LEGAL ASPECTS OF BANKING OPERATIONS INDIAN INSTITUTE OF BANKING

About This Presentation

Title:

LEGAL ASPECTS OF BANKING OPERATIONS INDIAN INSTITUTE OF BANKING

Description:

Public/individual investors are barred from investing in a securitisation or ... decision of Debt Recovery Tribunal with the Appellate Tribunal the time limit is ... – PowerPoint PPT presentation

Number of Views:3797

Avg rating:3.0/5.0

Slides: 120

Provided by: iibf8

more less

Transcript and Presenter's Notes

Title: LEGAL ASPECTS OF BANKING OPERATIONS INDIAN INSTITUTE OF BANKING

1
LEGAL ASPECTS OF BANKING
OPERATIONSINDIAN INSTITUTE OF BANKING
FINANCEMODULE C D11.10.07
2

SARFAESI Act 2002, extends to whole of India
including the State of Jammu Kashmir. Also
applicable to housing finance companies.
.. The act is effective from 21.06.2002. It also
covers the earlier loans which are outstanding.

.. Based on the observation of the Supreme Court
in the Mardia Chemicals vs Union of India case,
the Government of India issued notification
amending the provisions of the SARFAESI Act. The
amendment stipulates payment of 50 amount
instead of 75 as originally enacted. (When
appealed)

. Take over of loans or advances from the Bank
or Financial Institution for the purpose of
recovery is known as Asset reconstruction.
. The word Board is used in the Act refers to
the Securities and Exchange Board of India (SEBI)

01.. The SARFAESI Act is not applicable to
a.. Regional Rural Banks
b.. Nationalized Banks
c.. Co-operative Banks
d.. State Bank of India and their Associate banks

. Default should have been committed by the
debtor.
. The borrowers account should have been
classified as NPA as per the guidelines of RBI.
. The Act is applicable only to a Secured
creditor and not to an unsecured creditor

02..Which one is not pertaining to Hypothecation.
a.. A charge in or upon any movable property
b.. Right in favour of the creditor
c.. Possession also with the lender
d.. Retaining the ownership with the owner of the
property

03..Bank G has lent to N a sum of Rs.2 lacs on
the hypothecation of a car. Identify the
Originator as per the provisions of the SARFAESI
Act.
a.. Borrower N b.. Bank G
c.. Both are not Originators
d.. SEBI

Obligor is a person liable to pay to the lender
(originator).
As per the contract terms and conditions or
otherwise.
He has to discharge any obligation in respect
of a financial asset whether existing, future,
conditional or contingent or and includes a
borrower.

04.. Identify the odd item (Qualified
Institutional Buyer)
a.. Bank
b.. Insurance company
c.. Individual Investor
d.. An Asset Management Company

The securitization company or reconstruction
Company to raise funds from qualified
institutional buyers by formulating schemes.
.Separate scheme wise accounts to be
Maintained.
.The Scheme invites subscription to security
receipts proposed to be issued by such company
under the scheme.

05.. Acquisition of financial asset from the
originator, by Securitisation or reconstruction
company is known as
a.. Reconstruction
b.. Securitisation
c.. Transfer of Assets
d.. None of these

..On acquisition of financial asset the
securitisation or reconstruction company becomes
the owner of financial asset and steps into the
shoes of the lender bank or financial
institution.
.. RBI is the regulatory authority for
securitisation or reconstruction company.

06..The minimum capital requirement for
securitisation or reconstruction company, at the
time of registration is
a.. Rs. 30 Crore
b.. Rs. 50 Crore
c.. Rs.100 Crore
d.. Rs.200 Crore

.. Securitisation company is a company
registered under the Companies Act,1956 for the
purpose of securitisation. It also needs
registration from RBI under the provisions of
SARFAESI Act.
.. Security agreement includes an agreement,
instrument or any other document or arrangement
under which security interest is created in
favor of secured creditor

07..The securitisation company can set up
separate trusts scheme wise and act trustees for
such schemes as provided in the Securitisation
Companies and Reconstruction Companies (Reserve
Bank) Guidelines and Directions,2003. The
beneficiaries of such trusts are
a.. Investors b.. Debtors c.. Creditors
d.. Lending Bankers

