Doesn't Create Any Legal Relationship: Dr.D.Vetrivelan /AP/MBA

PRIYADARSHINI ENGG COLLEGE, VANIYAMBADI
DEPARTMENT OF MANAGEMENT STUDIES

LEGAL ASPECTS OF BUSINESS- 571107
Batch 2017-18
Question Bank
Unit- I
1. Define the difference between contract and agreement

Enforceability, legal obligation, binding on parties, Specialty
2. Define Revocation-
Termination of an offer- withdrawal of an offer
3. Define Ratification-
Acceptance of a contract
4. Write the difference between Revocation and rejection
Revocation takes place at the instance of the offerer Rejection- takes place at the
instance of the offeree
5. Define Consideration-
Something in return
6. Define Contractual capacity-
Capability of the parties to enter in to a contract
7. Define Coercion-
Compelled or forced to enter into a contract
8. Define Undue influence-
dominate the will of the other
9. Define Void agreement-
doesnt create any legal relationship
10. Define Illegal Agreement-
Agreement prohibited by law
11. Define contingent contract-
performance of contract is no immediate only after the happening and non happening
of some contingency
12. Define Quasi contract-
person shall not be allowed to enrich himself at the expense of another
13. Define breach of contract-
party breaks his obligation
14. Define Quantum Meruit-
right to claim the compensation
15. Define Del credere agent-
Extra remuneration guaranteed buy the principal for the performance of the contract
by the other party.
16. Write the difference between Sub agent- and substitute agent
person employed by and acting under the control of the original agent, Substituted
agent- person appointed by the agent to act for the principal
17. Define Irrevocable Agency-
Agency cannot be terminated
18. What is Sale of goods-
Dr.D.Vetrivelan /AP/MBA
Seller transfer or agree to transfer the goods
19. What is Agreement to sell
Future sale
20. Define Bill of lading-
Acknowledgement of receipt of goods and a document of title to goods
21. Write the difference between Conditions and Warranties
Condition- stipulation is essential to the main purpose of the contract.
Warranties Stipulation collateral to the main purpose of the contract
22. Define Doctrine of caveat emptor-
Buyer be aware
23. Who is an unpaid seller?
payment has not been paid by the buyer
24. Define Lien
Right against the goods
25. What is Stoppage in transit?
Right of stopping the transfer of goods
26. What do yu mean by Negotiable instrument?
Document transferable by delivery
27. Write various types of Negotiable instrument .
Bill of exchange, Promissory note Cheque
28. What is non -Negotiable instrument ?
Money order, share certificates, postal orders
29. Define Drawer
Maker of a negotiable instrument
30. Define Drawee-
The person on whom the instrument is drawn
31. Define-Holder.
He is either the original payer or any other person to whom the payee has endorsed the
instrument. In case of the bearer of the cheque. The bearer is the holder
32. What do you mean by Promissory note?
An instrument is writing containing an unconditional undertaking signed by the maker, to
pay a certain sum of money to the bearer of the instrument
33. What do yu mean by Bill of exchange?
An instrument is writing containing an unconditional order signed by the maker,
directing a certain person, to pay a certain sum of money to the bearer of the instrument.
34. What is the difference between agent and bailee?
Bailee is the person who reserves possession of goods from the owner for a specific
purpose.
Agents are brokers who do not receive possession of goods from the owner for any
purpose.
35. What is meant by termination of agency?
An agency may be terminated in the same manner as any other contract by the
operation of law or by the acts of the parties. In certain cases, the agency is irrevocable
i.e. it cannot be terminated.
36. What is meant by Irrevocable of agency?
The relationship between the principle and the agency cannot be terminated. The agency
is coupled with impressed (subject matter). Where the agency has party exercised his
authorities.
37. What is Contract?
Agreements which are enforceable at Law
38. Write the Essential elements of Contract
Agreement, Intention to create legal relationship, Free and genuine consent, Parties
competent to contract, Lawful consideration., Lawful object, Agreements not declared void,
certainty of meaning, possibility of performance, necessity of legal formalities
39. Write the duties of agent:
Instructions to be followed given by principle. 2.
Communicate 3. Adverse title limit given within which he has to act 4. Terminate with
agency 5. Liabilities 6. To pay all sum to his principle
40 . Write the nature of authority of an agent:
An agent is appointed with some authority by which he can bind the principal with
third person. In general, acts of an agent within his authority, bind his principal. The
authorities are express and implied authority, emergency authority and apparent authority
41. What is meant by termination of agency?
An agency may be terminated in the same manner as any other contract by the operation
of law or by the acts of the parties. In certain cases, the agency is irrevocable i.e. it
cannot be terminated.
42. What is meant by Irrevocable of agency?
The relationship between the principle and the agency cannot be terminated. The
agency is coupled with impressed (subject matter). Where the agency has party exercised
his authorities. When the agent has incurred a personal liability.
PART_B
1. Explain the elements of Contract act
Agreement, Intention to create legal relationship, Free and genuine consent, Parties
competent to contract, Lawful consideration., Lawful object, Agreements not declared
void, certainty of meaning, possibility of performance, necessity of legal formalities
2. Briefly explain the Classification of contracts:

Contracts are classified as follows:
I-Terms of validity or enforceability- Valid, Voidable, Void, illegal, enforceable
II-Mode of formation- Express, Implied, Quasi contracts
III-Performance- Executed ( Unilateral and Bilateral) Executory
3. Discuss the different ways in which a contract may be discharged.

Discharge by performance
Discharge by mutual agreement
Discharge by operation of lae
Discharge by impossibility of performance
Discharge by Lapse of time
Discharge by breach of contract
.
4. What are the remedies available to an aggrieved party on the breach of a contract?
Suit for recession
Suit for damage
Suit upon quantum Meruit
Suit for specific performance
Suit for injunction
5. What do you understand by Quantum of meruit? When does the claim on quantum
meruit arise?
1. Claim for necessaries supplied to a person incompetent to contract
2. Reimbursement of money paid due by another
3. Obligation of person enjoying benefit of non-gratuitous act: [sec. 70]
4. Enjoyment of benefit by the defendant is necessary:
5. Finder of Lost goods: sec. 71
6. How the agency is created?

Agency can be created in the following ways as mentioned below:
Creation of an Agency 1) By an express agreement
2) By Implication
3) By ratification.
Consideration is not essential to create an agency
A-Express Agency
The authority of an agent may be expressed by the following forms:
Word of Mouth (Oral)
By writing-usual form of written of agency Power of Attorney are stamped paper.
B-Implied Agency
Implied agency is possible by the below said method:
From conduct, situation or relationship of parties.
7. Write the requisites of a valid ratification
1. Agent must contract as agent
2. Principal must have been in existence at the time the agent originally acted
3. Principal must also be competent of contracting at the time of contract as well as at the
time of ratification
4. Ratification must be done within a reasonable time
5. The act to be ratified must be a lawful one
6. Principal should have full knowledge of facts
7. Ratification must be of a contract as a whole
8. Principal must have authority to ratify
9. Ratification cannot be made so as to subject a third party to damage or terminate any
night or interest or a third person.
8. Explain the rights and duties of principal, agents and third party
A-Rights of an agent
1. Right to receive agreed or reasonable remuneration
2. Right to retain moneys of the principal towards advances made or expenses properly included
by him
3. Right of lien to retain properties of the principal for the amount due to himself for commission,
disbursements or services rendered.
4. Right of stoppage- in transit -in case
(i) Where he purchase goods with his own funds or by incurring personal liability
(ii) Where he holds himself liable for the price of the goods sold, for example delcredete agent
B-Principals duties to agent
1. To indemnify the agent against the consequences of all lawful acts does by such agent in
exercise of authority conferred upon him.
2. Liable to indemnify an agent against the consequences of an act done it, good faith, though it
causes an inquiry to the right if third persons.
3. The principal is not liable for acts, which are criminal in nature though done by the agent at the
instance of the principal.
4. The principal must make compensation to his agent in respect of injury caused to such agent
by the principals neglect or want of skill.
C-Duties of agent
1. To conduct the business of agency to the principles directions and not to deviate even for the
benefit of the principal
2. To conduct the business with the diligence and skill generally possessed by persons engaged in
similar business
3. To render proper accounts
4. In case of difficulty to communicate with the principal
5. Not to make any secret profits
6. Not to deal on his own account
7. Not entitled to remuneration for business misconduct
8. An agent should not disclose confidential information
9. When an agency is terminated by the principal dying or becoming of unsound mind, the agent is
bound to taken behalf of the representatives of his late principal, all reasonable states for the
protection and preservation of the interests entrusted to him
9. Explain the passing of property from seller to buyer
1. Passing of property in specific goods

2. Passing of property in unascertained goods
3. Passing of property in goods sent on sales or return basis
o When the goods passes from seller to buyer- decide the liability & rights of seller
and buyer.
o Passing of property is effective according to the agreed intention of parties

I. Passing of property in specific goods ( Unconditional goods)
A) where the goods are in deliverable state
- Risk passes immediately when the contract is made
- Even time of [payment may be post banned but property of goods transferred
B) Where the goods are not in deliverable state
- When there is an unconditional contract (seller has to inform to buyer about the
non deliverable state ( A purchased a door from b. Some carving work to be made before
delivery. Before that door was destroyed, so B bear the loss because it was not passed.
C) Where the goods are in deliverable state but the seller is bound to do something to ascertain
the price
- goods are in deliverable state but seller is bound to test/ weigh
II Passing of property in unascertained goods
Property doesnt pass to buyer until the goods are ascertained
Contract of sale- unascertained goods
- Future goods
- Sale by description
III Passing of property in goods sent on sale or return basis
A delivered some books on sale or return basis to B- Books were stolen- B is liable to A.
10. Define CAVEAT EMPTOR and write its exceptions
It means let the buyer beware.

