thought of day

"Not everything that can be counted counts, and not everything that counts can be counted."

Companies Act_practical problems_2

In a private Company, after the death of Mr.X entire capital of the company is held by his son Y. Decide, whether Y can continue business of the co. with single shareholder.

In such a situation, Y can continue to carry on the business of the Company but, in accordance with the provisions of Sec.45 of the Act, if the same position continues for more than six months, then y will become personally liable for all the liabilities of the Company contracted after six months from the date he becomes only shareholder.

Companies Act_practical problems_1

Both the shareholders of the Private Company died in a car accident. Decide whether Company’s existence also comes to an end.

The Company’s existence is not affected by the death of its shareholders, since the Company has separate legal entity. This is clearly established in Salomon Vs. Salomon & Co. Ltd, Lee Vs. Lee Air farming Ltd & Kandoli tea Co. Ltd. cases. Further the Company has having perpetual succession.

Bonus Act_Practical Problems_2

An employer had been paying to his employees every year at the time of Deepawali one month's basic wages as Deepawali bonus for the last 10 years in addition to the bonus payable under the Payment of Bonus Act, 1965. The bonus had been paid even in those years when there were losses. The employer now wants to adjust Deepawali bonus paid by him for the current accounting year against the bonus payable by him under the Act, for the current accounting year. State with reference to the provisions of the Payment of Bonus Act, 1965, whether it is possible for the employer to make the above adjustments.

Section 17 of the Payment of Bonus Act, 1965 provides that if in any accounting year, an employer has paid any Puja bonus or other customary bonus to any employee, then he (the employer) shall be entitled to deduct the amount of bonus so paid from the amount of bonus payable by him to the employee under this Act in respect of that accounting year. The employee shall be entitled to receive only the balance. Payment of customary bonus over a period of time is immaterial. It does not create a statutory right.

Hence, employer, in the given case, shall be entitled to adjust the Deepawali bonus against the bonus payable under the Act.

Bonus Act_Practical Problems_1

The Model Mills, Nagpur refused to pay bonus to its employees on the ground that its management was controlled by an authorised controller appointed by the Government and as such it was entitled to exemption from the liability to pay bonus. Decide.

Section 32 of the Payment of Bonus Act, 1965 provides that the Act shall not apply to employees employed by an establishment engaged in any industry carried on by or under the authority of any Department of the Central Government or a State Government or a local authority.

However, in RMS vs. The Model Mills Hon. supreme court has held held that the exemption as aforesaid will not extend to cases contemplated in the given problem, i.e., where the establishment was not under the direct authority of the Central/State Government or local authority. Appointment of a controller may be a temporary phenomenon. The company was, therefore, held liable to pay bonus to its workmen. The claim of the company shall, therefore, be not tenable.

NI Act_Practical Problems_10

M draws a cheque in favour of N, a minor. N endorses it in favour of P. The cheque is dishonoured by the banker on the ground of insufficiency of funds? Discuss the rights of R

Section 26 of the Negotiable Instruments Act, 1881 provides that a minor may draw, endorse, deliver and negotiate instruments so as to bind all parties except himself.

Thus, in the given problem, P shall have a right to proceed against M only. N, the minor, cannot be held liable.

NI Act_Practical Problems_9

A promise to pay B Rs. 550 and all other sums which shall be due to him'. Is it a promissory note? State reasons.

It is not a promissory note since the amount payable is not a certain sum. The expression 'all other sums which shall be due to him' makes the amount indefinite or incapable of being made definite. Section 4 of the Negotiable Instruments Act which defines Promissory Note reads :

A 'promissory note' is an instrument in writing (not being a bank note or currency note) containing an unconditional undertaking, signed by the maker, to pay a certain sum of money only to, or to the order of, a certain person, or to the bearer of the instrument. Thus, to constitute a valid promissory note, the amount payable must be a certain sum or capable of being made certain. In fact, the problem in question is an illustration (d) to Section 4 stating that such an instrument is not a promissory note.