Tuesday, June 30, 2009


The Mewar Rural Financial Corporation, Udaipur, established under a special statute issued 5 years bonds to public directly and not through any Stock Exchange. Decide whether the said act of the Mewar Rural Financial Corporation is in violation of the provisions of the Securities Contracts (Regulation) Act, 1956.


MIs Goyanka & Company, which is a member of a recognised stock exchange desire to-buy and sell shares of Crossroads Company Limited on their own count as well as on behalf of investors. Advise MIs Goyanka & Company whether there are any restrictions for dealing in securities on their own count under the provisions of the Securities Contracts (Regulation) Act, 1956.

Sunday, June 28, 2009

Companies Act_Practical Problems_86

The Board of Directors of XYZ Ltd;. filled up a casual caused by the death of Mr. P by appointing Mr. C as a director on 3rd April, 2009. Unfortunately Mr. C expired on 15th May, 2009 after working about 40 days as a director. The Board now wishes to fill up the casual vacancy by appointing Mrs. C in the forthcoming meeting of the Board. Advise the Board in this regard.

Tuesday, June 23, 2009

Practical Problems_Sales of Goods Act_7

‘A’ raised a loan by pledging a Railway Receipt of goods in transit, as security, with a money lender ‘X’. ‘A’ got the Railway Receipt back from ‘X’ in order to get the goods released from the Railways. Instead, ‘A’ pledged the same Railway Receipt with another lender ‘Y’, to raise another loan. In a suit for recovery filed by ‘X’, ‘Y’ pleads estoppels against ‘X’ for not endorsing the Receipt “Under Lien Pledge” and thus, representing that the said receipt is free from lien, which facilitated ‘A’ to raise a second loan against the receipt. Decide, if estoppel is rightly invoked by ‘Y’ against ‘X’?

Monday, June 15, 2009

Practical Problems_Sales of Goods Act_6

The plaintiff, a butcher bought a carcass of a goat from the defendant, who was a meat shopkeeper in a meat market. The plaintiff in ignorance of the fact that it was exposed to tuberculosis, offered it for sale. It was seized by a Food Inspector, who adjudged the same as unfit for consumption, and condemned it to be destroyed. The plaintiff was also fined. Thereafter the plaintiff filed a suit against the defendant to recover the amount of fine and damages for breach of warranty under the Sale of Goods Act. The defendant pleaded that by usage of trade such an implied warranty was excluded. Decide.

Friday, June 12, 2009

Practical Problems_Sales of Goods Act_5

B’ purchases a motor car from ‘A’ which he uses for some months. It turns out that the car sold by ‘A’ to ‘B’ was a stolen one and has to be restored to the rightful owner. ‘B’ brings an action against ‘A’ for the return of the price. Will he succeed? Decide giving reasons.

Practical Problems_Partnership Act_12

‘A’ and ‘B’ are carrying on the business of grain merchants, in partnership. It is provided in the partnership deed that disputes relating to the affairs of the business would be preferred to arbitration. Arbitrators decided in favour of ‘A’. ‘B’ refuses to abide by the award. ‘A’ sues for enforcement of the award. Incidentally the firm is not registered under the Indian Partnership Act. Can A file case in this situation ?

Wednesday, June 10, 2009

Practical Problems_Partnership Act_11

‘A’ and ‘B’ carry on motor repair business in partnership. Under the deed of partnership, ‘A’ has no power of borrowing money. ‘C’ a creditor, knowing nothing about restrictions on the power of ‘A’ for borrowing money, lends ‘A’ money for the use of the firm. Is the firm liable to ‘C’ for repayment of the money lent by him to ‘A’. Refer to statutory provisions and decided cases.

