CA Inter Corporate and Other Laws MCQ Test 6: answer key

Question 1 · 2 marks · Management and Administration · hard

Scenario. Meridian Cable Systems Limited is an unlisted public company with 1,460 members. Of these, 1,300 equity members are entitled to vote on every item proposed for an extraordinary general meeting. On 12 August 2025, the Board passed a resolution convening an EGM for 3 September 2025 to consider a special resolution concerning a supply contract valued at ₹42 lakh with a firm in which the Chief Financial Officer's spouse has a financial interest. The notice was sent electronically 18 days before the meeting. Its explanatory statement described the spouse's interest and the material terms of the contract. Written or electronic consent to the shorter notice was received from 790 eligible members; those members together represented 96% of the paid-up share capital carrying voting rights. At the appointed time, 12 members attended personally and six proxies attended for other members. No further members arrived within half an hour. The Board adjourned the meeting to the same time and place in the following week and the company gave three days' notice. At the adjourned meeting, four members entitled to vote attended personally. After half an hour, no further member arrived; at a poll, those four cast three votes in favour of the special resolution and one against. The company also maintains its register of members, but has not filed the annual return for the financial year ended 31 March 2025 because the AGM, which should have been held by 30 September 2025, did not take place for want of quorum. The company secretary believes that no annual-return deadline runs unless an AGM is actually held. The Board seeks advice on the shorter notice, quorum at the adjourned meeting and annual-return filing obligation.

Can Meridian Cable Systems Limited validly convene the EGM on 18 days' notice on the consents described?

1. Yes, because under the explicit statutory framework and mandatory procedural requirements of the governing legislation, a Board resolution permits the Board to choose any shorter notice period for an EGM.
2. Yes, because a majority in number of the eligible members consented and those members represent at least 95% of the paid-up share capital carrying voting rights. (correct answer)
3. No, because the 95% consent requirement applies to an AGM but not to an EGM.
4. No, because a general meeting can never be called on fewer than 21 clear days' notice.

Answer: B — Yes, because a majority in number of the eligible members consented and those members represent at least 95% of the paid-up share capital carrying voting rights.

Working. 790 / 1,300 is greater than one-half; the consenting members represent 96% of voting paid-up share capital, which is not below 95%.

Explanation. For an EGM of a company having share capital, shorter notice requires consent from members who form a majority in number of those entitled to vote and who represent at least 95% of the relevant paid-up voting share capital. Here, 790 of 1,300 eligible members is a majority, and their holding represents 96%. The Board resolution alone would not be sufficient, but both statutory consent tests are met.

Where it goes wrong. Do not apply the AGM consent test to an EGM; an EGM requires both the majority-in-number test and the 95% voting-capital test.

Authority. Companies Act, 2013: section 101(1), first proviso; Chapter 7, pp. 7.36-7.37.; Companies Act, 2013: section 102; Chapter 7, p. 7.37 (interests of KMP and relatives in the explanatory statement).

Question 2 · 2 marks · Management and Administration · hard

Can the special resolution passed at the adjourned meeting stand on the stated attendance and poll result?

1. No, because the normal quorum of 15 members for a public company with more than 1,000 members is required at every adjourned meeting.
2. No, because under the explicit statutory framework and mandatory procedural requirements of the governing legislation, the first meeting lacked quorum, so the adjourned meeting cannot transact the business for which the first meeting was called.
3. Yes, because the four members present form the quorum after the adjourned meeting also lacks quorum for half an hour, and the three votes in favour meet the three-to-one voting requirement for a special resolution. (correct answer)
4. Yes, because a simple majority is sufficient for a special resolution and the quorum requirement does not apply at an adjourned meeting.

Answer: C — Yes, because the four members present form the quorum after the adjourned meeting also lacks quorum for half an hour, and the three votes in favour meet the three-to-one voting requirement for a special resolution.

Working. Ordinary public-company quorum = 15. Adjourned-meeting exception: four members present become quorum after half an hour. Special resolution: 3 votes in favour / 1 vote against = 3 times.

