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LL.B. (Three Years) Sem 4 Company Law Oct 2025 Question Paper with Solutions - SPPU

SPPU Solved Question Papers

Company Law

Previous Year Question Paper with Solution

LL.B. (Three Years) · Sem 4

Oct 2025 Examination

munotes.in

Mumbai

First published on munotes.in on 5 November 2026.

Published by munotes.in, Mumbai.

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The Paper as Set

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Duration 3 hours · Total marks 70 · 13 questions answered

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Read the original question paper

SECTION I

PART A

Answer any Two · 30 Marks

Q1)Discuss the definition of Company. Explain the kinds of company and Difference between company and Partnership Firm.[15]

Answer

For full marks, cover: Part A, the definition in section 2(20) of the Companies Act 2013 and the features of a company (Salomon); Part B, the kinds of company by incorporation, liability (section 3(2)), number of members, control, ownership, purpose, size and listing (Vodafone, State Trading Corporation); Part C, company and partnership firm compared point by point (Bacha F. Guzdar); a table; a conclusion.

Part A: the definition

Section 2(20) of the Companies Act 2013 defines a company as a company incorporated under the Act or under any previous company law. The definition only tells us where a company comes from. Its nature appears from its features.

In plain terms, a company is an association of persons, registered under the Act, for a common purpose. On registration it becomes a body corporate, a person in law, separate from those who formed it.

The features of a company

Separate legal person. From the date in the certificate of incorporation, the members become a body corporate by the company's name (section 9). In Salomon v. A. Salomon and Co. Ltd., [1897] AC 22, Salomon sold his boot business to a company in which he held all but six shares. The House of Lords held that the company was a person distinct even from him. Its debts were its own, not his.
Perpetual succession. Members may die or sell their shares, but the company continues. It ends only by winding up or dissolution.
Limited liability. In a company limited by shares, a member is liable only for the amount unpaid on his shares.
Transferable shares. Shares are movable property, transferable as the articles provide (section 44).
Own property. The company owns its assets. Members do not own them.
Right to sue and be sued in its own name.
Management by a Board. Members own the company, but the Board of Directors manages it.

Part B: the kinds of company

Companies are classified in several ways. One company may fall into several classes at once.

1. By mode of incorporation.

Chartered company, created by a royal charter, such as the East India Company. None are formed in India now.
Statutory company, created by a special Act, such as the Life Insurance Corporation of India.
Registered company, formed by registration under the Companies Act. Almost all companies are of this kind.

2. By liability of members (section 3(2)).

Company limited by shares (section 2(22)): liability is limited to the amount unpaid on the shares. This is the commonest form.
Company limited by guarantee (section 2(21)): each member undertakes to contribute a fixed sum on winding up. It may have a share capital or not. It suits clubs and chambers of commerce.
Unlimited company (section 2(92)): members' liability has no limit.

3. By number of members.

One Person Company (section 2(62)): a company with a single member. Its memorandum names a nominee who takes over on the member's death.

Private company (section 2(68)). Its articles restrict transfer of shares and limit members to two hundred, not counting employee members. They also prohibit invitations to the public to subscribe. It needs at least two members and two directors.
Public company (section 2(71)): a company that is not private. It needs at least seven members and three directors. A private company that is a subsidiary of a public company is treated as public.

4. By control.

Holding and subsidiary company (sections 2(46) and 2(87)). A company is a subsidiary of another that controls its Board, or more than half its total voting power.
Associate company (section 2(6)): one in which another has significant influence. That means at least twenty per cent of the voting power, or a say in decisions under an agreement.

In Vodafone International Holdings B.V. v. Union of India, (2012) 6 SCC 613, the Supreme Court held that a genuine group structure is respected. Each company in a group is a separate person unless the arrangement is a sham.

