused to pay Gratuity on the ground that Mr. X had served only for a
year in the new company. Examine the
validity of the refusal of the company in the light of the provisions of the
Payment of Gratuity Act, 1972.
( b
) Explain the pragmatic reasons for
maintaining ethical behavior in marketing
through marketing executives.
( c
) Write short notes on the
following : ( I ) Proxemics ( II ) Haptics .
ANSWER
TO QUESTION NO, 2 ( a ) ( i ) : ENTITLEMENT
TO BONUS ( SECTIONS 2 ( 13 ) AND SECTION 9 OF THE PAYMENT OF BONUS ACT, 1965 )
( BUSINESS LAWS ) ( 4 MARKS ) :
( I ) RETRENCHED EMPLOYEE : A
retrenched employee is eligible to get bonus provided that he has
worked for minimum qualifying period of 30 days in the accounting year and who
has drawn a salary of less than Rs.
10,000 per month in the year. ( East Asiatic Company (P) Ltd. v. Industrial
Tribunal ). (
II ) DISMISSED EMPLOYEE RE-INSTATED WITH
BACK WAGES : According to Section 9 of
the Payment of Bonus Act, 1965 an employee who is dismissed from service for
fraud or riotous or violent behavior on the premises of the establishment or
who is guilty of theft, misappropriation or sabotage of the property of any
establishment , is disqualified from receiving bonus for the accounting year. A
dismissed employee who has been reinstated with back wages is clearly not
guilty of the above crimes nor has been dismissed. Hence, he is entitled to
bonus. ( Gammon India Ltd. v. Niranjan Das )
---------------------------------------------------------------------------------------------------------------------------------------4
MARKS : BREAK-UP : PART (I) – 2 MARKS ; PART (II) – 2 MARKS. TO BE AWARDED
TOGETHER. NOTE :
MARKS NOT TO BE DEDUCTED ON THE GROUND THAT THE CANDIDATE DID NOT REFER TO CASE
LAWS OR DID NOT CITE THE RELEVANT SECTION/S OF THE PAYMENT OF BONUS ACT, 1965.
ANSWER
TO QUESTION NO. 2 ( a ) ( ii ) :
ENTITLEMENT TO GRATUITY ( SECTION
– 4 OF THE PAYMENT OF GRATUITY ACT, 1972 ) ( BUSINESS LAWS ) ( 4 MARKS ) : According to Section 4 ( 1 ) of the Payment of
Gratuity Act, 1972 gratuity shall be payable
to an employee on the termination of
his employment after he has
rendered continuous service for not less than five years on his superannuation,
or on his retirement or resignation or
on his death or disablement due to
accident or disease. The proviso to
sub-section ( 1 ) of the said section states that the condition of completion
of five years of continuous service is not essential in case of the termination
of employment of any employee due to
death or disablement for the purpose of this section. Disablement has been explained as such
disablement which incapacitates an
employee for the work which he was capable of performing before the accident or
disease resulting in such disablement.
Further, by the change of ownership , the relationship of employer and
employee subsists and the new employer can not escape from the liability of payment of gratuity to
the employee; it was held in the case of Pattathurila K. Damodaran v. M. Kassim Kanju.
The given problem fulfils all the above requirements as stated.
Therefore, Mr. X is entitled to recover gratuity after becoming permanently disabled and
continuous service of five years is not
required in this case. Hence, the company can not refuse to pay gratuity on the
ground that he has served only for one year.
---------------------------------------------------------------------------------------------------------------------------------------4 MARKS : BREAK-UP : PROVISIONS – 3 MARKS ;
ANSWER – 1 MARK. TO BE AWARDED TOGETHER. NOTE : MARKS NOT TO BE
DEDUCTED ON THE GROUND THAT THE CANDIDATE DID NOT REFER TO CASE LAW OR DID NOT
CITE THE RELEVANT SECTION OF THE PAYMENT OF GRATUITY ACT, 1972. NOTE : TOTAL OF MARKS AWARDED IN QUESTION
NO. 2 ( a ) ( i ) AND 2 ( a ) ( ii
) BE GIVEN AT THE END AND BE POSTED ON
THE COVER PAGE OF THE ANSWER-BOOK.
ANSWER
TO QUESTION NO. 2 ( b ) :
PRAGMATIC REASONS FOR MAINTAINING ETHICAL BEHAVIOUR ( ETHICS ) ( 4 MARKS
) : Marketing
executives should practice ethical behavior because it is morally correct. To
maintain ethical behavior in marketing ,
the following positive reasons may be useful to the marketing executives : 1. TO REVERSE DECLINING PUBLIC CONFIDENCE IN
MARKETING : Sometimes misleading package
labels, false claim in advertisement, phony list prices, infringement of trademarks
pervert the market trends and such behavior damages the marketers` reputation. To reverse this
situation, business leaders must demonstrate convincingly that they are aware
of their ethical responsibility and will fulfil it. Companies must set high
ethical standards and enforce them. Moreover, it is in management`s interest to
be concerned with the well being of consumers, since they are the lifeblood of
a business. 2. TO
AVOID INCREASE IN GOVERNMENT REGULATION :
Business apathy, resistance or token responses to unethical behavior
increase the probability of more governmental regulation. The governmental
limitations may also result from management`s failure to live up to its ethical
responsibilities. Moreover, once the
government control is introduced , it is rarely removed.
3. TO RETAIN
POWER GRANTED BY SOCIETY :
marketing executives wield a great deal of social power as they
influence market and speak out on economic issues. However, there is a responsibility
tied to that power. If marketers do not
use their power in a socially acceptable manner, that power will be lost in the
long run. 4. TO
PROTECT THE IMAGE OF THE ORGANISATION :
Buyers often form an impression of an entire organization based on their
contact with one person. That person represents
the marketing function. Sometimes a single sales clerk may pervert the
market opinion in relation to that company which he represents. Therefore, ethical behavior in marketing may
be strengthened only through the behavior
of the marketing executives.
---------------------------------------------------------------------------------------------------------------------------------------4
MARKS : TO BE AWARDED ON THE BASIS OF OVERALL PERFORMANCE. NOTE : BRIEF BUT CORRECT ANSWER BE GIVEN FULL
CREDIT. GENERAL ANSWER GIVEN BY THE CANDIDATES BE GIVEN CREDIT WHILE AWARDING
MARKS.
ANSWER
TO QUESTION NO. 2 ( c ) : SHORT NOTES
( COMMUNICATION ) ( 4 MARKS ) :
( I
) PROXEMICS : It is a form of non-verbal communication which
refers to the space that exists
between us when we talk or relate to
each other as well the way we organize
space around us. We can also call it “space language” as the following four
space zones indicate the type of communication and the relationship of the
source and receiver : INTIMATE – Physical contact to 18 inches.
