SEBI Grade A (Legal) Test 2 — Questions & Solutions
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Under Section 24 of the SEBI Act 1992, contravention of the Act, rules or regulations is punishable. What is the maximum punishment provided for such an offence?
aImprisonment up to 10 years, or fine up to ₹25 crore, or both
bImprisonment up to 3 years, or fine up to ₹10 crore, or both
cFine only, up to ₹1 crore
dImprisonment up to 7 years only
Answer: A
Section 24(1) of the SEBI Act 1992, as amended in 2014, provides for imprisonment for a term which may extend to ten years, or with fine which may extend to twenty-five crore rupees, or with both.
An acquirer, together with persons acting in concert, acquires shares entitling it to 26% of the voting rights of a target company in one transaction. Under the SEBI (SAST) Regulations, 2011, what is the consequence regarding an open offer?
aNo open offer is triggered because the acquisition is below 26%
bAn open offer is triggered as the acquisition crosses the 25% threshold
cAn open offer is triggered only if the acquirer crosses 30% in a financial year
dOnly disclosure is required; an open offer is triggered only at 5%
Answer: B
Under Regulation 3(1) of the SAST Regulations, 2011, acquisition of shares/voting rights entitling 25% or more triggers a mandatory open offer; acquiring 26% crosses this initial threshold.
An acquirer already holding 28% of a target company acquires a further 4% within a financial year. Under the SAST Regulations, 2011, what is the position on the creeping acquisition limit?
aAn open offer is triggered as the acquisition exceeds 5% in a financial year
bAn open offer is triggered because the holding crosses 25%
cNo open offer is triggered as the creeping acquisition is within 5% per financial year
dNo open offer is permissible once 25% is already held
Answer: C
Under Regulation 3(2), a holder between 25% and the maximum permissible non-public shareholding may acquire up to 5% additional voting rights in a financial year without triggering an open offer; 4% is within this creeping limit.
Under the SAST Regulations, 2011, what is the minimum size of a mandatory open offer made under Regulation 3 or 4?
aAt least 20% of the total shares of the target company
bAt least 25% of the total shares of the target company
cAt least 51% of the total shares of the target company
dAt least 26% of the total shares of the target company
Answer: D
Under Regulation 7(1) of the SAST Regulations, 2011, the open offer for acquiring shares must be for at least 26% of the total shares of the target company (as of the tenth working day from closure of the tendering period).
Under the SEBI (PIT) Regulations, 2015, who among the following is presumed to be a 'connected person' unless the contrary is established?
aAn immediate relative of a connected person
bAn ordinary retail investor who reads the company's annual report
cA journalist who has never communicated with the company
dAny shareholder holding a single share
Answer: A
Under Regulation 2(1)(d)(ii) of the PIT Regulations, 2015, immediate relatives of connected persons are deemed connected persons unless they establish the contrary, owing to their presumed access to unpublished price sensitive information.
Under the SEBI (PIT) Regulations, 2015, which of the following is recognised as a valid defence to a charge of trading while in possession of unpublished price sensitive information (UPSI)?
aThat the trade resulted in a loss rather than a profit
bThat the trades were carried out pursuant to a trading plan formulated and disclosed in accordance with the Regulations
cThat the insider did not personally read the UPSI but only heard of it
dThat the company's board had not formally classified the information as UPSI
Answer: B
Regulation 4(1) provides a proviso/defence where trades are carried out under a trading plan set up under Regulation 5, which must be approved, disclosed, and adhered to, insulating the insider from the prohibition.
In the leading insider-trading case concerning the requirement of mens rea / actual access, the Supreme Court and tribunal jurisprudence (e.g., Rakesh Agrawal v. SEBI) established which principle regarding the older 1992 insider trading regime?
aMens rea and motive to gain were wholly irrelevant under the 1992 Regulations
bInsider trading required proof beyond reasonable doubt as in criminal trials
cThe motive of personal gain to the insider was a relevant consideration under the 1992 Regulations
dOnly the company, never an individual, could be held liable for insider trading
Answer: C
In Rakesh Agrawal v. SEBI, the Securities Appellate Tribunal held that under the 1992 Insider Trading Regulations the motive of making a personal gain was relevant; this position was later narrowed under the 2015 Regulations which focus on possession of UPSI.
Under the Securities Contracts (Regulation) Act, 1956, a contract in securities entered into otherwise than between members of a recognised stock exchange or through such members is, as a general rule:
aAlways valid regardless of the manner of entering
bValid only if registered with the Registrar of Companies
cVoidable at the option of the buyer alone
dVoid and illegal unless it is a spot delivery contract or otherwise permitted
Answer: D
Section 13 read with Sections 16 and 18 of the SCRA, 1956, renders such contracts illegal, but Section 18 exempts spot delivery contracts and certain permitted transactions.
Under the Securities Contracts (Regulation) Act, 1956, a 'spot delivery contract' means a contract providing for actual delivery of securities and payment of price:
aOn the same day or the next day, subject to time for despatch through depository transfer
bWithin thirty days from the date of the contract
cWithin fourteen days from the date of the contract
dAt any time mutually agreed between the parties without limit
Answer: A
Under Section 2(i) of the SCRA, 1956, a spot delivery contract requires delivery and payment either on the same day or the next day (allowing the time taken for despatch/transfer through a depository).
