KSLU Solved Question Papers
Company Law
Previous Year Question Paper with Solution
B.A. LL.B. (Five Years) · Sem 6
2023 Sep Examination
munotes.in
Mumbai
B.A. LL.B. (Five Years) Sem 6 Company Law 2023 Sep Question Paper with Solutions
First published on munotes.in on 21 October 2026.
Published by munotes.in, Mumbai.
Model answers written and edited by the munotes.in editorial desk.
Passages from this volume may be quoted, in print, online or by an AI system, with credit: name munotes.in and link to this volume's page. The volume may not be reproduced as a whole. Full terms at munotes.in/content-license.
munotes.in is an independent study resource for students of Karnataka State Law University. It is not affiliated with Karnataka State Law University, and is not endorsed by it.
The University does not publish an official answer key for this paper. The answers in this volume are model answers, written to show how a full-mark answer is built. They are a study aid, not an authority on what an examiner marked.
The question paper reproduced here is the paper as set by Karnataka State Law University at the 2023 Sep examination.
Contents
The questions below are the paper as Karnataka State Law University set it at the 2023 Sep examination, in the order it was set.
MarksPage
MarksPage
The Paper as Set
The questions in this volume are the questions asked at the 2023 Sep examination, reproduced as Karnataka State Law University set them, in the order it set them. Long reading passages are shortened to their first and last lines and our summary; the original paper prints them in full. Only the answers are ours. See the original question paper.
Duration 3 hours · Total marks 80 · 20 questions answered
Instructions printed on the paper
- N.B. (1) Answer all five Units. (2) One essay type question and short note/problem is compulsory from each Unit. (3) Figures to the right indicate marks. (4) Answer should be written either in English or Kannada completely.
How to use this volume
Solve the paper first, under exam conditions and against the clock. Then read the answers here and mark your own. Reading a solution before attempting the question feels productive and teaches very little, because recognising an answer is not the same as being able to write one.
Q1
Unit I
(a)"Company is having an independent corporate existence". Explain it with case laws.[10]
Answer
For full marks, cover: the statement explained (section 9 of the Companies Act 2013: a body corporate distinct from its members); the leading case Salomon; the consequences, each with a case: the company owns its property (Macaura, Bacha F. Guzdar), it can contract with its members (Lee v. Lee's Air Farming), it has its own legal status (Tata Engineering), group companies are separate (Vodafone); perpetual succession and limited liability; the limits (lifting the veil, Skipper Construction, section 339); a conclusion.
The statement
The statement means that a company is a legal person separate and distinct from its members. Under section 9 of the Companies Act 2013, from the date of incorporation the members "shall be a body corporate". The body corporate has its own name and perpetual succession. It can acquire, hold and dispose of property, contract, and sue and be sued in its own name. The company is therefore not the sum of its members, nor their agent. It is a different person in law.
The leading case
Salomon v. A. Salomon and Co. Ltd., [1897] AC 22. Aron Salomon, a boot manufacturer, sold his business to a company he formed. Members of his family took one share each, and he took almost all the rest, together with secured debentures. When the company failed, the unsecured creditors argued that it was only Salomon in another form, so he should bear its debts. The House of Lords rejected this. The company had been validly formed under the statute. It was a person distinct from Salomon, whatever his motives and however much he controlled it. His debentures were valid, and he was paid as a secured creditor.
Consequences of independent existence
1. The company owns its property. Macaura v. Northern Assurance Co. Ltd., [1925] AC 619. Macaura held all the shares of a timber company and was also its creditor. He insured the timber in his own name, and fire destroyed it. The House of Lords held he had no insurable interest. The timber belonged to the company, and a member, even holding every share, owns none of its property.
Bacha F. Guzdar v. Commissioner of Income-Tax, Bombay, AIR 1955 SC 74, says the same in Indian law. A shareholder in tea companies claimed her dividends were agricultural income like the companies' income. The Supreme Court held that a shareholder has no interest in the company's assets. He has only a right to share in profits when distributed.
2. The company can contract with its members. Lee v. Lee's Air Farming Ltd., [1961] AC 12 (Privy Council). Lee held almost all the shares of an aerial top-dressing company and was its governing director. He was also employed by it as chief pilot. When he died in a crash, his widow claimed workers' compensation. The Privy Council held that the company was a separate person able to employ him. He was its worker, and she could recover.
3. The company has its own legal status. Tata Engineering and Locomotive Co. Ltd. v. State of Bihar, AIR 1965 SC 40. Companies, joined by shareholders, claimed fundamental rights under Article 19. The Supreme Court held that a company is a person separate from its shareholders but is not a citizen. The veil would not be lifted to lend it its shareholders' citizenship.
4. Each company in a group is separate. Vodafone International Holdings B.V. v. Union of India, (2012) 6 SCC 613. Vodafone bought a single share of a foreign company and so gained control of Indian operations. The Supreme Court held that a genuine holding structure is looked at, not through. Each company in a group is a separate person unless the arrangement is a sham.
5. Perpetual succession and limited liability. The company continues whatever happens to its members. Members of a company limited by shares are liable only for the amount unpaid on their shares (section 2(22)).
The limits
Independent existence is the rule, but the law will not let it be used as a cloak for fraud. Delhi Development Authority v. Skipper Construction Company (P) Ltd., (1996) 4 SCC 622, is an example. The company, controlled by one family, sold the same commercial space to several buyers and defied court orders. The Supreme Court disregarded the corporate form and reached the family and its assets. The Act also imposes personal liability in sections 3A, 7(7) and 339.
Conclusion. A company has an existence independent of its members, because section 9 makes it a body corporate, as Salomon established. It owns its property (Macaura, Bacha F. Guzdar), it may contract with and employ its members (Lee v. Lee's Air Farming), and it has its own legal status (TELCO). In a group, each company remains separate (Vodafone). This independence yields only where the company is used for fraud, as in Skipper Construction, or where a statute imposes personal liability.
The rest of the answers
The first answer is free. The rest come with the KSLU B.A. LL.B. Semester 6 solved papers.
You have read the question paper and its first answer in full. Buy the solved papers once and you can read every answer of every solved paper in this semester.
Solved papers: ₹499 Already bought it? Sign in
The question paper itself stays free.
Found an error in this volume? Report it and we will check it against the paper.