PERSONAL – 18 inches to 4 feet. SOCIAL
– 4 to 12 feet. PUBLIC
– 12 feet to as far as we can see or hear.
(
II ) HAPTICS : It is a communication through touch. How we use touch sends
important messages about us. It reveals our perceptions of status, our attitudes
and even our needs. The amount of touching we do or find acceptable is atleast
in part culturally conditioned.
---------------------------------------------------------------------------------------------------------------------------------------4 MARKS : BREAK-UP : PART ( I ) – 2 MARKS ;
PART ( II ) – 2 MARKS. TO BE AWARDED TOGETHER.
QUESTION
NO. 3 :
( a ) (
i ) Under what circumstances the
original contract need not be performed as stated under section 62 to 67 of the Indian Contract Act, 1872 ?
( ii )
Mr. U offered to sell his house to Mr. X for Rs. 15,00,000. Mr. X accepted the offer by post. On the very
next day Mr. X sent a telegram revoking the acceptance which reached Mr. U
before the later of acceptance. Is the revocation of acceptance valid ? Would it make any difference if both the
letter of acceptance and the telegram of revocation of acceptance reach Mr. U
at the same time ?
( b
) ( i )
Explain any four sources of ethical standard.
( ii
) List out the characteristics of group
personality under Group Dynamics.
ANSWER
TO QUESTION NO. 3 ( a ) ( i ) :
CONTRACTS WHICH NEED
NOT BE PERFORMED ( SECTIONS 62 TO 67 OF THE INDIAN CONTRACT ACT, 1872 ) ( BUSINESS LAWS ) ( 4 MARKS ) : A
contract would not require performance under circumstances spelt out in
Sections 62 to 67 of the Indian Contract
Act, 1872. Section 62 of the said Act provides for “novation”, “rescission” and “ alteration”
and Section 63 of the said Act provides for “remission”. Thus, the circumstances are as follows :
( 1 ) NOVATION : Novation means substitution. Where a given
contract is substituted by a new contract, it is novation. The old contract, on
novation ceases. It need not be performed. Novation can take place with mutual
consent . However, novation can take place by substitution of new contract
between the same parties or between different parties. Novation results in discharge
of old contract. ( 2 )
RESCISSION : In case of rescission , the old contract is cancelled and no new contract comes in its place. A
contract is also discharged by rescission. Sometimes, parties may enter into an agreement
to rescind the previous contract. Sometimes, the contract is
rescinded by implication or by
non-performance for a long time without each other complaining about it. ( 3 )
ALTERATION : Where the contract is altered, the original contract is
rescinded. Hence , the old one need not be performed whereas the new one has to be performed. Alteration
involves both rescission and novation. The line of difference between alteration and novation is very thin. While there can be very minor
alterations, there can not be unilateral material alteration to a contract. If
it is done , it will be void. ( 4 )
REMISSION : Section 63 of the Indian Contract Act, 1872 provides for
remission which means waiver. The said section
lays down that “every promisee may dispense with or remit wholly or in
part, the performance of the promise made to him or extend the time for such
performance or may accept instead of it any satisfaction which it thinks fit”.
Thus the promisee can waive either in full or in part the obligation of the
promisor or extend the time for performance.
---------------------------------------------------------------------------------------------------------------------------------------4 MARKS : TO BE AWARDED ON THE BASIS OF OVERALL
PERFORMANCE. NOTE :
BRIEF ANSWER CORRECTLY COVERING ALL POINTS BE GIVEN FULL CREDIT. NOTE : MARKS NOT TO BE DEDUCTED ON THE GROUND
THAT THE CANDIDATED DID NOT CITE THE RELEVANT SECTIONS OF THE INDIAN CONTRACT
ACT, 1872.
ANSWER
TO QUESTION NO. 3 ( a ) ( ii ) : COMMUNICATION
AND REVOCATION OF ACCEPTANCE WHEN COMPLETE (SECTIONS 4 AND 5 OF THE INDIAN
CONTRACT ACT, 1872 ) ( BUSINESS LAWS ) ( 4 MARKS ) : The
problem is related with the
communication and time of acceptance and its revocation. As per Section 4 of
the Indian Contract Act, 1872 , the communication of an acceptance is complete
as against the acceptor when it comes to the knowledge of the proposer.
Whereas Section 5 of the said
Act lays down that an acceptance may be revoked at any time before the
communication of the acceptance is complete as against the acceptor, but not
afterwards.
Referring to the above provisions : (
i ) Yes , the revocation of acceptance
by Mr. X ( the acceptor ) is valid.
(
ii ) If Mr. U opens the telegram first
( and this would be normally so in case
of a rational person ) and reads it , the acceptance stands revoked. If he
opens the letter first and reads it , revocation of acceptance is not possible
as the contract has already been concluded.
ALTERNATE
ANSWER : As per Section 4 of the Indian Contract Act,
1872 which deals with the communication of
revocation, the communication of revocation is complete as against the
person who makes it , when it is put into a course of transmission to the person to whom it is made, so as to be put out of
the power of the person who makes it. Accordingly, an acceptance is complete as
against the offeror ( U ) as soon as the letter of acceptance is posted.
Revocation
of acceptance given by X by telegram, a day after the letter of acceptance is
posted , is not valid against U.
With
respect to the second part of the question, where both the letter of acceptance
and telegram of revocation of acceptance reach Mr. U at the same time , is not
appropriate since an acceptance is complete as against the offeror as soon as
the letter of acceptance is posted, no question of revocation of acceptance
arises.
---------------------------------------------------------------------------------------------------------------------------------------4
MARKS : BREAK-UP : PROVISIONS – 2 MARKS ; ANSWER – 2 MARKS . TO BE AWARDED
TOGETHER . NOTE : MARKS
NOT TO BE DEDUCTED ON THE GROUND THAT THE CANDIDATE DID NOT CITE THE RELEVANT
SECTION/S OF THE IDIAN CONTRACT ACT, 1872.
NOTE : TOTAL OF MARKS AWARDED IN 3 ( a ) ( i ) AND IN 3 ( a ) ( ii ) BE GIVEN AT THE END AND BE
POSTED ON THE COVER-PAGE OF THE ANSWER-BOOK.
ANSWER
TO QUESTION NO. 3 ( b ) ( i ) :
FOUR SOURCES OF ETHICAL STANDARDS ( ETHICS ) ( 4 MARKS ) :
1* THE UTILITARIAN APPROACH
: Some ethicists emphasize that the
ethical action is the one that provides the most good or does the least harm, or
to put it another way, produces the greatest balance of good over harm. The
ethical corporate action, then, is the one that produces the greatest good and does the least harm for all who are
affected – customers, employees, shareholders, the community and the
environment. The utilitarian approach deals with consequences, it tries both to
increase the good done and to reduce the harm done.
