SEBI Grade A (Legal) Test 4 — Questions & Solutions
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A broker repeatedly places buy and sell orders for the same scrip among a connected group of clients without any change in beneficial ownership, creating an illusion of trading volume. Under PFUTP Regulations 2003 this conduct is best characterised as:
aA fraudulent and unfair trade practice in the nature of synchronised/circular trading prohibited under Regulations 3 and 4
bPermissible jobbing if executed on the exchange platform
cMerely a margin violation with no PFUTP implications
dAn insider-trading offence under PIT 2015
Answer: A
Regulations 3 and 4 of PFUTP 2003 prohibit manipulative/deceptive devices; synchronised or circular trades creating a false appearance of trading without change in beneficial ownership are a manipulative practice.
Under the SAST Regulations 2011, in computing the 'offer price' for an open offer for a frequently traded share, which of the following is generally NOT a relevant parameter under Regulation 8?
aThe highest price paid by the acquirer during the 52 weeks preceding the public announcement
bThe book value of the shares as per the last audited balance sheet alone
cThe volume-weighted average market price for 60 trading days preceding the public announcement
dThe highest price paid for any acquisition during the 26 weeks preceding the public announcement
Answer: B
Regulation 8 of SAST 2011 fixes the offer price by reference to negotiated/highest prices paid in defined look-back periods and the 60-day VWAP for frequently traded shares; book value alone is not the governing parameter.
Under PIT Regulations 2015, communication or procurement of unpublished price sensitive information is generally prohibited, but is permitted where it is:
aMade to any relative of an insider
bMade to research analysts to help them form views
cIn furtherance of legitimate purposes, performance of duties or discharge of legal obligations
dMade after market hours on any working day
Answer: C
Regulation 3 of PIT 2015 bars communication/procurement of UPSI except where it is in furtherance of legitimate purposes, performance of duties, or discharge of legal obligations.
An acquirer, along with persons acting in concert, holds 23% of the voting rights in a listed target company. During a financial year he acquires a further 4% taking his holding to 27%. Which obligation under the SAST Regulations 2011 is triggered?
aHe must make an open offer because he has acquired 5% or more in a financial year
bHe need only make a disclosure as no threshold is crossed
cHe must mandatorily delist the target company
dHe must make an open offer because he has crossed the 25% threshold of voting rights
Answer: D
Under Regulation 3(1) of the SAST Regulations 2011, acquisition of 25% or more of voting rights triggers a mandatory open offer; the creeping-acquisition limit in Reg 3(2) applies only to those already at 25% or above.
A person already holding 40% of voting rights in a listed company wishes to acquire additional shares. Under Regulation 3(2) of the SAST Regulations 2011, how much may he acquire in a financial year without making an open offer, subject to the maximum permissible non-public shareholding?
aUp to 5% of voting rights
bUp to 2% of voting rights
cUp to 10% of voting rights
dNo further acquisition is permitted without an open offer
Answer: A
Regulation 3(2) permits a holder of 25% or more but less than the maximum permissible non-public shareholding to creep-acquire up to 5% of voting rights in a financial year without an open offer.
Under the SAST Regulations 2011, the minimum size of an open offer made pursuant to a substantial acquisition is for what proportion of the total shares of the target company?
a20%
b26%
c15%
d25%
Answer: B
Regulation 7(1) of the SAST Regulations 2011 requires the open offer to be for at least 26% of the total shares of the target company (raised from 20% under the 1997 Regulations).
Under Regulation 2(1)(g) of the PIT Regulations 2015, who among the following is a 'connected person' presumed to have access to unpublished price sensitive information?
aA retail investor who reads the company's published annual report
bA market commentator with no association with the company
cAn immediate relative of a connected person
dA customer who buys the company's products
Answer: C
Regulation 2(1)(g)(ii) of the PIT Regulations 2015 deems immediate relatives of a connected person, among others, to be connected persons, who are presumed to be in possession of or having access to UPSI.
In SEBI v. Kishore R. Ajmera (2016), the Supreme Court held that in establishing fraudulent or manipulative trading under the PFUTP Regulations, the standard of proof to be applied is:
aProof beyond reasonable doubt as in criminal law
bOnly direct documentary evidence of fraud
cA confession by the noticee
dPreponderance of probabilities, and the conclusion may be drawn from circumstantial evidence
Answer: D
In SEBI v. Kishore R. Ajmera (2016) the Supreme Court held that fraud and manipulation may be inferred on a preponderance of probabilities from surrounding circumstances and the test of human probabilities, not on the criminal standard of proof beyond reasonable doubt.
Under the SEBI Act 1992, an appeal against an order of the Securities Appellate Tribunal lies to the Supreme Court. Within what period must such an appeal ordinarily be filed under Section 15Z?
a60 days from the date of communication of the SAT order, extendable by a further 60 days
b30 days from the date of communication of the SAT order
c45 days from the date of communication of the SAT order
d90 days with no extension
Answer: A
Section 15Z of the SEBI Act 1992 provides that an appeal to the Supreme Court must be filed within 60 days of communication of the SAT's decision, with a proviso allowing a further period of up to 60 days on sufficient cause.
Trading by a designated person while in possession of unpublished price sensitive information is, under the PIT Regulations 2015, defensible on certain grounds. Which of the following is a recognised defence under Regulation 4(1)?
aThe person made only a small profit
bThe transaction was carried out through a trading plan formulated and disclosed in accordance with Regulation 5
cThe person was unaware that insider trading is prohibited
dThe trade was executed on a recognised stock exchange
Answer: B
The proviso to Regulation 4(1) of the PIT Regulations 2015 recognises certain defences, including that the trade was pursuant to a trading plan set up under Regulation 5; mere small profit, ignorance of law, or use of an exchange are not defences.
