Model Question Paper (1 July 2017 to 31 December 2 017) Part-01

Q.1:- A preference shall be deemed to be given at a relevant time under section 43 of the Insolvency and Bankruptcy Code, 2016 if it is given to a during period of years preceding the insolvency commencement date.

• unrelated party, two years
• related party, two years
• unrelated party, two years
• related party, three years

Q.2:- The report on the premature end of a repayment plan submitted by a resolution professional to the adjudication authority need not contain.

• reason for premature end of the repayment plan.
• details of the creditors whose claims have not been fully satisfied.
• receipts and payments made in pursuance of the repayment plan.
• prayer for an alternate repayment plan.

Q.3:- Which of the following is not a responsibility of an insolvency professional agency?

• Redressing the grievances against its professional members
• Monitoring the performance of its professional members '
• Developing the profession of insolvency professionals
• Registration of insolvency professionals

Q.4:- An officer of a corporate debtor shall be liable for punishment under section 68 of the Insolvency and Bankruptcy Code, 2016, if he has, within the twelve months immediately preceding the insolvency commencement date, …………..:

• wilfully concealed any property or part of such property of the corporate debtor of the value of three thousand rupees.
• wilfully created any security interest over any property of the corporate debtor in the ordinary course of the business of the corporate debtor.
• wilfully made any false entry in any book or paper affecting or relating to the property of the corporate debtor or its affairs.
• fraudulently removed any part of the property of the corporate debtor of the value of three thousand rupees.

Q.5:- The Fund of the Insolvency and Bankruptcy Board shall not be applied for meeting the -

• payments to workmen of the corporate debtor under liquidation.
• expenses on objects and for purposes authorised by the Insolvency and Bankruptcy Code, 2016.
• salaries, allowances and other remuneration of the employees of the IBBI.
• expenses of the IBBI in the discharge of its functions.

Q.6:- The existence of debt due to an operational creditor under the corporate insolvency resolution process may be proved on the basis of a contract for the supply of the corporate debtor.

• goods and services
• goods only
• professional services only
• services only

Q.7:- In a resolution process of a company, the resolution professional appointed 2 valuers, who gave estimates of the liquidation value of Rs.2 crore and Rs.5 crore respectively. The resolution professional then appointed another valuer who gave an estimate of Rs.3 crore. What is the liquidation value in the case?

• Rs.3.00 crore
• Rs.3.33 crore
• Rs.4.00 crore
• Rs.2.50 crore

Q.8:- 34. Which of the following statements is not true about the disposal of the show cause notice issued to an insolvency professional agency?

• The Disciplinary Committee disposes of the show-cause notice by a reasoned order in adherence to principles of natural justice.
• The order of disposal of show-cause notice becomes effective on the day of receipt of the order by the insolvency professional agency.
• The Disciplinary Committee endeavors to dispose of the show-cause notice within a period of six months of the assignment.
• The order of disposal of show-cause notice becomes effective ordinarily after thirty days of the date of issue of order.

Q.9:- Which of the following is eligible for registration as an Insolvency Professional?

• An MBA with 11 years of professional experience and having passed the Limited Insolvency Examination
• A person resident of Nepal and having passed the National Insolvency Examination
• A chartered Accountant with 15 years of professional experience and having attempted National Insolvency Examination
• An advocate with 11 years of professional experience and having passed the Limited Insolvency Examination

Q.10:- Which of the following is not covered by the code of conduct for insolvency professionals?

• An insolvency professional should not accept gifts or hospitality which undermines or affects his independence as an insolvency professional.
• An insolvency professional should not act mala fide or be negligent while performing his functions and duties.
• An insolvency professional should not conduct business which in the opinion of the IBBI is inconsistent with the reputation of the profession.
• An insolvency professional should not take up corporate insolvency resolution processes of two corporate debtors simultaneously.

Q.11:- Which of the following may not prove existence of debt due to an operational creditor under the IBBI (Liquidation Process) Regulations, 2016?