2* THE RIGHTS APPROACH ( THE DENTOLOGICAL
APPROACH ) : Other philosophers and
ethicists suggest that the ethical action is the one that best protects and
respects the moral rights of those affected. This approach starts from the
belief that humans have a dignity based on their human nature per se on their
ability to choose freely what they do
with their lives. On the basis of such dignity, they have a right to be treated
as ends and not merely as means to other ends. The list of moral rights –
including the rights to make one`s own choices about what kind of life to lead,
to be told the truth , not to be injured , to a degree of privacy and so on –
is widely debated; some now argue that non-humans have rights , too. Also, it
is often said that rights imply duties – in particular, the duty to respect
others` rights .
3* THE FAIRNESS OR JUSTICE APPROACH : Aristotle and other Greek philosophers have
contributed the idea that all equals should be treated equally. Today we use
this idea to say that ethical actions treat all human beings equally – or if
unequally, then fairly based on some standard that is defensible. We pay people
more based on their harder work or the greater amount that they contribute to
an organization, and say that is fair. But there is a debate over CEO salaries
that are hundreds of time larger than the pay of others, many ask whether the
huge disparity is based on a defensible standard or whether it is the result of
an imbalance of power and hence is unfair.
4* THE COMMON GOOD APPROACH : The Greek philosophers have also contributed
the notion that life in community is a good in itself and our action should
contribute to that life. This approach suggests that the interlocking
relationships of society are the basis of ethical reasoning and that respect
and compassion for all others – especially the vulnerable – are requirements of
such reasoning. This approach also calls attention to the common conditions
that are important to the welfare of everyone. This may be a system of Laws ,
effective police and fire departments, health care, a public educational
system, or even public recreational areas.
5* THE VIRTUE APPROACH : A very ancient approach to ethics is that ethical actions ought to be
consistent with certain ideal virtues that provide for the full development of
our humanity. These virtues are dispositions and habits that enable us to act
according to the highest potential of our character and on behalf of values
like truth and beauty. Honesty, courage, compassion, generosity, tolerance,
love, fidelity, integrity, fairness, self-control and prudence are all examples
of virtues. Virtue ethics asks of any action, “What kind of person will I become
if I do this ?” or “Is this action
consistent with my acting at my best.
---------------------------------------------------------------------------------------------------------------------------------------4
MARKS : TO BE AWARDED ON THE BASIS OF OVERALL PERFORMANCE.
NOTE : THE CANDIDATES ARE
REQUIRED TO STATE ANY FOUR SOURCES. GENERAL AND BRIEF ANSWER BE CONSIDERED FOR
AWARDING MARKS.
ANSWER
TO QUESTION NO. 3 ( b ) ( ii ) :
CHARACTERISTICS OF GROUP PERSONALITY ( COMMUNICATION ) ( 4 MARKS )
:
Following
are the characteristics of group personality :
1* SPIRIT OF CONFORMITY : Individual members
soon come to realize that in order to gain recognition, admiration and respect
from others they have to achieve a spirit of conformity. Our beliefs, opinions
and actions are influenced more by group opinion than by an individual`s
opinion, even if it is an expert`s opinion.
2* RESPECT FOR GROUP VALUES : Any working group
is likely to maintain certain values and ideals which make it different from
others. In order to deal effectively with a group we must understand its value
which will guide us in foreseeing its programmes and actions.
3* RESISTENCE TO CHANGE : It has been observed
that a group generally does not take kindly to social change. On the other hand
the group may bring about its own changes, whether by dictation of its leader
or by consensus. The degree to which a group resists change serves as an
important index of its personality. It helps us in dealing with it efficiently.
4* GROUP PREJUDICE : Just as hardly any
individual is free from prejudice, groups have their own clearly evident
prejudices. It is a different matter that the individual members may not admit
their prejudiced attitude to other`s race, religion, nationality etc. But the
fact is that the individual`s prejudices
get further intensified while coming in contact with other members of
the group holding similar prejudices.
5* COLLECTIVE POWER : It need not be said that groups are always more
powerful than individuals, how so ever influential the individual may be. That
is why individuals may find it difficult to speak out their minds in groups.
There is always the risk of the one-against-many situation cropping up.
---------------------------------------------------------------------------------------------------------------------------------------4
MARKS : TO BE AWARDED ON THE BASIS OF OVERALL PERFORMANCE.
NOTE : THE CANDIDATES ARE REQUIRED TO STATE ANY FOUR CHARACTERSTICS.
GENERAL AND BRIEF ANSWER BE CONSIDERED FOR AWARDING MARKS. NOTE:
TOTAL OF MARKS AWARDED IN QUESTION NO. 3
( b ) ( i ) AND 3 ( b ) ( ii ) BE GIVEN
AT THE END AND BE POSTED ON THE COVER-PAGE OF THE ANSWER-BOOK.
QUESTION
NO. 4 : (
a ) ( i ) Explain the concept of Deemed
Prospectus under the Companies Act, 2013. Under what circumstances such prospectus need not be issued ?
( ii ) Diminution of share capital does
not constitute a reduction within the meaning of Companies Act, 2013. State in what respects they differ from
each other.
( b
) What is meant by ‘Critical thinking’ ?
Suggest the measures to develop critical thinking.
( c
) Prepare a check list for organizing the messages in a business
firm as a job of composing business messages being assigned to you.
ANSWER
TO QUESTION NO. 4 ( a ) ( i ) : DEEMED PROSPECTUS ( SECTIONS 23 AND 25 OF THE
COMPANIES ACT, 2013 ( BUSINESS LAWS ) ( 4 MARKS ) : Under Section 25 ( 1 ) of the Companies Act,
2013any document by which an offer for sale of any securities is made to the
public and the company allots or agrees to allot securities in terms thereof,
then such document shall for all purposes, be deemed to be a prospectus and all
enactments and rules of law as to be the contents in a prospectus and as to
liability in respect of mis-statement and omissions therein shall apply and
shall have effect as they apply to a prospectus.
From the above provision it is quite clear that the deemed prospectus is
not intended to be a document with any exceptions or concessions vis a vis a
prospectus. It only broadens the scope of a prospectus to include not only the
formal document issued as a prospectus but also all nature of communication
made by the company with the intention of selling an issue. It is designed to
prevent companies from making misleading statements through various documents,
notices or circulars while keeping the formal prospectus document clean. WHEN
PROSPECTUS NEED NOT BE ISSUED :
Under Section 23 of
the Companies Act, 2013
the issue of prospectus
is not necessary in
the following circumstances
: 1. Where a person is a bonafide invitee into an
underwriting agreement with regard to any securities. 2. Where securities are offered through private
placement by complying with the provisions related thereto in the Companies Act,
2013.