Under the Depositories Act 1996, which statement correctly describes the nature of holding of securities once they are dematerialised and held by a beneficial owner through a depository?
aThe depository is the beneficial owner and the investor merely a nominee
bThe depository participant becomes the legal owner of the securities
cSecurities in a depository are held in fungible form and the registered owner is the depository, while the investor is the beneficial owner
dEach dematerialised share retains a distinct certificate number traceable to the investor
Answer: C
Sections 10 and 11 of the Depositories Act 1996 provide that securities held in a depository are in fungible form, the depository is the registered owner for the purpose of effecting transfer, and the investor remains the beneficial owner with all attached rights and benefits.
Under Section 23A of the Securities Contracts (Regulation) Act 1956, a recognised stock exchange, a clearing corporation, or a depository that fails to furnish information or returns to SEBI is liable to a penalty of:
aA fixed penalty of ten lakh rupees
bImprisonment for one year and no monetary penalty
cA penalty not exceeding twenty-five crore rupees
dUp to one lakh rupees for each day during which the failure continues or one crore rupees, whichever is less
Answer: D
Section 23A of the SCRA 1956 prescribes a penalty of up to one lakh rupees per day of continuing failure to furnish information/returns, subject to a maximum of one crore rupees.
Regulation 4(2) of the PFUTP Regulations 2003 deems certain dealings to be manipulative, fraudulent or unfair trade practices. Which of the following best fits the deemed offence of 'circular trading'?
aExecuting a buy or sell order knowing it would not result in change of beneficial ownership, to create a false appearance of trading
bBuying securities for genuine long-term investment
cDisclosing material information to the stock exchange promptly
dSubscribing to a public issue at the issue price
Answer: A
Regulation 4(2) of the PFUTP Regulations 2003 deems trades that do not result in any change in beneficial ownership but create a false or misleading appearance of trading (synchronised/circular trades) to be a manipulative or unfair trade practice.
In Sahara India Real Estate Corporation Ltd. v. SEBI (2012), the Supreme Court principally held that:
aSEBI has no jurisdiction over unlisted companies in any circumstance
bOptionally Fully Convertible Debentures issued to over fifty persons were a public issue subject to SEBI's jurisdiction and listing requirements
cPrivate placements to any number of persons are exempt from SEBI regulation
dDebentures are not securities under the SCRA
Answer: B
In Sahara v. SEBI (2012) the Supreme Court held that the issue of OFCDs to more than fifty persons amounted to a public issue under Section 73 of the Companies Act and attracted SEBI's jurisdiction, ordering refund with interest.
A private company allots shares to its existing 50 members and also to 60 employees under an ESOP. To determine whether it has breached the 200-member ceiling under Section 2(68) of the Companies Act, 2013, which of the following must be excluded from the count of members?
aOnly present employees who are members
bAll joint holders, counted as a single member
cBoth present and past employee-members who acquired shares while in employment
dPersons who are members but hold shares in a fiduciary capacity
Answer: C
The proviso to Section 2(68) excludes from the 200 limit (i) present employees who are members, and (ii) persons who were members while in employment and continued after employment ceased; joint holders are counted as one member separately.
X subscribes to the memorandum of a company on the faith of a prospectus that contained a material misstatement. Y purchases shares of the same company later in the open market relying on the same prospectus. Under the law on misstatement in a prospectus, who can claim damages against the company/directors for the misstatement?
aBoth X and Y, as the prospectus is a continuing representation
bOnly Y, the secondary-market purchaser
cNeither, as a prospectus binds only the company internally
dOnly X, the original allottee who took shares directly from the company
Answer: D
Following Peek v. Gurney, the remedy for misstatement in a prospectus (Sections 34/35) is available only to original allottees who subscribed on the faith of the prospectus, not to subsequent market purchasers.
The directors of a company, authorised by the articles to borrow up to a stated limit with shareholder sanction, borrow beyond that limit without obtaining the sanction. A lender deals with the company in good faith. Which doctrine, and with what effect, protects the lender?
aDoctrine of indoor management (Turquand rule) — the lender may assume internal procedures were complied with
bDoctrine of ultra vires — the loan is void and unenforceable against the company
cDoctrine of constructive notice — the lender is fixed with notice and cannot recover
dDoctrine of lifting the veil — the directors alone are personally liable
Answer: A
Royal British Bank v. Turquand establishes that outsiders dealing in good faith may presume that the company's internal procedures (such as obtaining shareholder sanction) have been duly complied with.
A shareholder holding 60% of a company's equity proposes to remove a director, appointed for life by the articles, by an ordinary resolution under Section 169 of the Companies Act, 2013. The director resists. Which statement is correct?
aA life director appointed by the articles is wholly immune from removal under Section 169
bRemoval is possible, but the director appointed by proportional representation under Section 163 cannot be so removed
cAn ordinary resolution can never remove a director; only a special resolution can
dRemoval requires the prior approval of the Central Government in every case
Answer: B
Section 169 allows removal of a director by ordinary resolution after special notice, but it expressly does not apply to directors appointed by proportional representation under Section 163.
A company enters into a contract with a firm in which a director is a partner, without that director disclosing his interest. The contract is otherwise fair to the company. Under Sections 184 and 188 of the Companies Act, 2013, what is the consequence of the non-disclosure?
aThe contract is automatically void ab initio and cannot be ratified
bThe contract is fully valid; disclosure is merely directory
cThe contract is voidable at the option of the company and the director may be liable
dOnly the firm, not the director, faces any consequence
Answer: C
Under Section 184(3)/188(3), where a director fails to disclose interest in a contract, the contract is voidable at the option of the company, and the interested director may be required to indemnify the company.