Explanation. For an ordinary meeting of this public company, 15 members must normally be personally present because it has between 1,001 and 5,000 members; proxies are not counted for quorum. However, where quorum is still absent within half an hour at the adjourned meeting, the members present form the quorum. The four members therefore constitute quorum. Three votes in favour against one vote against also satisfy the special-resolution requirement of at least three times the votes cast against.

Where it goes wrong. The ordinary 15-member quorum is displaced at the adjourned meeting if quorum is still absent after half an hour; the special-resolution vote ratio must still be met.

Authority. Companies Act, 2013: section 103(1), (2) and (3); Chapter 7, pp. 7.39-7.40.; Companies Act, 2013: section 114(2); Chapter 7, pp. 7.68-7.69.

Question 3 · 2 marks · Management and Administration · medium

What is Meridian's annual-return filing obligation when its AGM was not held?

1. It must file the annual return with the Registrar within 60 days from the date on which the AGM should have been held, together with a statement of reasons for not holding it. (correct answer)
2. It need not file an annual return until an AGM is actually held, because under the explicit statutory framework and mandatory procedural requirements of the governing legislation, the filing period begins only after the meeting concludes.
3. It may file the annual return within 60 days after the end of the next financial year, because the AGM was not held.
4. It must file the annual return within 30 days from the date on which the Board decided not to convene the AGM.

Answer: A — It must file the annual return with the Registrar within 60 days from the date on which the AGM should have been held, together with a statement of reasons for not holding it.

Working. AGM due date: 30 September 2025. Annual return deadline: within 60 days from that date, accompanied by reasons for not holding the AGM.

Explanation. Section 92(4) does not suspend filing merely because the AGM was not held. The annual return must be filed within 60 days from the date on which the AGM should have been held, and the company must also submit a statement specifying the reasons for not holding it. The secretary's proposed approach wrongly treats an actually held AGM as a condition for the filing obligation.

Where it goes wrong. The filing clock is tied to the date the AGM ought to have been held when no AGM takes place.

Authority. Companies Act, 2013: section 92(4); Companies (Management and Administration) Rules, 2014: Rule 12; Chapter 7, pp. 7.27-7.28.

Question 4 · 2 marks · Prospectus and Allotment of Securities · hard

Scenario. Orbis Precision Components Limited, a public company, proposes to raise funds through a private placement of equity shares after completing a separate rights issue to its existing members under the share-capital provisions. In September 2026, the members passed a special resolution for the proposed private placement of ₹4 crore in equity shares. The Board then identified 219 proposed offerees for the equity issue in financial year 2026-27. Among them are 14 qualified institutional buyers and 7 employees who are being offered shares under the company's employee stock option scheme; the remaining 198 are other identified persons. A prior private placement of preference shares was fully allotted on 20 August 2026, and no earlier offer under section 42 remains pending. The communications team proposes to publish a public post and run a targeted online campaign inviting the public to contact the company about the issue. Separately, 28 identified persons received individual offer-cum-application letters and remitted application money totalling ₹56 lakh to the company's separate scheduled-bank account. The company did not allot the equity shares within 60 days from receipt of that application money. The finance head has not yet initiated any refund. The finance head argues that the money may remain in the account until the next Board meeting, while the communications team says its campaign is acceptable because the offer is addressed to a selected group. The Board seeks advice on the headcount, permitted solicitation and consequences of the delayed allotment and refund.

For the 200-person private-placement ceiling for this equity issue in FY 2026-27, how many offerees are counted?

1. 219 persons are counted because under the explicit statutory framework and mandatory procedural requirements of the governing legislation, qualified institutional buyers and employees under an employee stock option scheme remain within the ceiling.
2. 205 persons are counted because only the 14 qualified institutional buyers are excluded from the ceiling.
3. 212 persons are counted because only the 7 employees receiving shares under the employee stock option scheme are excluded from the ceiling.
4. 198 persons are counted because both the 14 qualified institutional buyers and the 7 employees receiving offers under the employee stock option scheme are excluded. (correct answer)

Answer: D — 198 persons are counted because both the 14 qualified institutional buyers and the 7 employees receiving offers under the employee stock option scheme are excluded.