Contract Act_Practical Problems_96

A company agreed to supply one thousand blankets to ‘X’ by a particular date. Rupees 10, 000/- were paid as an advance to the company by ‘X’. Before the due date of performance of the contract, the company informed ‘X’, that it would not supply blankets on due date and that he should treat the contract as repudiated. ‘X’ did not accept the repudiation, and kept on demanding the supply till the last date/ due date of performance of the contract. In the meantime, war between India and China broke out, and all the stocks of the company were requisitioned by Government for military purposes. ‘X’ files a suit against the company for damages for breach of contract. Will he succeed? Decide by referring to the provisions of the Indian Contract Act and decided cases.

Tuesday, June 09, 2009

Contract Act_Practical Problems_95

A, the owner of a hotel, contracts with B, to give him accommodation therein for the sale of his hosiery products and to furnish the accommodation with necessary furniture. A refuses to perform the contract. Can specific performance order be issued by court in this circumstances ?

Companies Act_Practical Problems_85

The Articles of Association of a company provide that the meeting of the Board of
Directors of the company will be held on the last Friday of every month. The Secretary of the company as a result does not serve the notice to the individual directors of the company. Consequently, a meeting of the Board of Directors was held on 20th February, 2008. The meeting was attended by all the directors with the exception of two directors out of a total of 10 directors and certain resolution were passed. The two absentee directors object to the meeting and the proceedings of the meeting for want of notice. Referring to the provisions of the Companies Act, 1956, decide:
(i) Whether the objection raised by the two absentee directors is valid?
(ii) Would your answer be the same in case the Secretary of the company, instead of sending notice on a usual format to the individual directors, sent a copy of the
Articles of Association to each one of the directors?

Section 286 of the Companies Act, 1956 does not specify any form of notice or period of notice. Usually, a week’s notice is considered sufficient. However, if the Articles provide that Board Meetings will be held on fixed days of every month or where the directors are duly informed that in future all meetings of the Board will be held on a fixed day of every month, it will be sufficient compliance with the statute [A. Chettiar Firm v. Kaleshwar Mills]. But, even where meetings are held on a fixed day of every month, a notice is usually sent to the directors as a reminder.

Friday, June 05, 2009

Limited Liability Partnership_12

Who can be a “Designated Partner”?

Every LLP shall be required to have atleast two Designated Partners who shall be individuals and at least one of the Designated Partner shall be a resident of India. In case of a LLP in which all the partners are bodies corporate or in which one or more partners are individuals and bodies corporate, at least two individuals who are partners of such LLP or nominees of such bodies corporate shall act as designated partners.

Limited Liability Partnership_11

What are the requirements in respect of “Designated Partners”?

Appointment of at least two “Designated Partners” shall be mandatory for all LLPs. “Designated Partners” shall also be accountable for regulatory and legal compliances, besides their liability as ‘partners, per-se”.

Thursday, June 04, 2009

Competition Act_Practical Problems_4

The Association of Truck Operators of India by agreement insisted that members of the association shall not deal with the non-members in transportation of goods. The Association claims that this agreement is entered for the welfare of trade and not for anyother purpose. In your opinion whether the agreement would be under the purview of the Competition Act, 2002. Whether your answer would be different if the association attempts to control the provisioning of services rendered by its members.

"Cartel" includes an association of producers, sellers, distributors, traders or service providers who, by agreement amongst themselves, limit, control or attempt to control the production, distribution, sale or price of, or, trade in goods or provision of services; The term cartel like agreement has been given an inclusive meaning. Thus an association for the welfare of the trade or formed for any other purpose not mentioned in the aforesaid definition will not be a cartel. It is only when an association, by agreement amongst themselves, limits control or attempts to control the production, distribution, sale or price of, or, trade in goods or provision of services, that it will be a cartel.

Companies Act_Practical Problems_84

The Board of Directors of ABC Private Limited having a paid-up share capital of Rs. 1 Crore consists of two directors, one of them, viz, Mr. S possesses membership of the Institute of Company Secretaries of India. The company desires to appoint him as a company secretary also. State the legal position.

Under Section 383A of the Companies Act, 1956, in case of a company having only two directors, none of them can be appointed company secretary in spite of possessing the requisite qualification. In view of the overriding effect of Section 383A, consideration of section 314 is unnecessary.