A group of minority shareholders alleges that the affairs of the company are being conducted in a manner oppressive to them. Which forum and threshold governs an application alleging oppression and mismanagement under the Companies Act, 2013?
aThe Civil Court, with no minimum shareholding requirement
bThe SEBI, exclusively, for all listed and unlisted companies
cThe High Court under its inherent winding-up jurisdiction
dThe NCLT under Sections 241–242, subject to the eligibility thresholds in Section 244 (with NCLT's power to waive)
Answer: D
Sections 241–242 vest jurisdiction over oppression and mismanagement in the NCLT; Section 244 prescribes the minimum-member/share thresholds, which the Tribunal may waive.
A company proposes to reduce its share capital by paying off paid-up capital in excess of its wants. Under Section 66 of the Companies Act, 2013, which of the following is essential for the reduction to take effect?
aA special resolution and confirmation by the NCLT (Tribunal)
bOnly a Board resolution and intimation to the Registrar
cAn ordinary resolution and approval of the SEBI
dUnanimous consent of all shareholders and creditors
Answer: A
Section 66 requires a special resolution and confirmation of the reduction of share capital by the NCLT (Tribunal), which protects the interests of creditors before confirming.
A whole-time director who is a key managerial personnel transfers price-sensitive unpublished information about an upcoming merger to a friend who then trades. Separately, on the question of who must be a KMP, which of the following is NOT mandatorily a KMP under Section 203 of the Companies Act, 2013 for the class of companies covered?
aChief Executive Officer or Managing Director or Manager
bInternal Auditor
cCompany Secretary
dChief Financial Officer
Answer: B
Section 203 lists the CEO/MD/Manager (and in their absence a whole-time director), Company Secretary and CFO as mandatory KMP; the internal auditor (Section 138) is not a KMP.
A creditor of a Limited Liability Partnership obtains a money decree and seeks to enforce it personally against an innocent partner for a wrong committed by another partner without his knowledge. Under the Limited Liability Partnership Act, 2008, what is the position of the innocent partner?
aHe is jointly and severally liable like an ordinary partnership partner
bHe is liable only to the extent of double his capital contribution
cHe is not personally liable solely by reason of being a partner; liability attaches to the wrongdoer and the LLP
dHe is liable only if he is the designated partner
Answer: C
Under Section 28 of the LLP Act, 2008, a partner is not personally liable, directly or indirectly, for an obligation of the LLP solely by reason of being a partner; liability for a wrongful act falls on the LLP and the partner who did the act.
An LLP is incorporated with two individual designated partners. One of them ceases to be a partner, leaving only one designated partner for over six months while the LLP continues business. Under the LLP Act, 2008, what is the consequence?
aThe LLP automatically stands dissolved
bThere is no consequence as one designated partner suffices
cThe Registrar must convert the LLP into a company
dThe remaining sole partner becomes personally liable for all obligations incurred during that period
Answer: D
Section 6 of the LLP Act requires at least two partners; the proviso provides that if business is carried on with fewer than two partners for more than six months, the sole person carrying on business (who knows of the fact) is personally liable for the LLP's obligations incurred during that period.
Q25Constitution of India
Under Article 256 and the doctrine of repugnancy in Article 254, if a State law and a Union law on a Concurrent List subject are repugnant, the State law:
aIs void to the extent of the repugnancy, unless it received Presidential assent under Article 254(2)
bPrevails because the State is closer to the subject
cIs void in its entirety regardless of Presidential assent
dPrevails until struck down by the Supreme Court
Answer: A
Under Article 254(1) the Union law prevails and the State law is void to the extent of repugnancy; however, Article 254(2) saves a State law reserved for and receiving the President's assent, which then prevails in that State.
Q26Constitution of India
Which of the following pairs of Directive Principles and the constitutional articles is correctly matched?
aUniform civil code — Article 39
bOrganisation of village panchayats — Article 40
cFree and compulsory education for children up to 14 years (as a DPSP) — Article 51
dSeparation of judiciary from executive — Article 48
Answer: B
Article 40 directs the State to organise village panchayats; the uniform civil code is Article 44, the original DPSP on education was Article 45, and separation of judiciary from executive is Article 50.
Q27Constitution of India
The President's power to grant pardons under Article 72 extends to which of the following that the Governor's power under Article 161 does NOT?
aOffences against laws relating to matters in the State List
bSentences of imprisonment for life
cSentences by court martial and sentences of death
dSuspension of sentences
Answer: C
Under Article 72, the President alone can pardon sentences by court martial and grant pardon in all cases where the sentence is a sentence of death; the Governor under Article 161 has no such power over court martial or to pardon a death sentence.
Q28Constitution of India
During a Proclamation of Emergency under Article 352, Article 19 stands suspended. Under the post-44th Amendment position, the enforcement of which fundamental rights can NEVER be suspended even during an emergency?
aArticles 14 and 19
bArticles 21 and 22
cArticles 19 and 21
dArticles 20 and 21
Answer: D
After the 44th Amendment, Article 359 expressly provides that the right to move courts for enforcement of Articles 20 and 21 cannot be suspended during an emergency.
Q29Constitution of India
A person aggrieved by the violation of a fundamental right approaches the High Court under Article 226 and, separately, the Supreme Court under Article 32. Which statement is correct regarding these remedies?
aArticle 32 can be invoked only for enforcement of fundamental rights, whereas Article 226 can be invoked for fundamental rights and for any other legal right
bArticle 226 is itself a fundamental right while Article 32 is a constitutional remedy
cThe territorial jurisdiction under Article 32 is confined to the State concerned
dArticle 32 can be invoked even where no fundamental right is violated
Answer: A
Article 32 is itself a fundamental right but can be invoked only to enforce Part III rights, while a High Court's Article 226 power is wider, extending to enforcement of fundamental rights and 'for any other purpose,' i.e., other legal rights.