- The buyer must examine the goods thoroughly - He cannot blame anybody
excepting himself.
Exceptions
i. Fitness for buyers purpose , ii. Sale under a patent or trade name,
iii. Merchantable Quality (When the goods are bought by description),
iv. Usage of Trade, v. Consent by fraud
Express and implied conditions and warranties
In a contract of sale of goods, conditions and warranties may be express or implied.
Express conditions and warranties are those, which are expressly provided in the contract.
Implied conditions and warranties are those, which the law implies into the contract unless
the parties stipulate to the contrary.
Implied conditions
1. Condition as to title
In a contract of sale, unless the circumstances of the contract are such as to show a
different intention, there is an implied condition on the seller that:
a) in the case of a sale, he has a right to sell the goods, and

b) in the case of an agreement to sell, he will have a right to sell the goods at the time when
the property is to pass
Example; R bought a car from D and used it for four months. D had no title to the car and
consequently R had to hand it over to the true owner.
Held: R could recover the price paid. [Rowland v. Divail, (1923) 2 K.B. 500]
2. Sale by description
Where there is a contract for the sale of goods by description, there is an implied
condition that the goods shall correspond with the description.
Example; A ship was contracted to be sold as a copper fastened vessel to be taken with
all faults, without any allowance for any defects whatsoever. The ship turned out to be
partially copper-fastened.
Held: The buyer was entitled to reject [Sheperd v. Kain, (1821) 5 B & add.240
3. In certain cases, conditions as to fitness or quality
Normally, in a contract of sale there is no implied condition as to quality or fitness
of the goods for a particular purpose.
The buyer must examine the goods thoroughly before he buys them in order to
satisfy himself that the goods will be suitable for the purpose for which he is buying them.
4. Goods to be of merchantable quality
Where goods are bought by description from a seller who deals in goods of that
description, there is an implied condition that the goods are of merchantable quality.
This means goods should be such as are commercially saleable under the
description by which they are known in the market at their full value.
Example: A manufacturer supplied 600 horns under a contract. The horns were found to
be dented, scratched and otherwise and therefore the sellers suit for price was dismissed
{Jackson v. Rotax Motor & Cycle Co. (1910) @ k.B.397}
5. Condition implied by custom
An implied condition as to quality or fitness for a particular purpose may be
annexed by the usage of trade.
Example: A bought a set of false teeth from a dentist. The set did not fit into As mouth.
Held- He could reject the set as the purpose for which anybody would buy it was implicitly
known to the seller, i.e., dentist {Dr.Baretto v.T.R.Price, A.I.R. (1939) Nag. 19}
6. In case of sale by sample
(a) Bulk to correspond with sample
(b) Buyer to have reasonable opportunity to compare the bulk with sample
(c) Goods to be of merchantable quality

(The goods should be free from any defect)
7. Conditions as to Wholesomeness
The goods shall be Wholesome.
Example: F bought milk from A. The milk contained some germs of typhoid fever. Fs wife took
the milk and got infection as a result of which she died.
Held : F could recover damages
11. Write the privileges of holder in due course

1.Inchoate (unclear) stamped instrument A person, who has signed and delivered to another
person, a stamped but otherwise inchoate instrument, is precluded (prohibited) from asserting
( declaring), as against a holder in due course, that the instrument has not been filled in
accordance with the authority given by him, the stamp being sufficient to cover the amount.
2. Liability of prior parties Every prior party to a negotiable instrument is liable thereon to a
holder in due course until the instrument is duly satisfied
3.Fictitious payee where a bill is drawn payable to the drawers order in a fictitious name and
is indorsed in the same hand as the drawers signature, the acceptor of the bill cannot say, as
against the holder in due course, that the other parties to the bill were fictitious.
4. Negotiable instrument without consideration When a negotiable instrument is
made, drawn, accepted or transferred without consideration, it creates no obligation of payment
between the parties to the transaction. An agreement made without consideration is void. But
if the negotiable instrument gets into the hands of a holder in due course, he can recover the
amount on it from any of the prior parties thereto
5. Conditional delivery If a bill or note is negotiated to a holder in due course, the other parties
to the instrument cannot avoid liability on the ground that the delivery of the instrument was
conditional or for a special purpose only.
6. Instrument cleaned of all defects
Once a negotiable instrument passes through the hands of a holder in due course, it gets cleared
of its defects provided the holder was himself not a party to the fraud or illegally which affected
the instrument in some stage of its journey. Thus any affected in the title of the transferor will
not affect the rights of the holder on due course even if he had knowledge of the prior defect
provided as he himself is not a party to the fraud
11. Instrument obtained by unlawful means or for unlawful consideration
The person liable to pay on a negotiable instrument cannot, as against a holder in due course,
contend that he had lost it, or that it was obtained from him by means of an offence or fraud or
for an unlawful consideration.
8. Estoppels against denying original validity of instrument. The maker of a promissory note,
the drawer of a bill of exchange or cheque and the acceptor of a bill of exchange for the honor
of the drawer cannot, in a suit thereon by a holder in due course, deny the validity of the
instrument as originally made or drawn
9. Every holder is a holder in due course The law presumes that every holder is a holder in
due course, although the presumption is reputable.
10. Estoppels against denying capacity of payee to payee to indorse The maker of a
promissory note and acceptor of a bill of exchange payable to order cannot, in a suit thereon
by a holder in due course, deny the payees capacity at the date of the note or bill, to indorse
the same.
11. Endorser not permitted to deny the capacity of prior parties The endorser of a negotiable
instrument cannot in a suit thereon by a subsequent holder, deny the signature or capacity to
contract of any prior party to the instrument
12..What do you mean negotiable instruments? Explain its briefly
Essential Characteristics of a Promissory
Writing:
Should be in writing
Mere verbal engagement to pay is not enough
Promise to pay:
The receipt should be coupled with a promise to pay to become a promissory note
Example:
We have received a sum of Rs. 9000 from Shri R.R. Sharma. This amount will be repaid on
demand. We have received the amount in cash.
Definite and Unconditional:
if it is uncertain or conditional, the instrument is invalid
Thus a promise to pay is not conditional, if
it depends upon an event which is certain to happen though the time of its
happening may be uncertain
The promise is to pay at a particular place or after a specified time
Signed by the maker
Other wise it is incomplete and of no effect
Certain parties
The instrument must point out with certainty as to who the maker is and who the payee is.
Certain sum of money
The sum payable is certain,
i. When it is payable with interest, but if the rate of interest is not stated in the
instrument, it is not a promissory note.
ii. When it is payable at an indicated rate of exchange
iii. When it is payable by installments, with provisions that on default being
made in payment, the balance unpaid shall become due
Promise to pay money only
If the instrument contains a promise to pay something other than money or something in
addition to money, it cannot be a promissory note
Bank note or currency note is not a promissory note
This is because a bank note or a currency is money itself
Formalities like number, date, place, consideration, etc.,
These are usually found in an instrument although they are not essential in law.
It may be payable on demand or after a definite period of time
The expression on demand means payable immediately or forthwith.
It cannot be made payable to bearer on demand
The Reserve Bank of India Act, 1934 prohibits issue of such promissory notes
except by the Reserve Bank of India itself or the Central Government.
13.Define a cheque and state its main characteristics. Can it be accepted like a bill of
exchange? Compare it with a bill of exchange.
It must be in writing
It must contain on order to pay
The order must be unconditional
It requires three parties, i.e., the drawer, the drawee and the payee.
The parties must be certain.
It must be signed by the drawer.
The sum payable must be certain.
It must contain an order to pay money.
The formalities relating to the number , date, place and consideration, though usually found in
bills, are not essential in law. But a bill must be affixed with the necessary stamp
6. Distinguish between a holder and a holder in due course. State some of the important
privileges of a Holder in Due Course.
7. Define contract of sale of goods. Explain the important provisions under sale of goods
Act.
8. When a seller of goods deemed to be an unpaid seller/ what are his duties and
responsibilities?
14. What are the methods available to discharge a negotiable instrument?
Discharge of negotiable instruments
By Discharge of party or parties

1.By payment
Discharge of
2. By cancellation
an Instrument
3. By release
1. By payment in due
4. By allowing drawee
Course
more than forty eight hours
2. By party primarily liable
5. By non presentment of cheque
Becoming holder
6. Cheque payable to order
3. B express waiver
7. Draft drawn by one branch on another
4. By cancellation
8. Parties not consenting discharged by
5. By discharge as a
qualified acceptance
simple contract
9. By operation of law
10. By lapse of tome
11. Discharge by payment
of altered instrument
Unit II
1. Define-Company-
Incorporated association, which is an artificial person. Having an independent legal
entity, with a perpetual succession, a common seal, a common capital comprised of
transferable shares and carrying limited liability in relation to its members
2. What do you mean byLifting the corporate veil?
when the protection is taken away, the veil is said to have been lifted.
3. Define -Memorandum of association-
It is one of the core documents which has to be filed by the registrar of the companies at
the time of incorporation of company
4. What is Doctrine of ultra-vires?
Any activity not expressed or impliedly authorized by the memorandum are Ultra-vire
to the company
5. Define-Articles of association.
Rules and regulation of the company framed for the purpose of the internal
management of is affairs
6. What is Doctrine of Indoor Management?
Exception to the rule of constructive notice
7. Define prospectus.
Document inviting the public to purchase the shares or debentures of the company
8. Define Lieu of prospectus
Document without the allocation of shares
9. Define Shelf prospectus.
Prospectus issued by any financial institution or bank for one or more issues of the
securities
10. What is Abridged form of prospectus?
Contain similar information similar to a prospectus in a concise and compact matter. So
that cost of public issue of capital may be reduced.
11. Discuss the relationship between Memorandum and Articles of Association of a
company.
Memorandum of association- It is one of the core documents which has to be filed by
the registrar of the companies at the time of incorporation of company
Articles of association- Rules and regulation of the company framed for the purpose of
the internal management of is affairs
12.Define company.
Company means a company formed and registered under this Act or an existing company.
An existing company means a company formed and registered under any of the
previous companys law.
13. What do you mean by Lifting or Piercing the Corporate Veil?

From the juristic point of view, a company is a legal person distinct from its members.
This principle is referred as the veil of Incorporation.
14. Define - Statutory Companies
These are companies which are created by a special Act of the Legislature. Example is
Reserve Bank of India, the State Bank of India
15. Define Company Limited by Shares.
A Company limited by shares is a company in which the liability of its members is limited
by its memorandum to the amount unpaid on the share respectively held by them.
The companies limited by shares may be either public companies or private companies.
If a member has paid the full amount of shares, then his liability shall be nil.
16. Define Company Limited by Guarantee
A Company limited by guarantee is a company in which the liability of its members
is limited by its memorandum to such an amount as the members may respectively
undertake to contribute to the assets of the company in the event of its being wound up.
17. Define- Unlimited Company
An unlimited company is a company in which the liability of its members is not limited by
its memorandum.
18. Define Foreign Company.
A foreign company means a company which is incorporated in a country outside India
under the law of that country
19. Define the term ultra vires
The term ultra vires a company means that the doing of the act is beyond the legal power
and authority of the company.
20. Define Doctrine of Indoor Management
The doctrine of indoor management is a limitation to the doctrine of constructive
notice.
An outsider is presumed to know the constitution of a company but not what may or
may not have taken place within the doors that are closed to him.
PART-B
1.Discuss the contents of Articles of association

Articles of Association
The Articles of Association or just Articles are the rules, regulations and bye-laws for the internal
management of the affairs of a company.
The Articles are next in importance to the memorandum of association which contains the
fundamental conditions upon which alone a company is allowed to be incorporated.
Contents of Articles
1. Share capital, rights of shareholders, variation of these rights, payment of commissions,

share certificates
2. Lien on shares
3. Calls on Shares
4. Transfer of shares (voluntary transfer of shares from one person to another)
5. Transmission of shares (transfer of shares from one person to another by operation of law)
6. Forfeiture (surrender or give up) of shares
7. Conversion of shares into stock
8. Share warrants
9. Alteration of capital
10. General meetings and proceedings there at
11. Directors, their appointment, remuneration, qualification, powers and proceedings of board
of directors
12. Voting rights of members, voting and poll, proxies
13. Manager
14. Secretary
15. Dividends and reserves
16. Accounts, audit and borrowing powers
17. Capitalization of Profits
18. Winding up
2.Write the various types of company.