5. By ownership. In a government company (section 2(45)), at least fifty-one per cent of the paid-up capital is held by government. It may be the Central Government, a State Government, or both. In State Trading Corporation of India Ltd. v. Commercial Tax Officer, AIR 1963 SC 1811, a wholly government-owned company claimed rights under Article 19. The Supreme Court held that a corporation is not a citizen, and could not claim them.

6. By purpose.

Section 8 company, formed to promote commerce, art, science, education, charity and similar objects. It applies its income to those objects and pays no dividend.
Nidhi (section 406), which borrows from and lends to its own members.
Producer company, formed by primary producers such as farmers.

7. By size, activity and listing.

Small company (section 2(85)): a private company within the prescribed limits of paid-up capital and turnover. It enjoys lighter compliance.
Dormant company (section 455): one formed for a future project or to hold an asset, with no significant accounting transaction.

Listed company (section 2(52)): one whose securities are listed on a recognised stock exchange.
Foreign company (section 2(42)): a company incorporated outside India with a place of business in India.

Part C: company and partnership firm compared

A partnership is "the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all" (section 4 of the Indian Partnership Act 1932). The partners together are a firm.

Law. A company is governed by the Companies Act 2013. A firm is governed by the Partnership Act 1932.
Creation. A company exists only on registration, when the Registrar issues the certificate of incorporation (section 7). A firm arises from an agreement. Registration of a firm is optional, though an unregistered firm cannot sue on its contracts (section 69 of the Partnership Act).
Legal personality. A company is a separate person (section 9; Salomon). A firm is not. Its name is only a collective name for the partners.

Liability. Members of a company limited by shares have limited liability. Partners are liable jointly and severally, without limit (section 25 of the Partnership Act).
Number. A private company may have up to two hundred members, and a public company has no upper limit. A firm may not have more than fifty partners, under section 464 of the Companies Act and the rules under it.
Property. A company's property belongs to the company. In Bacha F. Guzdar v. Commissioner of Income-Tax, Bombay, AIR 1955 SC 74, the Supreme Court held that a shareholder has no interest in the company's assets. A firm's property belongs to the partners jointly.
Transfer. Shares are transferable as the articles provide. A partner cannot bring in a new partner without the consent of all the others (section 31 of the Partnership Act).
Agency. A member is not an agent of the company. Every partner is an agent of the firm and can bind the others (section 18 of the Partnership Act).
Management. A company is managed by its Board. In a firm, every partner may take part in the business.

Succession. A company has perpetual succession. A firm is dissolved on a partner's death or insolvency, unless the partners have agreed otherwise (section 42 of the Partnership Act).
Compliance. A company must keep audited accounts, hold meetings and file returns. A firm has far fewer formalities.

The differences at a glance

Point	Company	Partnership firm
Law	Companies Act 2013	Partnership Act 1932
Created by	Registration	Agreement
Legal person	Yes (section 9)	No
Liability	Limited	Unlimited, joint and several
Maximum number	200 (private); no limit (public)	50
Property	The company's	The partners' jointly
Transfer of interest	Shares transferable	Needs all partners' consent

Point	Company	Partnership firm
Agency	Members are not agents	Each partner is an agent
Succession	Perpetual	Dissolved on death, unless agreed

A worked example

Three friends run a printing business in Pune as partners. A customer wins a large claim against the firm. Each partner may have to pay it from his own house and savings. If they had formed a private company, the company alone would owe the debt. The friends would lose at most the unpaid amount on their shares. That is the practical meaning of Salomon.

Conclusion

Conclusion. A company is an association registered under the Companies Act (section 2(20)). It becomes a separate person with perpetual succession, limited liability and transferable shares, as Salomon established. Companies may be classified by incorporation, liability, number of members, control, ownership, purpose, size and listing. Group and government companies keep their separate personality (Vodafone; State Trading Corporation). A partnership firm, by contrast, rests on agreement, has no separate personality and carries unlimited liability. Its partners are its agents, and its property is theirs, while a company's property is its own (Bacha F. Guzdar).

LL.B. (Three Years) Sem 4 Company Law Oct 2025 Question Paper with Solutions

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