• A contract for the supply of goods and services
• A charge registered with Registrar of Companies
• An invoice demanding payment for the goods and services supplied
• Records available with an information utility

Q.12:- A professional engaged by the liquidator in a voluntary liquidation process will have.

• remuneration as decided by the adjudicating authority.
• remuneration from the fees paid to the liquidator.
• remuneration as decided by the committee of creditors.
• reasonable remuneration which shall form part of liquidation cost.

Q.13:- Which of the following is not a requirement for registration as an information utility?

• At least 50% of its directors are independent directors.
• It has a minimum net worth of Rs. 100 crore.
• Its sole object is to provide core services and other services under the IBBI (Information Utilities) Regulations, 2017.
• Not more than 49% of its voting power is held by persons resident outside India.

Q.14:- In a Fast Track Insolvency Resolution Process, the Adjudicating Authority may extend the duration of such process not exceeding.

• 60 days
• 30 days
• 90 days
• 45 days

Q.15:- Who is empowered to pass an interim order on consideration of interim investigation report against an insolvency professional agency?

• Disciplinary Committee
• Chairperson of the IBBI
• Adjudicating Authority
• Investigating Authority

Q.16:- Who among the following need not to be given notice for the general meeting of a company?

• the auditor of the company
• a member of the company
• a debenture holder of the company
• an assignee of an insolvent member

Q.17:- When a company has failed to commence its business within one year of its incorporation,

• its registration will be suspended
• the registrar may strike off its name from the register of companies.
• it will be referred to official liquidator.
• it will be given a dormant status.

Q.18:- Mr. X, a partner of a limited liability partnership defrauded creditors of the limited liability partnership for fraudulent purpose. The liability of the limited liability partnership

• shall be limited, but the rest of liability will be that of Mr. X.
• shall be unlimited
• shall be nil, as all the liability will be that of Mr. X.
• shall be limited.

Q.19:- A contract in which one person promises to compensate the other person for the loss suffered by him, due to the conduct of the promisor or of any other person, is known as…………..:

• quasi-contract.
• contract of indemnity.
• contingent.
• contract of guarantee.

Q.20:- A transfers a garden to B for his life, with a proviso that, in case B cuts down a particular neem tree, the transfer shall cease to have any effect. B cuts down the tree. Decide the case in light of the Transfer of Property Act, 1882.

• No such provision is made under the Transfer of Property Act, 1882.
• B loses his life interest in the garden.
• The transfer was void.
• B does not lose his life interest in the garden.

Q.21:- The Hon’ble Supreme Court, in the matter of Mardia Chemicals Ltd. Vs. Union of India, held that the requirement of deposit of 75% of amount claimed before entertaining an appeal (petition) under Section 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest, 2002 is

• mandatory and must be complied with.
• valid but in the interest of justice, amount to be deposited should be reduced to 45%.
• a matter of executive prerogative and court can’t interfere in it.
• arbitrary condition against all the canons of reasonableness.

Q.22:- The Securities and Exchange Board of India does not regulate

• mutual funds
• securities
• commodity derivatives
• ULIPs

Q.23:- Basic Earnings per Share (EPS) is calculated by

• (net Profit - preference share capital)/Average number of shares outstanding.
• net profit/total number of shares.
• (net Profit - dividend)/Total shares outstanding.
• (net profit -preferred dividend)/weighted average number of shares outstanding.

Q.24:- In the context of operating leverage break-even analysis, if selling price per unit rises and all other variables remain constant, the operating break-even point in units will

• remains constant.
• rise.
• still be indeterminate until interest and preferred dividends paid are known.
• fall

Q.25:- In Tomorrow Sales Agency Pvt. Ltd. Vs. Raipur Power and Steel Ltd., NCLT held that a financial creditor

• who has disbursed money against a consideration of time value of money.
• is one whose sole business relates to finance.
• is one who is not an operational creditor.
• which is at least registered as a non-banking finance company.