1. On the Basis of Incorporation
i. Statutory Companies
These are companies which are created by a special Act of the Legislature.
Example is Reserve Bank of India, the State Bank of India.
ii. Registered Companies
A registered company is one, which is registered in accordance with the
provisions of the Companies Act of 1956 and also includes the existing companies. By
existing company means that a company formed and registered under any of the previous
laws
2. On the Basis of Liability

On the basis of liability, an incorporated company may either be
i. a company limited by shares
ii. a company limited by guarantee
iii. an unlimited company
i. Company Limited by Shares
A Company limited by shares is a company in which the liability of its

members is limited by its memorandum to the amount unpaid on the share respectively
held by them.
The companies limited by shares may be either public companies or private
companies.
If a member has paid the full amount of shares, then his liability shall be nil.
ii. Company Limited by Guarantee
A Company limited by guarantee is a company in which the liability of its

members is limited by its memorandum to such an amount as the members may
respectively undertake to contribute to the assets of the company in the event of its being
wound up.
iii. Unlimited Company
An unlimited company is a company in which the liability of its members
is not limited by its memorandum.
In other words, the liability of members is unlimited.
The members of such companies may be required to pay companys losses
from their personnel property.
3. On the Basis of Number of Members
Private Company
Public Company
I . Private Company
A private company means a company which has a minimum paid up capital
of Rs.1, 00,000 or such higher paid up capital as may be prescribed, and by its articles-
a) Restricts the right to transfer its shares, if any
b) Limits the number of its members to fifty, and
c) Prohibits any invitation to the public to shares in or debentures of the company.
d) Prohibits any invitation or acceptance of deposits from persons other then its members,
directors or their relatives
ii. Public Company
The Public company means a company which is either
not a private company and has a minimum paid up capital of Rs 5,00,000
or such higher paid-up capital as may be prescribed:
or
is a private company, which is subsidiary of public company.
4. Classification On the Basis of Control
On the basis of control, companies may be classified into:
Holding companies, and
subsidiary companies
Holding companies:
A company in known as the holding company of another company if it has control
over the other company.
Subsidiary companies:
A company in known as a subsidiary of another company when control is
exercised by the later over the former called a subsidiary company.
1. Company controlling composition of Board of directors.
2. Holding of majority of shares.
3. Subsidiary of another subsidiary.
5. Classification on the Basis of Ownership
i. Government Company
ii. Foreign Company
Government Company:
A government company means any company in which at least 51% of the
paid up share capital is held by the central government or by any state government or
government or partly by the central government and partly by one or more state
governments and includes a company which is a subsidiary of a government company as
thus defined.
Example: Hindustan Aeronautics Ltd.
Non-Government Company
A company which may not be termed as a government company as
a defined in Section 617 is regarded as a non-government company
Foreign Company
A foreign company means a company which is incorporated in a
country outside India under the law of that country.
One Man Company
This is a company (usually private) in which one man holds
practically the whole of the share capital of the company, and in order to meet the statutory
requirement of minimum number of members, some dummy members who are mostly his
relations or friends, hold just 1 or 2 shares each.
3. Write the nature of company Explain Corporate Veil.

Nature of a Company:
1. Separate Legal Entity

A company in Law is regarded as an entity separate from its members. It has an
independent corporate existence.
2. Limited Liability (accountability or responsibility)

In case of a company limited by share where, the liability of a member is limited
up to the amount remaining unpaid on the shares held by a member, or a company
limited by guarantee, where the liability of members is limited to such amount as the
members may undertake to contribute to the assets of the company, in the event of its
being wound up.
3. Perpetual (long lasting or continuous) Succession
The term perpetual existence means the continued existence. The death,
insolvency or unsoundness of mind of its members or transfer of shares by its members
does not in any way affect the existence of the company. Members may come and
members may go but the company goes on forever. The company can be compared
with flowing river where water (members) keeps on changing continuously, still the
identity of the river (company) remains the same.
4. Common Seal
The term Common Seal means the official signature of the company. Since the
company being an artificial person cannot sign its name on a document, every company
is required to have its common seal with its name engraved on the same. This seal acts
as the official signature of the company. Any document bearing the common seal of
the company and duly witnesses by at least two directors will be binding on the
company.
5. Transferability of Shares
The shares of a public company are freely transferable. A shareholder can transfer
association, even a public limited company can put certain restrictions on the transfer
of shares but it cannot altogether stop it. A shareholder of public company possessing
fully paid up shares is at liberty to transfer his shares to anyone he likes in accordance
with the manner provided for in the articles of association of the company.
6. Separate property
The company is the real person in which all its property is vested and by which
it is controlled, managed, and disposed of.
7. Capacity to Sue (take a legal action)
A Company can Sue and can be sued in its corporate name.
Lifting or Piercing the Corporate Veil
From the juristic point of view, a company is a legal person distinct from its members. This
principle is referred as the veil of Incorporation.
o There is a Fictional Veil between the company and the members
o The human ingenuity however started using this veil of corporate
personality blatantly (unashamedly) a cloak for fraud or improper
conduct. Thus, it became necessary for the courts (NCLT- National
Company Law Tribunal) to break through or lift the corporate veil or
crack the shell of corporate personality and look art the persons behind
the company who are the real beneficiaries of the corporate fiction.
Exceptions
The various cases in which the corporate veil has been lifted are as follows.
2. Protection of Revenue
3. Prevention of fraud or improper conduct
4. Determination of Character of a company whether it is enemy
5. Where the company is a sham (fraud)
6. Company avoiding legal Obligations
7. Company acting as Agent or trustee of the shareholders
8. Avoidance of Welfare legislations
9. Protecting public Policy
Statutory Exceptions
1. Number of members below statutory minimum
2. Failure to refund application money
3. Misdescription of companys name
4. Fraudulent trading
5. Holding and Subsidiary Companies
4.Discuss the contents of Memorandum of association. Write the difference between

Memorandum and Article of association
Memorandum of Association
It is one of the documents which have to be filed, with the registrar of companies at the
time of Incorporation
It is the charter (license or agreement) of the company and defines its reason for
existence
It contains the fundamental conditions upon which the company is allowed to be
incorporated
The purpose of the memorandum is to enable shareholders, creditors and those who
deal with the company to know what is the permitted range of the activities of the
enterprise
Contents of Memorandum
1. The Name Clause:
2. The Registered Office Clause:
3. The Objects Clause;
4. The Capital Clause
5. The Liability Clause;
6. The Association clause
1. The Name Clause

Undesirable name should be avoided
- Too similar name of another company
- Injunction if identical name adopted
- Limited or Private limited as the last words
2. The Registered Office Clause
- It should mention the registered office of the company
- It should mention the address of the company within 30 days
- It should mention the exact location of the district/state
3. The Objects Clause

The Company registered after the commencement of the Companies (Amendment) Act, 1965
must divide its object clause into two sub-clauses, namely:
(a) Main Objects

This sub-clause covers the following two:
Main Objects of the Company to be pursued on its incorporation, and
Objects incidental or ancillary (additional) to the attainment of the main objects
(b) Other Objects

This sub-clause covers the other objects which are not included in Main Objects.
The Objects Clause Purpose
i. to enable the subscribers to the memorandum to know the uses to which their money may
be put
ii. To enable creditors and persons dealing with the company to know what its permitted
range of enterprise or activities is
4. The Capital Clause
In case of limited companies by shares, this clause must state the amount of share
capital with which the company is to be registered and the division thereof into shares
of fixed amount,
Such capital is called Authorized or Nominal or Registered capital. The fixed
amount of a share is known as Par or Nominal value of a share.
The amount of authorized capital should be sufficiently high considering the immediate
need of the business and possible expansion in the near future. The stamp duty and
registration fee are payable on the basis of amount of authorized capital.
5. The Liability Clause
i. A Company limited by shares is a company in which the liability of its members is

limited by its memorandum to the amount unpaid on the share respectively held by them.
ii. A Company limited by guarantee is a company in which the liability of its members is
limited by its memorandum to such an amount as the members may respectively undertake to
contribute to the assets of the company in the event of its being wound up.
iii. An unlimited company is a company in which the liability of its members is not limited
by its memorandum.
The members of such companies may be required to pay companys losses from
their personnel property.
6. Association Clause
- It contains the consent of the members as regards the formation of the company
and the number of shares taken by each
- Each member should mention their name, address, business,

qualification and declare their name
-
The Memorandum of Association shall be signed by at least 7 subscribers (public
company) and at least by 2 subscribers (private company).
The signature of each subscriber shall be attested by at least 1 witness who cannot be any
of the other subscribers.
5.Discuss the Doctrine of Ultra-Vires in relation to companies. What are the liabilities of the
company and his agents for Ultra-Vires Act?
5. Doctrine of constructive notice (OR) constructive Notice of Memorandum and Articles
Every outsider dealing with a company is deemed to have notice of the contents of the
Memorandum and the Articles of Association. These documents, on registration with the Registrar, assume
the character of public documents. This is known as constructive Notice of Memorandum and Articles.
The Memorandum and the Articles are open and accessible to all. It is the duty of every
person dealing with a company to inspect these documents and see that it is within the powers of the
company to enter into the proposed contract.
Doctrine of Indoor Management
The doctrine of indoor management is a limitation to the doctrine of constructive notice.
An outsider is presumed to know the constitution of a company but not what may or may not
have taken place within the doors that are closed to him.
Exceptions to the doctrine of Indoor

Management
4. Acts outside the

1. Knowledge of Scope of
2. Negligence 3. Forgery apparent
Irregularity
authority
1. Knowledge of Irregularity
Where a person dealing with a company has actual or constructive (useful or beneficial)
notice of the irregularity as regards internal management, he cannot claim the benefit under the rule of indoor
management
2. Negligence
Where a person dealing with a company could discover the irregularity if he had made
proper inquiries, he cannot claim benefit under the rule of indoor management
3. Forgery
A company can never be held bound for forgeries committed by its officers.
4. Acts outside the Scope of apparent authority

If an officer of a company enters into a contact with a third party and if the act of the officer is
beyond the scope of his authority, the company is not beyond.
Prospectus
In order to finance its activities, a company needs capital which is raised by a public company by the issue
of a prospectus inviting deposits or offers for shares and debentures from the public.
A private company is prohibited from making any invitation to the public for any shares or debentures, hence,
it need not issue prospectus.
6.Define private and Public company. What privileges enjoyed by a private company under
the provisions of Company Law?
Special Privileges of a Private Company

Number of Members: a private company may have only 2 members
ii. Allotment before minimum subscription: a private company can allot shares before the minimum
subscription is subscribed for or paid
iii. Prospectus or statement in lieu of prospectus:
may allot shares without issuing a prospectus or delivering to the registrar a statement in
lieu of prospectus.
iv. Issue of new shares:
when a public company issues new shares, after the expiry of 2 years from its formation or
at any time after the expiry of 1 year from the date of first allotment of shares, whichever is earlier, a private
company has first to offer these shares to the existing equity share holders pro rata. However, the members
in a general meeting may, by a special resolution, decide otherwise.
There is no such provision in case of private companies.
v. Kinds of shares: a private company may issue share capital of any kind, and with such voting rights, as it
may think fit.
vi. Commencement of Business: a private company can commence business immediately on incorporation.
vii. Index of members: need not keep any index of members.
viii. Statutory meeting and statutory report: need not hold statutory meeting or file with the registrar the
statutory report.
ix. Demand for Poll: even one member having the right to vote and present in person or by proxy (substitute)
may demand a poll. If the number of members present in more than 7, two members present in person or by
proxy may demand a poll.
x. Managerial Remuneration: The rule of overall maximum managerial remuneration does not apply to a
private company which is not a subsidiary of a public company; the overall managerial remuneration must
not exceed 11 percent of the net profits.
xi. Number of Directors: A private company need not have more than two directors
xii. Rules regarding directors: The rules regarding directors of a private company are less stringent.
o Legal Position of a Private company:

The legal position of a private company is in most respects similar to that of a public
company, and even if one member holds practically all the shares, the company is a distinct person.
When does a private company become a public company?
a. Conversion by Default:
Where a default is made by a private company in complying with essential
requirements of a private company, the company ceases to enjoy the privileges and exemptions conferred on
a private company.
a. Conversion by Choice or Volition (wish or desire):
A private company which becomes a public company shall also
(i) File a copy of the resolution (declaration or decision) altering the articles,
within 30 days of passing thereof, with the registrar;
(ii) Take steps to raise its membership to at least 7 if it is below that number on
the date of conversion, and also increase the number of its directors to more than two if it is below that
number;
(iii) Alter the regulations contained in the articles which are inconsistent with
those of a public company.
Conversion of Public Company into a Private Company:
- By passing special resolution
- Change the articles of the company to includes the conditions as prescribed in sec. 3 (1) (iii) which
make a company private company.
- Alteration has effect only if approved by the central government .Where the alteration has been
approved by the central Government a printed copy of the articles as altered shall be filed by the company
with the registrar within 1 month of the date of receipt of approval.
7.Write the power of Directors

(1) General Powers of the Board (Sec. 291).
The Board of directors of a company is entitled to exercise all such powers and to do all such acts
and things as the company is authorized to exercise and do.
This proposition is, however, subject to two conditions:
First, the Board shall not do any act which is to be done by the company in general meeting.
Second, the Board shall exercise its powers subject to the provisions contained in the Companies Act,
or in the Memorandum or the Articles of the company or in any regulations made by the company in
general meeting.
But no regulation made by the company in general meeting shall invalidate any prior act of the Board
which would have been valid if that regulation had not been made.
(2) Powers to be exercised at Board meetings (Sec. 292)-

The Board of directors of a company shall exercise the following powers on behalf of the company by means of
resolutions passed at the meetings of the Board, viz., the power to-
make calls on shareholders in respect of money unpaid on their shares;
issue debentures;
borrow moneys otherwise than on debentures (say through public deposits);
invest the funds of the company; and
make loans.
The Board may, by a resolution (declaration) passed at a meeting, delegate the last three powers to a
committee of directors or the manager or any other principal officer of the company, but the Board
shall specify the limits of such delegation.
Sec. 292 does not in any manner affect the right of the company in general meeting to impose
restrictions and conditions on the exercise by the Board of any of the powers specified in Sec. 292.
(3) Powers to be exercised with the approval of company in general meeting (Sec. 293).
The Board of directors of a public company, or of a private company which is a subsidiary of a public
company, shall exercise the following powers only with the consent of the company in general meeting
8.Explain the importance of Corporate governance.

Corporate Governance
Corporate governance is the set of processes, customs, policies, laws, and institutions affecting
the way a corporation (or company) is directed, administered or controlled. Corporate governance
also includes the relationships among the many stakeholders involved and the goals for which the
corporation is governed. The principal stakeholders are the shareholders, the board of directors,
employees, customers, creditors, suppliers, and the community at large.
A corporate stakeholder is a party that can affect or be affected by the actions of the business as
a whole
Parties to corporate governance
Parties involved in corporate governance include the regulatory body (e.g. the Chief Executive
Officer, the board of directors, management, shareholders and Auditors). Other stakeholders who
take part include suppliers, employees, creditors, customers and the community at large.
A board of directors often plays a key role in corporate governance. It is their responsibility to
endorse the organizations strategy, develop directional policy, appoint, supervise and
remunerate senior executives and to ensure accountability of the organization to its owners and
authorities.
Directors, workers and management receive salaries, benefits and reputation, while
shareholders receive capital return.
Customers receive goods and services; suppliers receive compensation for their goods or
services. In return these individuals provide value in the form of natural, human, social and
other forms of capital.
Principles of corporate governance

Commonly accepted principles of corporate governance include:
1) Rights and equitable treatment of shareholders: Organizations should respect the rights of shareholders
and help shareholders to exercise those rights. They can help shareholders exercise their rights by effectively
communicating information that is understandable and accessible and encouraging shareholders to participate
in general meetings.
2) Interests of other stakeholders: Organizations should recognize that they have legal and other obligations
to all legitimate stakeholders.
3) Role and responsibilities of the board: The board needs a range of skills and understanding to be able to
deal with various business issues and have the ability to review and challenge management performance. It
needs to be of sufficient size and have an appropriate level of commitment to fulfill its responsibilities and
duties. There are issues about the appropriate mix of executive and non-executive directors.
4) Integrity and ethical behavior: Ethical and responsible decision making is not only important for public
relations, but it is also a necessary element in risk management and avoiding lawsuits. Organizations should
develop a code of conduct for their directors and executives that promotes ethical and responsible decision
making. It is important to understand, though, that reliance by a company on the integrity and ethics of
individuals is bound to eventual failure. Because of this, many organizations establish Compliance and Ethics
Programs to minimize the risk that the firm steps outside of ethical and legal boundaries.
5) Disclosure and transparency: Organizations should clarify and make publicly known the roles and
responsibilities of board and management to provide shareholders with a level of accountability. They should
also implement procedures to independently verify and safeguard the integrity of the company's financial
reporting. Disclosure of material matters concerning the organization should be timely and balanced to ensure
that all investors have access to clear, factual information.
9.Specify under what circumstances will the court order a compulsory winding up of a company?
What is the effect of the winding up of a company?
10. Explain the provisions applicable to a members` voluntary winding up

Secs. 490 to 498 shall apply in relation to a members` voluntary winding up (Sec. 489). The
provisions of these Sections are as follows:
1. Appointment and remuneration of liquidators (Sec. 490)
The company in general meeting shall appoint one or more liquidators for the
purpose of winding up its affairs and distributing the assets. It shall also fix the remuneration, if any,
to be paid to the liquidator or liquidators. Any remuneration so fixed shall not be increased in any
circumstances. The liquidator shall not take charge of his office before his remuneration is fixed as
aforesaid.
2. Board's powers to cease on appointment of a liquidator (sec. 491).
On the appointment of a liquidator, all the powers of the Board of directors, the managing
or whole-time directors, and manager, shall cease except when the company in general meeting or the
liquidator may sanction them to continue.
3.Power to fill vacancy in office of liquidator (sec. 492) If a vacancy occurs by death,
resignation or otherwise in the office of any liquidator appointed by the company, the company in
general meeting may fill the vacancy. For this purpose a general meeting may be convened by any
contributory or by the continuing liquidator or liquidators, if any.
4. Notice of appointment of liquidator to be given to Registrar (Sec.493).
The company shall give notice to the Registrar of the appointment of a liquidator or
liquidators. It shall also give notice of every vacancy occurring in the office of liquidator and of the
names of the liquidators appointed to fill every such vacancy. The company shall give the notice
within 10 days of the event to which it relates.
5. Power of liquidator to accept shares, etc. as the consideration for sale of property (Sec. 494).
6. Duty of liquidator to call creditors` meeting in case of insolvency (Sec.495)
If the liquidator is at any time of opinion that the company will not be able to
pay its debts in full within the period stated in the declaration, he shall forthwith summon a meeting of
the creditors. He shall lay before the meeting a statement of the assets and liabilities of the company.
Thereafter the winding up shall become creditors voluntary winding up.
7. Duty to call general meeting at the end of each year (Sec. 496).
In the event of the winding up continuing for more than 1 year, the liquidator shall call a
general meeting of the company at the end of the first year from the commencement of the winding up.
Likewise, he shall call a general meeting at the end of each succeeding year. He shall lay before the
meeting an account of his acts and dealings and of the conduct of the winding up during the year.
8. Final meeting and dissolution (Sec. 497). As soon as the affairs of the company are fully wound up,
the liquidator shall make up an account of the winding up, showing how the winding up has been
conducted and how the property of the company has been disposed of. He shall then call a general
meeting of the company and lay before it the accounts showing how the winding up has been conducted.
The meeting shall be called by advertisement
specifying the time, place and object of the meeting; and
published not less than one month before the meeting in Official Gazette, and also in some
newspaper circulating in the district the registered office of the company.
Within one week after the meeting, the liquidator shall sent to the Registrar and the Official
Liquidator a copy each of the account and shall make a return to each of them of the holding of
the meeting and of the late thereof. If a quorum is not present at the final meeting, the liquidator
shall make a return that the meeting was duly called but could not be held for want of quorum.
The Registrar on receiving the account and return shall register them. The Official Liquidator,
on receiving them, shall make a scrutiny, the books and papers of the company. The liquidator
of the company present officers shall give the Official Liquidator all reasonable facilities to
make the scrutiny.
On such scrutiny the Official Liquidator shall make a report to the Tribunal. If the report shows
that the affairs of the company have been conducted in a manner not prejudicial to the interests
of its members or to public interest, then from the date of the submission of the report to the
Tribunal, the company shall be deemed to be dissolved.
9. Provisions as to annual and final meeting in case of insolvency (Sec.498)
If in the case of a members voluntary winding up, liquidator finds that the company is
insolvent, Secs. 508 and 509 (what deal with the duty of the liquidator to call a meeting of the company
of creditors at the end of each year (Sec. 508) and final meeting and dissolution (Sec.509) in case of a
creditors` voluntary winding up] shall apply as if the winding up were a creditors` voluntary winding up
and a members` voluntary winding up. It should be noted that in such a case Secs. 508 and 509 shall
apply to the exclusion of Secs. 496 and 497.
2. Creditors voluntary winding up

A voluntary winding up of a company in which a declaration of solvency is not made is referred
to as a creditors` voluntary winding up.
Provisions applicable to creditors` voluntary winding up
Secs. 500 to 509 shall apply in relation to a creditors voluntary winding up (Sec.499).
The provisions of these Sections are as follows:
Meeting of creditors (Sec. 500)
- The company shall call a meeting of the creditors of the company on the day on which
there is to be held the general meeting of the company at which the resolution for voluntary winding up
is to be proposed, or on the next day.
- It shall send notices of the meeting to the creditors by post simultaneously with the
sending of the notices of meeting of the company.
- It shall also cause notice of the meeting of the creditors to be advertised once at least in
the Official Gazette and once at least in 2 newspapers circulating in the district of the registered office
of the company.
The Board of directors of the company shall cause a full statement of the position of the
companys affairs together with a list of the creditors and the estimated amount of their claims
to be laid before the meeting. It shall also appoint one of their members to preside at this
meeting. It shall be the duty of the director so appointed to attend the meeting and beside
thereat.
2. Notice of resolution to be given to Registrar

Notice of any resolution passed at a creditors` meeting shall be given by the
company the Registrar within 10 days of the passing thereof.
3. Appointment of liquidator (Sec. 502).
The creditors and the members at their respective meeting may nominate a liquidator. If
they nominate different persons, the creditors` nominee shall be the liquidator. But any director, member
or creditor of the company may apply to the Tribunal for an order that the person nominated as liquidator
by the company or any other Tribunal within 7 days after the nominate, on which the nomination was
made by the creditors.
If no person is nominated by the creditors, the person nominated by the members shall be the
liquidator. Likewise, if no person is nominated by the company, the person nominated by the
creditors shall be the liquidator.
4. Appointment of committee of inspection (Sec. 503).