Under the Depositories Act, 1996, when securities of a beneficial owner are held in a depository in dematerialised form, who is the registered owner for the purpose of effecting transfer of ownership on behalf of the beneficial owner?
aThe issuer company
bThe depository, which is deemed the registered owner
cThe stock exchange where the securities are listed
dThe Securities and Exchange Board of India
Answer: B
Under Section 10 of the Depositories Act, 1996, the depository is deemed to be the registered owner for the purpose of effecting transfers, while the beneficial owner is entitled to all rights and benefits and is subject to all liabilities.
Under the Depositories Act, 1996, securities held by a depository on behalf of a beneficial owner are recorded in fungible form. The legal effect of fungibility is that:
aEach security retains a distinctive number and certificate
bThe beneficial owner cannot transfer the securities
cThe securities lose their distinctive numbers and are interchangeable
dThe securities can only be held jointly by two persons
Answer: C
Under Section 9 of the Depositories Act, 1996, securities in a depository are held in fungible form, meaning distinctive numbers/certificates are dispensed with and the securities are interchangeable.
A trader places large buy orders for a thinly-traded scrip and cancels them before execution, repeatedly, to create a false appearance of demand and push up the price. Under the SEBI (PFUTP) Regulations, 2003, this conduct is best characterised as:
aA legitimate market-making activity
bPermissible if the orders were genuinely placed
cAn offence only if the trader actually profited
dA manipulative/fraudulent practice prohibited under the Regulations
Answer: D
Such order spoofing/layering to create a false or misleading appearance of trading is prohibited under Regulations 3 and 4 of the PFUTP Regulations, 2003 (manipulative and deceptive devices), irrespective of actual profit.
Under the SEBI Act, 1992, an appeal against an order of the Securities Appellate Tribunal (SAT) lies to which forum, and on what ground?
aTo the Supreme Court on any question of law arising out of such order
bTo the High Court on any question of fact or law
cTo the Central Government on grounds of policy
dTo SEBI itself by way of review
Answer: A
Under Section 15Z of the SEBI Act, 1992, an appeal from an order of the SAT lies to the Supreme Court on any question of law arising out of such order, within sixty days.
In Sahara India Real Estate Corporation Ltd. v. SEBI, the Supreme Court held that SEBI had jurisdiction over the Optionally Fully Convertible Debentures (OFCDs) issued by the Sahara companies primarily because:
aThe OFCDs were privately placed to fewer than fifty persons
bThe issue was effectively a public issue, having been offered to more than fifty persons, requiring listing and SEBI oversight
cOFCDs are not securities under the SCRA
dOnly the Registrar of Companies, not SEBI, had jurisdiction
Answer: B
In Sahara v. SEBI (2012), the Supreme Court held that an offer to fifty or more persons is deemed a public issue under the first proviso to Section 67(3) of the Companies Act, attracting mandatory listing and SEBI's jurisdiction over the OFCDs (which were 'securities').
Which statement about a Limited Liability Partnership under the LLP Act, 2008 is correct?
aAn LLP is not a body corporate and has no separate legal personality distinct from its partners
bAn LLP must have a minimum of seven partners and a maximum of fifty
cAn LLP is a body corporate with perpetual succession and a legal entity separate from its partners
dAn LLP cannot hold property in its own name
Answer: C
Section 3 of the LLP Act, 2008 declares an LLP to be a body corporate, a legal entity separate from its partners, having perpetual succession, capable of holding property and suing/being sued in its own name.
A director of a company gives a notice of resignation. Under Section 168 of the Companies Act, 2013, the resignation takes effect from:
aThe date of the next annual general meeting only
bThe date of acceptance of the resignation by the Board
cThe date of filing of the requisite form with the Registrar by the company
dThe date on which the notice is received by the company or the date specified in the notice, whichever is later
Answer: D
Under Section 168(2) of the Companies Act, 2013, a director's resignation takes effect from the date the company receives the notice or the date specified in the notice, whichever is later; Board acceptance is not a precondition.
Under Sections 241–242 of the Companies Act, 2013 (oppression and mismanagement), an application to the National Company Law Tribunal can succeed where:
aThe affairs of the company are being conducted in a manner prejudicial or oppressive to any member or to the public interest, and winding up would unfairly prejudice members
bAny single act of negligence by a director is shown, even if isolated
cA member is merely dissatisfied with the dividend policy of the company
dThe petitioner holds even a single share but fails to show any continuing wrong
Answer: A
Sections 241–242 require conduct of the company's affairs in a manner oppressive/prejudicial to members or public interest, with facts that would justify winding up on just and equitable grounds but where winding up would unfairly prejudice the applicant.
Under Section 447 of the Companies Act, 2013 dealing with fraud, the punishment includes imprisonment which:
aIs purely fine-based with no imprisonment for first-time offenders
bShall not be less than six months but may extend to ten years, with fine, and where the fraud involves public interest the minimum imprisonment is three years
cCannot exceed two years in any circumstance
dIs left entirely to the discretion of the Tribunal with no minimum
Answer: B
Section 447 of the Companies Act, 2013 prescribes imprisonment of not less than six months extending to ten years and fine; where the fraud involves public interest, the minimum imprisonment is three years.
In Salomon v. Salomon & Co. Ltd., the House of Lords established which foundational principle, since followed in Indian company law?
aThat the corporate veil can be lifted whenever a single shareholder controls the company
bThat a one-man company is a sham and its incorporation is void
cThat a duly incorporated company is a legal person distinct from its members, so its debts are its own and not those of the shareholders
dThat secured creditors of a company rank below its unsecured creditors
Answer: C
Salomon v. Salomon & Co. Ltd. established the doctrine of separate legal personality—a properly incorporated company is distinct from its members, and its liabilities are its own and not the shareholders'.