08..The creation of mortgage by deposit of title
deeds with the secured creditor is considered as
a.. Security Receipt
b.. Security Agreement
c.. Secured Asset
d.. Secured Debt

..Secured debt means a debt which is secured by
any security interest.
..Secured Asset means the property on which
security interest is created.
.. The powers given by SARFAESI Act for
enforcement of securities are against secured
assets only

09..Security Receipt is issued
a.. To Borrower by the Bank
b.. To Qualified Institutional buyer by the
Reconstruction Company
c.. To Creditor by the Securitisation Company
d...To Reconstruction company by the
Securitisation Company

..The security receipt evidences the purchasers
undivided right, title and interest in the
security.
..These receipts are transferable in the market.
.. Sponsor is a person holding not less than 10
of the paid up capital of securitisation or
reconstruction company.

10.. The Securitisation or reconstruction company
to commence business or carry on business
subject to
It obtains certificate of registration from the
Registrar of Companies
It has the owned funds not less than Rs3 crore or
such other amount not to exceed 10 of the
financial assets acquired to be acquired
Correct b.. Incorrect
From SEBI and not Registrar of Companies Not
less than Rs 2 crore and not to cross 12
None of these

..Depending on the nature of security asset RBI
has
the powers to specify different amounts of owned
funds for different companies.
..The company can formulate separate schemes for
acquisition of financial asset.
..The securitisation or reconstruction company
can
act as trustees for such trusts and manage the
assets
held in trust.

..The Securitisation or reconstruction company
can acquire financial asset without execution of
any deed of assignment or transfer in its favor
by the concerned bank or the financial
institution.
..Assignment is complete on the acquiring company
issuing debenture or bond and incorporating
therein the terms and conditions of acquisition.

.. The securitisation involves two stages.
In the first stage it is acquisition of financial
assets and undivided interest therein.
Second stage is issue of security receipts in
favor of investors for the purpose of raising
money from investors

11..As per the provisions of SARFAESI Act the
document to be executed requires (identify which
one is not correct)
a.. Payment of stamp duty
b.. As per the provisions of the Indian Stamp Act
c.. State Stamp duty laws
d.. Central Stamp duty laws

..As per RBI guidelines,
a...an acquisition of funded assets should not
include take over of outstanding commitments, if
any, of any bank or financial institution to lend
further.
bterms of acquisition of security interest in
non-fund based transactions should provide for
the relative commitments to continue with bank or
financial institute till demand for further
funding arises

12..Which one is correct (Securitisation matter)
Security receipt is in favor of investor
Security receipt is issued with RBIs permission
Security receipt can not be transferred
Security receipt is issued to the borrower who
has failed to repay

13..When the bank decides that the financial
asset now be acquired by the securitisation
company, a notice of such development to be given
to
a.. The Obligor b.. Such notice is not
optional
c.. The Obligor, which is compulsory
d.. The Obligor which is not compulsory under the
Act.

.. If the obligor is a company there is no need
for modification of charge, when the notice
regarding acquisition of financial asset by a
securitisation company, is not given to the
debtor company.
However, if such notice is given to the
obligor company, then notice to the Registrar of
companies becomes essential.

14.. A bank had advanced to a person who had
defaulted leading to a securitisation company
acquiring the financial asset. In fact no notice
has been issued to the obligor. Later on the
debtor remits some amount towards his dues to the
bank from where he had availed the financial
facility.
a.. The bank can utilise the funds
b.. The bank has an obligation to remit to the
securitisation company
c.. The bank first of all should not accept such
payment
d.. The bank has to enquire why the debtor had
not paid earlier when the liability was
outstanding with them.

..The securitisation or reconstruction company
raises funds for acquisition of asset by issue of
security receipts. Public/individual investors
are barred from investing in a securitisation or
reconstruction company by the Act.
..Realisation of the asset is held and applied
towards redemption. i.e., repayment of
investments as assured while issuing the security
receipt.

