Gurukripa’s Guideline Answers for May 2015 CA Inter (IPC) Law, Ethics, and Communication
Gurukripa’s Guideline Answers to May 2015 Exam Questions
CA Inter (IPC) Law, Ethics & Communication
Question No.1 is compulsory (4 X 5 = 20 Marks).
Answer any five questions from the remaining six questions (16 X 5 = 80 Marks). [Answer any 4 out of 5 in Q.7]
Q
Questions
(a) ‘X’ entered into a contract with ‘Y’ to supply him 1,000 Water
Bottle @ ` 5.00 per water bottle, to be delivered at a specified
time. Thereafter, ‘X’ contracts with ‘Z’ for the purchase of
1,000 Water Bottles @ ` 4.50 per Water Bottle, and at the
same time told ‘Z’ that he did so, for the purpose of
performing his contract entered into with ‘Y’. ‘Z’ failed to
perform his contract in due course and Market Price of each
Water Bottle on that day was ` 5.25 per Water Bottle.
Consequently, ‘X’ could not procure any Water Bottle and ‘Y’
rescinded the contract. What would be the amount of
damages which ‘X’ could claim from ‘Z’ in the
circumstances? What would be your answer if ‘Z’ had not
been informed about the ‘Y’s contract? Explain with
reference to the provision of the Indian Contract Act, 1872.
1 (b) ‘The Doctrine of Indoor Management always protects the
Persons (Outsiders) dealing with a Company.” Explain the
above statement. Also, state the exceptions to the above Rule.
(c) State with reasons whether the following statements are
Correct or Incorrect:
(i)
‘Fairness and Justice’ are two different approaches as a
source of Ethical Standards.
(ii) Inclusion of Environmental Considerations as a part of
Corporate Strategy improves Corporate performance.
(d) Explain the ‘factors that lead to Grapevine Communication’.
(a) Explain the meaning of ‘Quasi–Contracts’. State the
circumstances which are identified as Quasi Contracts by the
Indian Contract Act, 1872.
(b) What are the ‘United Nations Guidelines Themes’ on
2
Consumer Protection?
(c) Explain the types of Groups in an organization which play an
important role in solving the difficult problems in the
organization.
(a) (i) Explain the “Time Limit for Payment of Bonus’ to the
Employees in different circumstances under the provisions of
the Payment of Bonus Act, 1965.
(a) (ii) ‘N’ is employed in ABC Limited, a Seasonal
Establishment. The Factory was in operation from 1st March
to 30th June during the financial year 2014–15. Though, ‘N’
3
was not in continuous service during this period, he had
worked for 95 days. Under the Payment of Gratuity Act, 1972,
decide whether ‘N’ is entitled to Gratuity.
(b) What is meant by ‘Corporate Governance’? State the
‘Measures of Corporate Governance’ with reference to Indian
Companies.
May 2015.1
Reference
M
Page 1.72, Q. No. 34 [M 07]
Hint:
1. If Z is informed of Y’s Contract: ‘X’ can
claim an Ordinary Damages of ` 5.25 – ` 4.50
= ` 0.75 per Water Bottle + Special Damages
of ` 5.25 – ` 5 = ` 0.25 per Water Bottle.
5
2. If Z is NOT informed of Y’s Contract: In
this case, ‘X’ can claim only Ordinary Damages.
Page 8.18, Para 8.4.4 and 8.4.5
[RTP, N 95, M 99, N 01, M 03, M 07]
5
Page 16.3, Para 16.1.4 Hint: Incorrect.
It is a single approach aiming to treat all equals
equally and to reduce imbalance of power, and
to ensure that human beings are treated fairly
based on some standard that is defensible.
3
Page 16.34, Q. No. 36 [M 10]
Hint: Correct.
2
Page 17.4, Para 17A.1.4, Point 3
[N 11]
5
Page 1.65, Para 1B.4.1
[N 93, N 94, M 99, M 02, M 13]
8
Page 16.26, Para 16.7.12, Point 2
[RTP , N 09]
4
Page 17.27, Para 17C.1.3
[N 12]
4
Page 3.14, Para 3.3.1
[M 12]
4
Page 5.13, Q. No. 3 [M 10]
Hint: The Factory was in operation for 4
months. 75% of total operational days = 75% ×
120 days = 90 days. Since N worked for 95 days,
he is eligible for Gratuity as it exceeds 90 days.