The creditors at their meeting may, if they think fit, appoint a committee of
inspection consisting of not more than 5 persons. If such a committee is appointed, the company may
also at a general meeting appoint not more than 5 members to the committee. However, the creditors
may, if they think fit, dissolve that all or any of the persons appointed by the company ought to be
members of the committee of inspection. If the creditors and members do not agree on a common list,
the Tribunal may constitute a committee of inspection.
5. Liquidators remuneration (Sec.504),
The committee of inspection, if there is no such committee, the creditors, may fix
the remuneration of the liquidator. Where the remuneration is not so fixed, it shall be determined by the
Tribunal. The remuneration shall not be increased in any circumstances.
6) Boards powers to c ease on appointment of liquidator (Sec.505).

On the appointment of a liquidator, all the powers of the Board of directors shall cease.
But the committee of inspection, or if there is no such committee, the creditors in general meeting, may
sanction the continuance of the Board.
7) Power to fill vacancy in office of liquidator (Sec.506).
If a vacancy occurs by death, resignation or otherwise, in the office of a liquidator (other
than a liquidator appointed by, or by the direction of, the Tribunal), the creditors in general meeting may
fill the vacancy.
8) Power of liquidator to accept shares, etc., as consideration for sale of property (Sec. 507).
The provisions of Sec. 494 shall apply in the case of a creditors` voluntary
wounding up. However the powers of the liquidator under Sec. 494 shall not be exercised except with
the sanction either of the Tribunal or of the committee of inspection.
9) Duty of liquidator to call meeting at the end of each year (Sec.508).
The liquidator shall call a general meeting of the company and a meeting of the creditors
every year, within 3 months from the close of every year. This will be so if the winding up continues
for more than 1 year. He shall lay (put down ) before the meeting an account of his acts and dealings
and of the conduct of winding up during the preceding year and position of the winding up.
10) Final meeting and dissolution (Sec. 509)
As soon as the affairs of the company are fully wound up, the liquidator shall
make up an account of the winding up showing how the winding up has been conducted and how the
property of the company has been disposed. He shall then call a general meeting of the company and a
meeting of the creditors for the purpose of laying the account before the meeting and giving explanation
thereof. Thereafter the procedure shall be the same and laid down in Sec.497.
11.
12. Explain the possible circumstance is lifting of corporate veil. Write short notes on
Doctrine of Constructive notice and Doctrine of indoor management
13. Define holding company and subsidiary company(2) B selects certain furniture in a shop.
The price is settled. He arranges to take delivery of the furniture the next day through his
servant and agrees to pay for the furniture on the first of the next month. The furniture was
destroyed by fire the same evening. Is B liable to pay the price? Give reasons.
14. What is corporate veil?Under what circumstance lifting of corporate veil is possible?
15. Holding company (2) Statutory Company (3) State the powers and Liabilities of director of a
company. (4) When is a director disqualified for appointment as a director of the company?
16. Explain the meaning and importance of prospectus. Write the legal provisions relating to the
issue and registration of a prpspectus
Contents of Prospectus
1. General Information
Name & address of registered office of the company
Details of letter of intent/industrial license
Name of stock exchange where listed
Date of opening, closing of the issue
Name, address of lead manager, bankers to the issue, brokers to the issue
Underwriting arrangement
2. Capital Structure of the company
Authorized, issued, subscribed, paid up capital of the company should be mentioned
Size of the issue
3. Details of the issues
Objects of the issues
Tax benefits available to the company
Rights of the instrument holders
Authority of the issues & details of resolution passed for the issues
Terms of payment
4. Details about the company management
History, main objects, present business of the company
Subsidiaries of the company
Promoters and their background
Name, address occupation of manager, managing directors relationship with the company
5. Details about the project
Cost of the project & means of financing
Location of the project
Plant & machinery for the projects
Infrastructure facilities for raw materials
Expected date of trial production and commercial production
Schedule of Implementation of the projects
8. Other Information
In respect of any issue made by the company and other listed companies under the same management, the
following details,
Name of the company, year of issue, types of issue, amount of issue & date of completion of the projects
Procedure and time schedule for allotment & issue of certificates
Management perception of risk factors
Procedure for making application & availability of forms, prospectus and mode of payment
Changes in directors and auditors in the last 3 years
17. Discuss the following (1) Alteration of subject clause in a memorandum
(2) Doctrine of Indoor Management (3) Articles of association (b). under what
circumstances will the court order a compulsory winding up of a company? What is the
effect of the winding up of a company?
Unit III
1. Writ the formulae to calculate Bonus

Calculation of Bonus--= Salary *declared % of bonus* 12
--------------------------------------------
100
2. Main objects of payments of wages act?
a. It was passed to regulate payment of certain classes of persons employed in
industries.
b.It specifies the particular form in the amount has to be given, only in the form of
money, no mixing of money or barter system can be followed. The wages must be
given at regular intervals. The wages must be given without any unauthorized
deductions. It may be applied to any factory, railways, industry or any establishment
workers.
3. Define Scheduled employment?
Employment specified in the scheduled to the act, process or breach of work forming
part of such employment. This schedule is divided into two as
PART I: Woolen carpet or shawl weaving, rice mill, flower mill or dhal mill, tobacco
PART II: Employment in any of agricultural (i.e) farming, diary, harvesting etc.
4. Define Wage
Wages means all remuneration expressed in terms of money or capable of being so
expressed which would, if the terms of employment, express
or implied were fulfilled, be payable to a person employed in respect of his employment
or of work done in such employment.
5. Define Factory:
Factory means any premises including the precincts thereof-whereon ten or more
workers are working, or were working on any day of the preceding twelve months, and
in any part of which a manufacturing process is being carried on with the aid of power
or is ordinarily so carried on, or whereon twenty or more workers are working, or were
working on any day of the preceeding twelve months, and in any part of which a
manufacturing process is being carried on without the aid of power, or is ordinarily so
carried on.
6. Define shift or Relay:
Where work of the same kind is carried out by two or more sets of workers working
during different periods of the day, each of such sets is called a relay and each of such
periods is called a shift
7. What is the manufacturing process?
The manufacturing process includes 1. Making, altering, ornamenting, finishing,
packing, oiling, mining, etc,2. Pumping oil, water, sewage,3. Generating,
transforming, etc.,4. Composing types of printing, lithography, printing by letter press
8. What is meant by worker?
Worker means a person employed, directly or by through by any agency with or
without the knowledge of the principle employer, whether for remuneration or not in
any manufacturing process or connected with the manufacturing process but does not
include any member of the armed forces of the union.
9. What are the provisions regarding the health of workers?
Cleanliness, 2. Ventilation and temperature, 3. Disposal of wastes and effluents, 4.
Artificial humidification, 5. Overcrowding, 6. Lighting, 7. Drinking water, 8. Latrines
and urinals, 9. Dust and fume, 10.spittoons.
10. What are provisions regarding the safety of workers?
Fencing of machinery, 2.work on or near machinery in motion, 3. Employment of
young persons on dangerous machines, 4. Striking gear and devices for cutting off
power, 5. Self acting machines, 6. Pressure plant, 7, protection of eye, 8. Precaution
against dangerous fume, 9. Revolving machinery, 10. Maintenance of building, 11.
Precaution in case of fire.
11. What are the provisions regarding the welfare of workers?
Washing 2. Storing and drying, 3. Sitting, 4. First aid, 5. Canteen, 6. Shelters, 7.
Crches8. Welfare officers, 9. Rules
12. Working hours of adults?
Weekly hours: No adult worker is allowed to work in a factory for more than 48 hours
in any week. Daily hours: No adult worker is allowed to work in a factory for more
than 9 hours in any day. Intervals for rest: No adult worker should work not more than
5 hours, continuously. There must be at least half an hour interval after 5 hours in a
day.
13. How the young persons are employed?
Employment of children: No child who has not completed his 14th year shall be required
or allowed to work in any factory. Certificate of fitness or token: A child who has
completed his 14th year is allowed to work in any factory unless he has been granted a
certificate of fitness, such child caries a token giving a reference to such certificate.
14. Explaain the working hours for children.
No night shift to children: No child is permitted to work in any factory for more than
four and a half hour in a day and during the night hours .No double employment: No
child is permitted to work in any factory on any day on which he has already been
working in another factory. Limited to two shifts: The period of work of all children
employed in a factory is limited to two shifts which will not overlap more than 5 hours
and each child should be employed in only one of the relays which should not, expect
with the previous permission in writing of the chief inspector, be changed more
frequently than once in a period of 30 days
15. Write Main objects of payments of wages act.
a. It was passed to regulate payment of certain classes of persons employed in
industries.
b. It specifies the particular form in the amount has to be given, only in the form of
money, no mixing of money or barter system can be followed.
i. The wages must be given at regular intervals.
ii. The wages must be given without any unauthorized deductions.
iii. It may be applied to any factory, railways, industry or any establishment
workers.
iv.
16. What does the wage include?
a. Any remuneration payable under any award or settlement between the parties or
order a court. 2. Any remuneration to which the person entitled for his overtime
work or any leave period. Any additional remuneration payable under the terms of
employment.
b. Any sum which the employer has to pay in case of termination of the employee.
17. Write the rules for payment of wages.
a. Responsibility for payment of wages(sec. 3).Fixation of wage period.
b. Time of payment of wages.Medium of payment of wages.
18. Write the time for payment of wages?
a. Wages to be paid before 7th or 10th day of every month.
b. Wages in case of termination of an employee has to be paid before the expiry of the
second day. Wages are to be paid during the working hours only and on working days
only. Exemption: The state government may, by general order exempt the person
responsible for the payment of wages.
19. Explain the various deduction from wages?
Deductions for fines. Deductions for absence from duty. Deductions for services such as
house accommodation, water, light supply etc .Deductions for damages or loss caused by
employee.Deductions for recovery of advance.Deductions for payments to co-operative
societies and insurance schemes.
20. Define Adolescent:
Person who has completed 14 years but not completed 18 years.
21. Define Adult:
Person who has completed 18 years.
22. Define Employer:
He is a person who employs, directly or through another person, or whether on behalf of
himself or any other person, or more employees, in any schedules employment in respect
of which minimum rates of wages have been fixed under the act.
23. Define Child
He is a person not completed 14 years.
24. Write the rules regarding fixing and revising minimum wages:
Sec 5, The procedure for fixing and revising minimum wages, there are two methods,
either of which can be followed by the appropriate government. Committees and sub-
committees are appointed to hold inquiries, and advise the government in the first
method. But the committee is only an advisory body and the government is not bound to
recommendations.
25. Define Overtime:
Supposing a person who works in scheduled employment is required to work beyond the
normal hours of his duty, he shall be paid overtime allowance at the rate fixed under this
act or under any law of the appropriate government.
26. What do you mean by Bonus?
Bonus means a cash payment made to employees in addition to wages. It represents a
share of profit made by an industry as a result of the joint contribution of capital and
labour.
27. What is Available Surplus?
The available surplus comprises of the gross profits for the accounting year after
deducting certain prior charges. Further any amount equal to the tax saved on the account
of bonus in respect of the immediately preceding accounting year should be added.
28. What is Allocable Surplus?
This expression means 67% of the available surplus in an accounting year, in relation to
an employer, being a company, other than a banking company, which has not made the
arrangements prescribed under the Income Tax Act.
29. Who are the persons eligible for Bonus?