Working. 219 proposed offerees - 14 QIBs - 7 ESOP employees = 198 persons counted for the ceiling.

Explanation. The prescribed ceiling is 200 identified persons in a financial year for the relevant kind of security. Qualified institutional buyers and employees receiving securities under an employee stock option scheme under section 62(1)(b) are excluded while computing the count. Therefore, 219 minus 14 minus 7 gives 198 countable persons. Counting either excluded group would produce an incorrect result.

Where it goes wrong. Both QIBs and the specified ESOP employees are excluded; the limit is not calculated by subtracting only one category.

Authority. Companies Act, 2013: section 42(2) and Explanation II to section 42(3); Companies (Prospectus and Allotment of Securities) Rules, 2014: Rule 14(2); Chapter 3, pp. 3.46-3.47.; Companies Act, 2013: section 62(1)(b), referred to in the Rule 14(2) exclusion; Chapter 3, p. 3.46.

Question 5 · 2 marks · Prospectus and Allotment of Securities · medium

May the communications team use the proposed public post and online campaign to invite the public to participate in this private placement?

1. No, because a company making a private placement cannot release public advertisements or use media, marketing or distribution channels to inform the public at large about the issue. (correct answer)
2. Yes, because under the explicit statutory framework and mandatory procedural requirements of the governing legislation, the members have passed a special resolution and the Board has identified the persons to whom the offer-cum-application letters are addressed.
3. Yes, because an online campaign is permitted whenever the number of persons counted under Rule 14(2) does not exceed 200.
4. No, because a public company is not permitted to make a private placement and may raise securities only through a public offer.

Answer: A — No, because a company making a private placement cannot release public advertisements or use media, marketing or distribution channels to inform the public at large about the issue.

Working. The proposed post and campaign invite public participation; section 42(7) bars that method for a private placement.

Explanation. Section 42(7) prohibits a company from releasing public advertisements or using media, marketing or distribution channels or agents to inform the public at large about an issue made under the private-placement route. The special resolution and identified-person list do not create an exception to this prohibition. A public company may use private placement, so option (d) states the wrong reason.

Where it goes wrong. A valid identified-person list does not permit publicity to the public at large.

Authority. Companies Act, 2013: section 42(7); Chapter 3, p. 3.51.; Companies Act, 2013: section 23(1)(b); Chapter 3, pp. 3.3-3.4 (private placement as a mode available to a public company).

Question 6 · 2 marks · Prospectus and Allotment of Securities · hard

After the company misses the 60-day allotment deadline, what is the statutory next step for the application money?

1. The company may allot the securities during the following 15 days and need not return the application money.
2. The company must repay the application money within 15 days from the expiry of the 60-day allotment period. (correct answer)
3. The company must refund the application money within 15 days from the date on which each application was received.
4. The company may retain the money in the scheduled-bank account until 90 days have elapsed from the receipt of application money.

Answer: B — The company must repay the application money within 15 days from the expiry of the 60-day allotment period.

Working. First period: allot within 60 days from receipt of application money. If no allotment occurs, next step: refund within 15 days after expiry of the 60-day period.

Explanation. A company making a private-placement offer must allot the securities within 60 days from receipt of application money. If it does not make the allotment within that period, the application money must be repaid to the subscribers within 15 days from expiry of the 60 days. The additional 15 days are a period for repayment, not an extension of the time available for allotment.

Where it goes wrong. The 15-day period is counted after expiry of the 60-day allotment period; it is not an extra allotment window.

Authority. Companies Act, 2013: section 42(6); Chapter 3, p. 3.51.