4
Page 16.6, Para 16.3.2, Point 1 & 2 and
Page 16.7, Para 16.3.3 Point 3
4
Gurukripa’s Guideline Answers for May 2015 CA Inter (IPC) Law, Ethics, and Communication
Q
Questions
(c) State with reasons whether following Statements are Correct
or Incorrect.
(i) Rumours and Gossips are synonymous.
(ii) Lying breaks down the trust between individuals.
(a) Board of Directors of PQR Ltd wants to create a ‘Debenture
Redemption Reserve (DRR)’ for the redemption of debentures
issued by the Company under the provisions of Companies
Act, 2013. Explain the provisions of the Companies (Share
Capital and Debenture) Rules, 2014 in this regard.
4 (b) Explain the meaning of ‘Sustainable Development’? State the
special responsibilities of the Industries that are based on
natural resources.
(c) Write short notes on:
(i) The Press Communique
(ii) The Press Notes
(a) (i) What is meant by ‘Sans Recourse Endorsement’ of a Bill of
Exchange? How does it differ from ‘Sans Frais
Endorsement’?
(ii) ‘P’, a Major and ‘Q’, a Minor executed a Promissory Note in
favour of ‘R’. Examine with reference to the provisions of the
Negotiable Instruments Act, 1881, the validity of the
5
Promissory Note and, whether it is binding on ‘P’ and ‘Q’.
(b) Explain the concept of ‘Electronic Voting System’ as
provided by the Companies Act, 2013.
(c) Explain the ‘Threats faced by an Accounting and Finance
Professional adhering to Ethical Principles’ at the time of
performing his Professional duties.
(a) Explain the conditions and the manner in which a
Company may issue Depository Receipts in a Foreign
Country under the Companies (Issue of Global Depository
Receipts) Rules, 2014.
(b) State if the following Statements are Correct or Incorrect:
(i) Agency coupled with Interest is Irrevocable.
(ii) Depositing of Ornaments in a Bank Locker is a Bailment.
6
(iii) Deferred Shares are also called as Founder’s Shares.
(iv) Debentures with Voting Rights can be issued only if
permitted by the Articles of Association.
(c) What is meant by ‘Emotional Intelligence’? Explain the ‘Self–
Awareness and Self–Management Personal Competencies’
associated with Emotional Intelligence.
Answer any Four of the following:
(a) An Inspector appointed under the Employees’ Provident
Funds and Miscellaneous Provisions Act, 1952 makes an
inspection at 8 a.m. (an hour before Factory timings) and
7
seeks to take copies of the “Income Tax Returns”. How far
under the Act is his action reasonable?
(b) Define the term ‘Small Company’ as contained in the
Companies Act, 2013.
May 2015.2
Reference
M
Incorrect – Page 17.22, Para 17B.3.4, Pt 4
Hint: Rumours relate to events, while Gossips
relate to People.
2
Correct – Page 17.22, Para 17B.3.4, Pt 5
2
Page 14.5, Para 14.1.8
8
Page 16.19, Para 16.6.1
Page 16.22, Para 16.6.9, Point 7
[ RTP, M 07, M 08, N 10, N 11, M 12]
4
4
Page 18.6, Para 18.9, Point 4
Page 18.6, Para 18.9, Point 4
Page 2.16, Para 2.3.7, Point 4 & 8
[RTP, N 01]
4
Page 2.46, Q. No. 25 [M 00, N 05]
Hint: The Promissory Note executed by P and Q
is valid, even though a Minor (Q) is a party to it,
Q, being a Minor, is not liable, but his immunity
from liability does not absolve the other joint
Promisor (P) from liability. [Sulochana vs
Pandiyan Bank Limited]
4
Page 13.18, Para 13.4.6
4
Page 16.28, Para 16.8.5
[RTP, M 08]
4
Page 9.17, Para 9.5.2
8
Correct – Page 1.98, Q.No.13 [N 09]
1
×
4
=
4
Incorrect – Page 1.98, Q.No.6
Correct
Incorrect – Page 14.23, Q.No.1
[M 10, M 12]
Page 17.20, Para 17B.2.6
& Para 17B.2.7, Point 1(a) & 1(d)
[RTP, M 07]
4
Page 4.9, Para 4.2.5, Point 3(b) & 3(e).