A public company having share capital, incorporated in 2020, wishes to start its operations and exercise borrowing powers. A subscriber challenges its capacity to commence business. Which of the following is the correct precondition for commencement of business under the Companies Act, 2013?
aThe company may commence business immediately on incorporation without any further filing.
bCommencement requires only a special resolution of members, with no filing with the Registrar.
cCommencement-of-business certificates were abolished in 2015 and never reintroduced.
dThe company must file a declaration in Form INC-20A that every subscriber has paid the value of shares agreed to be taken and that the registered office has been verified.
Answer: D
Section 10A (inserted by the Companies (Amendment) Ordinance/Act 2018) requires a declaration by a director, in Form INC-20A within 180 days, that every subscriber has paid the value of shares agreed and that the registered office has been verified, before commencement of business or exercise of borrowing powers.
X enters into a contract on behalf of a company that is still in the process of incorporation and is not yet registered. After incorporation the company refuses to adopt the contract. As against the third party, which statement reflects the law on such pre-incorporation contracts under the Companies Act, 2013 read with the Specific Relief Act, 1963?
aThe company is bound only if it adopts the contract after incorporation and the terms warrant such adoption; otherwise the promoter remains personally liable.
bThe contract automatically binds the company on incorporation regardless of adoption.
cSuch contracts are void ab initio and bind no one, including the promoter.
dThe third party can sue only the Registrar of Companies for losses.
Answer: A
A company cannot be bound by pre-incorporation contracts as it did not exist; under Sections 15 and 19 of the Specific Relief Act, 1963 the contract may be enforced by/against the company only if warranted by the terms of incorporation and the company adopts it, failing which the promoter is personally liable (Kelner v. Baxter).
A company's memorandum states its object as the business of railway-wagon manufacture. The directors enter into a contract to finance railway construction in a foreign country, which the shareholders later attempt to ratify unanimously. Applying the doctrine reaffirmed under the scheme of the Companies Act, 2013, the contract is:
aValid, because unanimous shareholder ratification cures any defect.
bVoid as ultra vires the company, and incapable of ratification even by the whole body of shareholders.
cVoidable at the option of the contracting third party only.
dValid, since financing is incidental to any manufacturing business.
Answer: B
An act beyond the objects clause is ultra vires the company, void, and cannot be ratified even by all shareholders (Ashbury Railway Carriage & Iron Co. v. Riche); the object clause under Section 4 of the Companies Act, 2013 continues to delimit corporate capacity.
A private company's articles require that any transfer of shares be approved by the board, which has discretion to refuse. An outsider dealing with the company claims he is unaffected by this restriction because he never read the articles. Which doctrine determines whether the outsider is deemed to know this restriction?
aThe outsider is protected by the doctrine of indoor management and need not know the articles.
bThe doctrine of ultra vires alone governs and the outsider is unaffected.
cThe outsider is bound by the doctrine of constructive notice, as the memorandum and articles are public documents registered with the Registrar.
dThe outsider is protected because private companies' articles are confidential.
Answer: C
Under the doctrine of constructive notice, every person dealing with a company is deemed to have read and understood its memorandum and articles, which are public documents filed under the Companies Act; thus an outsider is bound by restrictions appearing therein.
The articles of a company empower the board to delegate borrowing powers to a managing director by passing a resolution. A bank lends money on the strength of a borrowing entered into by a person acting as managing director, though no resolution of delegation was in fact passed. The bank had no notice of the irregularity. The loan is:
aUnenforceable, because the bank had constructive notice that a resolution was required.
bEnforceable only if the bank obtained a certified copy of the resolution.
cVoid, as borrowing powers can never be delegated.
dEnforceable against the company, as the bank may assume that internal procedures permitted by the articles were duly complied with.
Answer: D
Under the doctrine of indoor management (Royal British Bank v. Turquand), an outsider acting in good faith may assume that acts of internal management and procedural formalities permitted by the articles have been duly carried out, and is not bound to inquire into such internal irregularities.
Q25Constitution of India
A writ of quo warranto is sought. In which of the following situations would it most appropriately lie?
aTo call upon a person holding a public office to show by what authority he holds it, the office having been filled in contravention of the law
bTo compel a public authority to perform a statutory duty it has failed to discharge
cTo quash an order passed by a tribunal acting without jurisdiction
dTo secure the production of a person who is unlawfully detained
Answer: A
Quo warranto lies to question the title of a person to a substantive public office of a public nature created by statute or the Constitution where the appointment is contrary to law; mandamus, certiorari and habeas corpus cover the other situations respectively.
Q26Constitution of India
Article 21 has been judicially expanded. Which of the following has NOT been read as part of the right to life and personal liberty under Article 21?
aRight to a clean and healthy environment
bRight to acquire, hold and dispose of property as a fundamental right
cRight to privacy
dRight to live with human dignity, including the right to livelihood
Answer: B
The right to property ceased to be a fundamental right with the 44th Amendment (deletion of Article 19(1)(f) and Article 31) and is now only a constitutional/legal right under Article 300A; the others are recognised facets of Article 21 (e.g., Subhash Kumar, K.S. Puttaswamy, Olga Tellis).
Q27Constitution of India
A law made by Parliament under Article 31C declares that it gives effect to the policy of the State towards securing the principles in Article 39(b) and (c). After Minerva Mills, what is the position regarding judicial review of such a law on the ground that it does not in fact secure those principles?
aThe law is wholly immune from challenge once it contains the declaration
bThe law can be challenged only on the ground of legislative competence
cThe court may examine whether there is a nexus between the law and the objectives in Article 39(b) or (c)
dArticle 31C was struck down in its entirety and no longer exists
Answer: C
Minerva Mills struck down the extension of Article 31C to all Directive Principles but left intact its protection for laws giving effect to Article 39(b) and (c); courts may still examine whether a real nexus exists between the law and those clauses.