Question 7 · 2 marks · Declaration and Payment of Dividend · hard

Scenario. Aster Life Sciences Limited has a financial year ending on 31 March. During the current financial year 2026-27, the company incurred losses up to the close of the quarter immediately preceding the Board meeting scheduled for 20 August 2026. It nevertheless has a surplus in its profit and loss account. The company had declared dividends on its equity shares at rates of 8%, 10% and 12% in the three immediately preceding financial years. It had also defaulted in repayment of deposits accepted before the commencement of the Companies Act, 2013; however, the entire overdue amount was repaid on 10 August 2026 and no part of that default remained outstanding on the date of the proposed declaration. At its meeting on 20 August, the Board considers an interim dividend of 10.5% on equity shares. Separately, the members had declared a final dividend on 5 June 2026. An amount of ₹2.4 lakh remained unpaid and unclaimed after the 30-day period from declaration. The company transferred that portion to a separate account with a scheduled bank only on the twelfth day after the 30-day period had expired, although the statutory transfer window had already ended. The finance controller proposes to treat the delay as harmless because the money was eventually transferred and the company intends to publish the unpaid-dividend statement within 90 days. The Board seeks advice on the interim-dividend rate and the consequence of the late transfer to the Unpaid Dividend Account.

What is the highest interim-dividend rate the Board may declare on the facts at its 20 August 2026 meeting?

1. The Board may declare 12%, because the company has a profit-and-loss surplus and the earlier deposit default has no bearing on an interim dividend.
2. The Board may declare no more than 10%, because the current-year loss caps the rate at the average of the preceding three years and the deposit-default bar is no longer continuing after repayment. (correct answer)
3. The Board may declare no dividend at all, because under the explicit statutory framework and mandatory procedural requirements of the governing legislation, a past failure to repay deposits permanently disqualifies the company from declaring an equity dividend.
4. The Board may declare no more than 8%, because the lowest rate in the preceding three years is the applicable ceiling whenever a current-year loss arises.

Answer: B — The Board may declare no more than 10%, because the current-year loss caps the rate at the average of the preceding three years and the deposit-default bar is no longer continuing after repayment.

Working. Average prior dividend rate = (8 + 10 + 12) / 3 = 10%. The section 123(6) bar does not continue on the stated facts because the deposit repayment default was cured before declaration.

Explanation. Because the company incurred a loss up to the end of the quarter immediately preceding the proposed interim declaration, the rate cannot exceed the average rate declared in the immediately preceding three financial years: (8% + 10% + 12%) / 3 = 10%. Section 123(6) bars an equity dividend only so long as the specified deposit-related failure continues. The facts state that the overdue amount was fully repaid before the Board meeting.

Where it goes wrong. The deposit-related bar is continuing in nature, while the separate interim-dividend loss proviso still caps the rate by the three-year average.

Authority. Companies Act, 2013: section 123(3), proviso; Chapter 8, pp. 8.4-8.5.; Companies Act, 2013: section 123(6), read with sections 73 and 74; Chapter 8, p. 8.17.

Question 8 · 2 marks · Declaration and Payment of Dividend · medium

Which consequence follows from transferring the unpaid portion to the Unpaid Dividend Account only on the twelfth day after the 30-day period expired?

1. No interest is payable if the company transfers the amount before the 90-day period for preparing the unpaid-dividend statement expires.
2. Interest at 12% per annum is payable on the entire dividend declared, beginning on the declaration date.
3. The company may wait for seven years from the dividend declaration and transfer the amount directly to the Investor Education and Protection Fund, as specifically evaluated under the mandatory statutory framework and applicable regulatory guidelines.
4. The company should have transferred the unpaid amount within seven days after the 30-day period; the late transfer attracts interest at 12% per annum from the date of default on the amount not transferred in time. (correct answer)

Answer: D — The company should have transferred the unpaid amount within seven days after the 30-day period; the late transfer attracts interest at 12% per annum from the date of default on the amount not transferred in time.

Working. Transfer deadline = 30-day unpaid period plus a further 7 days. Transfer on day 12 after expiry of the 30-day period is late; section 124(3) applies 12% p.a. from default.

