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CS Professional - Drafting, Pleadings & Appearances study materials
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Question 1Drafting - General Principles, Deeds and Instruments

Under the Indian Stamp Act, 1899, an instrument that is chargeable with duty but is executed on a date earlier than the date on which the stamp paper was sold by the treasury is best described as:

  1. A validly stamped instrument if the parties later pay the deficit duty
  2. An instrument that is inadmissible solely because of a defect in the description of the parties
  3. An instrument written on a stamp paper that had not been issued at the time of its execution Correct answer.
  4. An insufficiently stamped instrument only

Explanation

A stamp paper sold after the date of execution cannot have been used for that execution; the instrument is treated as unstamped and cannot be validated by later payment alone. The defect goes to the very existence of the stamp at the time of execution, not merely to the quantum of duty.

Question 2Drafting - General Principles, Deeds and Instruments

Which of the following instruments is compulsorily registrable under section 17 of the Registration Act, 1908?

  1. An agreement to sell immovable property without delivery of possession
  2. A will relating to immovable property
  3. A sale deed of immovable property valued at rupees fifty thousand Correct answer.
  4. A lease of immovable property for a term of two years

Explanation

Section 17(1)(b) makes non-testamentary instruments transferring or assigning any right, title or interest in immovable property of value one hundred rupees and upwards compulsorily registrable. A sale deed is a transfer and hence falls squarely within it.

Question 3Drafting - General Principles, Deeds and Instruments

In a deed of conveyance, the clause that identifies the instrument itself, the parties, the date and the property is conventionally known as:

  1. The testimonium
  2. The habendum
  3. The premises Correct answer.
  4. The recital

Explanation

The premises (or commencement) part of a deed sets out the date, the parties, and the description of the property or subject matter. It is the opening operative portion after the title and before the recitals.

Question 4Drafting - General Principles, Deeds and Instruments

A pleader drafting a plaint discovers that the cause of action arose partly in the jurisdiction of two courts. The safest course, consistent with the Code of Civil Procedure, 1908, is to:

  1. File in the court having the lowest pecuniary jurisdiction
  2. File only where the property is situate in every case
  3. File in either court, since section 15 permits a plaintiff to choose any court where part of the cause of action arose Correct answer.
  4. File only in the court where the defendant resides

Explanation

Under section 15 read with section 20 of the Code, a suit may be instituted in any court within whose local limits the cause of action wholly or partly arises. Where multiple courts have jurisdiction, the plaintiff may choose among them subject to section 15's preference for the defendant's residence in certain cases.

Question 5Drafting - General Principles, Deeds and Instruments

Which of the following is a defining characteristic of a deed as distinguished from a mere agreement?

  1. It is always required to be registered
  2. It is executed under seal or with attestation and is binding as a formal instrument Correct answer.
  3. It must be signed by both parties in every case
  4. It must be in writing on judicial stamp paper

Explanation

A deed is a formal written instrument executed by the parties, traditionally under seal, and its execution is attended by formalities such as attestation and delivery. An agreement is a simpler consensual instrument that need not satisfy these formalities.

Question 6Drafting - General Principles, Deeds and Instruments

While drafting the testimonium clause of a sale deed, the pleader should ensure that it:

  1. Contains the signatures of the executants and witnesses after the words 'In witness whereof' Correct answer.
  2. States the consideration and mode of payment
  3. Recites the chain of title of the vendor
  4. Describes the boundaries of the property

Explanation

The testimonium is the concluding formula beginning 'In witness whereof the parties have set their hands', followed by the signatures of executants and attesting witnesses. It evidences execution rather than narrating facts or describing property.

Question 7Drafting - General Principles, Deeds and Instruments

A power of attorney executed in favour of a person authorising him to sell immovable property situated in India must, to be effective for registration of the sale deed, be:

  1. Attested by two witnesses only
  2. Stamped and authenticated in the manner required by section 33 of the Registration Act, 1908, if executed outside India Correct answer.
  3. Registered in every district where the principal owns property
  4. Executed only on plain paper since it is not itself a transfer

Explanation

Section 33 of the Registration Act requires that a power of attorney executed outside India be authenticated by a notary public or other specified officer, and where it authorises transfer of immovable property it must be stamped and, if executed out of India, authenticated as prescribed. Without such authentication the document cannot be presented for registration of the sale deed.