Q30Constitution of India
Article 31C, as it stands after judicial interpretation, protects laws giving effect to which Directive Principles from challenge under Articles 14 and 19?
aAll Directive Principles in Part IV
bOnly the principles specified in clauses (b) and (c) of Article 39
cOnly the principle of a uniform civil code under Article 44
dOnly the principles relating to free legal aid under Article 39A
Answer: B
Though the 42nd Amendment had extended Article 31C to all Part IV principles, Minerva Mills v. Union of India struck down that extension, restoring its protection only to laws implementing Article 39(b) and (c).
Q31Constitution of India
A State law providing reservation in promotions for SCs/STs is challenged. Which of the following is the correct constitutional position regarding such reservation in promotions?
aReservation in promotions is absolutely prohibited under Article 16
bReservation in promotions is automatically valid once a class is notified as SC/ST without any further requirement
cThe State may provide reservation in promotion with consequential seniority under Article 16(4A), but must collect quantifiable data showing inadequacy of representation and overall administrative efficiency
dReservation in promotions can only be provided to OBCs, not SCs/STs
Answer: C
Under Article 16(4A) the State may provide reservation in promotion with consequential seniority for SCs/STs; M. Nagaraj (2006) and Jarnail Singh (2018) require quantifiable data on inadequacy of representation and consideration of efficiency under Article 335.
Q32Constitution of India
X is detained under a preventive detention law. Under Article 22, for what maximum period may he be detained without obtaining the opinion of an Advisory Board?
aMaximum 15 days without Board opinion
bMaximum 1 year without Board opinion
cMaximum 6 months without Board opinion
dThe detention must in no case exceed 3 months without the opinion of the Advisory Board
Answer: D
Article 22(4) provides that no preventive detention law may authorise detention beyond three months unless an Advisory Board has reported sufficient cause within that period; the Board's reference is generally required within three months.
Q33Criminal Law — Bharatiya Nyaya Sanhita 2023 & Bharatiya Nagarik Suraksha Sanhita 2023 (use NEW code sections)
A group of five persons commits robbery on a highway after dark, all being members of a gang associated for habitually committing robbery. The Bharatiya Nyaya Sanhita, 2023, classifies this aggravated form as:
aBeing a member of a gang of robbers/dacoits (belonging to gang of robbers) under Section 311
bDacoity under Section 310
cRobbery simpliciter under Section 309
dTheft in dwelling house under Section 305
Answer: A
Section 311 BNS punishes belonging to a gang of persons associated for the purpose of habitually committing theft or robbery; dacoity itself requires five or more persons conjointly committing or attempting robbery under Section 310 BNS.
Q34Criminal Law — Bharatiya Nyaya Sanhita 2023 & Bharatiya Nagarik Suraksha Sanhita 2023 (use NEW code sections)
Under the Bharatiya Nagarik Suraksha Sanhita, 2023, in any sessions trial, the prosecution must complete its evidence and the trial be concluded within an overall outer limit, with judgment to be pronounced within how many days of completion of arguments?
a30 days, extendable to 60 days
b15 days, extendable to 45 days for reasons recorded in writing
c7 days, with no extension
d90 days in all cases
Answer: B
Section 392 BNSS requires the judgment to be pronounced as soon as possible within 45 days; more specifically, Section 258 BNSS mandates pronouncement of judgment in sessions trials within 30 days of completion of arguments, extendable to 45 days for reasons recorded in writing.
Q35Criminal Law — Bharatiya Nyaya Sanhita 2023 & Bharatiya Nagarik Suraksha Sanhita 2023 (use NEW code sections)
Under the Bharatiya Nagarik Suraksha Sanhita, 2023, a 'Zero FIR' — registration of an FIR by a police station irrespective of the area where the offence is committed — is given statutory recognition in:
aSection 200
bSection 154
cSection 173
dSection 482
Answer: C
Section 173 BNSS (information in cognizable cases) statutorily recognises the Zero FIR, allowing information about a cognizable offence to be recorded irrespective of the jurisdiction in which the offence is committed, for later transfer to the competent station.
Q36Criminal Law — Bharatiya Nyaya Sanhita 2023 & Bharatiya Nagarik Suraksha Sanhita 2023 (use NEW code sections)
Under the Bharatiya Nagarik Suraksha Sanhita, 2023, trial in absentia of a proclaimed offender who has absconded to evade trial and there is no immediate prospect of arrest is permitted under:
aSection 105
bSection 223
cSection 187
dSection 356
Answer: D
Section 356 BNSS is a new provision enabling trial and judgment in absentia of a proclaimed offender who has absconded to evade trial when there is no immediate prospect of arresting him, after compliance with prescribed safeguards.
Q37Criminal Law — Bharatiya Nyaya Sanhita 2023 & Bharatiya Nagarik Suraksha Sanhita 2023 (use NEW code sections)
Under the Bharatiya Nagarik Suraksha Sanhita, 2023, the maximum period of police custody that a Magistrate may authorise, and the manner in which it may be sought, is best stated as:
a15 days in the whole, which may be sought wholly or in parts during the initial 40 or 60 days of the period of detention
b15 days, but only continuously within the first 15 days of arrest
c30 days in the whole
d7 days only, with no extension
Answer: A
Section 187 BNSS retains the 15-day cap on police custody but now permits it to be sought in parts within the first 40 days (for offences up to 10 years) or 60 days (for graver offences) of detention, a departure from the CrPC interpretation.