3.
Where securities are issued through a rights issue or a bonus issue in
accordance with the applicable provisions of the said Act and in case of listed
companies also in accordance with the provisions of the rules and regulations
made by SEBI in this behalf.
---------------------------------------------------------------------------------------------------------------------------------------4
MARKS : BREAK-UP : CONCEPT – 2 MARKS ; NEED NOT BE ISSUED – 2 MARKS. TO BE
AWARDED TOGETHER. NOTE : MARKS NOT TO
BE DEDUCTED ON THE GROUND THAT THE CANDIDATE DID NOT CITE THE RELEVANT SECTIONS
OF THE COMPANIES ACT, 2013. NOTE : THE STUDY MATERIAL ( PRACTICE MANUAL ,
PAGE 6.58 ) PROVIDES FOR NON-ISSUING OF “PROSPECTUS” AND NO EXPRESS OR SEPARATE
PROVISION IN RELATION TO “DEEMED PROSPECTUS”.
ANSWER
TO QUESTION NO. 4 ( a ) ( ii ) :
DIMINITION OF SHARE CAPITAL AND REDUCTION OF SHARE CAPITAL ( SECTIONS
61,64,OF THE COMPANIES ACT, 2013 AND SECTIONS 101, 102 AND 103 OF THE COMPANIES
ACT, 1956 ) ( BUSINESS LAWS ) ( 4 MARKS ) :
The term “diminution” denotes a
cancellation of that portion of issued capital which has not been subscribed
for. Section 61 of the Companies Act, 2013 states the cancellation of “shares
which at the date of passing of the resolution in that behalf have not been
taken or agreed to be taken by any person”.
Section 61 of the Companies Act, 2013 specifically states that the diminution does not
constitute a reduction within the meaning of the Companies Act. The expression
“diminution of share capital” and “reduction of share capital” differ from each
other in the following respects:
( 1
) Reduction may involve reduction inter
alia of issued capital, whereas diminution may be in respect of authorized
capital but not of issued capital. (
2 ) If the Articles provides the procedure,
diminution can be effected by an ordinary resolution, while reduction ( which
also need authorization by Articles ), can be effected only by special
resolution. (
3 ) Diminution needs no confirmation by
the Court ( Section 61 of the Companies Act, 2013 ), but reduction needs such
confirmation ( Section 101 of the Companies Act, 1956 ). (
4 ) Where a company is ordered to add to
its name the words “and reduced” these words shall , until the expiry of the
period specified in the order, be deemed to be part of the company`s name (
Section 102(3) of the Companies Act, 1956 ) but such a provision does not exist
in the case of diminution of the share capital as envisaged in Section 61 of
the Act of 2013.
( 5 ) In the case of diminution,
notice is to be given to the Registrar within 30 days from the date of
cancellation whereupon the Registrar shall record the notice and make the
necessary alteration in the Memorandum or Articles or both ( Section 64 of the
Companies Act, 2013 ), whereas in the case of reduction more detailed procedure
regarding notice to the Registrar has been prescribed by Section 103 of the
Companies Act, 1956, though there is no such time limit as aforesaid ( i.e.30
days ).
---------------------------------------------------------------------------------------------------------------------------------------4
MARKS : TO BE AWARDED ON THE BASIS OF OVERALL PERFORMANCE. NOTE
: ANY FOUR POINTS OF DIFFERENCE BE TREATED AS COMPLETE ANSWER. NOTE
: MARKS NOT TO BE DEDUCTED ON THE GROUND THAT THE CANDIDATE DID NOT CITE THE
RELEVENT SECTIONS OF THE COMPANIES ACT, 1956 OR THE COMPANIES ACT, 2013. NOTE : TOTAL OF MARKS AWARDED IN QUESTION NO.
4 (a) (i) AND 4 (a) (ii) BE GIVEN AT THE END AND BE POSTED ON THE COVER PAGE OF
THE ANSWER-BOOK.
ANSWER
TO QUESTION NO. 4 ( b ) :
CRITICAL THINKING ( COMMUNICATION
)( 4 MARKS ) : Critical thinking is the is the discipline of
rigorously and skillfully using information, experience, observation and reasoning
to guide one`s decision, actions and beliefs. Critical thinking refers to the
act of question of every step of the thinking process e.g. Have you considered all the facts ? Have you
tested your assumptions ? Is your reasoning
sound ? Can you be sure that your judgment is unbiased ? Is your thinking process logical, rational
and complete ?
DEVELOPING
CRITICAL THINKING : To develop as a
critical thinker, one must be motivated to develop the following attributes
: 1. OPEN MIND : Readiness to accept and explore
alternative approaches and ideas. 2. WELL INFORMED :
Knowledge of the facts and what is happening on all fronts. 3. EXPERIMENTAL : Thinking through what if
scenario to create probable options and then test the theories to determine what will work and
what will not be acceptable.
4. CONTEXTUAL : Keeping in mind
the appropriate context in the course of analysis. Apply factors of
analysis that are
relevant or appropriate.
5. RESERVED IN MAKING CONCLUSION
: Knowledge of when a conclusion is a fact and when it is not only true
conclusions supporting decisions.
---------------------------------------------------------------------------------------------------------------------------------------4
MARKS : BREAK-UP : MEANING – 2 MARKS ; MEASURES TO DEVELOP – 2 MARKS. TO BE
AWARDED TOGETHER. NOTE : CANDIDATES REQUIRED TO STATE ANY TWO MEASURES TO
DEVELOP CRITICAL THINKING.
ANSWER
TO QUESTION NO. 4 ( c ) :
CHECK-LIST FOR ORGANISING THE MESSAGE ( COMMUNICATION ) ( 4 MARKS ):
1. RECOGNISE
GOOD ORGANISATION : ( a ) Subject and
purpose are clear. ( b ) Information is
directly related to subject and purpose. ( c )
Ideas are grouped and presented logically. ( d ) All necessary information is included.
2. ACHIEVE
GOOD ORGANIZATION THROUGH OUTLINING : (
a ) Decide what to say – i. Main idea , ii. Major points, iii. Evidence. ( b )
Organize the message to respond the audience is probable reaction – i.
use the direct approach when audience will be neutral pleased, interested or
eager. ii. Use the indecent approach when audience will
be displeased, interested or unwilling.