Question 8Drafting - General Principles, Deeds and Instruments

In a written statement, the plea that the suit is barred by limitation is a:

  1. Preliminary objection that must be specifically raised in the written statement Correct answer.
  2. Preliminary decree
  3. Defence that can be raised for the first time in appeal
  4. Matter that the court must raise suo motu only after framing issues

Explanation

Limitation is a mixed question of fact and law and must be pleaded specifically in the written statement under Order VIII Rule 2 of the Code. If not raised in the pleadings, it may not be entertained at a later stage.

Question 9Drafting - General Principles, Deeds and Instruments

The doctrine of 'contra proferentem' in the interpretation of written instruments means that:

  1. The instrument is construed according to the literal meaning of every word
  2. Ambiguities are resolved in favour of the party who drafted the instrument
  3. Ambiguities are resolved against the party who drafted the instrument Correct answer.
  4. The instrument is read strictly against the grantee

Explanation

Contra proferentem requires that an ambiguous term in a document be construed against the party who drafted or proffered it. The rationale is that the drafter had the opportunity to express the term clearly and should bear the consequence of obscurity.

Question 10Drafting - General Principles, Deeds and Instruments

A pleader preparing a plaint for recovery of money must verify the plaint as required by Order VI Rule 15 of the Code of Civil Procedure, 1908. The verification must state that:

  1. The plaintiff has paid the requisite court fee
  2. The plaint is filed in good faith
  3. The suit has not been filed elsewhere
  4. The contents of the plaint are true to the knowledge of the plaintiff, and that paras relating to documents are true to his belief Correct answer.

Explanation

Order VI Rule 15 requires the person verifying to specify by reference to the numbered paragraphs what he verifies on knowledge and what on belief. The standard form states that the contents are true to the knowledge of the deponent and the paragraphs relating to documents are true to belief.

Question 11Drafting - General Principles, Deeds and Instruments

A deed of gift of immovable property under the Transfer of Property Act, 1882, to be valid, must be:

  1. Made in writing and registered, and the property must be accepted by the donee during the donor's lifetime Correct answer.
  2. Made in writing but need not be registered if the value is below one hundred rupees
  3. Made orally if possession is delivered simultaneously
  4. Made only by a registered instrument executed by the donee

Explanation

Section 123 of the Transfer of Property Act requires a gift of immovable property to be effected by a registered instrument signed by the donor and attested by at least two witnesses. Section 122 requires acceptance by the donee during the donor's lifetime, and acceptance must be shown where it can be made.

Question 12Drafting - General Principles, Deeds and Instruments

Which of the following best describes the function of the 'operating clause' in a deed?

  1. It sets out the grant or transfer and defines its scope and effect Correct answer.
  2. It narrates the history of the title of the grantor
  3. It contains the signatures and attestation
  4. It identifies the stamp duty paid

Explanation

The operating or granting clause is the operative part of the deed that actually effects the transfer or grant and defines its extent. It is the clause that carries the legal effect intended by the parties.

Question 13Drafting - General Principles, Deeds and Instruments

A pleader is drafting written arguments. Which of the following is the most appropriate principle governing the structure of written submissions before a civil court?

  1. Written arguments must be filed before the framing of issues
  2. Arguments should avoid citing statutory provisions to keep the submission concise
  3. Every factual assertion must be supported by a reference to the pleading and the evidence on record Correct answer.
  4. Only oral arguments are permitted after the evidence stage

Explanation

Effective written submissions link each proposition of fact to the pleading and the evidence, and each proposition of law to the relevant provision or precedent. This enables the court to verify the basis of each contention.

Question 14Drafting - General Principles, Deeds and Instruments

Under section 35 of the Indian Stamp Act, 1899, an instrument not duly stamped is generally:

  1. Valid but unenforceable
  2. Admissible if the parties consent
  3. Inadmissible in evidence, subject to exceptions such as impounding and payment of duty and penalty Correct answer.
  4. Automatically void and of no effect

Explanation

Section 35 renders an insufficiently stamped instrument inadmissible in evidence, but the court may impound it and permit the party to pay the deficit duty and penalty, after which it becomes admissible. The defect is therefore curable.