Q38Criminal Law — Bharatiya Nyaya Sanhita 2023 & Bharatiya Nagarik Suraksha Sanhita 2023 (use NEW code sections)
A causes the death of a person by a rash and negligent act not amounting to culpable homicide. He knows of the death but does not report it to the police or Magistrate and escapes from the scene. Under Section 106(2) of the Bharatiya Nyaya Sanhita, 2023, the enhanced punishment applies specifically to:
aAny rash or negligent death caused by a registered medical practitioner
bCausing death by rash and negligent driving of a vehicle and escaping without reporting to a police officer or Magistrate
cDeath caused during a lawful sport
dDeath caused by a minor
Answer: B
Section 106(2) BNS prescribes enhanced punishment (up to ten years and fine) where a person causes death by rash and negligent driving of a vehicle not amounting to culpable homicide and escapes without reporting the incident to a police officer or Magistrate soon after.
Q39Criminal Law — Bharatiya Nyaya Sanhita 2023 & Bharatiya Nagarik Suraksha Sanhita 2023 (use NEW code sections)
Under the Bharatiya Nyaya Sanhita, 2023, 'mob lynching' — murder or grievous hurt by a group of five or more persons acting in concert on grounds such as race, caste, community, sex, place of birth, language or personal belief — where it results in death, attracts:
aPunishment identical to ordinary murder with no special provision
bA maximum of seven years' imprisonment
cDeath or imprisonment for life, under the first proviso to Section 103(2)
dOnly fine and community service
Answer: C
Section 103(2) BNS specifically criminalises group murder (mob lynching) by five or more persons on the enumerated grounds, prescribing death or imprisonment for life and fine for each member of the group.
Q40Contract & allied — Indian Contract Act 1872, Sale of Goods Act 1930, Partnership Act 1932, Specific Relief Act 1963
A guarantees payment to B for goods supplied to C. B, without A's consent, varies the terms of the contract with C. What is the effect on the surety A?
aA remains fully liable, as variation between creditor and principal does not affect the surety.
bA is discharged only if the variation increases his risk and he proves actual prejudice.
cA's liability is merely suspended until C consents to the variation.
dA is discharged as to transactions subsequent to the variance.
Answer: D
Under Sec. 133 of the Indian Contract Act, 1872, any variance made in the terms of the contract between the principal debtor and creditor, without the surety's consent, discharges the surety as to transactions subsequent to the variance (Bonar v. Macdonald).
Q41Contract & allied — Indian Contract Act 1872, Sale of Goods Act 1930, Partnership Act 1932, Specific Relief Act 1963
A pledges goods with B as security for a loan. A defaults. Which statement about B's rights as pawnee is correct?
aB may either sue for the debt retaining the pledge, or sell after giving reasonable notice of sale to A.
bB may immediately sell the goods without any notice to A.
cB automatically becomes owner of the goods on default (foreclosure).
dB may sell but must obtain a court decree before any sale.
Answer: A
Under Sec. 176 of the Indian Contract Act, 1872, on default the pawnee may sue on the debt retaining the goods as collateral, or sell the goods after giving the pawnor reasonable notice of sale; he cannot become owner automatically.
Q42Contract & 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 agrees to sell B '100 bags of the rice now lying in my godown,' but unknown to both, the entire stock had been destroyed by fire before the agreement. The contract is:
aValid and B must pay the price.
bVoid, the goods having perished before the contract without the seller's knowledge.
cVoidable at B's option.
dValid as an agreement to sell future goods.
Answer: B
Section 7 of the Sale of Goods Act, 1930 provides that a contract for the sale of specific goods is void if, without the seller's knowledge, the goods had already perished at the time the contract was made.
Q43Contract & allied — Indian Contract Act 1872, Sale of Goods Act 1930, Partnership Act 1932, Specific Relief Act 1963
Under the Sale of Goods Act, 1930, goods are sold by sample as well as by description. For the seller to fulfil his obligation:
aIt is enough that the bulk corresponds with the sample.
bIt is enough that the goods answer the description.
cThe bulk must correspond with the sample and the goods must also answer the description.
dEither correspondence with sample or with description suffices, at the buyer's election.
Answer: C
Under Sec. 15 of the Sale of Goods Act, 1930, in a sale by sample as well as by description the goods must correspond both with the sample and with the description; conformity to only one is insufficient (Nichol v. Godts).
Q44Contract & allied — Indian Contract Act 1872, Sale of Goods Act 1930, Partnership Act 1932, Specific Relief Act 1963
Under the doctrine of caveat emptor in the Sale of Goods Act, 1930, the implied condition as to fitness for a particular purpose under Sec. 16(1) applies where:
aThe buyer buys goods under their patent or trade name.
bThe goods are bought after the buyer has examined them.
cThe sale is by sample and the bulk matches the sample.
dThe buyer makes known the particular purpose and relies on the seller's skill or judgment, the goods being of a description the seller deals in.
Answer: D
Section 16(1) of the Sale of Goods Act, 1930 implies a condition of fitness for purpose only when the buyer expressly or impliedly makes the particular purpose known so as to show reliance on the seller's skill or judgment, and the goods are of a description the seller deals in (Priest v. Last).
Q45Contract & allied — Indian Contract Act 1872, Sale of Goods Act 1930, Partnership Act 1932, Specific Relief Act 1963
Under the Indian Partnership Act, 1932, a minor admitted to the benefits of a partnership, on attaining majority, gives no public notice within six months of his election. The legal consequence is that he:
aBecomes a full partner liable for the acts of the firm done since he was admitted to its benefits.
bIs treated as never having been connected with the firm.
cIs liable only prospectively for acts done after attaining majority.
dMust seek a court declaration to become a partner.