Q28Constitution of India
The President proclaims a Proclamation of Emergency under Article 352 on the ground of armed rebellion. Which fundamental right can NEVER be suspended even during the operation of such a Proclamation?
aThe freedoms under Article 19
bThe right to move courts for enforcement of all fundamental rights under Article 32
cThe right against discrimination under Article 15
dThe rights conferred by Articles 20 and 21
Answer: D
After the 44th Amendment, Article 359(1) prohibits suspension of the enforcement of Articles 20 and 21 even during an Emergency; Article 19 freedoms are suspended only on a proclamation on grounds of war or external aggression under Article 358.
Q29Constitution of India
A member of a State Legislative Assembly belonging to a political party voluntarily gives up membership of that party. Under the Tenth Schedule, who decides the question of his disqualification, and is that decision subject to judicial review?
aThe Speaker/Chairman decides, and the decision is subject to judicial review on limited grounds despite the finality clause
bThe Election Commission decides, and the decision is final and non-justiciable
cThe Governor decides on the advice of the Council of Ministers, and it is non-justiciable
dThe High Court decides in the first instance under Article 226
Answer: A
Under Paragraph 6 of the Tenth Schedule the Speaker/Chairman decides disqualification; in Kihoto Hollohan v. Zachillhu the finality clause (Para 7 ouster of jurisdiction) was struck down and the Speaker's order held subject to judicial review on grounds such as mala fides, perversity and violation of natural justice.
Q30Constitution of India
Parliament, by an ordinary law, seeks to alter the boundaries of a State and transfer part of its territory to a neighbouring State. Which requirement must be satisfied?
aA constitutional amendment passed by special majority under Article 368
bIntroduction of the Bill on the President's recommendation, the views of the affected State legislature having been ascertained, by simple majority under Article 3
cRatification by the legislatures of not less than one-half of the States
dApproval by a national referendum
Answer: B
Under Article 3 read with Article 4, Parliament may by ordinary law alter State boundaries; the Bill requires the President's prior recommendation and reference to the affected State's legislature for its views, which are not binding, and such laws are not deemed amendments under Article 368.
Q31Constitution of India
A Public Interest Litigation is filed in the Supreme Court under Article 32 alleging large-scale bonded labour. The maintainability objection that the petitioners are not the persons whose rights are affected is best answered by which principle?
aArticle 32 can be invoked only by the aggrieved person personally in every case
bPIL is permissible only before High Courts under Article 226, not the Supreme Court
cThe rule of locus standi is relaxed so that a public-spirited person may move the Court on behalf of those who, by reason of poverty or disability, cannot approach it themselves
dSuch a petition must first exhaust all alternative remedies
Answer: C
In S.P. Gupta v. Union of India and Bandhua Mukti Morcha v. Union of India, the Court relaxed the traditional rule of locus standi, allowing any bona fide public-spirited person to seek relief under Article 32 for those unable to approach the Court due to poverty or disability.
Q32Constitution of India
A State legislature enacts a law that, in pith and substance, falls within the State List but incidentally encroaches upon a matter in the Union List. Which doctrine is most directly invoked to uphold the validity of such a law?
aDoctrine of colourable legislation
bDoctrine of repugnancy
cDoctrine of eclipse
dDoctrine of pith and substance
Answer: D
The doctrine of pith and substance allows a law to be upheld if its true nature falls within the enacting legislature's competence, even if it incidentally trenches on another List, as held in State of Bombay v. F.N. Balsara.
Q33Criminal Law — Bharatiya Nyaya Sanhita 2023 & Bharatiya Nagarik Suraksha Sanhita 2023 (use NEW code sections)
Under the BNSS, 2023, what is the maximum period for which an accused can be remanded to police custody, and what is the significant change regarding when these days may be sought?
aFifteen days, which may be sought in whole or in parts during the initial forty or sixty days of the total detention period
bSeven days, to be sought only in the first seven days of arrest
cThirty days continuously from the date of arrest
dFifteen days, but only within the first fifteen days as under the old Code
Answer: A
Section 187 BNSS, 2023 retains the fifteen-day police custody cap but allows it to be sought in parts within the first forty days (offences up to ten years) or sixty days (offences above ten years/life/death) of the total detention period, unlike the old Section 167 CrPC limit to the first fifteen days.
Q34Criminal Law — Bharatiya Nyaya Sanhita 2023 & Bharatiya Nagarik Suraksha Sanhita 2023 (use NEW code sections)
The BNSS, 2023 introduces trial in absentia for proclaimed offenders. Under which provision is a proclaimed offender who has absconded to evade trial liable to be tried and sentenced in his absence?
aSection 84 BNSS
bSection 356 BNSS
cSection 105 BNSS
dSection 250 BNSS
Answer: B
Section 356 BNSS, 2023 is a new provision permitting trial, judgment and sentence in absentia of a proclaimed offender who absconds to evade trial, where there is no immediate prospect of arresting him.