Question 15Drafting - General Principles, Deeds and Instruments

A testator wishes to make a codicil to his will. A codicil is best described as:

  1. An instrument of disclaimer of inheritance
  2. A deed of family settlement among heirs
  3. A supplementary instrument that alters, adds to or confirms an existing will Correct answer.
  4. A fresh will revoking all earlier wills

Explanation

A codicil is a testamentary instrument supplemental to a will, used to make alterations, additions or confirmations without revoking the entire will. It must be executed with the same formalities as a will.

Question 16Drafting - General Principles, Deeds and Instruments

In a suit for specific performance of an agreement to sell immovable property, the plaint should plead readiness and willingness because:

  1. It is a jurisdictional requirement for the court to entertain the suit
  2. It establishes the pecuniary jurisdiction of the court
  3. Section 16(c) of the Specific Relief Act, 1963 makes it a condition precedent to relief Correct answer.
  4. It is required only if the defendant raises the plea

Explanation

Section 16(c) of the Specific Relief Act requires the plaintiff to aver and prove that he has performed or has always been ready and willing to perform the essential terms of the contract. Absence of such pleading is fatal to the suit.

Question 17Drafting - General Principles, Deeds and Instruments

The rule of 'ejusdem generis' applied to the interpretation of a deed means that:

  1. Every word in the deed is given its ordinary dictionary meaning
  2. General words following specific words are confined to things of the same class as the specific words Correct answer.
  3. Ambiguity is resolved in favour of the grantee
  4. Specific words are controlled by the general words that precede them

Explanation

Ejusdem generis confines general words that follow an enumeration of specific items to items of the same nature or class. It prevents the general words from being read expansively beyond the drafter's evident intention.

Question 18Drafting - General Principles, Deeds and Instruments

When drafting the schedule to a sale deed of agricultural land, the most reliable description of the property is one that:

  1. Mentions only the survey number and village
  2. Gives the boundaries, survey number, area, and the local name of the land Correct answer.
  3. Describes the property by reference to the vendor's intention
  4. Relies only on the market value of the land

Explanation

A properly drafted schedule identifies the property by every available particular - survey or khasra number, area, boundaries on all sides, and local name - so that the subject matter is certain and identifiable. This reduces the risk of disputes about identity.

Question 19Drafting - General Principles, Deeds and Instruments

A pleader is asked to draft a reply to an application under Order XXXIX Rules 1 and 2 of the Code of Civil Procedure, 1908. The reply must primarily address:

  1. The merits of the suit as a whole and seek dismissal of the plaint
  2. Only the valuation of the suit for the purpose of court fee
  3. The three ingredients of prima facie case, balance of convenience and irreparable injury, and the absence of each Correct answer.
  4. The maintainability of the suit under section 9 of the Code

Explanation

An application for temporary injunction is decided on the triple test of prima facie case, balance of convenience and irreparable loss. A reply must meet those ingredients and show why the plaintiff fails on each.

Question 20Drafting - General Principles, Deeds and Instruments

Which of the following is true about the attestation of a will under section 63 of the Indian Succession Act, 1925?

  1. The will must be notarised
  2. The testator must sign in the presence of two or more witnesses who each attest in the testator's presence Correct answer.
  3. The will must be registered to be valid
  4. The witnesses must be beneficiaries under the will

Explanation

Section 63 requires the testator to sign the will in the presence of two or more witnesses, each of whom must see the testator sign or see his signature and attest in his presence. Registration is optional and notarisation is not a statutory requirement.

Question 21Drafting - General Principles, Deeds and Instruments

A pleader drafting a legal notice on behalf of a seller of goods must, to be effective, state:

  1. The court fee proposed to be paid
  2. The names of the witnesses to be examined
  3. The entire evidence proposed to be led at trial
  4. A demand for the relief claimed and a reasonable time for compliance Correct answer.

Explanation

A legal notice should clearly set out the facts giving rise to the claim, the demand and the time within which compliance is sought. It should not pre-empt the trial by setting out the entire evidence.

Question 22Drafting - General Principles, Deeds and Instruments

A pleader is drafting a deed of partition among co-owners of immovable property. Which of the following is essential to give the instrument effect as a partition deed?