15..In case there is no realization and repayment
by the securitisation or reconstruction company,
then the qualified institutional buyers are
entitled to call a meeting of all qualified
institutional buyers making investments in that
scheme and the resolution passed in the meeting.
a.. The first institutional buyer has the right
to call for such meeting
b.. The qualified institutional buyers holding
not less than 75
of the total value of security receipts has
the right
c.. Any one of the Institutional investor who
takes the lead gets the priority
d.. None of the above

.. When the securitisation or reconstruction
company issues security receipts the holder of
the security receipts is entitled to an undivided
interest in the financial asset.
.. In such an event the security receipt does not
require registration which is other wise
compulsory under the Registration Act,1908

16..XYZ bank has got a security receipt from a
securitisation company. They wish to transfer the
same. Then
a.. Such security receipt need not be registered
b.. Such security receipt has to be registered
c.. Such security receipt cannot be transferred
d.. Such security receipt has to be retained by
the bank who is the original institutional
investor and hence there is no question of
registration / non registration.

..Asset reconstruction means acquisition of any
right or interest of any bank or financial
institution in any financial asset for the
purpose of realisation. Powers to take measures
for asset reconstruction are given without any
prejudice to the provisions contained in any
other law.

..If the cause of default in an unit is
mismanagement or lack of expertise on the part of
the existing management the securitisation or
reconstruction company has the powers to take
over the management or change the management.
This power can be exercised even when there is no
default.

..The SARFAESI Act is silent about the grounds or
reasons on the basis of which action of
acquisition can be taken. Therefore, loan
agreements between bank/financial institution and
the borrower are required to be taken into
account as provisions of this do not have
overriding effect on existing contracts and laws.

17..A securitisation or recosnstruction company
can raise funds by way of deposits.
a.. Under special circumstances only
b.. Cannot raise funds by way of deposits
c.. If need arises with the permission of RBI
d.. As and when required with the permission of
RBI,SEBI and Company Law Board

18.. When the asset is acquired for
reconstruction there is limit of six years for
such reconstruction.
a.. True b.. False
c.. Not 6 years but 5 years
d.. No such restriction on number of years

19..Which one is not correct
a At the time of enforcing securities as per the
provisions of SARFAESI Act, the securitisation
company may itself acquire secured assets for use
or resale if such resale is through a public
auction.
b.. The Securitisation company is permitted to
set up trusts who can issue security receipts.
c.. While issuing security receipts detailed
disclosures are required to be made by the
securitisation company
d.. While issuing security receipts detailed
disclosures are not required to be made by the
reconstruction company.

20..While a securitisation company is taking over
the financial asset from the creditor bank, they
will issue
a.. Debenture b.. Security Receipt
c.. Undertaking d.. None of these

..Under the SARFAESI act a secured creditor can
enforce the security interest created in his
favor without the INTERVENTION
of the Court or Tribunal.
..The act deals with how the notice to be given
by the secured creditor asking for repayment of
the out standings.

..The secured creditor bank to give a notice
asking the debtor to clear the liability in full
within 60 days from the date of notice.
.. The above is applicable to such debtors who
have defaulted and classified as NPA.
.. There is no bar for the creditor to seek the
other legal remedies such as resorting to filing
of suit in a competent court

21..Identify which one is not incorrect.
(SARFAESI Act)
a.. Notice as per the provisions of the act is a
routine one
b.. Notice as per the provisions of the act is a
statutory notice.
c.. The Act does contemplate a reply form the
borrower to the notice.
d.. When the offer of sale of property is
accepted by the purchaser and the secured
creditor accepting the offer confirms the sale,
the purchaser has to deposit 50 of the offer
price.

22..The authorized officer is authorized to issue
sale certificate. Such certificate is conveyance
of immovable property and requires stamping as
per the provisions of Stamp Act.
a.. True b.. False
c.. Relevant State Laws
d.. Central Laws

..As the powers of enforcing securities need to
be exercised prudently, fairly and with due care
and caution the Rules framed under SARFAESI Act
provide that Authorized Officer should be of the
level equivalent to Chief Manager of a public
sector bank or equivalent or any other authorised
person exercising powers of superintendence,
direction and control of the business or affairs
of the creditors, as the case may be.

..For taking possession and then sale of
immovable property, the secured creditor is
required to serve a possession notice on the
borrower and by affixing the possession notice on
the outer door or at the conspicuous place at the
property.
..The authorised officer is required to publish
the possession notice in two leading newspapers,
one
of which should be in vernacular language.