Q35Criminal Law — Bharatiya Nyaya Sanhita 2023 & Bharatiya Nagarik Suraksha Sanhita 2023 (use NEW code sections)
Under Section 173 of the BNSS, 2023, a major change concerning registration of FIRs is the 'Zero FIR' and electronic registration. Which statement is correct?
aA Zero FIR can be registered only for offences punishable with death
bElectronic FIRs are valid only in metropolitan areas
cInformation relating to any cognizable offence may be given electronically, but must be signed within three days by the informant
dAn FIR for an offence punishable below three years can never be registered
Answer: C
Section 173(1) BNSS, 2023 permits information about a cognizable offence to be given orally or electronically; if given electronically, it must be taken on record on being signed by the informant within three days.
Q36Criminal Law — Bharatiya Nyaya Sanhita 2023 & Bharatiya Nagarik Suraksha Sanhita 2023 (use NEW code sections)
Under Section 176(3) of the BNSS, 2023, for which category of offences is forensic investigation and videography of the collection of forensic evidence at the crime scene made mandatory?
aAll cognizable offences without exception
bOnly offences punishable with death or life imprisonment
cOnly economic offences
dOffences punishable with imprisonment of seven years or more
Answer: D
Section 176(3) BNSS, 2023 mandates that for offences punishable with imprisonment of seven years or more, a forensic expert shall visit the crime scene and the collection of forensic evidence be videographed.
Q37Criminal Law — Bharatiya Nyaya Sanhita 2023 & Bharatiya Nagarik Suraksha Sanhita 2023 (use NEW code sections)
Under the BNS, 2023, 'snatching' has been carved out as a distinct offence separate from theft. Which section defines snatching and what is its punishment?
aSection 302; imprisonment up to three years and fine
bSection 304; imprisonment up to seven years
cSection 303; imprisonment for life
dSection 305; rigorous imprisonment for ten years
Answer: A
Section 302 BNS, 2023 newly defines 'snatching' (theft involving sudden or quick or forcible seizure) and punishes it with imprisonment up to three years and fine.
Q38Criminal Law — Bharatiya Nyaya Sanhita 2023 & Bharatiya Nagarik Suraksha Sanhita 2023 (use NEW code sections)
The offence of sedition under Section 124A IPC has been replaced in the BNS, 2023. Which provision now deals with acts endangering the sovereignty, unity and integrity of India, and how does its scope differ?
aSection 147; it is identical to the old sedition law
bSection 152; it penalises exciting secession, armed rebellion, subversive activities or encouraging separatist feelings, dropping the word 'sedition'
cSection 150; it applies only to speeches made in Parliament
dSection 113; it merges sedition with terrorism
Answer: B
Section 152 BNS, 2023 replaces sedition; it punishes purposely exciting secession, armed rebellion, subversive activities or encouraging feelings of separatist activities endangering sovereignty, unity and integrity of India, with life imprisonment or up to seven years and fine.
Q39Criminal Law — Bharatiya Nyaya Sanhita 2023 & Bharatiya Nagarik Suraksha Sanhita 2023 (use NEW code sections)
Under the BNSS, 2023, within what maximum period must a judgment in a criminal trial be pronounced after completion of arguments, reflecting the new emphasis on time-bound disposal?
aWithin seven days, extendable to fifteen days
bWithin sixty days without any extension
cWithin thirty days, extendable to forty-five days for reasons recorded in writing
dWithin ninety days mandatorily
Answer: C
Section 392 BNSS, 2023 requires judgment to be pronounced within thirty days of completion of arguments, extendable up to forty-five days for special reasons recorded in writing.
Q40Contract & allied — Indian Contract Act 1872, Sale of Goods Act 1930, Partnership Act 1932, Specific Relief Act 1963
In a contract of agency, an agent without authority enters into a contract on behalf of the principal. The principal later, with full knowledge, accepts the benefit of the contract. This amounts to:
aA fresh contract binding only from the date of acceptance
bNo contract, as want of authority cannot be cured
cRatification, but binding only prospectively from the date of acceptance
dRatification, making the principal bound from the date of the original contract
Answer: D
Under Sections 196 and 197 of the Indian Contract Act, 1872, ratification of an unauthorised act relates back to the date of the original act, so the principal is bound as if originally authorised.
Q41Contract & allied — Indian Contract Act 1872, Sale of Goods Act 1930, Partnership Act 1932, Specific Relief Act 1963
Under the Sale of Goods Act, 1930, A sells specific goods to B and the goods are in a deliverable state. Nothing is said about the time of payment or delivery. When does property in the goods pass to B?
aAt the time the contract is made, irrespective of postponement of payment or delivery
bWhen the goods are delivered to B
cWhen the price is paid by B
dWhen B takes possession of the goods after notice
Answer: A
Under Section 20 of the Sale of Goods Act, 1930, in an unconditional contract for sale of specific goods in a deliverable state, property passes when the contract is made, and postponement of payment or delivery is immaterial.
Q42Contract & allied — Indian Contract Act 1872, Sale of Goods Act 1930, Partnership Act 1932, Specific Relief Act 1963
Which of the following best states the rule of caveat emptor and its exception regarding fitness for purpose under the Sale of Goods Act, 1930?
aThere is always an implied condition that goods are fit for the buyer's purpose
bThe buyer takes the risk, but an implied condition of fitness arises where the buyer makes known the particular purpose and relies on the seller's skill, the goods being of a description the seller deals in
cThe seller is never liable once goods are delivered
dFitness for purpose is implied only in sales by sample
Answer: B
Section 16(1) of the Sale of Goods Act, 1930 carves an exception to caveat emptor: where the buyer makes known the particular purpose so as to show reliance on the seller's skill or judgment, and the goods are of a description the seller deals in, there is an implied condition of fitness.