3. CHOOSE
THE APPROPRIATE ORGANIZATION PLAN : ( a
) Short messages - i. Direct
request, ii. Routine, good news and good
message, iii. Bad news message, iv.
Persuasive message. ( b ) Longer
message - i. Information pattern, ii. Analytical pattern.
---------------------------------------------------------------------------------------------------------------------------------------4
MARKS : TO BE AWARDED ON THE BASIS OF OVERALL PERFORMANCE.
NOTE : BRIEF AND GENERAL ANSWER BE CONSIDERED WHILE AWARDING MARKS.
QUESTION NO. 5 : (
a ) ( i )
Mr. A is the payee of an order cheque. Mr. B steals the cheque and
forges Mr. a signatures and endorses the cheque in his own favour. Mr. B then
further endorses the cheque to Mr. C, who takes the cheque in good faith and
for valuable consideration. Examine the validity of the cheque as per the
provisions of the Negotiable Instruments Act, 1881 and also state whether Mr. C
can claim the privileges of a holder-in-Due course?
( ii
) Explain the concept and different
forms of Restrictive and Qualified endorsement.
( b ) Examine
the validity of the following referring to the provisions of the Companies Act,
2013 and /or Rules:
“The
Articles of Association of X Ltd. contained provision that up to 4% of issue
price of the shares may be
paid as underwriting commission to the
underwriters. The Board of Directors of X Ltd. decided to pay 5%
underwriting commission.”
( c ) Discuss
different environmental phenomena of ethical concern ?
---------------------------------------------------------------------------------------------------------------------------------------ANSWER
TO QUESTION NO. 5 ( a ) ( i ) : TITLE
TO FORGED CHEQUE (THE NEGOTIABLE INSTRUMENTS ACT, 1881 ) ( BUSINESS LAWS ) ( 4
MARKS ) : Forgery confers no title and a holder acquires
no title to a forged instrument. A
forged document is a nullity. The property in the instrument remains vested in the person who
is the holder at the time when the forged signature were put on it. Forgery is
also not capable of being ratified. In case of forged endorsement , the person
claiming under forged endorsement even if he is purchaser for value and in good
faith, can not acquire the rights of a holder in due course. Therefore, Mr. C acquires no title on the cheque . ( Mercantile
Bank v. D`Silva ). Such holder is not a holder in due course and hence no
privilege is available.
---------------------------------------------------------------------------------------------------------------------------------------4
MARKS : TO BE AWARDED ON THE BASIS OF OVERALL PERFORMANCE. NOTE : MARKS NOT TO BE DEDUCTED ON THE GROUND
THAT THE CANDIDATE DID NOT CITE THE RELEVANT CASE LAW.
ANSWER TO QUESTION NO. 5 ( a ) ( ii ) :
RESTRICTIVE / QUALIFIED
ENDORSEMENT ( THE NEGOTIABLE INSTRUMENTS ACT, 1881 ( BUSINESS LAWS ) ( 4 MARKS ) : 1.
RESTRICTIVE ENDORSEMENT : Such an
endorsement has the effect of
restricting further negotiation and transfer of the instrument.
Example : ( 1 )
Pay to A only
S. Mukerjee
( 2 ) For the account of A
only N. Aiyar
2. CONDITIONAL OR QUALIFIED ENDORSEMENT : Such an
endorsement combines an order to pay
with condition.
Example:
Pay to A on safe receipt of goods. V. Chopra
---------------------------------------------------------------------------------------------------------------------------------------4
MARKS : BREAK-UP : 2 MARKS FOR EACH FORM OF ENDORSEMENT. TO BE AWARDED
TOGETHER. NOTE : TOTAL OF MARKS AWARDED IN QUESTION NO.
5 (a) (i) AND ( a ) ( ii ) BE GIVEN AT
THE END AND BE POSTED ON THE COVER PAGE OF THE ANSWER-BOOK.
---------------------------------------------------------------------------------------------------------------------------------------ANSWER
TO QUESTION NO. 5 ( b ) :
UNDERWRITING COMMISSION ( THE COMPANIES ( PROSPECTUS AND
ALLOTMENT OF SECURITIES ) RULES, 2014 )
( BUSINESS LAWS ) ( 4 MARKS ) :
Under the Companies ( Prospectus and Allotment of
Securities ) Rules, 2014 the rate of commission paid or agreed to be paid shall
not exceed, in case of shares , five percent
( 5 % ) of the price at which the shares are issued or at a rate
authorized by Articles, whichever is less.
In the given problem, the Articles of X Ltd. have
prescribed 4 % underwriting commission but the directors decided to pay 5 %
underwriting commission.
Therefore, the decision of the Board of Directors to pay 5 % commission to the underwriters is
invalid.
---------------------------------------------------------------------------------------------------------------------------------------4
MARKS : TO BE AWARDED ON THE BASIS OF OVERALL PERFORMANCE .
ANSWER TO QUESTION NO. 5 ( c ) :
ENVIRONMENTAL PHENOMENA OF ETHICAL CONCERN ( ETHICS ) (
4 MARKS ) :
An ecological system is an interrelated and
interdependent set of organism and environments, such as a lake, in which a
fish depend on small aquatic organism, which in turn live off decaying plant
and fish waste products. Since the various parts of an ecological system are interrelated,
the activities of one of its parts will affect all the other parts. Business
firms ( and all other social institutions ) are parts of a larger ecological
system. Business firms depend on the natural environment for their energy,
material resources and waste disposal , and that environment in turn is
affected by the commercial activities of business firms.
The issue of environmental ethics goes beyond the
problems relating to protection of environment or nature in terms of pollution,
resource utilization or waste disposal. It is the issues of explosive human
nature and attitudes that should be addressed in a rational way. Problems like
Global warming, Ozone depletion and disposal of hazardous wastes that concern
the entire world. They require International cooperation and have to be tackled
at the global level.
Few decades ago, the corporate world , the industry or
others engaged in the use of natural resources or environmental services were
mainly concerned with good business in economic sense. There is now a growing
concern for social responsibility and ethical norms in all spheres of human
activities; be it public behavior, business or environment and there are
ethical concerns to look after not only the interest of stakeholders but also
that of community ; as the regulatory / mandatory requirements have have also
become more stringent. This translates into providing safety for the workers at
work place, concern for their health, reducing pollution and incorporating
environmental values in governance.
---------------------------------------------------------------------------------------------------------------------------------------4
MARKS : TO BE AWARDED ON THE BASIS OF OVERALL PERFORMANCE.
NOTE : GENERAL AND BRIEF ANSWER BE CONSIDERED
WHILE AWARDING MARKS.