[RTP, M 97, N 03]
Hint: Search shall be made at any Reasonable
Time. What constitutes Reasonable Time will be
based on circumstances. Generally, Reasonable
Time shall be within Business hours.
4
Page 6.16, Point 4 in Para 6.5.7
4
Gurukripa’s Guideline Answers for May 2015 CA Inter (IPC) Law, Ethics, and Communication
Q
Questions
Reference
M
(c) The Annual General Meeting of KMP Limited was held on 30th
April 2015. The Articles of Association of the Company is
silent regarding the Quorum of the General Meeting. Only 10
Members were personally present in the above Meeting, out
of the total 2,750 Members of the Company. The Chairman
adjourned the Meeting for want of quorum. Referring to the
provisions of the Companies Act, 2013, examine the validity
of Chairman’s decision.
Page 13.12, Para 13.3.6, Point 3 & 6
Hint: 15 Members should be personally present
to constitute valid Quorum in the given case.
Since only 10 Members are present, Quorum is
not available. In case of AGM, Meeting shall be
adjourned to same day in next week, at the
same Time and Place, or such other day, time &
Place as determined by BOD. The decision of the
Chairman for adjournment is valid. But,
Chairman cannot independently decide the date
and place of adjourned Meeting.
4
Page 16.15, Para 16.5.4, Point 2
4
Page 17.38, Para 17D.1.4
4
(d) Explain the various Socio –Psychological factors responsible
for developing Negative Attitude by an Individual at Workplace.
(e) State the reasons for ‘Resistance to Change’ in an
Organization.
Recent Notifications / Circulars under Companies Act, 2013
Notification / Circular No.
G.S.R. 741(E) dt. 24.10.14
G.S.R. dt. 16.02.15
S.O.(E) dt. 31.03.15
38/2014 dt. 14.10.14
39/2014 dt. 14.10.14
41/2014 dt. 15.10.14
43/2014 dt. 13.11.14
04/2015 dt. 10.03.2015
5/2015 dt. 30.03.2015
6/2015 dt. 09.04.15
7/2015 dt. 10.04.15
(01.10.2014 to 04.05.2015)
Summary / Description
CSR Schedule VII: Contributions to Swachh Bharath Kosh and Clean Ganga Fund are
included in Schedule VII Activities for CSR purposes.
IND AS are prescribed by MCA under The Companies (Indian Accounting Standards)
Rules, 2015.
Inspection: Power to direct an immediate Inspection of a Company’s Register is now
delegated to Regional Director (RD) u/s 94(5) from Central Government.
Right of persons other than Retiring Directors to stand for directorship –Deposit
u/s 160: Board can decide whether ` 1 Lakh deposit u/s 160 to be forfeited or refunded if
25% votes are not secured at General Meeting
Consolidated FS: Company is required to give disclosures relevant for Consolidated
Financials only and not all disclosures that it made under its stand–alone Financials.
Effect of Company Law Settlement Scheme: No disqualification of Directors u/s 164
(3) of Companies which filed Balance Sheet after 01.04.14 but before CLSS – 15.08.2014
FCCB / FCB: Chapter III (Sec.23 to 42) of the Act shall not apply to Foreign Currency
Convertible Bonds (FCCBs) and Foreign Currency Bonds (FCBs), issued to persons Resident
outside India unless specifically provided by RBI Regulations/Schemes.
Sec.186 does not apply to Loans given to Employees other than WTD/MD.
Deposits by Pvt Co: Amounts received by Private Companies their Members, Directors or
their Relatives before 1st April 2014, shall not be treated as Deposits, provided it is
properly disclosed in the Notes to Accounts.
However, Fresh Deposits and Renewals shall fall under the provisions of COA 2013.