23..Before sale of immovable property by the
secured creditor, the borrower has to be given a
notice about the sale.
a.. 30 days of sale b. 15 days of sale
c.. 45 days of sale d. 60 days of sale

24.. If the price for secured asset is coming
less than the reserve price, the authorized
officer can sell the asset at a lower price
a.. Then his decision will be final
b.. With the consent of the secured creditor
c.. With the consent of the borrower and the
secured creditor
d.. Without consulting any one

..When the secured creditor is required to take
possession or control of the secured asset or to
sell such secured asset, he can take the help of
the Chief Metropolitan Magistrate or District
Magistrate.
..For seeking their help a request in writing is
required.
..To approach the authority within whose
jurisdiction the secured asset or documents
related to it are situated.

..When the secured creditor takes over the
management of business of a borrower, he may
publish a notice in a newspaper published in
English language and in a newspaper published in
Indian language in circulation in the place where
the principal office of the borrower is situated,
for appointment of
a.. If the borrower is a company as defined in
the Companies Act, 1956 to be the directors of
such company, or
b.. In any other case, to be the administrator of
the business of borrower.

Any person, including borrower, aggrieved by
any of the measures taken by the secured creditor
or his authorised officer for taking possession
of the security may make an application along
with the prescribed fees to the Debt Recovery
Tribunal having jurisdiction within 45 days from
the date on which such measures are taken.

25..The DRT has to dispose off the application
preferred seeking justice, within a period of
a.. 30 days b.. 45 days
c.. 60 days d.. 90 days

26.. If an appeal has to be preferred based on
the decision of Debt Recovery Tribunal with the
Appellate Tribunal the time limit is
a.. 30 days form the date of receipt of the order
of Debt Recovery Tribunal
b.. 15 days form the date of receipt of the order
of Debt Recovery Tribunal
c.. 60 days form the date of receipt of the order
of Debt Recovery Tribunal
d.. 45 days form the date of receipt of the order
of Debt Recovery Tribunal

27..The amendment to the SARFAESI act, stipulate
that no appeal can lie unless the borrower
deposits 75 of the debt claimed by the secured
creditor. The Tribunal has powers for reasons to
be recorded to reduce this amount to 50 of the
claim amount.
a.. True
b. From 75 to 50 and tribunal cannot reduce
further
c.. From 75 to 50 in the first stage and
Tribunal can reduce the same to 25
d.. False

..The Central Government has to appoint by
notification a person as Central Registrar for
the purpose of registration contemplated under
the Act.
..The record of Central Registrar can be kept
fully or partially in computer, floppies,
diskettes, or any other electronic form. The
Central Registrar shall have the control and
management of the Central Registrar.

28..Under the SARFAESI Act now filing of details
of transactions of securitisation, reconstruction
and creation of security interest is required to
be filed with the Central Registrar. The period
of filing such details in form as may be
prescribed is 21 days after the days of
transaction or creation of security.
a.. Correct
b.. Not 21 days and no such limit
c.. Not 21 days but 30 days
d.. Incorrect

..Whenever any security interest is registered
with the Central Registrar is modified, the
modification is required to be filed before
Central Registrar. It is the duty of the
securitisation company or reconstruction company
or the secured creditor to file the modification.

..The security interest registered with the
Central Registrar is required to be satisfied on
payment of full amount by the borrower. The duty
to report satisfaction is on the Securitisation
company or Reconstruction company or the secured
creditor. The reporting to be done within 30 days
of payment in full or satisfaction of the charge.

29..On receipt of the satisfaction of the charge
the Central Registrar to cause a notice to be
issued to the concerned calling upon to show
cause as to why the payment of satisfaction
should not be recorded as intimated. Such notice
to be issued
a.. Within 7 days
b.. Within 14 days
c.. Within 21 days
d.. Within 30 days

30.. If a Securitization company of
Reconstruction company fails to comply with any
of the directions issued by RBI, then such a
company is punishable by RBI with fine not
exceeding Rupees Two lacs for the default. For
further continuation of the offence an additional
fine is up to Rs.5000/ per day of default can be
imposed.
a.. Not in correct
b.. Incorrect
c.. Rs.5 lacs and Rs.10000/- per day respectively
d.. Rs.7 lacs and Rs 5000/- per day respectively