Q.26:- In ICICI Bank Ltd. Vs. Innoventive Industries Ltd., Mumbai Bench of NCLT held that the non-obstante clause of the section 238 of the Insolvency and Bankruptcy Code (IBC), 2016 has over-riding effect with non-obstante clause of any other state legislation as

• legislative entries in the State list are read subject to the legislative entries in the Union list and Concurrent list of the seventh schedule; hence section 238 of IBC, 2016 prevails.
• non-obstante clause of the IBC, 2016 is latter in time, hence it ought to prevail.
• the legislation enacted by the Parliament shall prevail over State’s powers of legislation under concurrent list.
• the state has no power to enact a law relating to bankruptcy, hence section 238 of IBC prevails.

Q.27:- The term ‘Wages’ under the Minimum Wages Act, 1948 includes

• contribution by employer to any pension fund.
• house rent allowance.
• travelling allowance.
• value of house accommodation.

Q.28:- As per the Indian Partnership Act, 1932, which of the following statement is correct with respect to relation of partners to third parties?

• A partner is a manager of the firm.
• A partner is an agent of the firm.
• A partner does not have any authority to act for the firm.
• A partner is a representative of the firm.

Q.29:- The financial statement of a company does not include

• cash flow statement.
• due and drawn statement.
• profit and loss account.
• balance sheet.

Q.30:- A show-cause notice issued by the IBBI on consideration of an inspection report needs to be disposed of within

• Adjudicating Authority, One year
• Inspecting Authority, Six months.
• Disciplinary Committee, Six months
• IBBI, Three months

Q.31:- An information utility holds financial information as a.

• Custodian.
• trustee.
• Fiduciary.
• Regulator.

Q.32:- The option to sell the assets of a corporate debtor by means of private sale under the IBBI (Liquidation Process) Regulations, 2016 is not available to a liquidator if the asset is____________ .

• likely to deteriorate in value if not sold immediately.
• Perishable.
• sold at a price higher than the reserve price of a failed auction.
• sold at a price lower than the reserve price of a failed auction.

Q.33:- Which of the following statements is not true about the bye-laws of an insolvency professional agency (IPA)?

• The amendments to the bye-laws shall come into effect on the 30th day of its publication in Gazette of India.
• An IPA shall publish its bye-laws on its website.
• The amendments to the bye-laws shall come into effect on the 30th day of its publication in Gazette of India.
• The Governing Board of the IPA may amend the bye-laws by a resolution passed by votes in favour being not less than three times the number of the votes, if any, cast against the resolution, by the directors.

Q.34:- Which of the following is not a mandatory content of a resolution plan?

• Adequate means for supervising the implementation of the resolution plan
• Insolvency resolution process costs
• Liquidation value due to operational creditors
• Plan for additional infusion of debt by creditors

Q.35:- A corporate applicant is required to dispatch the application filed with the National Company Law Tribunal for initiation of corporate insolvency resolution to the registered office of.

• corporate debtor.
• all the financial creditors.
• operational creditors.
• all the creditors.

Q.36:- The bye-laws of an insolvency professional agency (IPA) may not provide for.

• the manner of conducting disciplinary proceedings against its professional members.
• eligibility for enrolment as professional members.
• the duties of professional members.
• the minimum number of professional members to be enrolled by an IPA.

Q.37:- Section 218 of the Insolvency and Bankruptcy Code, 2016 does not envisage a complaint by a person aggrieved by the functioning of _______:

• Interim Resolution Professional.
• Information Utility
• Insolvency Professional Agency.
• Committee of Creditors.

Q.38:- The estate of the bankrupt shall include.

• property held by the bankrupt in trust for any other person.
• property belonging to or vested in the bankrupt at the bankruptcy commencement date.
• property acquired by the bankrupt within three months from the bankruptcy commence date.
• sums due to workmen from the provident fund.