Q43Contract & allied — Indian Contract Act 1872, Sale of Goods Act 1930, Partnership Act 1932, Specific Relief Act 1963
Under the doctrine of nemo dat quod non habet in the Sale of Goods Act, 1930, which buyer acquires a good title despite the seller not being the owner?
aA buyer from a thief who paid full market value in good faith
bA buyer who purchases from a finder of goods
cA buyer who purchases from a mercantile agent in possession of goods with the owner's consent, acting in the ordinary course of business, in good faith
dA buyer who purchases stolen goods at a public auction
Answer: C
An exception to nemo dat in the proviso to Section 27 of the Sale of Goods Act, 1930 protects a buyer in good faith who buys from a mercantile agent in possession with the owner's consent and acting in the ordinary course of business.
Q44Contract & allied — Indian Contract Act 1872, Sale of Goods Act 1930, Partnership Act 1932, Specific Relief Act 1963
Under the Indian Partnership Act, 1932, an unregistered firm suffers which of the following disabilities?
aThe firm cannot carry on any business
bThe firm is automatically dissolved
cThe partners cannot share profits among themselves
dA partner cannot sue the firm or co-partners to enforce a right arising from the contract, and the firm cannot sue third parties to enforce a contractual right
Answer: D
Section 69 of the Indian Partnership Act, 1932 bars an unregistered firm or its partners from suing to enforce contractual rights against co-partners or third parties, though non-registration does not make the firm illegal or bar defence.
Q45Contract & allied — Indian Contract Act 1872, Sale of Goods Act 1930, Partnership Act 1932, Specific Relief Act 1963
A is admitted as a new partner into an existing firm. As to debts incurred by the firm before his admission, A is:
aNot liable for debts incurred before he became a partner, in the absence of an agreement to the contrary
bLiable for all such past debts automatically upon admission
cLiable only for half of the past debts
dLiable for past debts only if the firm is registered
Answer: A
Under Section 31 read with the principle in Section 25 of the Indian Partnership Act, 1932, an incoming partner is not liable for debts of the firm contracted before he became a partner, unless he agrees otherwise.
Q46Contract & allied — Indian Contract Act 1872, Sale of Goods Act 1930, Partnership Act 1932, Specific Relief Act 1963
Under the Specific Relief Act, 1963, in which case will a court generally NOT decree specific performance of a contract?
aA contract for the sale of a unique parcel of immovable property
bA contract whose performance involves the continuous performance of duties the court cannot supervise
cA contract for transfer of a rare antique painting
dA contract for sale of shares of a private company not freely available in the market
Answer: B
Under Section 14 of the Specific Relief Act, 1963 (as amended), a contract whose performance involves continuous duties the court cannot supervise is not specifically enforceable; immovable property and unique goods are ordinarily enforceable.
Q47Code of Civil Procedure, 1908
A decree is passed against three defendants jointly. One defendant alone files a first appeal challenging the decree, and the appeal raises a question common to all. Under Order XLI Rule 4 CPC, the appellate court may:
aReverse or vary the decree only in favour of the appealing defendant
bDismiss the appeal as defective for non-joinder of the other defendants
cReverse or vary the decree in favour of all the defendants where the decree proceeds on a ground common to all
dDirect the other defendants to be impleaded before hearing the appeal
Answer: C
Order XLI Rule 4 permits one of several plaintiffs or defendants to appeal from the whole decree, and the appellate court may reverse or vary the decree in favour of all where it proceeds on a ground common to all.
Q48Code of Civil Procedure, 1908
A foreign judgment is sought to be enforced in India. Under Section 13 CPC, such a judgment is NOT conclusive in which of the following situations?
aWhere it has been pronounced by a court of competent jurisdiction
bWhere it has been given on the merits of the case
cWhere it is founded on a correct view of international law
dWhere it sustains a claim founded on a breach of any law in force in India
Answer: D
Section 13(f) makes a foreign judgment not conclusive where it sustains a claim founded on a breach of any law in force in India; clauses (a), (b) and (d) describe conditions of conclusiveness, not exceptions.
Q49Code of Civil Procedure, 1908
After an ex parte decree is passed, the defendant applies under Order IX Rule 13 to set it aside, contending the summons was not duly served. If the court is satisfied of non-service, it:
aShall set aside the decree as against him and appoint a day for proceeding with the suit
bMust dismiss the application and relegate the defendant to appeal
cMay set aside the decree only on payment of the entire decretal amount as security
dShall convert the application into a review petition under Order XLVII
Answer: A
Under Order IX Rule 13, where the court is satisfied that the summons was not duly served or the defendant was prevented by sufficient cause, it shall set aside the ex parte decree and fix a day for proceeding with the suit.
Q50Code of Civil Procedure, 1908
A plaintiff's plaint discloses no cause of action on its face. The proper course for the defendant and the court is to:
aFrame a preliminary issue and record evidence before deciding
bReject the plaint under Order VII Rule 11(a) CPC
cReturn the plaint for presentation to the proper court under Order VII Rule 10
dDismiss the suit under Order IX Rule 8 for default
Answer: B
Order VII Rule 11(a) mandates rejection of a plaint where it does not disclose a cause of action; rejection is to be decided on a meaningful reading of the averments in the plaint alone.
Q51Code of Civil Procedure, 1908
Two suits between the same parties are pending — an earlier suit in a court of competent jurisdiction and a later suit on the same matter in issue. Under Section 10 CPC, the proper order in the later suit is to:
aDismiss it as barred by res judicata
bConsolidate it with the earlier suit automatically
cStay the trial of the subsequently instituted suit
dTransfer it to the High Court for disposal
Answer: C
Section 10 (res sub judice) bars the court from proceeding with the trial of a subsequently instituted suit where the matter in issue is directly and substantially in issue in a previously instituted suit between the same parties; the remedy is a stay, not dismissal.