Answer: A
Under Sec. 30(5) of the Indian Partnership Act, 1932, if a minor who was admitted to the benefits of the firm fails to give public notice within six months of attaining majority (or of knowing of his admission, whichever is later), he is deemed to have become a partner and is liable for the firm's acts since he was admitted to its benefits.
Q46Contract & 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 wishes to sue. Which of the following suits is NOT barred by Sec. 69?
aA suit by the firm against a third party to enforce a contractual right.
bA suit by a partner of a dissolved firm for accounts of the dissolved firm and realisation of property of the dissolved firm.
cA suit by a partner against the firm to enforce a right arising from the partnership contract.
dA suit to set off a claim exceeding Rs. 100 in proceedings against the firm.
Answer: B
Section 69(3)(a) of the Indian Partnership Act, 1932 expressly saves a suit for the realisation of the property of a dissolved firm and for accounts of a dissolved firm; the other suits are barred for want of registration.
Q47Code of Civil Procedure, 1908
A executes a money decree against B. B owns immovable property in District X, which lies outside the local limits of the court that passed the decree. For attachment of B's immovable property situated in District X, the decree should ordinarily be:
aExecuted directly by the court that passed the decree without any transfer
bExecuted only after obtaining leave of the High Court
cTransferred for execution to the court within whose local limits the property is situated
dExecuted by appointing a receiver under Order XL irrespective of location
Answer: C
Under Section 39 read with Order XXI, where the property to be attached lies outside the local limits of the court that passed the decree, the decree is sent for execution to the court within whose jurisdiction the property is situated.
Q48Code of Civil Procedure, 1908
Regarding the doctrine of res sub judice under Section 10 CPC, which statement is most accurate?
aIt bars the institution of a second suit on the same matter in issue
bIt applies even where the parties to the two suits are entirely different
cIts contravention renders the decree in the later suit a nullity
dIt stays 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
Answer: D
Section 10 stays the trial (not institution) of the later suit when the matter directly and substantially in issue is also directly and substantially in issue in a previously instituted suit between the same parties litigating under the same title; a decree passed in breach is not a nullity but only an irregularity.
Q49Code of Civil Procedure, 1908
An ex parte decree is passed against a defendant who was duly served but did not appear. Which remedy is NOT available to such a defendant?
aSeeking a fresh trial as of right under Order IX Rule 9
bApplying to set aside the ex parte decree under Order IX Rule 13
cPreferring an appeal against the decree under Section 96(2)
dApplying for review under Order XLVII
Answer: A
Order IX Rule 9 deals with dismissal for default of the plaintiff, not with ex parte decrees against a defendant; the defendant's remedies are an application under Order IX Rule 13, an appeal under Section 96(2), or review under Order XLVII.
Q50Code of Civil Procedure, 1908
With respect to a 'foreign judgment' under Section 13 CPC, on which of the following grounds is such a judgment NOT conclusive between the parties?
aWhere it has been pronounced by a court of competent jurisdiction
bWhere it sustains a claim founded on a breach of any law in force in India
cWhere it has been given on the merits of the case
dWhere the proceedings were conducted in accordance with natural justice
Answer: B
Under Section 13(f), a foreign judgment is not conclusive where it sustains a claim founded on a breach of any law in force in India; the other listed features (competent jurisdiction, merits, natural justice) are conditions for conclusiveness.
Q51Code of Civil Procedure, 1908
A suit for possession of immovable property is decreed. Before execution, the judgment-debtor transfers the property to T, who had notice of the pending suit. The decree-holder seeks possession against T. The applicable principle is:
aT is a bona fide purchaser and the decree cannot be executed against him
bThe decree-holder must file a fresh suit against T
cThe transfer pendente lite is hit by the doctrine of lis pendens under Section 52 of the Transfer of Property Act, and T is bound by the decree
dT must be impleaded and the suit retried
Answer: C
A transferee pendente lite is bound by the result of the suit under the doctrine of lis pendens (Section 52 TPA), and the decree can be executed against such transferee without a fresh suit; he takes subject to the decree.
Q52Code of Civil Procedure, 1908
Concerning the power of the appellate court to remand a case under Order XLI Rule 23 CPC, a remand is appropriate where:
aThe appellate court merely disagrees with the appreciation of evidence by the trial court
bAdditional evidence is required to be taken by the appellate court itself
cThe appeal is dismissed for default of the appellant
dThe trial court has decided the suit on a preliminary point and the decree is reversed in appeal
Answer: D
Order XLI Rule 23 permits remand where the trial court disposed of the suit on a preliminary point and the appellate court reverses that decree, requiring the suit to be tried on the remaining issues; mere disagreement on evidence does not justify remand.
Q53Law of Evidence — Bharatiya Sakshya Adhiniyam 2023 (use NEW code sections)
A is on trial for the murder of B. The prosecution wishes to prove that immediately after the stabbing, B exclaimed, "A has killed me!" before dying. Under the Bharatiya Sakshya Adhiniyam, 2023, this statement is admissible under which provision and as what kind of evidence?
aSection 26(a) — as a dying declaration, an exception to the rule against hearsay
bSection 6 — as part of the same transaction (res gestae)
cSection 24 — as an admission against interest
dSection 28 — as conduct of a deceased person
Answer: A
Statements by a person as to the cause of death or circumstances of the transaction resulting in death are relevant under Section 26(a) BSA, 2023 (corresponding to old Section 32(1) of the Evidence Act) — the classic dying declaration.