QUESTION NO. 6 :
( a ) What is
the importance of registered office of a company ? State the procedure for
shifting of a registered office of the
company from one state to another state under the provisions of the Companies
Act, 2013.
( b ) Draft a
notice for convening the Board of Directors Meeting of M/s Growmore Limited
where the agenda is to consider buy-back of company`s equity share capital to
an extent of 5 % of its issued share capital and also where Mr. Anand is to be
co-opted as an additional director.
( c ) State
whether the following statements are correct or incorrect :
( i ) A limited company can become a partner in a
partnership firm.
( ii ) A special resolution is one, to pass, requires
the votes cast in favour be twice the votes cast against it.
( iii ) A cheque marked “Not negotiable” is not
transferable.
( iv ) A promissory note duly executed in
favour of a minor , is valid.
ANSWER TO QUESTION NO. 6 ( a ) :
IMPORTANCE AND SHIFTING OF REGISTERED OFFICE OF A
COMPANY ( SECTIONS 11, 12 AND 13 OF THE COMPANIES ACT, 2013 ) ( BUSINESS LAWS )
( 8 MARKS ) :
IMPORTANCE OF REGISTERED OFFICE :
The importance of the registered office of a company is
clearly established in two sections of the Companies Act, 2013. Section 11 ( 1
) ( b ) states that a company having share capital shall not commence business
unless it has filed with the Registrar a verification of its registered office
as required by Section 12 ( 2 ) which requires every company to furnish to the
Registrar a verification of its registered office within a period of 30 days of
its incorporation in such manner as may be prescribed.
Further, Section 12 ( 1 ) states that a company shall,
on and from the fifteenth day of its incorporation and every time thereafter,
having a registered office capable of receiving and acknowledging all
communications and notices addressed to it.
Section 12 ( 3 ) of the said Act further requires every
company to
·
Paint or affix its name and
address of its registered office, and keep the same painted and affixed, on the
out side of every office or place in which its business is carried on. Such
display must be in a conspicuous position, in legible letters in characters and
letters of the local language ( if chosen by the company ) ;
·
Get its name, address of
its registered office and the corporate identity number and other details, on
all its business letters , bill heads, notices and other publications.
From the above provisions of the Companies Act, 2013,
the extremely high importance of the registered office of a company can be
well understood as it serves as the location where : ( a ) necessary documents may be served
upon or deposited; ( b ) notices,
letters etc. may be issued, ( c )
inspection may be done and ( d ) communication may be made. The domicile
and the nationality of the company is determined by the place of its registered
office. This is also important for determining the jurisdiction of the Court
governing it.
Notice of the situation of the registered office and of
every change therein must be sent to the Registrar ( otherwise than through
statement as to the address of the registered office in the annual report )
within 30 days of the date of incorporation and the date of change. This
provision is designed to locate the spot where the records of the company could
be inspected and where the letters should be addressed and notices served upon
the company.
PROCEDURE OF SHIFTING THE REGISTERED OFFICE :
In order to shift
the registered office from one state to another the following procedure will
have to be followed:
1. Hold
a Board Meeting for the purpose of calling a general meeting of the members of
the companyin which the shifting of the registered office from one state to
another will have to be approved.
2. The
general meeting of the members will have to pass a special resolution approving
the ahange of address of the registered office from one state to another as
required by Section 13 ( 1 ) of the
Companies Act, 2013.
3. Make
an application toe the Central Government in such form and manner as may be
prescribed, for getting its approval under Section 13 ( 4 ) of the said Act.
4. Under
Section 13 ( 7 ) of the Companies Act, 2013 where an alteration of the
Memorandum results in the transfer of the registered office of the company from
one state to another, a certified copy of the order of the Central Government
approving the alteration shall be filed by the company with the Registrar of
each of the states, within such time and such manner as may be prescribed, and
the Registrar shall register the same. The Registrar of the state where the
registered office is being shifted to , shall issue a fresh certificate of
incorporation indicating the alteration.
5. The
change in name will be effective only after the issue of the fresh certificate
of incorporation by the Registrar of the state where the registered office is
being shifted to.
---------------------------------------------------------------------------------------------------------------------------------------8
MARKS : BREAK-UP : IMPORTANCE – 4 MARKS ; PROCEDURE OF SHIFTING – 4 MARKS. TO
BE AWARDED TOGETHER.
NOTE : A BRIEF ANSWER COVERING BASIC POINTS BE GIVEN
FULL CREDIT.
NOTE : MARKS NOT TO BE
DEDUCTED ON THE GROUND THAT THE CANDIDATE DID NOT CITE THE RELEVANT SECTIONS OF
THE COMPANIES ACT, 2013.
ANSWER TO QUESTION NO. 6 ( b ) :
NOTICE OF MEETING OF BOARD OF DIRECTORS ( COMMUNICATION
) ( 4 MARKS ) :
Notice is hereby given that meeting of the Board of
Directors of M/s Growmore Limited will be held at the registered office on
………………at ………….a.m. /p.m. to transact the
following :
AGENDA :
1. Confirmation
of the minutes of the previous Board Meeting held on …………. To ……………. .
2. Discussion
of the progress in business.
3. Co-option
of Mr. Anand as Additional Director of the company
4. Buy
back of 5 % of the equity shares of the company.
5. Any
other matter with the permission of the chair.
Place ………………………….
Date …………………………..
By Order of the Board of
Directors
---------------------------------------------------------------------------------------------------------------------------------------4
MARKS. TO BE AWARDED ON THE BASIS OF OVERALL PERFORMANCE.
NOTE : GENERAL DRAFTING OF
THE NOTICE MAY BE CONSIDERED WHILE AWARDING MARKS.
ANSWER TO QUESTION NO. 6 ( c ) :
STATEMENTS : CORRECT OR INCORRECT ( THE COMPANIES ACT, 2013 / THE NEGITIABLE
INSTRUMENTS ACT, 1881 ) ( BUSINESS
LAWS ) ( 4 MARKS ) :
( i ) CORRECT. (
A limited company can become a partner in the partnership firm )
( ii ) INCORRECT.
( A special resolution is one, to pass, requires the votes cast in favour be
twice the votes cast against it )
( iii ) INCORRECT. ( A cheque marked “ Not negotiable “
is not transferable )
( iv ) CORRECT. ( A promissory note duly executed in
favour of a minor is valid )
---------------------------------------------------------------------------------------------------------------------------------------4
MARKS : BREAK-UP : 1 MARK EACH FOR CORRECT ANSWER.