31..The provisions of SARFAESI Act not applicable
in respect of
a.. A pledge of movable within the meaning of the
Indian Contract Act,1872(sec172)
b.. Any right of an unpaid seller as per Sale of
Goods Act,1930 (sec 47)
c.. Any security interest created in an
agricultural land
d.. All the above

32.. A bank had lent Rs.9 lacs to a borrower and
obtained security in the possession of the debtor
by way of hypothecation. Later on by using the
provisions of the SARFAESI Act, bank could
recover only Rs.5 lacs. The outstanding dues
works out to rs.6.35 lacs. Then the bank
a.. Can proceed against the borrower under Civil
Law
b.. Since the bank had availed the support of
SARFAESI Act has to forego the balance
outstanding
c.. The bank should have applied their mind
before invoking Securitisation Act
d.. The bank can proceed against the borrower
under Civil Law subject to the provisions of
Limitation Act as well.

33..A bank has used the Securitisation Act
provisions and could recover only Rs. 18 lacs .
Still they will have to recover Rs.11 lacs plus
interest. Fortunately for the bank the limitation
period on the loan documents is intact.
a.. Bank has to seek legal remedy through the
Civil Court.
b.. Bank has to seek legal remedy through DRT
c.. Bank has to forego since they have already
availed the legal avenue
d.. Bank may have to approach the borrower
straight away and request him to settle the
balance amount.

34.. A complaint alleging deficiency in banking
service may be filed with the Banking Ombudsman
having the jurisdiction
a.. Non-issue of drafts to customers and others
b.. Inordinate delay in collection of cheques
c.. Both a b
d.. None of the two

..No complaint to the Banking Ombudsman shall lie
unless the complainant had before making a
complaint to the Banking Ombudsman made a written
representation to the bank and either the bank
had rejected the complaint or the complainant had
not received any reply within a period of one
month after the bank concerned received his
representation or the complainant is not
satisfied with the reply given to him by the bank.

..The complaint is made not later than one year
after the cause of action has arisen.
..The complaint is not in respect of the subject
matter, which was settled through the office of
the Banking Ombudsman in any previous proceedings

.. If a complaint is not settled by agreement
within a period of one month from the date of
receipt of the complaint or such further period
as considered by Banking Ombudsman, he can pass
an award.
.. He shall be guided by the evidence placed
before him, the principles of law and practice,
directions, instructions and guidelines issued by
RBI from time to time to pass the necessary award.

35..The Banking Ombudsman while passing an Award
in respect of a complaint may direct the
complainant to furnish a surety for refund of
amount received under the Award along with
interest if any.
a.. There is no such requirement
b.. It is not Surety but Indemnity
c.. It is not only Indemnity but also suitable
Surety
d.. None of the above

..A bank not agreeing to accept the Award passed
under the Banking Ombudsman scheme may file a
review application before the Review Authority
within one month from the date of receiving copy
of the Award. Banks application to be approved
by the banks Chairman or in his absence by the
Managing Director or any other officer of equal
rank.

36.. The Banking Ombudsman assuming the charge of
an arbitrator shall follow the procedure as laid
down under the scheme read wit the provisions of
a.. The Arbitration Act, 1996
b.. The Banking Regulation Act,1949
c.. The Reserve Bank of India Act,1934
d.. None of these

37. For a Debt Recovery Tribunal, the Presiding
Officer holds office for a term of 5 years from
the date on which he enters upon his office or
until he attains the age of 62 years, which ever
is less.
a.. Correct
b.. In correct
c.. Not 5 years and 62 years but 3 years and 63
years respectively
d.. Not 5 years but 7 years whereas 62 years of
age is correct .

..As per the observation of the High Court, the
DRT has power to entertain the application for
execution of the decree of foreign court.
.. Every application to be filed before the DRT
shall be accompanied by appropriate fees.
.. The Tribunal may , on giving opportunity to
both the sides of being heard, pass interim or
final order for payment of amount including
interest thereon.

38..A Civil suit which is pending stands
transferred to the DRT. Then the fees payable
a.. Will be decided by the DRT
b.. Standard fees to be paid as applicable to a
new case referred to the DRT
c.. No fees required to be paid
d.. None of the above

39.. A bank has moved the DRT for justice. Before
the final order is passed another Bank who have
also advanced to the same borrower has approached
the DRT for inclusion in the same proceedings.
a.. Permissible
b.. Not permissible
c.. Not permissible since both the contracts are
different
d.. DRT would not entertain and advise the bank
to file a separate case.