Q54Law of Evidence — Bharatiya Sakshya Adhiniyam 2023 (use NEW code sections)
On a charge of dacoity against A, evidence is led that immediately after the incident a stolen ornament was found in A's possession. Which presumption may the court draw, and under which provision of the Bharatiya Sakshya Adhiniyam, 2023?
aPresumption that A committed the dacoity, mandatorily, under Section 114
bThat the court may presume A is either the thief/dacoit or a receiver of stolen goods, under Section 119 (illustration on recent possession)
cNo presumption is permissible; possession is wholly irrelevant
dA conclusive presumption of guilt under Section 116
Answer: B
Section 119 BSA, 2023 (old Section 114, Illustration (a)) permits the court to presume that a man in possession of stolen goods soon after the theft is either the thief or has received the goods knowing them to be stolen — it is a discretionary, not mandatory or conclusive, presumption.
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 own possession but A produces only a certified copy without accounting for the original. Under the Bharatiya Sakshya Adhiniyam, 2023, the certified copy is:
aAdmissible, because certified copies are always primary evidence
bAdmissible as secondary evidence, since registered documents are exempt from the original-production rule
cGenerally inadmissible, because secondary evidence is permissible only when the non-production of the original is justified under Section 60
dAdmissible only with the opposite party's consent under Section 58
Answer: C
Documents must ordinarily be proved by primary evidence; secondary evidence (Section 58 BSA) is allowed only when one of the conditions in Section 60 BSA, 2023 (old Section 65) is met, such as the original being held by an adverse party who fails to produce it — not where the original is in the proponent's own hands.
Q56Law of Evidence — Bharatiya Sakshya Adhiniyam 2023 (use NEW code sections)
Following a confession to a police officer that he murdered the victim and hid the knife, A leads the police to a field from where the knife is recovered. Under the Bharatiya Sakshya Adhiniyam, 2023, what part of this is admissible against A?
aThe entire confession, including the admission of murder, under Section 22
bNothing, since all statements to police are barred under Section 23(1)
cThe whole statement, because recovery corroborates it under Section 27
dOnly so much of the information as distinctly relates to the fact thereby discovered (the recovery of the knife), under Section 23(2)
Answer: D
Section 23(1) BSA bars confessions to police, but the proviso in Section 23(2) BSA, 2023 (old Section 27) admits only so much of the information as distinctly relates to the fact discovered — here, the part leading to recovery of the knife, not the admission of murder.
Q57Law of Evidence — Bharatiya Sakshya Adhiniyam 2023 (use NEW code sections)
A child of about six years is produced as a witness in a kidnapping case. The defence objects that a child cannot testify. Under the Bharatiya Sakshya Adhiniyam, 2023, the correct position is:
aAll persons are competent unless prevented from understanding the questions or giving rational answers due to tender years, extreme old age, disease or the like, under Section 124
bA child is incompetent until the age of twelve
cCompetency depends on age alone, fixed at seven years
dA child can testify only on oath administered by a Magistrate
Answer: A
Section 124 BSA, 2023 (old Section 118) makes competency a function of understanding, not age — a child is competent if able to comprehend the questions and give rational answers; the court satisfies itself by a voir dire.
Q58Administrative Law
In which of the following situations is the rule of audi alteram partem (right to be heard) most clearly EXCLUDED by reason of the doctrine of 'useless formality'?
aWhere the authority has a closed mind but the outcome could change with representation
bWhere, on admitted or indisputable facts, only one conclusion is legally possible even if a hearing were granted
cWhere the affected person waives the hearing in writing
dWhere the statute is silent on the procedure to be followed
Answer: B
The 'useless formality' / 'no difference' exception applies where on admitted facts only one conclusion is possible, so a hearing would be an empty ritual; discussed in S.L. Kapoor v. Jagmohan (1980) and Aligarh Muslim University v. Mansoor Ali Khan (2000). Statutory silence actually means natural justice is read in, not excluded.
Q59Administrative Law
The doctrine that a public authority must not fetter the exercise of its statutory discretion by rigidly applying a self-imposed policy without regard to individual cases is violated when the authority:
aAdopts a general policy but remains willing to consider exceptions on merits
bDelegates discretion to a subordinate with the parent statute's express authority
cRefuses to consider any departure from a fixed rule even where the statute confers discretion and the case is exceptional
dActs strictly within the four corners of the enabling statute
Answer: C
Non-fettering of discretion is violated when an authority applies a self-imposed rule mechanically and shuts its ears to exceptional cases; a lawful policy must leave room to consider individual merits (British Oxygen Co. v. Minister of Technology, 1971). Option (b) is the permissible course.
Q60Administrative Law
Under the doctrine of legitimate expectation as developed by Indian courts, which statement is CORRECT?
aA legitimate expectation, once established, always entitles the person to the substantive benefit claimed
bIt arises only from an express written promise and never from a regular past practice
cIt creates an enforceable contractual right against the State
dIt can be defeated by an overriding public interest, and the court reviews such denial for reasonableness/non-arbitrariness
Answer: D
Per Union of India v. Hindustan Development Corpn. (1993) and Punjab Communications Ltd. v. Union of India (1999), legitimate expectation may be defeated by overriding public interest, and a change of policy is examined on Wednesbury reasonableness; it can also arise from a regular consistent past practice.
Q61Administrative Law
Which of the following best describes 'proportionality' as a ground of judicial review compared with 'Wednesbury unreasonableness' in India?
aProportionality permits the court to assess whether the measure was excessive in relation to its object, a more intrusive review than the deferential Wednesbury test
bProportionality and Wednesbury are identical standards with no practical difference
cWednesbury allows the court to substitute its own view, whereas proportionality forbids it
dProportionality applies only to legislative, not administrative, action
Answer: A
Proportionality, recognised especially in fundamental-rights and service-punishment contexts (Om Kumar v. Union of India, 2001; Coimbatore District Central Coop. Bank, 2007), allows a closer 'balancing' scrutiny of whether the action was excessive, going beyond the limited Wednesbury irrationality standard.