Q.39:- A debtor may apply for a Fresh Start Process if, his gross annual income does not exceed rupees.

• five lakh
• ten lakh
• sixty thousand
• one lakh

Q.40:- The liquidation estate of a corporate debtor comprises liquidation estate assets which include.

• assets of a foreign subsidiary of the corporate debtor.
• assets owned by a third party which are in possession of the corporate debtor.
• assets of the corporate debtor in respect of which a secured creditor has relinquished security interest.
• assets owned of an Indian subsidiary of the corporate debtor.

Q.41:- A resolution professional does not require approval of the committee of creditors for.

• amending constitutional document of the corporate debtor.
• creating security interest over the assets of the corporate debtor.
• issuing information memorandum.
• undertaking related party transaction.

Q.42:- A public announcement of the corporate insolvency resolution process may not contain.

• name of the authority with which the corporate debtor is incorporated.
• penalties for false or misleading claims.
• details of the assets and liabilities of the debtor.
• details of the interim resolution professional.

Q.43:- Core services of an information utility do not include.

• authenticating and verifying the financial information.
• accepting electronic submission of financial information.
• determination of default.
• safe and accurate recording of financial information.

Q.44:- Assume that IRP has failed in this case. After deducting the insolvency costs, sum available from proceeds of liquidation of assets is Rupee 10.99 crore. Based on priority of claims, Bank l will receive:

• 5.96 crore
• 10.29 crore
• 6.01 crore
• 6.05 crore

Q.45:- The committee of creditors will constitute of:

• Banks B1, B2, GCC, Nephew of the promoter
• Banks B1 and B2
• Banks B l, B2, GCC, Nephew of the promoter, Workmen
• Banks B l, B2, and GCC

Q.46:- GCC has a net claim of rupees against PC.

• 12.0 crore
• 3.5 crore
• 19.0 crore
• 2.0 crore

Q.47:- The Calcutta High Court in Sree Metaliks Ltd. Vs. Union Bank of India held that as section 9 of the Code did not

• provide for notice in case of filing of case by financial creditor as the Adjudicating Authority was given power to verify facts.
• specifically provide for giving of notice to the corporate debtor, but the requirement is implied.
• provide for the giving of notice to corporate debtor of the financial creditor, there was no requirement to give notice to such corporate debtor of initiation of proceedings under IBC, 2016.
• provide for giving of notice as the proceedings under IBC, 2016 were not adversarial in nature.

Q.48:- In Era Infra Engineering Ltd., Vs. Pride Commercial Projects Pvt. Ltd., NCLAT held that an operational creditor has to give notice of demand to the corporate debtor under the IBC, 2016, for initiating Corporate Insolvency resolution process as-

• the IBC, 2016 is the special law and is intended to be a complete code on insolvency.
• this is what the IBC, 2016 requires of all creditors, whether financial or operational.
• the mere giving of notice under old statute does not amount to start of proceedings to vest a right.
• the code gave another opportunity of ten days to the operational corporate debtor to pay, which it would be deemed, if new notice not given after the Code came into operation.

Q.49:- The Insolvency and Bankruptcy Code, 2016, distinguishes between an operational creditor and a financial creditor and their rights. In DF Deutsche Forfait AG Vs. Uttam Galva Steel Ltd., the Mumbai bench of NCLT was of the view

• a financial creditor will be treated as an operational creditor if the lending contract does not provide for payment of interest.
• that since for a financial creditor the time value of money was consideration for lending, only a financial creditor was entitled to interest on the amount overdue.
• an operational creditor too may be entitled to interest for delayed payment as time value of money is something every supplier takes into account.
• an operational creditor can be treated as a financial creditor if as per contract it is entitled to interest for delayed payment.

Q.50:- A firm can enhance its value by

• increasing capital expenditure.
• decreasing cost of capital.
• increasing debt.
• increasing working capital.