40..Any person aggrieved by the order passed by
the Tribunal or deemed to have been passed by the
Tribunal under DRT Act, may prefer an appeal to
the concerned Appellate Tribunal.
a.. Within 45 days form the date on which copy of
the order is received.
b.. If the order was made by the Tribunal with
the consent of the parties no appeal possible
c.. Both a b
d.. Within 60 days from the date on which copy of
the order is received.

.. The DRT issues Recovery Certificate to the
applicant. Recovery Officer has to proceed to
recover the amount specified in the Recovery
Certificate, by adopting any one of the following
a.. Attachment and sale of movable and immovable
property of the defendants
b. Arrest of the defendant and his detention in
prison
c.. Appointment of a receiver for the management
of the movable and immovable properties of the
defendant.

..The Bankers Book Evidence Act extends to whole
of India except the Sate of Jammu Kashmir,.
..Bankers books include ledgers, daybooks,
cashbooks, account books and all other records
used in the ordinary course of business of a bank.

41..Under the Bankers Book Evidence Act, the term
Judge refers to
a.. Judge of a special Court
b.. Judge of a High Court
c.. Judge of a DRT
d.. Judge of Supreme Court

42.. For making the order that bank officer
should either produce the books of account or
appear as witness (as per the Bankers Book
Evidence act) can be made by the Court or Judge
with out summoning the bank. Such order shall be
served on the bank at least 5 days before the
same is to be obeyed.
a.. True
b.. False
c.. Not 5 days but 3 days
d.. At least 3 clear working days

..The Consumer Protection Act is not applicable
in the State of Jammu and Kashmir.
..The Act is for better protection of the
interests of the consumers and for that purpose
to make provision for the establishment of
consumer councils and other authorities for the
settlement of consumers dispute.
..The Act is social welfare benefit oriented
legislation for the consumer providing
self-contained quasi-judicial machinery to
provide speedy and simple redressal to consumer
disputes.

43..A dispute where the person against whom
complaint has been made, denies or disputes the
allegations contained in the complaint.
a.. Complaint
b.. Consumer Dispute
c.. Dispute
d.. Allegation

44..District Consumer Protection Council to meet
as an when necessary. There has to be at least
two meetings every year.
a.. Correct
b.. Incorrect
c.. At least One meeting
d.. At least Three meetings

45..Which one is not correct (Consumer Protection
matters).
Once the complaint is admitted by the District
Forum it cannot be transferred to any other Court
or Tribunal or any authority set up under any
law.
Any person aggrieved by the order passed by the
District Forum may prefer an appeal to the State
Commission within a period of 30 days from the
date of the order.
A person who is a Judge of the Supreme Court, to
be nominated by the Law Ministry, who shall be
the Chairman of Selection Committee to the
National Commission
For filing any complaint before a District
Forums, State Commission or the National
Commission the limitation period is 2 years from
the date of cause of action.

46.. Borrower K has executed a Demand Promissory
Note and a Hypothecation agreement to Bank B.
Then the bank has made available the finance.
a.. Valid contract
b.. In valid contract
c.. Quasi contract
d.. No contract

47.. A B has taken a loan from the bank by
executing a demand promissory note and other
documents jointly.
a.. A is the promisor
b.. B is the promisee
c.. Bank is the promiser
d.. Bank is the promisee and both A B promisors

48. Identify which is not essential of a valid
contract.
a.. Proposal and acceptance
b.. Consideration
c.. Free consent
d.. Agreement under force

..A contract of indemnity is entered into when a
party apprehends a loss in a particular contract
and it wants itself to be covered from the losses
it may incur.
.. A contract guarantee is a contract to perform
the promise, or discharge the liability, of a 3rd
person in case of default.