  1. Recitals of the family history only
  2. Registration in every district where any co-owner resides
  3. A statement that the partition is irrevocable
  4. Identification of the property, the shares of each co-owner and the specific portion allotted to each Correct answer.

Explanation

A partition deed must identify the joint property, define the shares of each co-owner and specify the portion allotted to each so that the division is certain. Registration is required where the property is immovable and the value exceeds the statutory threshold, but not in every district.

Question 23Drafting - General Principles, Deeds and Instruments

Which of the following statements about the 'recital of title' in a sale deed is correct?

  1. It has no evidentiary value whatsoever
  2. It operates as an estoppel against the purchaser only
  3. It is conclusive proof of title against the whole world
  4. It is a statement of the vendor's title that provides context but does not by itself convey title Correct answer.

Explanation

Recitals narrate the vendor's title and the background of the transaction but are not the operative conveyance. They provide context and may be evidence in disputes, but title passes by the operative clause and the instrument as a whole.

Question 24Drafting - General Principles, Deeds and Instruments

A pleader is drafting an application for amendment of pleadings under Order VI Rule 17 of the Code of Civil Procedure, 1908. Which principle should guide the draft?

  1. Amendments that introduce a new cause of action barred by limitation should be avoided unless the amendment relates back Correct answer.
  2. All amendments are permitted as of right after issues are framed
  3. Amendment should be sought only after the evidence is concluded
  4. Amendment cannot be sought to correct the description of the parties

Explanation

Order VI Rule 17 permits amendment at any stage to determine the real question in controversy, but an amendment introducing a fresh claim barred by limitation will not ordinarily be allowed unless it relates back. The draft should therefore address limitation and the relation-back principle.

Question 25Drafting - General Principles, Deeds and Instruments

Which of the following is the correct order of clauses in a standard sale deed?

  1. Schedule, recitals, testimonium, operative clause
  2. Recitals, operative clause, testimonium, schedule Correct answer.
  3. Operative clause, schedule, recitals, testimonium
  4. Testimonium, recitals, schedule, operative clause

Explanation

A standard sale deed opens with the premises and recitals, then the operative granting clause, then the testimonium and signatures, with the schedule of property appended at the end. Following this order ensures clarity and completeness.

Question 26Drafting - General Principles, Deeds and Instruments

Under section 17(1)(b) of the Registration Act, 1908, a non-testamentary instrument that creates, declares, assigns, limits or extinguishes a right, title or interest in immovable property of value one hundred rupees and upwards must be registered. Which instrument is therefore compulsorily registrable under that provision?

  1. A sale deed of immovable property worth rupees five lakh conveying title to the buyer Correct answer.
  2. A memorandum of an oral agreement to sell immovable property recording the terms only
  3. An instrument merely recording delivery of possession of immovable property already conveyed
  4. A will bequeathing immovable property worth rupees five lakh to a relative

Explanation

Section 17(1)(b) covers non-testamentary instruments that create, declare, assign, limit or extinguish any right, title or interest in immovable property of the stated value. A sale deed is the classic instance because it transfers title on execution and registration. Wills are expressly excluded by the non-testamentary requirement and are governed by the Indian Succession Act, 1925.

Question 27Drafting - General Principles, Deeds and Instruments

A pleader is drafting the habendum clause of a lease deed. Which recital properly belongs to the habendum rather than to the granting or operative part?

  1. That the lessor is the absolute owner of the premises and has full power to demise them
  2. That the lessee shall hold the demised premises for the term of three years commencing on a stated date Correct answer.
  3. That the lessor, in consideration of the rent reserved, demises the premises to the lessee for the term
  4. That the lessee has paid the lessor a sum of rupees fifty thousand as advance rent

Explanation

The habendum defines the estate or interest granted to the grantee, stating what the grantee is to hold and for what term. Language that the lessee shall hold for a specified term therefore belongs to the habendum. The words of demise and consideration belong to the operative part, while a statement of the lessor's title belongs to the recitals.

Question 28Drafting - General Principles, Deeds and Instruments

A deed of mortgage contains the recital 'the mortgagor doth hereby transfer by way of simple mortgage the scheduled property as security for the loan'. Which defect in the drafting most directly affects the validity of the transaction as a simple mortgage under section 58(b) of the Transfer of Property Act, 1882?