Q62Administrative Law
A delegate exercising delegated legislative power further sub-delegates that power to another authority. This sub-delegation is generally:
aAlways valid, since delegated power inherently includes the power to sub-delegate
bValid only if the parent statute expressly or by necessary implication authorises sub-delegation (delegatus non potest delegare)
cValid only if approved by the courts after the fact
dVoid in all cases without exception
Answer: B
The maxim delegatus non potest delegare means a delegate cannot further delegate unless the enabling Act expressly permits it or it arises by necessary implication; otherwise the sub-delegation is ultra vires (Sahni Silk Mills v. ESI Corpn., 1994).
Q63Jurisprudence, Interpretation of Statutes & legal maxims
A subordinate authority makes a rule under a statute, but the rule travels beyond the scope of the enabling provision. The appropriate ground to challenge the rule is that it is—
aIntra vires the parent Act
bRes judicata
cUltra vires the parent Act
dFunctus officio
Answer: C
Delegated legislation exceeding the limits of the enabling statute is ultra vires the parent Act and void. 'Intra vires' would mean within power; the other maxims are unrelated.
Q64Jurisprudence, Interpretation of Statutes & legal maxims
While interpreting a beneficial/welfare statute (e.g. labour or social-welfare legislation), which approach do courts generally adopt where two constructions are possible?
aThe construction that narrows the benefit to limit the burden on employers
bThe construction that defeats the object to avoid hardship to the State
cA strictly literal construction regardless of the object
dThe construction that advances the object and confers the benefit (liberal/purposive)
Answer: D
Beneficial statutes are construed liberally to advance the remedy and suppress the mischief, so the interpretation favouring the intended beneficiaries is preferred where the language reasonably permits it.
Q65Jurisprudence, Interpretation of Statutes & legal maxims
The maxim 'actus non facit reum nisi mens sit rea' underlies the presumption of mens rea in criminal statutes. In which type of statutory offence is this presumption most readily displaced?
aStrict-liability regulatory offences concerning public welfare
bOffences involving moral turpitude such as theft
cOffences punishable with death
dOffences requiring proof of dishonest intention
Answer: A
The presumption of mens rea is most easily rebutted in strict-liability regulatory or public-welfare offences, where the statute aims at regulation rather than punishing moral guilt. True crimes retain the mens rea requirement.
Q66Jurisprudence, Interpretation of Statutes & legal maxims
A taxing statute is ambiguous and reasonably capable of two interpretations, one favourable to the assessee and one to the Revenue. Which canon of construction governs the court's choice?
aThe court must adopt the interpretation that maximises State revenue, since fiscal statutes are remedial
bWhere two reasonable constructions are possible, the one favourable to the assessee must be adopted
cThe court must apply the mischief rule and read in words to cover the gap
dThe court must refer the ambiguity to the legislature before deciding
Answer: B
It is settled that a taxing statute must be construed strictly, and where two reasonable views are possible the one favouring the subject/assessee prevails, as held in CIT v. Vegetable Products Ltd. (1973) 88 ITR 192 (SC).
Q67Transfer of Property Act, 1882
A is the ostensible owner of property with the consent of the real owner B, and transfers it for consideration to C, who after taking reasonable care to ascertain A's power acts in good faith. B later asserts his real ownership. The transfer to C:
aIs void as against B, the true owner, regardless of C's good faith
bIs valid only if A held registered title in his own name
cCannot be impeached by B merely on the ground that A was not authorised, under Section 41 (transfer by ostensible owner)
dBinds B only if C also obtained B's express consent
Answer: C
Section 41 protects a transferee for consideration from an ostensible owner: where, with the consent (express or implied) of the real owner, a person is the ostensible owner and transfers the property, the transfer is not voidable on the ground of want of authority if the transferee took reasonable care and acted in good faith.
Q68Transfer of Property Act, 1882
A makes a gift of immovable property to B and B accepts it during A's lifetime, but before any registered instrument is executed A dies. The gift is:
aValid and complete, since acceptance during the donor's lifetime is sufficient
bValid if there was delivery of possession even without a registered deed
cVoidable at the option of A's legal heirs
dIncomplete and ineffective, because Section 123 requires a gift of immovable property to be effected by a registered instrument signed by the donor and attested by two witnesses
Answer: D
Section 123 mandates that a gift of immovable property be made by a registered instrument signed by the donor and attested by at least two witnesses; delivery of possession does not cure the absence of a registered deed for immovable property.
Q69Arbitration and Conciliation Act, 1996
Under Section 29A (inserted in 2015), an arbitral award in a matter other than international commercial arbitration must be made within what period, ordinarily reckoned from completion of pleadings?
aTwelve months, extendable by six months by consent of parties
bSix months
cNine months
dEighteen months
Answer: A
Section 29A requires the award within 12 months from completion of pleadings (post-2019), extendable by up to six months by party consent; further extension requires a court order.
Q70Arbitration and Conciliation Act, 1996
Where parties have not agreed on the number of arbitrators, Section 10 of the Act provides that the arbitral tribunal shall consist of:
aThree arbitrators
bA sole arbitrator
cAny odd number fixed by the court
dTwo arbitrators and an umpire
Answer: B
Section 10(2) provides that failing party determination of the number of arbitrators, the tribunal shall consist of a sole arbitrator; Section 10(1) only bars an even number where parties do fix the number.
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