Mid Term Examination, September- 2016
B.A.LL.B. (HONS.)
SEMESTER V
CORPORATE LAW-I
Max. Marks: 20 Max. Time: 1:30 Hrs.
Note: Answer any TWO questions out of three. All questions carry equal marks.
1. Discuss the concept of promoters and their duties. Do you agree that a promoter can be
remunerated by the company for his services that he has so rendered for the purposes of
incorporating the company? Elaborate your answers with case laws and relevant legal provisions.
(Marks 10)
2. A company Natal Softtech Pvt. Ltd. was in the process of incorporation. Promoters of the
company signed an agreement for the purchase of 100 pieces of office furniture for the company
and payment was to be made to the suppliers of the furniture by the company after incorporation.
Shortly after incorporation and before the Directors were appointed the company went into
financial crisis and the consideration could not be paid by the company for the purchase of the
furniture. The suppliers have sued the promoters of the company for the recovery of money.
Discuss the concept of pre-incorporation contract and examine if there is a pre-incorporation
contract in place.
Examine the liability of promoters vis-a-vis pre- incorporation contracts. (Marks
3. Analyse the information given below and answer the following:
Kenron Corporation is an energy based company in India. Kenron is one of the world's major
electricity, natural gas and communications companies, with claimed revenue of nearly Rs. 100
crore during the year 2015. A multinational business magazine named Kenron as "India's Most
Innovative Company" for 5 consecutive years. The company has been making considerable profit
over the years. On inspection of the balance sheet of Kenron it was found that there have been no
losses reported by the company in the previous years but it was found that instead the debts and
losses were put into entities formed "offshore" that were not included in the company's financial
statements, and other sophisticated and concealed financial transactions between Kenron and
related companies were used to eliminate unprofitable entities from the company's books and so it
appeared to the shareholders that the company is making considerably good profit.
I. Whether the 'Doctrine of lifting the corporate veil/Piercing the corporate veil' finds
applicability in the above situation? (Marks 07)
If yes, state the ground/grounds on which the court would lift/pierce the corporate
veil. Support your answer with the help of decided cases.
If no, then state reasons as to why the court would not to lift/pierce the corporate
veil in the above scenario. Support your answer with the help of decided cases.
II Explain the Doctrine of lifting the corporate veil. (Marks 03)