Q52Code of Civil Procedure, 1908
A court passes a decree but realises there is a clerical error in the figures arising from an accidental slip. Without the parties filing any appeal, the court may correct this under:
aSection 151 (inherent powers) only
bOrder XLVII Rule 1 (review) only
cSection 114 read with Order XLI
dSection 152 CPC dealing with amendment of clerical or arithmetical mistakes
Answer: D
Section 152 empowers the court to correct, at any time, clerical or arithmetical mistakes in judgments, decrees or orders, or errors arising from any accidental slip or omission.
Q53Law of Evidence — Bharatiya Sakshya Adhiniyam 2023 (use NEW code sections)
An electronic record produced in court must, under the Bharatiya Sakshya Adhiniyam, 2023, be accompanied by a certificate for it to be admissible as a document. This certificate requirement is found in:
aSection 63
bSection 57
cSection 61
dSection 39
Answer: A
Section 63 BSA 2023 (corresponding to old Section 65B IEA) governs admissibility of electronic records and mandates the certificate; Section 63(4) prescribes the certificate's form and signatories.
Q54Law of Evidence — Bharatiya Sakshya Adhiniyam 2023 (use NEW code sections)
Under the Bharatiya Sakshya Adhiniyam, 2023, which of the following statements about Section 61 is correct?
aSection 61 abolishes the distinction between primary and secondary evidence
bSection 61 provides that the admissibility of an electronic or digital record shall not be denied merely because it is electronic, subject to Section 63
cSection 61 excludes electronic records from the definition of 'document'
dSection 61 permits oral evidence to substitute for the Section 63 certificate
Answer: B
Section 61 BSA 2023 is a new provision clarifying that admissibility of electronic/digital records shall not be denied merely on the ground that they are electronic, subject to compliance with Section 63.
Q55Law of Evidence — Bharatiya Sakshya Adhiniyam 2023 (use NEW code sections)
In a suit, A wishes to prove the contents of a registered sale deed. The original is in A's possession and is available. Under the Bharatiya Sakshya Adhiniyam, 2023, A must ordinarily prove the contents by:
aSecondary evidence, since registered deeds are public documents
bA certified copy obtained from the Registrar
cPrimary evidence, i.e., production of the document itself
dOral admission of the opposite party only
Answer: C
Sections 56–58 BSA 2023 (old Sections 61–64 IEA) require contents of documents to be proved by primary evidence; where the original is available, secondary evidence is impermissible.
Q56Law of Evidence — Bharatiya Sakshya Adhiniyam 2023 (use NEW code sections)
A is charged with receiving stolen goods, having been found in possession of recently stolen property and offering no explanation. Under the Bharatiya Sakshya Adhiniyam, 2023, the court may presume he is either the thief or the receiver. This is an instance of:
aA conclusive presumption ('conclusive proof')
bA presumption of law that 'shall presume'
cAn irrebuttable estoppel
dA discretionary presumption of fact ('may presume')
Answer: D
Illustration (a) to Section 119 BSA 2023 (old Section 114 IEA) is a 'may presume' presumption of fact, leaving it to the court's discretion whether to draw the inference.
Q57Law of Evidence — Bharatiya Sakshya Adhiniyam 2023 (use NEW code sections)
During the subsistence of a valid marriage, a child is born to W. H seeks to prove the child is not his. Under the Bharatiya Sakshya Adhiniyam, 2023, the only way to rebut the legitimacy presumption is by showing:
aThat the parties had no access to each other at any time when the child could have been begotten
bThat the spouses were of different religions
cThat H merely suspects infidelity
dThat a DNA test was offered by H
Answer: A
Section 116 BSA 2023 (old Section 112 IEA) makes birth during marriage conclusive proof of legitimacy unless non-access at the relevant time is shown.
Q58Administrative Law
A statute empowers the government to make rules 'for carrying out the purposes of the Act' and to levy fees, but the rule framed imposes a tax. The rule is liable to be struck down on the ground of:
aPromissory estoppel
bExcessive delegation / ultra vires the parent statute
cLegitimate expectation
dDoctrine of pleasure
Answer: B
Delegated legislation must stay within the four corners of the enabling Act; a power to levy fees does not authorise imposition of a tax, so the rule is ultra vires.
Q59Administrative Law
The writ that lies to compel a public authority to perform a public/statutory duty which it has wrongfully refused to perform is:
aCertiorari
bProhibition
cMandamus
dQuo warranto
Answer: C
Mandamus ('we command') issues to compel performance of a public duty; it does not lie to enforce purely contractual or discretionary obligations.
Q60Administrative Law
Which writ is issued to quash an order already passed by an inferior tribunal acting without or in excess of jurisdiction, whereas a connected writ issues to stop ongoing proceedings before the order is passed?
aQuo warranto (quash) and habeas corpus (stop)
bProhibition (quash) and mandamus (stop)
cMandamus (quash) and certiorari (stop)
dCertiorari (quash) and prohibition (stop)
Answer: D
Certiorari quashes a decision already made by an inferior tribunal; prohibition forbids it from continuing proceedings in excess of jurisdiction — both being curative of jurisdictional error.
Q61Administrative Law
A government circular promises that exporters who set up units in a backward area will get tax concessions for five years. Relying on it, an exporter invests heavily, but the government withdraws the concession after two years citing fresh policy. The exporter's strongest plea is:
aPromissory estoppel against the government
bDoctrine of pleasure
cRes judicata
dDoctrine of severability
Answer: A
Promissory estoppel (e.g., M.P. Sugar Mills v. State of U.P.) binds the government to a clear promise acted upon to the promisee's detriment, subject to overriding public interest.