Explanation. If a declared dividend remains unpaid or unclaimed for 30 days, the company must transfer the unpaid amount to a scheduled-bank Unpaid Dividend Account within the next seven days. A failure to transfer all or part of the amount attracts interest at 12% per annum from the date of default on the amount not transferred. The separate 90-day statement requirement does not extend the transfer deadline.

Where it goes wrong. The 90-day statement deadline is separate from, and does not extend, the seven-day transfer window.

Authority. Companies Act, 2013: section 124(1), (2) and (3); Chapter 8, pp. 8.17-8.18.

Question 9 · 2 marks · Foreign Exchange Management Act, 1999 · medium

Scenario. Asteron Mobility Limited is incorporated in India and controls a branch in Kuala Lumpur that negotiates overseas supply contracts. The company proposes to acquire a 32% stake in a Singapore technology company for USD 900,000 and to subscribe to USD 400,000 of bonds issued by a different foreign enterprise. A director argues that the Kuala Lumpur branch is a person resident outside India because its premises and employees are outside India. The company's advisers also disagree about the regulatory framework: one says the Reserve Bank of India determines the conditions for every overseas investment, while another says the Central Government has a role for non-debt instruments. Separately, Ishita Rao returned to India in October 2024 after eight years of employment in Canada, began carrying on a business in India and stayed in India for more than 182 days during the preceding financial year. She retained a foreign-currency account and savings accumulated from her overseas employment while she was a person resident outside India. In November 2026, she proposes to invest USD 285,000 in shares of a foreign company, funding the entire investment from that retained overseas balance and income earned on it; she will not draw foreign exchange from an authorised person in India for this investment. Her adviser objects that an Indian resident individual is subject to a USD 250,000 annual limit. The company and Ishita seek advice on their FEMA status, the regulatory allocation for debt and non-debt instruments and the use of eligible overseas assets after return to India.

For FEMA purposes, how are Asteron Mobility Limited and its Kuala Lumpur branch classified?

1. Both are persons resident in India, because the company is incorporated in India and an overseas branch owned or controlled by a person resident in India is also included in that definition. (correct answer)
2. Only the Indian company is a person resident in India, because under the explicit statutory framework and mandatory procedural requirements of the governing legislation, a branch situated outside India is automatically a person resident outside India.
3. Only the Kuala Lumpur branch is a person resident in India, because the company makes investments outside India.
4. Neither is a person resident in India unless the company and the branch each maintain a physical office in India for more than 182 days.

Answer: A — Both are persons resident in India, because the company is incorporated in India and an overseas branch owned or controlled by a person resident in India is also included in that definition.

Working. Asteron is incorporated in India; its Kuala Lumpur branch is owned and controlled by Asteron. Both fall within section 2(v).

Explanation. The FEMA definition includes any body corporate registered or incorporated in India as a person resident in India. It also includes an office, branch or agency outside India that is owned or controlled by a person resident in India. Therefore, the branch's overseas location does not by itself make it a person resident outside India. This classification is relevant when applying the Schedule I framework for overseas investment by residents.

Where it goes wrong. The definition expressly includes an overseas branch owned or controlled by a person resident in India.

Authority. Foreign Exchange Management Act, 1999: section 2(v)(ii) and (iv); Chapter 3, pp. 3.8-3.10.; FEMA: section 6(1) and Schedule I to the Foreign Exchange Management (Permissible Capital Account Transactions) Regulations, 2000; Chapter 3, pp. 3.29-3.31.

Question 10 · 2 marks · Foreign Exchange Management Act, 1999 · hard

Which statement correctly allocates the regulatory role for the proposed overseas investments in debt and non-debt instruments?

1. The Central Government, after consulting the RBI, specifies permissible classes of debt instruments, while the RBI alone specifies non-debt instruments.
2. The RBI alone specifies both debt and non-debt instrument classes, because all overseas investments are capital-account transactions.
3. The RBI, in consultation with the Central Government, specifies permissible classes and conditions for debt-instrument capital-account transactions; the Central Government, in consultation with the RBI, does so for transactions not involving debt instruments. (correct answer)
4. The Central Government alone specifies both categories, because the investments are being made by an Indian company rather than an individual.