49..Bank has lent money to R on the personal
guarantee of L. The bank obtained a demand
promissory note from R and a guarantee agreement
from both L R. Among other contents, the
guarantee agreement protected the bank with
special clauses for which Guarantor L has given
his consent. When R failed to repay, Bank asked L
to repay the loan. He promptly refused and
advised the bank to approach R who only has taken
the money. After trying only they can approach
him and not before that, that is what L told the
bank.
a.. The stand of L is incorrect
b.. The stand of Bank is incorrect
c.. What L says has relevant substance
d.. Bank will succeed if they proceed against L
even without
proceeding against R based on the guarantee
agreement

..Where there are co-sureties, a release by the
creditor of one of them does not discharge the
others. Also, the surety released does not become
free from his responsibility to the other
sureties.
..A surety has the right of Subrogation.
..Any guarantee obtained by means of
misrepresentation made by the creditor is
invalid.
..Any guarantee which the creditor has obtained
by
means of keeping silence as to material
circumstance is also
invalid.

50..N has given his personal guarantee for a
loan to P by bank W. When the repayments are
regular, N has decided to discontinue his
guarantee for certain personal reasons.
a.. He has the right to discontinue
b.. Bank will uphold his decision to discontinue
c.. Bank need not concur with the decision of the
surety
d.. Borrower will have to permit the surety to
leave

51.. A bank has taken gold ornaments as security
by way of pledge and lent. When the borrower
defaulted, the bank sold the gold ornaments
without intimating the Pledgor in writing. The
bank depended on the contents of the pledge
agreement in which the Pledgor has given it in
writing and authorised the bank to dispose off
without referring the matter to him in writing.
a.. The banks stand is correct
b.. The bank will succeed if contested by the
pledgor
c.. The bank will fail if contested by the
pledgor
d.. As the creditor the bank has the right to
dispose off

.. No consideration is necessary to create an
agency.
.. In an emergency, an agent has authority to do
all acts to protect his principal form loss as
would be done by a person in his own case.
.. An agent can detain money received by him on
account of goods sold, even if all the goods
consigned to him for sale are not sold.

52.. A bank as a collecting banker has
misplaced the cheque accepted for collection.
The customer when he approached to know
about the realisation of the cheque, then only
the bank could realise it has misplaced the
Cheque.
a.. The bank is responsible
b.. Till the cheque is realized or returned, the
bank is not responsible.
c.. If the cheque had been purchased then the
bank would have been responsible and not for
collection item.
d.. The bank is not responsible

.. A Sale and an Agreement Sell are different.
.. A sale is a contract in which the parties have
already performed their part.
.. The ownership of goods stands transferred
under a sale
.. If the seller fails to deliver, the buyer can
sue the seller

.. In an agreement to sell, the parties are yet
to perform their mutual promises.
..The ownership of the goods yet to pass on to
the seller
.. In case the seller fails to deliver the goods,
the buyer can claim only damages.
.. The seller can only sue for damages.

53..Under Sale the risk in goods is with the
a.. Seller
b.. Buyer
c.. Both of them
d.. None of them

..Whether a stipulation in a contract of sale is
condition or warranty depends on the types of
contract. Even if the parties have agreed that a
stipulation is a warranty, in fact, it may be a
condition if it is the basis of the contract.
.. If the sale of goods is by description, there
is an implied condition that the goods shall
correspond with the description.

54..There is an implied condition that the buyer
shall have and enjoy quiet possession of the
goods.
a.. True
b.. False
c.. It is not implied condition but implied
warranty
d.. It is not only implied condition but also
implied warranty

100

55.. An Unpaid Seller may exercise his right of
stoppage in transit by
a.. Taking actual possession of the goods
b.. Giving notice of his claim to the carrier
c.. Both of them
dAny one of them

101

56.. A B C co a partnership firm has a current
account with bank J. The account is operated by
any one of the partners. A cheque (open cheque)
received signed by one of the partners B,
representing the firm and in favour of B. Another
cheque signed by C representing the firm
favouring Self.
a.. The bank is in order in paying both the
cheques
b.. The bank is not in order in paying both the
cheques
c.. The bank is in order in paying the cheque
signed by B and not by C
d.. The bank is in order in paying the cheque
signed by C and not by B

102

..If a minor who is admitted to receive the
benefits of the partnership firm chooses to
become a partner after he attains majority is
responsible for all the acts of the firm with
effect from the date on which he has been
admitted to receive the benefits.