Q62Administrative Law
Legitimate expectation, as a ground of judicial review, can be defeated when:
aThe expectation was based on a clear and unambiguous representation
bThe decision-maker shows an overriding public interest justifying the change of policy
cThe affected party relied on the representation
dThe change was made by a competent authority alone, without more
Answer: B
A legitimate expectation, whether procedural or substantive, yields to a demonstrated overriding public interest; the court reviews whether the change is arbitrary or unfair.
Q63Jurisprudence, Interpretation of Statutes & legal maxims
A proviso in a section begins with 'Provided that nothing in this section shall apply to...'. What is the orthodox function of such a proviso in statutory interpretation?
aTo enlarge the main enactment to cases not otherwise covered
bTo override the entire statute including unrelated sections
cTo carve out an exception from the general words of the main enactment
dTo serve merely as a heading with no legal effect
Answer: C
A proviso normally qualifies or creates an exception to the main enactment to which it is attached (Madras & Southern Maratha Rly v. Bezwada Municipality); it does not enlarge the section or govern unrelated provisions.
Q64Jurisprudence, Interpretation of Statutes & legal maxims
The maxim 'expressio unius est exclusio alterius' is invoked when a statute expressly mentions certain things. What is the correct effect of this maxim, and what caution applies?
aExpress mention of one excludes others, and it must be applied mechanically in every case
bExpress mention of one includes all things of the same class automatically
cIt applies only to penal statutes and never to fiscal statutes
dExpress mention of one implies exclusion of others, but it is only a guide and may be displaced by context
Answer: D
The maxim means the express mention of one thing implies the exclusion of another, but courts treat it as a flexible aid that yields to contrary legislative intent or context, not a rigid rule.
Q65Jurisprudence, Interpretation of Statutes & legal maxims
In Heydon-type reasoning a court adopts a 'purposive' construction. In which situation is a court LEAST justified in departing from the literal meaning of clear statutory words?
aWhere the words are plain, unambiguous and produce no absurdity
bWhere literal reading leads to manifest absurdity
cWhere literal reading defeats the evident object of the Act
dWhere two readings are equally possible and one furthers the purpose
Answer: A
Where statutory language is plain and unambiguous and yields no absurdity, the literal rule prevails and the court may not substitute its own view of purpose. Departure is warranted only on absurdity or ambiguity.
Q66Jurisprudence, Interpretation of Statutes & legal maxims
A taxing statute imposes duty in language that is genuinely ambiguous as between the subject and the revenue. Following the rule in fiscal interpretation, how should the ambiguity be resolved?
aIn favour of the revenue, to maximise collection
bIn favour of the subject/assessee
cBy reading down the charging section to nil
dBy referring the matter to the legislature
Answer: B
In construing a charging provision of a taxing statute, a genuine ambiguity is resolved in favour of the assessee (Cape Brandy Syndicate; CIT v. Vegetable Products). The subject is taxed only by clear words.
Q67Transfer of Property Act, 1882
Property is transferred to A for life, then to B for life, then to the eldest son of B who is unborn at the date of transfer, for life. The interest of the eldest son of B is:
aValid, because an unborn person can take a life interest
bValid, provided he is born before A's death
cVoid, because Section 13 requires that a transfer to an unborn person must confer the whole of the remaining interest (an absolute interest), not a limited life interest
dVoid only if it offends the rule against perpetuities under Section 14
Answer: C
Under Section 13, a transfer for the benefit of an unborn person must give him the entire remaining interest; a limited interest such as a life estate to the unborn person is void, and consequently any subsequent interest also fails.
Q68Transfer of Property Act, 1882
A mortgages his land to B and delivers possession; B is to retain possession and appropriate the rents and profits in lieu of interest and is to repay himself the principal from such rents, with no personal liability of A and no power of sale. This is a:
aSimple mortgage
bEnglish mortgage under Section 58(e)
cMortgage by conditional sale under Section 58(c)
dUsufructuary mortgage under Section 58(d)
Answer: D
Section 58(d) defines a usufructuary mortgage as one where the mortgagee is put in possession and authorised to retain possession until payment, appropriating rents and profits in lieu of interest or in payment of the mortgage-money; there is no personal covenant to repay and no power of sale.
Q69Arbitration and Conciliation Act, 1996
Under Section 16 of the Act, which doctrine empowers the arbitral tribunal to rule on its own jurisdiction, including objections to the existence or validity of the arbitration agreement?
aDoctrine of kompetenz-kompetenz
bDoctrine of severability alone
cDoctrine of functus officio
dDoctrine of forum non conveniens
Answer: A
Section 16 embodies the kompetenz-kompetenz principle, allowing the tribunal to rule on its own jurisdiction; it also treats the arbitration clause as an independent (severable) agreement.
Q70Arbitration and Conciliation Act, 1996
An application to set aside an arbitral award under Section 34 must be made within how many months from the date the party received the award (or disposal of a Section 33 request), subject to a further condonable period?
aOne month, extendable by 15 days
bThree months, extendable by a further 30 days only
cSix months, extendable by 30 days
dNinety days, extendable indefinitely for sufficient cause
Answer: B
Section 34(3) prescribes three months, with a proviso allowing a further 30 days on sufficient cause but 'not thereafter'; this outer limit is mandatory and cannot be extended under Section 5 of the Limitation Act.
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