Every employee shall be entitled to be paid by his employer in an accounting year, bonus,
in accordance with the provisions of this Act, provided he has worked in the
establishment for not less than thirty working days in that year.
30. Who are disqualified from receiving Bonus?
Notwithstanding anything contained in this Act, an employee shall be disqualified from
receiving bonus under this Act, if he is dismissed from service for-Fraud; orRiotous or
violent behaviour while on the premises of the establishment; or Theft, misappropriation
or sabotage of any property of the establishment
PART-B
1. Write the provisions related to health and welfare
Factory means any premises where 10 or more workers are working and a
manufacturing process is carried out with aid of power (20 if manufacture is without
aid of power) {Sec.2(m)}
HEALTH
The factory should be kept clean
There should be arrangement to dispose wastes and effluents
Ventilation should be adequate
Reasonable temperature for the comfort of the employees
Dust and fumes should be controlled below permissible limits
Artificial humidification should be at prescribed standard level
Overcrowding should be avoided
Adequate lighting, drinking water, latrines, urinals and spittoons should be

provided
WELFARE
Adequate facility for washing, sitting, storing clothes, when not worn during
working hours
Sitting arrangements to take short rests
Adequate first-aid boxes shall be provided and maintained
Ambulance, if 500 or more workers
Canteen, if 250 or more workers
Rest rooms/shelters, if 150 or more workers
Crche, if 30 or more women workers are employed
Full time Welfare officer, if 500 or more workers

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2. Write the provisions related to SAFETY
All machinery should be properly fenced, when machinery is in motion
Hoists and lifts should be in good and tested periodically
Pressure plant should be of sound construction and free from obstruction
Safety appliances for eyes against dangerous fumes, dusts, gas should be
provided
Adequate fire fighting equipment should be available
Safety officer should be appointed if number of workers in factory are 1,000 or

more
All machinery should be properly fenced, when machinery is in motion
Hoists and lifts should be in good and tested periodically
Pressure plant should be of sound construction and free from obstruction
Safety appliances for eyes against dangerous fumes, dusts, gas should be
provided
Adequate fire fighting equipment should be available
Safety officer should be appointed if number of workers in factory are 1,000 or

more
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3. Brief about the working hours, overtime wage, under factories act
A worker cannot be employed for more than 48 hours in a week
Weekly holiday is compulsory
If he is asked to work on weekly holiday, he should have full holiday on one of
the three days immediately or after the normal day of holiday
He cannot be employed for more than 9 hours in a day
At least 30 minutes rest should be provided after 5 hours of work
Total period of work inclusive of rest interval cannot be more than 10.5 hours
Overlapping of shifts is not permitted
Notice of period of work should be displayed.
Overtime wages
If the worker works beyond 9 hours a day or 48 hours a week, overtime
wages are double the rate of wages are payable
A workman cannot work in two factories
There is restriction on double employment
Overtime wages are not paid, when the worker is on tour
Total working hours inclusive of over time should not exceed 60 hours in a
week and total overtime should not exceed 50 hours in a quarter
Register of overtime should be maintained

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4. Write the provisions related to Employment of women and children
A women worker cannot be employed beyond the hours 6 a.m. & 7.00 p.m.
State Govt. can grant exemption to any factory or group or class of factories,
but no woman can be permitted to work during 10pm to 5am
Record of workmen
A register (muster roll) of all workers should be maintained.
No worker should be permitted to work unless his name is in the register
Record of overtime is also to be maintained

Annual leave with wages
A worker is entitled in every calendar year annual leave with ages at the rate
of one day for every 20 days of work performed in the previous calendar year,
provided that he had worked for 240 days or more in the previous calendar
year
Child worker is entitled to one day per every 15 days
While calculating 240 days, earned leave, maternity leave up to 12 weeks and
lay-off days will be considered, but leave shall not be earned on those days
Leave can be accumulated up to 30 days in case of adult and 40 days in case
of child
Leave admissible is exclusive of holidays occurring during or at either end of

the leave period
Wage for period must be paid before leave begins, if leave is for 4 or more
days
Leave cannot be taken for more than 3 times in a year
Application for leave should not normally be refused.
Wages include DA & cash equivalent of any benefit excluding bonus & OT
Employers can give additional benefits
Child employment
Child below age of 14 cannot be employed
Child above 14 but below 15 years can be employed only for 4.5 hours per
day
He should be certified fit by a certifying surgeon
He cannot be employed during night between 10pm to 6am
A person over 15 but below 18 is termed as adolescent.
He can be employed as an adult if he has a certificate of fitness for a full

days work from certifying surgeon
An adolescent is not permitted to work between 7pm to 6am
More restrictions on employment of female adolescent
Register of child workers should be maintained
Working hours for children.

No night shift to children: No child is permitted to work in any factory for more than four and
a half hour in a day and during the night hours .No double employment: No child is permitted
to work in any factory on any day on which he has already been working in another factory.
Limited to two shifts: The period of work of all children employed in a factory is limited to
two shifts which will not overlap more than 5 hours and each child should be employed in only
one of the relays which should not, expect with the previous permission in writing of the chief
inspector, be changed more frequently than once in a period of 30 days
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5. Write THE objectives and adjudications of INDUSTRIAL DISPUTES ACT,
1947
ADJUDICATION OF DISPUTES ( Authorities involved to bring Disputes
Industrial disputes means any dispute or difference between employers and

employers or between employers and workmen, or between workmen and workmen, which is
connected with the employment or non-employment of the terms and conditions of employment
or with the conditions of labour of any person
Works Committee
Conciliation officer
Board of Conciliation
Court of Enquiry
Labour Court
Industrial Tribunal
National Tribunal
Works Committee [Sec.3]: The Act provides for Works Committee in factories
employing 100 or more workers. The works committee will consist of equal
number of representatives of employer and employees. Representatives of
employees will be selected in consultation with the Registered Trade union. The
works committee will first try to settle disputes. If dispute is not solved, it will be
referred to the appropriate Government.
Governments. It will be presided over by Presiding Officer. The Labour court has
powers in respect of interpretation of Standing Orders, violation of Standing
Orders, Discharge or dismissal of a workman, withdrawal of any customary
concession or privilege, illegality or otherwise of a strike or lock out, other matters
which are not under Industrial Tribunal [Second Schedule to the Act]
Industrial Tribunal [Sec.7-A]: The tribunal will be presided over by Presiding
Officer. The Industrial Tribunal has powers in respect of wages including period
and mode of payment, compensatory and other allowances, hours of work and
rest intervals, leave with wages and holidays, bonus, profit sharing, provident fund
and gratuity, shift working, classification by grades, rules of discipline
Rationalization and retrenchment of workmen. [Third Schedule to the Act]
National Tribunal [Sec.7-B]: National Tribunal is formed by Central Government
for adjudication of industrial disputes of national importance or where industrial
establishments situated in more than one States are involved.
Sec.11-A: The Labour Court and Tribunal have wide powers. They can reappraise
evidence. They can also see whether the punishment is disproportionate to the
gravity of the misconduct proved. If the Court or Tribunal is of the view that the
punishment is disproportionate, it can impose lesser punishment or even set aside
the termination and order reinstatement. If the court orders reinstatement and
employer files appeal in Higher Court, the employer is required to pay full wages
to the employee during the period of pendency of proceedings with High Court or
Supreme Court. However, if the workman was gainfully employed elsewhere,
Court can order that payment of such wages is not to be made.
SETTLEMENT
It means a settlement arrived at in the course of conciliation proceedings. It includes a
written agreement between employer and workmen arrived at otherwise than in course
of conciliation proceedings (i.e., outside the conciliation proceedings). The difference is
that settlement arrived at in course of conciliation or an arbitration award or award of
labour court or Tribunal binds all parties to industrial dispute
6. Write a note on LAY-OFF and RETRENCHMENT
LAY-OFF
account of shortage of coal, power or raw materials or accumulation of stock or
break down of machinery or natural calamity; to give employment to a workman
on muster roll. Lay-off means not giving employment within 2 hours after reporting
to work. Lay-off can be for half a day also.
A factory employing 50 or more but less than 100 workers on an average per
working day can lay off the workmen, who have completed one year of service, by
paying compensation equal to 50% of salary (Basic plus DA). Employer can offer
him alternate employment, if the alternate employment does not call for any special
skill or previous experience and lay off compensation will be not be payable if
employee refuses to accept the alternate employment
RETRENCHMENT
Sec.2(oo): It means termination by the employer of service of a workman for any
reason, other than as a punishment inflicted by a disciplinary action. However,
retrenchment does not include voluntary retirement or retirement on reaching age
of superannuation or termination on account of non-renewal of contract or
termination on account of continued ill-health of a workman.
Retrenchment should be on basis of last in first out. Later, if the employer wants
to re-employ persons, first preference should be given to retrenched workmen.
A worker who has completed one year of service can be retrenched by giving one
month notice (or paying one months salary) plus retrenchment compensation @
15 days average wages for every completed year of service. [If number of
workmen are 100 or more, prior permission of appropriate Government is
necessary]
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7. Write a note on STRIKE & LOCK-OUT
Sec.2(q): Strike means a cessation of work by a body of persons employed in any
industry, acting in combination or a concerted refusal or a refusal under a common
understanding, of any number of persons who are or have been so employed to
continue to work or to accept employment.
Sec.2(I): Lock-out means temporary closing of a place of employment or the suspension
of work, or the refusal by employer to continue to employ any number of persons
employed by him
ILLEGAL STRIKE AND LOCK-OUT
Workman should not go on strike during
1. Pendency of conciliation proceedings and 7 days thereafter
2. Pendency of proceedings before Labour Court, Industrial Tribunal or National
Tribunal
3. Pendency of Arbitration proceedings
4. When Settlement or Award in operation
In case of public utility services, employees have to give at least 14 days notice for
strike. The notice is valid only if strike commences within 6 weeks. Otherwise,
fresh notice is required. Similarly, an employer cannot declare lock out without
giving 14 days notice.
Punishment: Fine up to Rs.50 per day to workman and Rs.1,000 employer can be
imposed. In addition, they can be imprisoned up to one month
The object of the Act is to make provisions for investigation and settlement of
industrial disputes. However, it makes other provisions in respect of lay off,
retrenchment, closure etc.
8. Write the objectives and application of the PAYMENT OF

BONUS ACT, 1965
APPLICATION OF THE ACT

a) Every factory
b) Every other establishment in which 20 or more persons are employed
c) Appropriate Govt. by Notification in the Official Gazette 2 months notice bring

any establishment - less than 20 workers but not less than 10
NON APPLICABILITY OF THE ACT