Sec.186(7): Tax–Free Bonds with Effective Yield greater than the prevailing yield on
Government Securities does not violate Sec.186(7).
Managerial Remuneration: Managerial Person appointed before COA 2013, even if his
tenure falls after 01.04.2013, shall be paid remuneration for that tenure in accordance with
Schedule XIII of COA 1956 only.
Additional Questions for Practice
Question 1: Chapter 4: The Employees’ Provident Fund and Misc. Provisions Act, 1952
RTP
A 60 years old District Judge was appointed by the Central Government as Presiding Officer of the Employees' Provident Funds
Appellate Tribunal for a period of 2 years. After one year, he resigns from his office and ceases to work with immediate effect without
handing over the charge to his successor, who was not appointed by the Government till that date. Examine the validity of his action
to cease work under the provisions of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952.
May 2015.3
Gurukripa’s Guideline Answers for May 2015 CA Inter (IPC) Law, Ethics, and Communication
Solution:
1. Principle [Sec. 7F]:
(a) The Presiding Officer of a Employees’ Provident Funds Appellate Tribunal may by notice in writing under his hand
addressed to the Central Government, resign his office.
(b) The Presiding Officer shall, unless he is permitted by the Central Govt. to relinquish his office sooner, continue to
hold office until the expiry of three months from the date of receipt of such notice or until a person duly appointed
as his Successor enters upon his office or until the expiry of his term of office, whichever is the earliest.
2.
Analysis and Conclusion: The action to cease work is not valid in this case.
Question 2: Chapter 3: Ethics
Explain the statement that ‘Business Firms are parts of a larger ecological system’.
RTP
Solution: Refer Page 16.21, Para 16.6.6, Point C
Question 3: Chapter 16: Ethics
Fairness and Honesty are at the heart of Business Ethics and relate to the general values of decision makers. Discuss.
RTP
Solution: Refer Page 16.16, Para 16.5.6, Point C
Question 4: Chapter 16: Ethics
Comment on the statement “Business is all green, only philosophy is grey”.
RTP
Solution:
1. Karl Marx, while commenting on the business objectives, said “Business is all green, only philosophy is grey.”
2. He meant that business is all about profits and comfort for its rich owners and discomforts for all other sections of the
society who are at the receiving end of the business.
3. However, even if such socialist ideology is now diluted and capitalism is being gradually accepted, business is still
considered as essentially exploitative in nature.
4. It is also to be noted that much of the progress in the world would not have been possible without entrepreneurship
and business, which involves risk.
Question 5: Chapter 16: Ethics
“CSR can mean different things to different people”. Explain.
Solution: CSR can mean different
Stake Holder
1
Employees
2
Shareholders
3
Suppliers
4
Customers
5
Local Communities /Authorities
6
Non – Govt. Organization &
Pressure Groups
7
Company
RTP
things to different stake holders as under –
CSR Management
Fair Wages, No Discrimination, Good Working Conditions, etc.
Making responsible and transparent decisions regarding the use of capital
Receiving payment on time, transparency in Business deals, etc.
Delivery on time, value for Money, etc.
Taking measures to protect the environment from pollution.
Disclosing Business Practices and Performance on various issues, e.g. Energy
Conservation, Global Warming, Human Rights, Animal Rights, Protection of Rainforests
& Endangered Species, Child and Forced Labour, etc.
Responding to the needs & concerns of people who can influence its success, and
whom the Company can impact through its business activities and its processes.
Question 6: Chapter 18: Corporate Communication Aspects
“A key element in any Communication Activity is the values of the Organization”. Explain.
RTP
Solution:
1. Organizational values are beliefs and ideas about what kinds of Goals, Members of an Organisation should pursue and
ideas about the appropriate principles of behavior that organizational members should use to achieve these goals.
2. When people are in doubt about decisions, they frequently rely on deep seated values to help them make the right choice.
3. Values of an organization can be understood from its Vision and Mission Statement, which provide short descriptions of
the purpose of organizations and the directions they try to take to achieve success.
4. Organizations communicate their Vision and Mission Statements suitably, so that employees know about the
Organization Values.
May 2015.4