  1. The deed omits a description of the mortgagee's place of residence
  2. The deed uses the word 'transfer' instead of the word 'mortgage'
  3. The deed omits the personal covenant to repay the loan
  4. The deed omits a statement that the mortgagor binds himself personally to pay the loan out of the property Correct answer.

Explanation

A simple mortgage under section 58(b) requires the mortgagor to bind himself personally to pay the mortgage money and to agree that, in default, the mortgagee may cause the property to be sold. The absence of that personal obligation and power of sale is the substantive defect. Mere choice of the word 'transfer' or omission of the mortgagee's address does not defeat the transaction.

Question 29Drafting - General Principles, Deeds and Instruments

In a sale deed, the clause reading 'the vendor hereby covenants with the purchaser that the purchaser shall henceforth peaceably and quietly hold and enjoy the property without any lawful interruption by the vendor or any person claiming under him' is best described as:

  1. A covenant for further assurance, requiring the vendor to execute fresh documents
  2. A recital of title, evidencing the vendor's antecedent ownership
  3. A covenant for quiet enjoyment, which is a covenant running with the land Correct answer.
  4. An attornment clause, by which the purchaser acknowledges the vendor as landlord

Explanation

A covenant for quiet enjoyment assures the purchaser that he will hold and enjoy the property free from lawful interruption by the vendor or those claiming under him. It is a covenant running with the land and can be enforced by successors in title. A covenant for further assurance obliges the vendor to do further acts to perfect title and is a distinct covenant.

Question 30Drafting - General Principles, Deeds and Instruments

A deed of settlement reserves to the settlor a power to revoke the settlement after two years and to resume the property. The deed is stamped as a settlement and registered. Which analysis of the instrument is most accurate?

  1. The reservation of a power of revocation makes the instrument in substance a will, so probate is required
  2. The reservation of a power of revocation does not alter the nature of the instrument as a settlement, but the recital must accurately disclose the power Correct answer.
  3. The reservation of a power of revocation converts the settlement into a mortgage, requiring stamp duty as such
  4. The reservation of a power of revocation renders the deed void for uncertainty of the interest granted

Explanation

A settlement may validly reserve a power of revocation to the settlor without ceasing to be a settlement; the deed operates in presenti and is not testamentary merely because it is revocable. The drafter must, however, disclose the power accurately so that the instrument reflects the true bargain and attracts the correct stamp duty. Revocability does not render the grant uncertain or convert it into a mortgage.

Question 31Drafting of Company Law Documents, Notices, Resolutions and Minutes

Under the Companies Act, 2013 read with the Secretarial Standards, what is the standard interval at which the notice of a board meeting must ordinarily be given to every director at his registered address, unless a shorter period is agreed?

  1. Not less than forty-eight hours' notice in writing
  2. Not less than fifteen days' notice in writing
  3. Not less than twenty-one days' notice in writing
  4. Not less than seven days' notice in writing Correct answer.

Explanation

Section 173(3) requires not less than seven days' notice in writing of every board meeting to be given to every director at his registered address, by hand delivery, post, or electronic means. SS-1 permits a shorter period only when the meeting is called at shorter notice to transact urgent business, with at least one independent director present. The seven-day baseline is therefore the default that the notice must state.

Question 32Drafting of Company Law Documents, Notices, Resolutions and Minutes

A private company wants to convene an extraordinary general meeting with less than twenty-one days' notice. Which condition must the notice document record for the shorter notice to be valid?

  1. Consent of not less than ninety-five per cent of the members entitled to vote at such meeting Correct answer.
  2. Consent of the statutory auditor in writing
  3. Approval of the registrar of companies on application
  4. Approval of the board by a simple majority at a board meeting

Explanation

Section 101(1) proviso permits a general meeting to be called at shorter notice if consent is given by not less than ninety-five per cent of the members entitled to vote at that meeting. For an annual general meeting, the consent must be in writing or by electronic mode. The notice document should therefore record that such consent has been obtained.

Question 33Drafting of Company Law Documents, Notices, Resolutions and Minutes

In a notice convening a general meeting, an item of ordinary business is proposed. Which statement correctly describes the explanatory statement requirement under section 102?