1. Employees employed by the LIC
2. Employees employed by Indian Red Cross
3. Employees employed by Universities & other educational institutions
4. Employees employed by RBI
5. Employees employed by UTI
6. Employees employed by NABARD, IDBI, SIDBI, NHB, DIC.,
*Govt. has the power to exempt any establishment based on financial position &
other circumstances
OBJECTIVES OF THE ACT
1. To impose statutory liability upon an employer of every establishment covered by
the Act to pay bonus to employees
2. To define the principle of payment of bonus according to the prescribed formula
3. To provide for payment of minimum and maximum bonus and linking the payment
of bonus with the scheme of set-off & set-on
4. To provide machinery for enforcement of the liability for payment of bonus
9. DEFINE THE FOLLOWING TERMS
AVAILABLE SURPLUS, ALLOCABLE SURPLUS, SET ON AND SETOFF

AVAILABLE SURPLUS: The available surplus in respect of any accounting year is
the gross profit for that year after deducting the sums as per Sec.6
* Gross profit to be calculated in the manner specified in the First & Second
Schedules
*Section: 6 Depreciation, Development rebate or investment allowance or
development allowance, direct tax & other sums mentioned in the Third Schedule
ALLOCABLE SURPLUS Sec.2(4)]
The allocable surplus is the workers share in the available surplus as defined in
Sec.2(6)
In relation to an employer, being a company 67% of the available surplus in an
accounting year
In any other case, 60% of the available surplus
Set-On Available Surplus
Where for any accounting year, the allocable surplus exceeds the amount of maximum
bonus payable to the employees in the establishment under Sec.11, the, the excess
shall, subject to a limit of twenty per cent of the total salary or wage of the employees
employed in the establishment in that accounting year, be carried forward for being
set-on in the succeeding accounting year and so on up to and inclusive of the fourth
accounting year to be utilized for the purpose of payment of bonus in the manner
illustrated in the Fourth Schedule.
Set-Off Available Surplus
Where for any accounting year, there is no available surplus or the allocable surplus
in respect of that year falls short of the amount of minimum bonus payable to the
employees in the establishment under Section 10, and there is no amount or sufficient
amount carried forward and set on under sub-section (1) which could be utilized for
the purpose of payment of the minimum bonus, then, such minimum amount or the
deficiency, as the case may be, shall be carried forward for being set-off in the
succeeding accounting year and so on up to and inclusive of the fourth accounting
year in the manner illustrated in the Fourth Schedule.
Set-On Allocable Surplus
Where the allocable surplus for any accounting year exceeds the amount maximum
bonus payable to employees under sec.10, then the excess of allocable surplus,
subject to a limit of 20% of the total salary or wage of the employees employed in that
accounting year shall be c/f for being set-on to the succeeding year and so on. This
excess amount, which is carried on, shall be utilized for the purpose of payment of
bonus in the succeeding years.
Set-Off Allocable Surplus
Where there is no allocable surplus or the allocable surplus for that year falls short of
the amount of bonus payable to the employees in the establishment under sec.10 and
there is no sufficient amount carries forward and set on which could be utilized for the
purpose of payment of bonus, then so much amount is necessary for the payment of
bonus shall be carried forward for being set off in the succeeding year and so on.
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10. Who are all eligible and not eligible to get bonus?
ELIGIBILITY FOR BONUS

Every employee is eligible for bonus, if he has worked for not less than 30 working
days in that year
Where an employee has not worked for all the working days (240 days), the bonus
payable shall be proportionately reduced
DISQUALIFICATION FOR BONUS

An employee shall be disqualified from receiving bonus, if he is dismissed from
service for
fraud
riotous or violent behavior
theft, misappropriation or sabotage of any property of the establishment
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11. Explain the COMPUTATION OF THE GROSS PROFIT
Net profit as per the Profit & Loss Account ADD the following items:
Provision for bonus
Provision for depreciation
Provision for direct taxes
Provision for development rebate
Provision for any other reserves
LESS the following items:

Capital receipts & capital profits
Profits out of business situated outside India
Refund of any direct tax
Cash subsidy from the Government.
II. DETERMINATION OF AVAILABLE SURPLUS [Sec.5]
Gross profit as per Sec.4
LESS the following items
a. any amount of depreciation
b. any amount of development rebate
c. any direct tax
d. any other specified in the Third Schedule
*The resultant figure is the Available Surplus for distribution as bonus
III. DETERMINATION OF ALLOCABLE SURPLUS
The rules to be followed for the distribution of Allocable surplus are:
Minimum Bonus 8.33% of the wages or salary of an employee (up to Rs.3,500)
* where the salary or wage of an employee exceeds Rs.6,500 per month, the bonus
payable to such employee shall be calculated as if his salary or wage were Rs 6,500 per
month
Maximum Bonus 20% of the wage or salary
Set-on & Set-off: While computing the allocable surplus, the amount of set-on &
set-off to be taken into consideration [Fourth Schedule]
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12. Enumerate the important provisions of Payment wage Act
Wages means all remuneration due to any worker or employee if the

terms of contract of employment are fulfilled. Wages include
a) award or settlement
b) overtime wages & annual leave with wages
c) additional remuneration
d) any remuneration paid at the time of termination of employment other than gratuity
e) Any sum to which the person employed is entitled under any scheme
Rules related to pay ment of wages, period of payment, time mode of payment
13. Explain the various deductions from Wage

Deductions for fines. Deductions for absence from duty. Deductions for services such as house
accommodation, water, light supply etc .Deductions for damages or loss caused by
employee.Deductions for recovery of advance.Deductions for payments to co-operative societies and
insurance schemes
Unit IV
1. What is Tax planning?
Arrangements of financial activity.
2. Write the objectives of Tax planning-.
Save the hard labour of the tax payer and enjoy the fruits of his income and wealth,
Reduction of tax liability, Minimization of litigation, Productivity investment.
3. Define Tax Evasion-
Evade their tax liability.
4. Define Tax Avoidance-
Minimize or adjusting the account with in the four corners of tax law.
5. What do you mean byOnus of Proof?
Duty of the tax assessee to produce all relevant fact.
6. Define Input Tax-
Payable by a registered dealer in the course of business, on the purchase of any goods made
from a registered dealer.
7. Define Output tax-
Tax charged or chargeable under this act by a registered dealer in respect of sale of goods
in the course of his business
8. What are the various types of dealers?
TOT dealer
VAT dealer
Exempted dealer
9. Write various types of sales Tax-
Single point sales tax- tax imposed at only one point between production and sales
Multiple point Tax levied at all stages of commodity
10. How will you determine sales tax ? Rate of tax * Aggregate of sales
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100
11. Write varius types of registration- Voluntary Dealer whose turnover exceed Rs30,000
and who deals multiple point tax goods can apply voluntary registration.
Compulsory- Turnover is more than Rs. 50,000
12. Define- Octroi
Toll or tax levied at the gates of a city on articles brought to the city
13. Define VAT

It is one of he stepping up measures of fiscal reforms in the changed globalize scenario
14. Explain the elements of Sale.
Transfer of property in goods
Two parties
Consideration
Valid consent of both parties
15. Define Deemed sale.
Transfer of consideration of controlled commodities
Transfer of consideration of property of goods
Delivery of goods on hire purchase/ Installments
Transfer of right to use any goods for the purpose of cash or valuable consideration
16. Define Zero tax company.
Company is showing book profits and declaring dividends to share holders but they were not
paying income tax
20 Define MAT.
In order to bring zero tax company under income tax act section 115 JA was introduced with
effect from assessment year 1997-98. According to this section, taxable income of a company
compute under this act, levy 30% of tax of its book profit.
21. Define ad valorem duty.
Levy of octroi either on specific basis or advalorem
It is based on value of articles
Types Low advalorem- less cost articles
High advalorem- high cost articles
22. Explain the issues towards implementation of VAT.
1. Tax is collected at each stage of sale when there is a value addition to the goods
2. Several taxes are still not covered under VAT
3. CST will be eliminated over a period of time
4. Tax is only on value added items
PART-B
1.Explain the significance of VAT
Best practice of indirect taxation in the world
Create taxation policy- convenient, flexible, transparent, growth oriented revenue
Force government to change in- economic, industrial tax & corporate laws
Helps industry & trade to have global level field
perceive a spate of reforms in capital market, foreign exchange, foreign direct investment,
information technology, tax,& finance sector
2.Write the salient features of CST

Salient features-
Extent to whole India
It is payable in the state
Levied by central, Collected by state ( where the goods have been sold)
Compulsory to every dealer- who makes inter state trade
Based on amount of turn over made in the course of interstate trade
Two types of goods are dealt- Declared goods ( 0- 4% but not exceed 4%
& Non- declared goods( 10% or state specified , which ever is high)
All registered dealer liable to pay tax
3.Write the objectives of CST
To formulate the principles for determining as to when a sale or purchase of goods
takes place in the course of inter state trade.
a. To provide for the levy , collection, & distribution of taxes on sales of goods
in the course of trade
b. To declare certain goods to be of special importance in the interstate trade
c. To specify the restrictions and conditions to which state law imposing taxes
on the sale or purchase of goods.
4. Explain the ways of Dealer Registration under sales tax act
New Dealers (who are not registered under the Tamil Nadu General Sales Tax Act,1959)
are hereby requested to fill up the form available through the link below and send the filled in
application with necessary enclosures including two passport size photographs of applicant, to the
Registering Authority of the area in which their Principal Place of Business is situated with
sufficiently stamped self addressed envelope after taking printout.
Dealers are encouraged to enter the application online and then to take a printout. This online
facility is only to speed up the process of application.
Registration under CST Act

CST Act makes provisions for registration of dealer. Registration brings many advantages e.g.
the dealer can issue C form and purchase goods at concessional rate.
Compulsory Registration under CST-

Section 2(f) states that 'registered dealer' means a dealer who is registered under section 7 of CST Act.
As per section 7(1), every dealer liable to pay Central Sales Tax has to register himself with sales
tax authority. As per section 6(1) of CST Act, every dealer effecting sale in the course of Inter State
trade or commerce is liable to pay CST. Thus, only those dealers who effectinter state sales are
required to register under CST Act. Effect means bring about, accomplish, cause to exist or
occur [Concise Oxford Dictionary 1994 edition]. Thus, intermediaries like agents, transporters
etc. who only facilitate sales are not required to be registered, as they do not effect sales.
Central Government has authorised State Governments to prescribe State Sales Tax authorities
authorised for the purpose of registration. Thus, registration under CST Act is done by State Sales
Tax authorities who are authorized for the purpose.
Voluntary Registration-
A dealer registered with State sales tax authorities may voluntarily apply for registration under
CST Act
even if he is not liable to pay Central Sales Tax [section 7(2) of CST Act]. He is entitled to apply
for registration even if goods sold or purchased by him are exempt under State sales tax law.
This application for registration can be made any time. This provision is mainly useful when the
dealer makes purchases in Inter State but all his sales are within the State. Thus, he is not liable
for payment of any CST. However, he can make purchases in Inter State at concessional rate
only if he is registered. Hence, he can register even if he is not liable to pay any CST.
Application for registration-
Application for registration should be made in prescribed form A as per CST (Registration and
Turnover) Rules; within 30 days from the date when dealer becomes liable to CST. Application
fee of Rs. 25 is payable (by way of court fee stamps ). Application has to be signed by (a )proprietor
of business ( b ) one of the partners in case of business owned by partnership firm ( c ) Karta
or Manager of HUF ( d ) director or principal officer of Company (e
) principal officer in case of association of individuals or (f ) officer authorised by Government in
case of Government.
Additional Places of business