103

.. A firm can be dissolved with the consent of
all the partners or in accordance with a contract
between the partners.
.. A firm can also be dissolved by agreement
between the partners or by the court

104

57..A bank has got the documents executed by a
Limited Company. However they have overlooked to
get the Common Seal affixed on these documents. A
reference to the Articles of Association has
revealed that affixing the Common Seal for the
documents has not been mentioned. In other words,
the Articles of Association is silent with regard
to the same.
Bank will get protection
Bank cannot recover the dues based on the
documents
Affixing of Common Seal is compulsory in such
cases.
Affixing of Common Seal is not compulsory unless
it is specifically stated in the Articles of
Association

105

58..Which one is incorrect
a.. A private company is prohibited from
acceptance of any deposit from public
b.. A private company should have a minimum paid
up capital of Rs.2 lcs
c.. A foreign company is incorporated in India
but has a place of business in foreign countries
d.. A public company should have minimum 5 members

106

59.. Identify the correct one.
a.. Any terms of the Articles of Association can
be altered by an ordinary resolution
b.. Change of Registered Office in another State
or the object clause can be altered only by a
special resolution and passed by the company and
with the sanction of the Company Law Board
c.. The borrowings in excess of the paid up
capital plus free reserves in respect of a public
limited company can be done based on resolution
by way of circulation among the board of
directors.
d.. Both Memorandum and Articles of Associations
are not considered as Public documents.

107

..When a company exercise its powers to promote
and/or realise any of its objects stated in the
Memorandum of Association, it is known as Intra
vires ( i.e., within the powers of ) the company.
.. Any other act of the company which is outside
the scope of the objects clause of the Memorandum
of Association is called Ultra vires(i.e., beyond
the powers of ) the company

108

.. Doctrine of Constructive notice states that
every outsider is assumed to have read the
Memorandum of Association and Articles of
Association.
Doctrine of Indoor Management lays down that the
outsiders are not required to see the compliance
of internal regulations of the company.

109

60.. A person is deemed to become a member of a
company if he allows his name to be put on the
register of the members of otherwise holds
himself out as a member even if there is no
agreement to become a member.
a.. Ordinary Member
b.. Acquiescence Member
c.. Special Member
d.. Non member

110

61.. On the death of a member, if the member has
not made a nomination for the shares then the
surviving joint holder (if any) or his legal
representatives have the right to register
themselves as members.
a.. Transmission of Shares
b.. Transfer of Shares
c.. Assignment of Shares
d.. Negotiation of Shares

111

62.. Identify which is not a Statutory Right
a.. To receive notice of meetings, attend and
vote at meetings
To receive dividends
To receive copies of annual accounts of the
company
To transfer shares

112

63.. To be registered as a member in the
companys register of members (subject to a valid
membership obtained by transfer, allotment,
etc.,)
a.. Proprietary Right
b.. Statutory Right
c.. General Right
d.. Documentary Right

113

..A prospectus must be signed by every person
mentioned therein as a director or proposed to
be a director.
.. Every application form for shares must be
accompanied by a copy of the prospectus except
application forms issued to underwriters and
existing shareholders and debenture holders.

114

64.. A prospectus has to be registered with
a.. The Registrar of Companies
b.. SEBI
c.. Stock Exchange
d.. No one

115

..The provisions of FEMA extend to all over
India and also apply to all branches, offices and
agencies outside India owned or controlled by a
person resident in India and also to any
contravention committed outside India by any such
person to whom this Act applies.

116

65..A transaction by which there may be a change
(either an increase or decrease) in the assets or
liabilities outside India of persons resident in
India or assets or liabilities in India of
persons resident outside India.
a.. Capital account Transaction
b.. Current account Transaction
c.. Both a b
d.. Neither a nor b

117

66.. The mortgagor agrees that in the event of
his failing to pay according to his contract, the
mortgagee shall have a right to get the
mortgaged property sold and recover his dues.
Mortgage by Conditional Sale
Equitable Mortgage
English Mortgage
None of these

118

67..A came with his brother, to take a loan on
the security of his Term deposit which will
mature after 7 years. He has changed his decision
and wants the same to be transferred in the name
of his brother.
a.. Possible
b.. Impossible
c.. Possible by way of assignment
d.. Not possible since the FDR is not transferable

119

Thanks
Best wishes to one and all
T.M.C.Vasudevan
09819500380
022-27606208
vasu1611_at_yahoo.co.in
vasu1611_at_rediffmail.com

Write a Comment

User Comments (0)