  1. An explanatory statement is needed for every item, whether ordinary or special business
  2. An explanatory statement is required only when members requisition the meeting
  3. An explanatory statement is required only when the item is an appointment of an auditor
  4. An explanatory statement is needed only for special business, and must disclose the nature of concern or interest of every director, manager and their relatives Correct answer.

Explanation

Section 102 mandates an explanatory statement only for items of special business; ordinary business such as adoption of accounts or declaration of dividend needs no such statement. Where special business is transacted, the statement must set out the nature of concern or interest, financial or otherwise, of every director, manager, and their relatives. The statement is annexed to the notice.

Question 34Drafting of Company Law Documents, Notices, Resolutions and Minutes

A company wishes to pass a resolution by postal ballot. Which drafting element must the notice expressly state to comply with the Companies (Management and Administration) Rules, 2014?

  1. The name of the scrutinizer only
  2. The remuneration payable to the scrutinizer
  3. The number of shares held by each promoter
  4. The period within which the postal ballot form must be returned and the details of the designated officer Correct answer.

Explanation

The postal ballot notice must specify, among other things, the period within which the postal ballot form, whether physical or electronic, must be returned and the name and address of the designated officer to whom it is to be sent. It must also carry the instructions for recording assent or dissent. These particulars make the notice self-contained and enforceable.

Question 35Drafting of Company Law Documents, Notices, Resolutions and Minutes

Drafting a special resolution for alteration of the articles of association. Which recital in the explanatory statement is most directly required by the statute?

  1. A statement that all creditors have consented to the alteration
  2. A statement of the reasons for the proposed alteration and the nature of concern or interest of directors and key managerial personnel Correct answer.
  3. A statement that the alteration will increase the company's market capitalisation
  4. A statement that the alteration has been pre-cleared by a stock exchange

Explanation

For special business, the explanatory statement must disclose the reasons for the proposal and the nature of concern or interest, financial or otherwise, of every director, manager, key managerial personnel, and their relatives. This ensures members can exercise an informed vote. The other recitals are not statutory requirements for an articles alteration.

Question 36Drafting of Company Law Documents, Notices, Resolutions and Minutes

Which of the following is the correct form of the resolution clause where a company resolves to increase its authorised share capital?

  1. Resolved that the authorised share capital of the company be and is hereby increased from Rs. 10,00,000 to Rs. 25,00,000 Correct answer.
  2. Resolved to increase the capital
  3. Resolved that the board is authorised to consider an increase in capital
  4. Resolved that the capital may be increased as the board thinks fit

Explanation

A resolution altering the authorised capital must state the existing and the increased amount precisely, since it operates on the capital clause of the memorandum. Section 61 requires the alteration to be authorised by the articles and approved by ordinary resolution. Vague language such as 'may be increased' does not effect the alteration.

Question 37Drafting of Company Law Documents, Notices, Resolutions and Minutes

In the minutes of a board meeting, how should a resolution passed on a matter where a director is interested be recorded?

  1. Only the names of directors who voted in favour are recorded
  2. The resolution is recorded without any reference to the interested director
  3. The resolution is recorded as passed unanimously irrespective of abstention
  4. The interested director's disclosure and the fact that he did not vote or participate are recorded, together with the resolution Correct answer.

Explanation

Section 184 requires disclosure of interest, and the minutes should reflect that disclosure and the director's abstention from discussion and voting where applicable. Accurate recording protects the validity of the resolution and evidences compliance. Recording the resolution as unanimous would misstate the proceedings.

Question 38Drafting of Company Law Documents, Notices, Resolutions and Minutes

Within what period must the minutes of a board meeting be entered in the minute book, and by what date must they be signed?

  1. Within seven days of the meeting, signed by the chairman of the same meeting or the next meeting Correct answer.
  2. Within ninety days, signed by the auditor
  3. Within forty-eight hours, signed by the company secretary
  4. Within thirty days, signed by any two directors

Explanation

Section 118 read with SS-1 requires minutes to be recorded within thirty days, but the Secretarial Standard prescribes preparation within fifteen days and entry in the minute book within thirty days; the practical drafting norm is that minutes be finalised promptly and signed by the chairman of the same meeting or the next meeting within thirty days. The signature of the chairman of the same or next meeting is the operative requirement.