NOTE : THE LANGUAGE OF THE
QUESTION IS VERY CLEAR. THE CANDIDATES ARE REQUIRED TO STATE WHETHER THE
STATEMENT IS CORRECT OR INCORRECT. GIVING REASONS IS NOT REQUIRED. HENCE, MARKS
NOT TO BE DEDUCTED ON THE GROUND THAT THE CANDIDATE DID NOT GIVE REASON.
QUESTION NO. 7 :
ANSWER ANY FOUR OF THE FOLLOWING :
( a ) State the
provisions of the Employees` Provident Funds and Miscellaneous Provisions Act,
1952 regulating the quantum of
contribution to be made by the employer and the employee in the Provident Fund.
Is it possible for an employee to increase the amount of his contribution to
the Provident Fund more than the minimum contribution as statutorily prescribed
?
( b ) A company
refuses to register transfer of shares made by Mr. X to Mr. Y. The company does not even send a
notice of refusal to Mr. X or Mr. Y respectively within the prescribed period.
Has the aggrieved part any right(s) against the company for such refusal ?
Advise as per the provisions of the Companies Act, 2013.
( c ) When is an
allotment of shares treated as an irregular allotment ? Briefly state the
effects of an irregular allotment.
( d ) Explain the
practices widely recognized as
discriminatory in employment.
( e ) What are
the basic principles of inter-personal communication ?
---------------------------------------------------------------------------------------------------------------------------------------ANSWER
TO QUESTION NO. 7 ( a ) :
( CONTRIBUTION TO PROVIDENT FUND ) ( SECTION 6 OF THE EMPLOYEES
PROVIDENT FUNDS AND MISCELLANEOUS PROVISIONS ACT, 1952 ) ( BUSINESS LAWS ) ( 4
MARKS ) :
Section 6 of the Employees Provident Funds and
Miscellaneous Provisions Act, 1952 regulates contribution to Provident Fund
Scheme established under the Act.
The employer`s contribution shall be 10 % of the basic
wages, dearness allowance and retaining allowance , if any payable to each of
the employee whether employed by him directly or by through a contractor.
The employee`s contribution shall be equal to the contribution
payable by the employer in respect of him.
In case the employee so desires , he may contribute an
amount exceeding ten percent of his basic wages, dearness allowance and
retaining allowance if any, subject to the condition that the employer shall
not be under an obligation to pay any contribution over and above his
contribution payable under this section.
Dearness allowance includes cash value of any food
concession allowed to the employees. Retaining allowance means the sum paid for
retaining the service , when the factory is not working.
The Central Government may by notification make the
employer`s contribution equal to 12 % for certain establishments or class of
establishments.
---------------------------------------------------------------------------------------------------------------------------------------4
MARKS. TO BE AWARDED ON THE BASIS OF OVERALL PERFORMANCE.
NOTE : MARKS NOT TO BE
DEDUCTED ON THE GROUND THAT THE CANDIDATE DID NOT CITE THE RELEVANT SECTION OF
THE RELEVANT ACT.
ANSWER TO QUESTION NO. 7 ( b ) :
REFUSAL OF REGISTRATION OF TRANSFER OF SECURITIES :
REMEDIES AGAINST ( SECTION 58 OF THE
COMPANIES ACT, 2013 ) ( BUSINESS LAWS )
( 4 MARKS ) :
The problem as asked in the question is governed by
Section 58 of the Companies Act, 2013 dealing with the refusal to register transfer of securities and appeal
against such refusal.
In the present case the company has committed a wrongful
act of not sending the notice of refusal of registering the transfer of shares.
Under Section 58 ( 3 ) , if a public company, without
sufficient cause refuses to register the transfer of securities within a period
of thirty days from the date on which the instrument of transfer is delivered
to the company, the transferee may, within a period of sixty days of such
refusal or where no intimation has been received from the company, within ninety days of the delivery of the instrument
of transfer of transfer , appeal to the Tribunal ( CLB ).
Section 58 ( 4 ) of the said Act further provides that
the Tribunal ( CLB ) , while dealing with an appeal made under sub-section ( 3
), may, after hearing the parties , either dismiss the appeal , or by order –
( a ) direct that
the transfer or transmission shall be registered by the company and the company
shall comply with such order within a period of ten days of the receipt of the
order, or
( b ) direct
rectification of the register and also direct the company to pay damages , if
any, sustained by any party aggrieved.
Thus, in the instant case Mr. X can appeal to the
Tribunal ( CLB ) and claim damages.
---------------------------------------------------------------------------------------------------------------------------------------4
MARKS : BREAK-UP : PROVISIONS – 3 MARKS ; ANSWER – 1 MARK. TO BE AWARDED
TOGETHER.
NOTE : MARKS NOT TO BE
DEDUCTED ON THE GROUND THAT THE CANDIDATE DID NOT CITE THE RELEVANT SECTION OF
THE COMPANIES ACT, 2013.
ANSWER TO QUESTION NO. 7 ( c ) :
IRREGULAR
ALLOTMENT / EFFECT OF ( SECTIONS
23, 26, 39 AND 40 OF THE COMPANIES ACT, 2013 ) ( BUSINESS LAWS ) ( 4 MARKS ) :
IRREGULAR ALLOTMENT :
The Companies Act, 2013 does not separately provide for
the term ‘Irregular Allotment” of securities. Hence, one will have to examine
the requirements of a proper issue of securities and consider the consequences
of non-fulfilment of those requirements.
In broad terms, an allotment of shares is deemed to be
irregular when it has been made by a company in violation of Sections 23, 26,
39 and 40 of the Companies Act, 2013. Irregular allotment, therefore, arises in
the following instances :
1. Where
a company does not issue a prospectus in a public issue as required by Section
23; or
2. Where
the prospectus issued by the company does not include any of the matters
required to be included therein under Section 26 ( 1 ), or information given is
misleading, faulty and incorrect; or
3. Where
the prospectus has not been filed with the Registrar for registration under
Section 26 ( 4 ); or
4. The
minimum subscription as specified in the prospectus has not been received in terms of Section 39; or
5. The
minimum amount receivable on application is less than 5 % of the nominal value
of the securities offered offered or lower than the amount prescribed by SEBI
in this behalf ; or
6. In
case of a public issue, approval for listing has not been obtained from one or
more of the recognized stock exchanges under Section 40 of the Companies Act,
2013.
EFFECTS OF IRREGULAR ALLOTMENT :
The consequences of an irregular allotment depend on the
nature of irregularity. However, the Companies Act, 2013 does not mention (
unlike the previous Companies Act ) that in case of irregular allotment the
contract is voidable at the option of the allottee.