Answer: C — The RBI, in consultation with the Central Government, specifies permissible classes and conditions for debt-instrument capital-account transactions; the Central Government, in consultation with the RBI, does so for transactions not involving debt instruments.

Working. Debt instruments: RBI in consultation with Central Government. Non-debt instruments: Central Government in consultation with RBI.

Explanation. Section 6(2) empowers the RBI, in consultation with the Central Government, to specify classes, limits and conditions for capital-account transactions involving debt instruments. Section 6(2A) assigns the corresponding role for transactions not involving debt instruments to the Central Government, in consultation with the RBI. The two roles are therefore divided rather than vested exclusively in one authority.

Where it goes wrong. Do not reverse the debt and non-debt responsibilities or treat either authority as acting alone in both categories.

Authority. Foreign Exchange Management Act, 1999: section 6(2) and section 6(2A); Chapter 3, pp. 3.26-3.27.

Question 11 · 2 marks · Foreign Exchange Management Act, 1999 · hard

May Ishita make the proposed USD 285,000 overseas investment without RBI approval on the stated funding facts?

1. No, because the USD 250,000 annual drawal ceiling applies to every overseas investment by an individual resident, irrespective of the source of funds.
2. Yes, because section 6(4) permits use of eligible overseas assets and income held or earned while she was resident outside India, provided the investment cost is met exclusively from those eligible assets and the transaction does not contravene FEMA. (correct answer)
3. Yes, because every person resident in India may make overseas investments without limit and without regard to the source of funds.
4. No, because a person who becomes resident in India must close every foreign-currency account and cannot make any further investment abroad.

Answer: B — Yes, because section 6(4) permits use of eligible overseas assets and income held or earned while she was resident outside India, provided the investment cost is met exclusively from those eligible assets and the transaction does not contravene FEMA.

Working. The USD 250,000 ceiling applies to drawal from an authorised person. The proposed USD 285,000 is sourced exclusively from eligible overseas assets and income covered by section 6(4).

Explanation. The USD 250,000 ceiling in section 6(1) concerns foreign exchange drawn from an authorised person by a resident individual for specified capital-account transactions. The study material separately explains that a returning resident may use eligible assets abroad, income on those assets and qualifying sale proceeds for fresh overseas investments without RBI approval, provided the cost is met exclusively from those eligible assets and the transaction is otherwise compliant. Ishita's stated funding meets that condition.

Where it goes wrong. Distinguish a fresh drawal from an authorised person from the use of eligible assets already held abroad while the individual was a person resident outside India.

Authority. Foreign Exchange Management Act, 1999: section 6(1), proviso; Chapter 3, p. 3.32.; FEMA: section 6(4); RBI clarification discussed in Chapter 3, pp. 3.27-3.28.

Question 12 · 2 marks · Limited Liability Partnership Act, 2008 · hard

Scenario. Kestrel Survey LLP, an engineering-survey business, has been in winding-up proceedings since 5 February 2026. It has creditor claims of ₹4.8 crore and partner contributions of ₹1.5 crore. It has proposed an amalgamation with Lumen Geospatial LLP under a ₹6.2 crore scheme that transfers Kestrel's equipment, contracts, property and liabilities to Lumen. The scheme also seeks dissolution of Kestrel without a separate winding-up process after the transfer. On the application made to the Tribunal, separate meetings of creditors and partners were directed. Creditors representing 78% in value voted in favour, while partners representing 72% in value supported the arrangement. The LLP contends that the creditor approval should be sufficient to bind both groups, or alternatively that the two percentages can be combined. The application places Kestrel's latest financial position before the Tribunal and discloses an investigation proceeding pending against it. The Registrar has sent a report stating that Kestrel's affairs have not been conducted in a manner prejudicial to the interests of its partners or to public interest. The liquidator appointed in the winding-up is still scrutinising Kestrel's books and papers and has not submitted a report. The parties propose to file any sanction order with the Registrar within 30 days. The Tribunal seeks advice on the required voting support and reports before sanctioning the scheme and ordering dissolution without winding up.