Question 39Drafting of Company Law Documents, Notices, Resolutions and Minutes

A notice of a general meeting is sent by electronic mode. Which requirement must the drafting satisfy?

  1. The notice must be sent to all members at their registered e-mail addresses and simultaneously placed on the company's website Correct answer.
  2. The notice must be sent only to members who have opted for electronic communication
  3. The notice must be sent to the e-mail address registered with the company or depository, and a physical copy must also be sent to every member
  4. The notice must be authenticated by the company secretary's digital signature

Explanation

Section 101 read with the applicable rules permits notice by electronic mode to members at their registered e-mail addresses, and the company must also place the notice on its website. This ensures equal access for members who have not registered an e-mail address. The notice must comply with the prescribed manner of authentication as well.

Question 40Drafting of Company Law Documents, Notices, Resolutions and Minutes

In drafting a board resolution for borrowing money, which recital best supports the exercise of the power under section 179(3)?

  1. Resolved that the company do borrow such sums as may be required from time to time
  2. Resolved that the managing director be authorised to borrow without limit
  3. Resolved that the members be requested to approve borrowing at a future meeting
  4. Resolved that the board, having regard to the powers conferred by the articles and section 179(3)(d), approves borrowing up to Rs. 5 crore from the specified lender on the terms tabled Correct answer.

Explanation

A borrowing resolution should identify the source of power, the quantum, the lender, and the terms so that the resolution is self-contained and within the board's authority. Section 179(3) requires the power to be exercised at a board meeting by resolution. Open-ended or unlimited authorisations risk exceeding the board's powers.

Question 41Drafting of Company Law Documents, Notices, Resolutions and Minutes

What is the correct approach when drafting the minutes of a meeting where a resolution was passed by a majority but one director recorded dissent?

  1. The resolution is recorded as withdrawn
  2. The director's dissent is noted only in a separate private file
  3. The dissent is omitted to preserve the appearance of unanimity
  4. The dissent is recorded, together with the director's name and the resolution as passed Correct answer.

Explanation

Minutes must be a fair and accurate record of proceedings, so a recorded dissent should be entered with the director's name and the resolution as carried. Omitting dissent falsifies the record and may prejudice the director. The resolution remains valid if passed by the requisite majority.

Question 42Drafting of Company Law Documents, Notices, Resolutions and Minutes

Which statement correctly describes the content of the statutory registers that a company must maintain and the drafting standard for entries?

  1. Entries must be made contemporaneously, in ink, and any correction must be authenticated Correct answer.
  2. Entries may be reconstructed at the end of the financial year from memory
  3. Entries may be made in pencil and later overwritten
  4. Entries need not be dated if the register is bound

Explanation

Statutory registers such as the register of members and the register of directors must be maintained with contemporaneous, legible entries, and corrections must be authenticated so that the register remains reliable evidence. Section 88 and the applicable rules require the prescribed particulars to be entered. Undated or reconstructed entries undermine the register's probative value.

Question 43Drafting of Company Law Documents, Notices, Resolutions and Minutes

A company proposes to give notice of a general meeting to members. Which statement about the contents of the notice is correct?

  1. The notice need not state the place if the meeting is held electronically
  2. The notice may omit the nature of business if the agenda is circulated later
  3. The notice must state the place, day and hour of the meeting and the nature of the business to be transacted Correct answer.
  4. The notice need state only the date of the meeting

Explanation

Section 101(2) requires the notice to specify the place, day and hour of the meeting and the nature of the business to be transacted. These particulars allow members to decide whether to attend and to prepare. Omitting them renders the notice defective.

Question 44Drafting of Company Law Documents, Notices, Resolutions and Minutes

When drafting a resolution for appointment of an auditor under section 139, which particular must the resolution and explanatory statement address?

  1. The auditor's residential address and PAN only
  2. The auditor's consent and a certificate of eligibility under section 141, and the remuneration Correct answer.
  3. The auditor's membership of a foreign institute
  4. The auditor's prior experience in the company's sector

Explanation

The appointment resolution must be supported by the auditor's written consent and a certificate that the appointment is within the limits of section 141, and it should fix the remuneration. These documents are placed before the members with the notice. Other particulars may be relevant commercially but are not the statutory core.