- If a dealer has places of business in different States, he has to obtain separate registration in
each State. However, if he has more than one places of business within the same State, he has to
get only one registration with additional places of business endorsed on the Certificate
17. What is the difference between VAT and CENVAT?
VAT- Value Added Tax

VAT is a sales tax collected by the government (of the state in which the final consumer is located)
which is the government of destination state on consumer expenditure.
Over 120 countries worldwide have introduced VAT over the past three decades and India is
amongst the last few to introduce it.
India already has a system of sales tax collection wherein the tax is collected at one point
(first/last) from the transactions involving the sale of goods. VAT would, however, be collected in
stages (installments) from one stage to another.
The mechanism of VAT is such that, for goods that are imported and consumed in a particular
state, the first seller pays the first point tax, and the next seller pays tax only on the value-addition
done leading to a total tax burden exactly equal to the last point tax.
CENVAT - Central Value Added Tax
CENVAT is the new name for MODVAT. Basically they are the same. These are related to central
excise.
CENVAT means, Tax on Value Addition on the goods manufactured according to Central Excise
& Customs Act Difinition. Here the value addition means the Additional Services/Activities etc.
which converts the Input in to Output, and the output is newly recognised as per the this act as
Exciseble goods. Like this the discussion
is goes on for definition
Sales Tax
Sales tax is levied on the sale of a commodity, which is produced or imported and sold for the first
time. If the product is sold subsequently without being processed further, it is exempt from sales
tax.
Sales Tax is a levy on purchase and sale of goods in India and is levied under the authority of both
Central Legislation (Central Sales Tax) and State Governments Legislations (Sales Tax). The
government levies Sales Tax principally on intra-state sale of goods. States also levy tax on
transactions which are "deemed sales" like works contracts and leases.
In addition to Sales Tax, some states also levy additional tax, surcharge, turnover tax and the like.
Ordinarily, Sales tax is recovered from the buyer as a part of consideration for sale of goods.
Sales tax is paid by every dealer on the sale of any goods made by him in the course of inter-state
trade or commerce, despite the fact that no liability to tax is raised on the sale of goods under the
tax laws of the appropriate state.
1. Define Corporate Tax Planning Explain the need and importance of tax planning.
2. Briefly explain Tax Management.
3. Explain the important provisions under Central Sales Tax Act.
4. Explain the various Mode of Charging Sales Tax
5. Explain the process of VAT
6. Explain the advantages and disadvantages of VAT
7. Explain the procedure for Central Sales Tax Act.
8. Define-Double Taxation (b) Multiple point Taxation method (c)
9. Explain the provisions regarding the Registration of Dealer
10. Define Tax Evasion, Tax Avoidance and Explain Tax Management.
11. Define VAT, Explain the advantages and Disadvantages of VAT(16)
Unit- V
1. Write the objectives of Consumer protection Act:
To provide for the better protection of consumers, Io provide simple and speedy and
inexpensive redressal to the consumer grievances, and award for compensation where ever
appropriate to the consumer.
2. . What is restrictive trade practice:
Which requires a consumer to buy, hire, or avail of any good or service as a condition
precedent for buying, hiring or availing of any other goods or services.
3. what do you mean by Unfair trade practice: Purpose of promoting sale, use or supply of
any goods or for the provision of any services, adopts any unfair method or deceptive
practice including the following
False or misleading representation, bargain price, offering of gifts, prizes, non
compliance of product safety standard, hoarding or destruction of goods
4. What is Consumer Protection council
Central Consumer Protection council and State Consumer Protection council
5. Write the varius Redressal machinery.
District forum, State commission, National Commission, Supreme Court
6. Define Cyber Law.
Law of the internet and World Wide Web
7. What is Cyber Crime?
Act that are punishable by the Information technology Act would be unsuitable as the
Indian Penal code also covers many cyber crimes, such as e-mail spoofing and cyber
defamation, sending threatening e-mails etc.
8. Write various types of Cyber Crime:
Hacking, cracking, security related crimes, Net work Packet Snifters, Inter net protocol
Spoofing, Password attacks, Fraud on the Internet, Online investment newsletters, Bulletin
Boards, E-mail scams, Credit card fraud, Publishing of false digital Signature, Making
available digital signature for fraudulent purpose, Alteration and Destruction of digital
information and Pornography on the Net.
9. What do you mean by Encryption?
Sending a postal mail to another party with a lock code on the envelope which is known only
to the sender and the recipient. Encryption means use of secret codes and ciphers to
communicate information electronically from one person to another use the codes and
ciphers
10. Define Cryptography.
Study of secret codes and ciphers and the innovations that occur in the field.
11. Define GATT-.
General Agreement on Trade and tariff. It was created to facilitate world trade. Remove
trade barriers
12. What is Tariff barrier- Custom Duty is a common example. Custom duty increase the
cost of imports thus, discourages imports. It protects domestic manufacturer against
foreign competition.
13. Define Non- Tariff barrier- For eg Country prohibited the import of certain commodities,
to encourage domestic industry or may be a quota on the extent of imports. It ensures that
foreign goods do not swamp the market and destroy indigenous production.
Government also regulates import through license and regulations. All these measures
hinder trade, are called non trade barriers.
13. Define GATT Plus agreement
Those who agreed to educe the non tariff barrier in Tokyo round in 1973-1979 (
reduce the non tariff barrier ) They were accepted to incorporate the codes.
15 . Define Intelectual Property: Emerge from human creativity, innovation and
engagement. It takes different forms like ideas, inventions, literary works, designs, music
films, computer software and industrial process. IPR have been classified into patents,
copyrights, trademarks and designs.
16. Who is Patentee?
The person in whose favor a patent is granted, is called a patentee.
17. What are the Rights of Patentee?
He can sell it to another person. He can grant a license to use the patented property to
others. He can also assign such property to another person. The patent holder has the
exclusive right to make, use, exercise, sell or distribute the inventions in India.
18. What is Biological Diversity Act 2002:
protect the rights of the breeders and innovators of new forms of seeds and plants.
19. Define Copy writing:
It is in favor of the author or creator of the work. It arises the moment a person creates a
work.
20. What can be copyrighted?
Literary works- novels, books articles in magazines and journals, lyrics
for song and instruction manuals. Dramatic works: recitation,
acting out of any literary work or an arrangement of scenes, choreographic
works and dumb shows. Musical work: Any original musical work and a
particular combination of melody and harmony come under this category.
Artistic work: Painting, sculpture, photograph, drawing of a diagram,
chart or map. Film: Motion pictures, television shows and recording of
events. Record: Any recording of sound
21. Explain the duration of copyright protection:
In case of literary, dramatic, musical or artistic works (other than photograph) Life time
of the author. In addition, it subsists for the next sixty years from the death of the author.
In the case of joint authors, the sixty year period is to be continued after the death of the
who dies last.
In case of literary, dramatic, musical or artistic works (other than photograph) which is
anonymous or pseudonymous, copy right is for sixty years from the date of publication.
The copy right for a photograph and films is for a period of sixty years from the date of
publication.
22. Explain the Broadcast Reproduction rights:
No person can re- broadcast a Broadcast, No person can make a recording
of a Broadcast other than for private use, or for teaching and research. No
person is to sell or hire a Broadcast without a license from the owner.
23. Explain the provision of New Trade Mark Law:
Inclusion of Service Mark
Procedure and duration of registration
Expanded definition of trade mark
Collective Mark
Certification mark
Expansion of the meaning of Trade Mark Infringement
Stringent requirements for registration
24. Define well Known trademarks.
It is a mark used over particular goods or services which has gained sufficient recognition
among the consumers. It need not be registered in India. . Familiarity, even through
advertisement is adequate to constitute a trade mark as a well known trade mark.
PART B
1.What is the function of the state consumer protection council
2.Write as note on: the consumer disputes redressed agencies
3.Write a note on Consumer Disputes Redressal Forum. In what manner is a complaint filed
before it? What procedure is followed by it after receiving a complaint?
4. What is the composition of the National Consumer Disputes Redressal Commission? What is
its jurisdiction and what procedure does it follow to settle any complaint
5. Explain the important provisions under CYBER law
6. Explain the important provisions under information technology Act 2000 & 2002.
7. Explain the salient features of Trade and merchandise Act of 1958.
8. Explain the requirement for registration of a Trade mark.
9. Explain the procedure of registration of Foreign Marks.
10. Explain the developments in the field of Passing off.
11. Explain the provision of New trademark Act.
12. Explain the rights of Owner and activities which are not copyright violations.
13. What can be copyrighted?
14. What can be patented? Explain compulsory licensing.
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PRIYADARSHINI ENGG COLLEGE, VANIYAMBADI

DEPARTMENT OF MANAGEMENT STUDIES

1. Define the difference between contract and agreement

2. Briefly explain the Classification of contracts:

3. Discuss the different ways in which a contract may be discharged.

6. How the agency is created?

9. Explain the passing of property from seller to buyer

1. Passing of property in specific goods

o Passing of property is effective according to the agreed intention of parties

10. Define CAVEAT EMPTOR and write its exceptions

It means let the buyer beware.

a) in the case of a sale, he has a right to sell the goods, and

(a) Bulk to correspond with sample

(c) Goods to be of merchantable quality

Held : F could recover damages

11. Write the privileges of holder in due course

14. What are the methods available to discharge a negotiable instrument?

Discharge of negotiable instruments

By Discharge of party or parties

13. What do you mean by Lifting or Piercing the Corporate Veil?

1.Discuss the contents of Articles of association

1. Share capital, rights of shareholders, variation of these rights, payment of commissions,

4. Transfer of shares (voluntary transfer of shares from one person to another)

6. Forfeiture (surrender or give up) of shares

10. General meetings and proceedings there at

12. Voting rights of members, voting and poll, proxies

2.Write the various types of company.

2. On the Basis of Liability

i. Company Limited by Shares

A Company limited by shares is a company in which the liability of its

A Company limited by guarantee is a company in which the liability of its

3. Write the nature of company Explain Corporate Veil.

1. Separate Legal Entity

2. Limited Liability (accountability or responsibility)

Lifting or Piercing the Corporate Veil

4.Discuss the contents of Memorandum of association. Write the difference between

1. The Name Clause

3. The Objects Clause

(a) Main Objects

(b) Other Objects

5. The Liability Clause

i. A Company limited by shares is a company in which the liability of its members is

- Each member should mention their name, address, business,

5. Doctrine of constructive notice (OR) constructive Notice of Memorandum and Articles

Doctrine of Indoor Management

The doctrine of indoor management is a limitation to the doctrine of constructive notice.

Exceptions to the doctrine of Indoor

4. Acts outside the

4. Acts outside the Scope of apparent authority

Special Privileges of a Private Company

o Legal Position of a Private company:

7.Write the power of Directors

This proposition is, however, subject to two conditions:

(2) Powers to be exercised at Board meetings (Sec. 292)-

8.Explain the importance of Corporate governance.

Principles of corporate governance

10. Explain the provisions applicable to a members` voluntary winding up

2. Creditors voluntary winding up

2. Notice of resolution to be given to Registrar

4. Appointment of committee of inspection (Sec. 503).

6) Boards powers to c ease on appointment of liquidator (Sec.505).

17. Discuss the following (1) Alteration of subject clause in a memorandum