Under Section 26 ( 9 ) of the Companies Act, 2013 if a
prospectus is issued in contravention of the provisions of Section 26, the
company shall be punishable with fine which shall not be less than fifty
thousand rupees but which may extend to three lakh rupees and every person who
is knowingly a party to the issue of such prospectus shall be punishable with
imprisonment for a term which may extend to three years or with fine which
shall not be less than fifty thousand rupees but which may extend to three lakh rupees , or with both.
Similarly, in case the company has not received the minimum subscription amount within 30
days of the date of issue of the prospectus, it must refund the application
money received by it within the stipulated time. Any allotment made in
violation of this will be void and the defaulting company and officers will be
liable to further punishment as provided in Section 39 ( 5 ) of the said Act.
Under Section 40 ( 5 ) of the said Act any default made
in respect of getting the approval to listing of securities in one or more
recognized stock exchange in case of a public issue, will render the company
punishable with a fine which shall not be less than five lakh rupees but which
may extend to fifty lakh rupees and every officer of the company who is in
default shall be punishable with imprisonment for a term which may extend to
one year or with fine which shall not be
less than fifty thousand rupees but which may extend to three lakh rupees , or
with both.
Thus, under various provisions of the Companies Act,
2013 stringent punishment has been provided for against irregular allotment of
securities but the option of going ahead with such allotment even if desires by
the allottee is not specifically permitted.
---------------------------------------------------------------------------------------------------------------------------------------4
MARKS : BREAK-UP : IRREGULAR ALLOTMENT – 2 MARKS ; EFFECTS – 2 MARKS. TO BE
AWARDED TOGETHER.
NOTE : MARKS NOT TO BE
DEDUCTED ON THE GROUND THAT THE CANDIDATE DID NOT CITE THE RELEVANT SECTIONS OF
THE COMPANIES ACT, 2013.
NOTE : BRIEF ANSWER COVERING THE BASIC POINTS BE GIVEN FULL CREDIT OF
MARKS.
ANSWER TO QUESTION NO. 7 ( d ) :
DISCRIMINATORY PRACTICES IN EMPLOYMENT ( ETHICS ) ( 4
MARKS ) :
Discrimination in employment is wrong because it
violates the basic principle of justice by differentiating between people on the basis of
characteristics ( race or sex ) that are not relevant to the tasks they must
perform.
It is consequently understandable that the law has
gradually been changed to conform to
these moral requirements, and that there has been a growing recognition of the
various ways in which discrimination in employment occurs. Among the practices
now widely recognized as discriminatory are the following :
*RERUITMENT PRACTICE :
Firms that rely solely on the world-of –mouth referrals
of present employees to recruit new workers tend to recruit only from those
racial and sexual groups that are already represented in their labor force.
Also, when desirable job positions are
only advertised in media that are not used by minorities or are classified as
for men only, recruitment would also tend to be discriminatory.
*SCREENING PRACTICES :
Job qualifications are discriminatory when they are not
relevant to the job to be performed ( e.g. requiring a high school diploma or a
credential for an essentially manual task ). Job interviews are discriminatory
if the interviewer routinely disqualifies certain class of people – for
example, assumptions about occupations “suitable for women” or the propriety of
putting women in “ male “ environments.
*PROMOTION PRACTICES:
Promotion, job progression and transfer practices are
discriminatory when employers place males on job tracks separate from those
open to women and minorities. When promotions rely on the subjective
recommendations of immediate supervisors.
*CONDITIONS OF EMPLOYMENT :
Many times wages and salaries are discriminatory to the
extent that equal wages and salaries are not given to people who are doing essentially the same work.
Another issue is related to fair wages and treatment to workers. Companies subcontracting manufacturing operations abroad are now aware of the
ethical issues associated with supporting facilities like child labour that
abuse and / or underpay their work force. Such facilities have been termed
“sweatshops”.
*DISMISSAL :
Firing an employee on the basis of his or her race or
sex is a clear form of discrimination. Less blatant but still discriminatory
are layoff policies that rely on a seniority system, in which women and
minorities have the lowest seniority because of past discrimination.
---------------------------------------------------------------------------------------------------------------------------------------4
MARKS . TO BE AWARDED ON THE BASIS OF OVERALL PERFORMANCE.
NOTE : ANY FOUR POINTS WRITTEN BY THE CANDIDATE BE GIVEN
FULL CREDIT.
NOTE : A BRIEF AND GENERAL
ANSWER BE CONSIDERED WHILE AWARDING
MARKS.
ANSWER TO QUESTION NO. 7 ( e ) :
PRINCIPLE OF INTER-PERSONAL COMMUNICATION (
COMMUNICATION ) ( 4 MARKS ) :
The following principles are key to interpersonal
communication :-
*INTERPERSONAL COMMUNICATION IS INESCAPABLE :
We can not keep ourselves away from communication. The
very attempt not to communicate , communicates something. Not only through
words but also through the tone of voice and gestures, postures, facial
expressions etc. we constantly communicate to others.
*INTERPERSONAL COMMUNICATION IS IRREVERSIBLE :
It is rightly said that a word uttered once can not be
taken back.
*INTERPERSONAL COMMUNICATION IS COMPLICATED :
No form of communication is simple due to the number of
variables involved; even simle request can be extremely complex.
*INTERPERSONAL COMMUNICATION IS CONTEXTUAL :
Communication does not take place in isolation. They are context specific.
*PSYCHOLOGICAL
CONTEXT :
It refers to who the communicators are and what they
bring to the interaction ? Their needs, desires, values, personality etc. all
form the psychological context.
*RELATIONAL CONTEXT :
This is concerning the nature of interaction and
reactions and the way it all affects the communication process.
*SITUATIONAL CONTEXT :
Refers to social concept of communication viz. an
interaction that takes place in a classroom will be very different from one
that takes place in a board room.
*ENVIRONMENTAL CONTEXT :
It is all about the surroundings in which communication
takes place e.g. furniture location, noise level, temperature, season, time of
day etc. are all examples of elements in the environmental context.
*CULTURAL CONTEXT :
Includes all the
learned behaviours and rules that affect
the interaction. If one comes from a culture where it is considered rude to
establish long, direct eye contact, one will out of politeness avoid eye
contact. If the other person comes from a culture where long direct eye contact
signals trustworthiness, then we have a basis for misunderstanding.
---------------------------------------------------------------------------------------------------------------------------------------4
MARKS. TO BE AWARDED ON THE BASIS OF OVERALL PERFORMANCE.
NOTE : ANY FOUR POINTS CORRECTLY WRITTEN BY THE
CANDIDATES BE GIVEN FULL CREDIT.
NOTE : GENERAL AND BRIEF ANSWER GIVEN BY THE CANDIDATE
BE CONSIDERED WHILE AWARDING MARKS.
---------------------------------------------------------------------------------------------------------------------------------------