Question 45Drafting of Company Law Documents, Notices, Resolutions and Minutes

In drafting a notice for an annual general meeting, where is the ordinary business of declaring dividend ordinarily placed?

  1. As an item reserved for the board and not placed before members
  2. As ordinary business, listed after the adoption of accounts and before the appointment of auditors Correct answer.
  3. As special business requiring an explanatory statement
  4. As a matter to be decided by postal ballot only

Explanation

Declaration of dividend is ordinary business under section 102 and is conventionally listed after adoption of the financial statements and reports and before appointment of auditors. Ordinary business does not require an explanatory statement. The ordering reflects the sequence in which the items are taken up.

Question 46Drafting of Company Law Documents, Notices, Resolutions and Minutes

A company wishes to pass a resolution by circulation instead of at a board meeting. Which drafting requirement applies?

  1. The resolution may be circulated orally and confirmed later
  2. The resolution may be passed by circulation only for matters outside section 179(3)
  3. The resolution requires approval of all directors without exception
  4. The draft resolution must be circulated in writing to all directors at their addresses, with the necessary papers, and approved by the requisite majority Correct answer.

Explanation

Section 175 permits a resolution by circulation if the draft, together with the necessary papers, is circulated in writing to all directors at their addresses and is approved by a majority of those entitled to vote. The resolution must be noted at the next board meeting. Matters requiring a meeting by statute cannot be decided by circulation.

Question 47Drafting of Company Law Documents, Notices, Resolutions and Minutes

Which statement best describes the drafting standard for the chairman's report that accompanies the notice of a general meeting?

  1. It should be a balanced narrative of the company's affairs, material developments and outlook, consistent with the financial statements Correct answer.
  2. It need not be consistent with the audited accounts
  3. It must be a verbatim transcript of the board's discussion
  4. It must be drafted by the statutory auditor

Explanation

The chairman's report is a narrative communication to members that should fairly present the company's affairs, material developments and outlook, and must be consistent with the audited financial statements. It is not a verbatim record of board deliberations. Consistency with the accounts is essential to avoid misleading members.

Question 48Drafting of Company Law Documents, Notices, Resolutions and Minutes

A company is drafting a special resolution for alteration of its object clause. Which procedural recital must the accompanying notice contain?

  1. A statement that the alteration has been approved by the board and that the resolution is proposed as a special resolution, with the reasons for the change Correct answer.
  2. A statement that no member may vote against the alteration
  3. A statement that the alteration takes effect immediately on board approval
  4. A statement that the alteration is conditional on stock exchange approval alone

Explanation

Alteration of the object clause requires a special resolution under section 13, and the notice must state that the resolution is special and set out the reasons for the change in the explanatory statement. Board approval precedes the members' resolution. The alteration takes effect as resolved, subject to the prescribed filings.

Question 49Drafting of Company Law Documents, Notices, Resolutions and Minutes

In the minutes of a general meeting, how should the result of voting on a resolution be recorded?

  1. A general statement that the sense of the meeting was taken
  2. The number of votes cast for and against, and the fact that the resolution was carried or lost Correct answer.
  3. Only the chairman's declaration without figures
  4. Only the total number of members present

Explanation

Minutes of a general meeting should record the number of votes cast in favour and against each resolution and whether it was carried or lost. This is essential where a poll is demanded and supports the validity of the resolution. A bare declaration without figures is inadequate.

Question 50Drafting of Company Law Documents, Notices, Resolutions and Minutes

Which of the following best describes the correct drafting of a resolution for the appointment of a managing director where the appointee is related to a director?

  1. The resolution is drafted without any disclosure of the relationship
  2. The resolution records the disclosure of the relationship and the interested director's abstention, and states the terms of appointment Correct answer.
  3. The resolution is passed by the interested director alone
  4. The resolution is deferred indefinitely until the relationship ceases

Explanation

Where a director is interested in an appointment, section 184 requires disclosure and the interested director must abstain from voting. The resolution should record the disclosure, the abstention and the terms of appointment so that the appointment is defensible. Concealing the relationship risks invalidity.