Can the proposed compromise become binding on both the creditors and partners on the voting results stated?

1. No, not on both classes, because creditors representing 78% in value meet the three-fourths threshold but partners representing 72% in value do not; Tribunal sanction is also required. (correct answer)
2. Yes, because under the explicit statutory framework and mandatory procedural requirements of the governing legislation, creditor support above three-fourths in value binds all partners as well as creditors, even where the partners' own approval is below that level.
3. Yes, because the creditor and partner percentages may be combined and their average is 75%, which is sufficient for both classes.
4. No, because section 60 requires unanimous approval from every creditor and every partner before the Tribunal can consider the scheme.

Answer: A — No, not on both classes, because creditors representing 78% in value meet the three-fourths threshold but partners representing 72% in value do not; Tribunal sanction is also required.

Working. Creditors: 78% >= 75%, threshold met. Partners: 72% < 75%, threshold not met. Tribunal sanction and full material disclosure remain necessary.

Explanation. Under section 60, the required approval is a majority representing three-fourths in value of the creditors or partners, as the case may be, at the relevant meeting. Creditor support of 78% meets that threshold, but partner support of 72% does not. The percentages cannot be pooled across the two classes to cure the shortfall. Even where the voting threshold is met, the arrangement becomes binding only if sanctioned by the Tribunal and the material facts are disclosed.

Where it goes wrong. The three-fourths-in-value test applies to the relevant creditor or partner class; the two class percentages cannot be averaged.

Authority. Limited Liability Partnership Act, 2008: section 60(1), section 60(2) and its proviso; Chapter 12, p. 12.34.

Question 13 · 2 marks · Limited Liability Partnership Act, 2008 · hard

Which reports must be before the Tribunal before it may both sanction this amalgamation and order Kestrel's dissolution without winding up?

1. Only the Registrar's report is required, because it addresses the conduct of Kestrel's affairs.
2. Only the liquidator's report is required, because the scheme seeks dissolution without winding up.
3. A report from the Registrar and a separate report from the transferee LLP's auditor are required, but no liquidator report is needed, as specifically evaluated under the mandatory statutory framework and applicable regulatory guidelines.
4. The Registrar's report on the affairs of the LLP under winding up and the liquidator's report, after scrutiny of its books and papers, are both required for the respective statutory conditions. (correct answer)

Answer: D — The Registrar's report on the affairs of the LLP under winding up and the liquidator's report, after scrutiny of its books and papers, are both required for the respective statutory conditions.

Working. Winding-up transferor amalgamation: Registrar's report. Dissolution without winding up: liquidator's report after scrutiny of books and papers. Both conditions arise here.

Explanation. Section 62 contains two separate safeguards. Where an amalgamation scheme involves an LLP that is being wound up, the Tribunal cannot sanction it unless it receives the Registrar's report that the LLP's affairs have not been conducted prejudicially to partners or public interest. Separately, an order dissolving a transferor LLP without winding up requires the liquidator's report after scrutiny of its books and papers. The Registrar's report alone does not satisfy both conditions.

Where it goes wrong. The Registrar's report and the liquidator's report address different statutory safeguards; one does not replace the other.

Authority. Limited Liability Partnership Act, 2008: section 62(1), first and second provisos; Chapter 12, pp. 12.36-12.37.

Question 14 · 2 marks · Interpretation of Statutes · medium

Scenario. The legislature enacted the fictional Rural Digital Markets Regulation Act in 2025. Section 8 restricts a “commercial operator” from establishing a collection depot in a protected zone, but the Act does not define the expression “commercial operator”. A dispute arises when a cooperative society runs a small collection kiosk in such a zone. The Authority argues that the expression covers every person or body that operates a collection point; the cooperative, whose kiosk has annual receipts of ₹16 lakh, says it is meant only for large commercial storage businesses with annual receipts such as the ₹9 crore warehouse operator cited in the legislative debate. During the Bill's passage, members discussed the problem of large warehousing firms concentrating storage facilities and excluding small local suppliers. The legislative file also contains the Bill's Statement of Objects and Reasons, describing the proposal as a measure to prevent concentration of storage facilities and improve local access. A previous Rural Market Regulation Act, 1998 deals with licensing of collection depots on a similar subject, although it uses a related but not identical expression. That earlier Act does not expressly define “commercial operator” either. The parties have also produced two dictionaries: one gives a broad everyday meaning of “operator”, while the other uses a narrower commercial meaning. The court must decide which sources can assist in construing the ambiguous expression, without treating material outside the enacted provision as a substitute for the statute itself.

How may the court use the Parliamentary debates and historical material placed before it when construing the ambiguous expression in section 8?

1. It must disregard the debates, because only words printed in the enacted section can ever be considered in interpretation.
2. It may use the debates to substitute a new definition for the expression, even if that definition cannot be supported by the enacted words.
3. It may consider the historical setting and Parliamentary History to understand the subject matter, scope and object of an ambiguous enactment, while continuing to construe the enacted text. (correct answer)
4. It must follow the view expressed by the largest number of speakers during the Bill's passage, because the numerical majority of speeches determines legislative meaning.

Answer: C — It may consider the historical setting and Parliamentary History to understand the subject matter, scope and object of an ambiguous enactment, while continuing to construe the enacted text.

Working. The expression is stated to be ambiguous. Historical setting and Parliamentary History may therefore assist in identifying the enactment's background and object.

Explanation. The study material identifies historical setting, including Parliamentary History and other relevant historical facts, as external aids that may assist in understanding the subject matter, scope and object of an enactment. Such material is relevant where interpretation is needed; it does not replace the enacted provision or make individual speeches conclusive. The court must still construe the statutory language rather than enact a new definition from the debates.

Where it goes wrong. Parliamentary history may assist with ambiguity; it does not operate as a substitute for the enacted text.

Authority. ICAI Study Material, Interpretation of Statutes, Chapter 2, section 5(a), Historical Setting; pp. 2.34-2.35.; ICAI Study Material, Interpretation of Statutes, Chapter 2, rule of literal construction; pp. 2.11-2.12.

Question 15 · 2 marks · Interpretation of Statutes · medium

Which interpretive approach should the court adopt when considering the undefined expression, the earlier 1998 Act and the competing dictionary meanings?

1. It must adopt the broadest dictionary definition because the 2025 Act does not define the expression.
2. It cannot refer to the 1998 Act unless the 2025 Act expressly incorporates that Act, and the dictionary meanings must then be ignored.
3. It must apply the 1998 Act's language word for word to the 2025 Act, because every later statute automatically carries forward every earlier definition.
4. It should first check whether the 2025 Act defines the expression; if not, a dictionary may assist, but the meaning must fit the context and the earlier Act on a similar subject may be read with it as a statute in pari materia. (correct answer)

Answer: D — It should first check whether the 2025 Act defines the expression; if not, a dictionary may assist, but the meaning must fit the context and the earlier Act on a similar subject may be read with it as a statute in pari materia.

Working. Check the current Act's definition first. If none exists, consult dictionary meaning in context and read the similar earlier statute as an analogous or pari materia enactment.

Explanation. The study material states that where a word is not defined in the Act under consideration, dictionaries may be consulted for its general sense, but the context in which the word appears must guide the choice of meaning. Statutes in pari materia may be construed together as one system and as explanatory of each other. The earlier Act is not imported word for word automatically, and a dictionary meaning does not prevail without regard to context.

Where it goes wrong. Dictionary consultation is conditional and contextual; statutes in pari materia may inform meaning but are not copied mechanically.

Authority. ICAI Study Material, Interpretation of Statutes, Chapter 2, section 5(d), Earlier and Later Acts and Analogous Acts; pp. 2.35-2.36.; ICAI Study Material, Interpretation of Statutes, Chapter 2, section 5(e), Dictionary Definitions; p. 2.37.