Model Question Paper (1st January, 2018 to 31st October 2018) Part-01

Q.1:- Provisions of which legislation would be applicable for the proceedings before a special court under the Insolvency and Bankruptcy Code, 2016?

• The Indian Financial Code, 2013
• Summary Trial of Offences Act, 1999
• The Code of Criminal Procedure, 1973
• The Indian Penal Code, 1860

Q.2:- Which of the following is not a requirement for a company to be registered as an insolvency professional agency?

• It is promoted by a statutory regulator.
• Its sole object is to carry on the functions of an insolvency professional agency.
• It is not under the control of person(s) resident outside India.
• It has a minimum net worth of ten crore rupees.

Q.3:- Which of the following is not covered by the code of conduct for insolvency professionals?

• Conducting business which in the opinion of the IBBI is inconsistent with the reputation of the profession.
• Negligence while performing his functions and duties.
• Accepting gifts or hospitality from a creditor
• Taking up corporate insolvency resolution processes of two corporate debtors simultaneously.

Q.4:- In which of the following circumstances voluntary liquidation is permissible?

• Where debt equity ratio of the company is less than one.
• Where the company has no debt or can pay all its debts in full.
• Where the Adjudicating Authority does not receive a resolution plan of a company
• Where the committee of creditors decides to liquidate the company during the resolution period.

Q.5:- An information utility holds financial information as a

• custodian.
• fiduciary.
• trustee.
• regulator.

Q.6:- A show-cause notice issued by the Insolvency and Bankruptcy Board of India on consideration of an inspection report needs to be disposed of by within…………:

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

Q.7:- Who among the following need not to be given notice for the general meeting of a company?

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

Q.8:- After the retirement of a partner of a partnership firm, If the remaining partners want to continue the business, a new partnership agreement is

• is optional
• not possible as the partnership is already dissolved
• Not necessary
• Necessary

Q.9:- A valid Agreement is one which

• creates legally binding rights and obligations of the parties to it
• is written on a piece of paper and signed by the parties
• creates rights of a party
• creates legal and social obligations of the parties

Q.10:- When an instrument has been lost as per the Negotiable Instrument Act, 1881, until the contrary is proved, it shall be presumed that it was

• duly stamped
• expired
• misplaced
• stolen

Q.11:- In computing the period of limitation of any suit for the execution of a decree, the institution or execution of which has been stayed by injunction or order, the time of the continuance of the injunction or order from the day on which it was shall be excluded.

• Admitted
• Issued
• First heard
• Filed

Q.12:- Which of the following represents the standard of living in a country?

• Poverty ratio
• National Income
• Unemployment rate
• Per capita income

Q.13:- The balance sheet of a company does not show

• financial health of the company.
• income and expenditure of the company.
• what the company owns and what the company owes.
• assets and liabilities of the company.

Q.14:- How is cash management different than liquidity management?

• Cash management only considers cash, while liquidity management considers assets that are considered liquid.
• Cash management is essential to financial reporting, while liquidity management is just a good practice
• Cash management deals with only one account, while liquidity management involves everything on the balance sheet.
• Cash management only considers the current financial reporting period, while liquidity management looks out 2-3 years.

Q.15:- The process whereby a company sells its receivables to a collection agent in order to secure a cash sum which is at a discount to the face value of the receivables is termed as a process.

• Sell per
• Debt factoring
• Cash Collection
• Credit factoring

Q.16:- The Supreme Court in Mobilox Innovations(P) Limited v. Kirusa Software (P) Limited CA No. 9405 of 2017, has interpreted the term

• Time value of money
• Operational creditor
• Doctrine of repugnancy
• Existence of dispute

Q.17:- In the case, M/s VDS Plastics Pvt. Ltd. Vs. M/s Pal Mohan Electronics Pvt. Ltd., [C.P.No. (IB)/37/ 2017, NCLT (New Delhi Bench)], the National Company Law Tribunal has-

• dismissed the application as the alleged claim was disputed
• admitted the petition of the operational creditor for initiation of Corporate Insolvency Resolution Process
• dismissed the application as the operational creditor has not approached the National Company Law Tribunal with clean hand
• directed the petitioner to rectify the application and submit

Q.18:- Which of the following is not settlement machinery appointed by the appropriate authority for the settlement of the industrial disputes under the Industrial Disputes Act, 1947?

• Board of Arbitrators
• Labour Courts
• Courts of Inquiry
• Conciliation officers

Q.19:- Which of the following is most appropriate for measuring a bond’s sensitivity to shaping risk?

• Modified duration
• Key rate duration
• Median duration
• Effective duration

Q.20:- 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 the 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.21:- Which of the following decides applications from the banks and financial institutions for recovery of debts due to them?

• Securities Appellate Tribunal
• Debt Recovery Tribunal
• Central Board of Direct Taxes
• Debt Recovery Appellate Tribunal

Q.22:- 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 the light of Transfer of Property Act, 1882.

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

Q.23:- 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.24:- Mr. X, a partner of a limited liability partnership defrauded creditors of the limited liability partnership for a fraudulent purposes. 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.25:- When a company has failed to commence its business within one year of its incorporation,

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

Q.26:- The financial statement of a company does not include

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

Q.27:- When a complaint and grievance is in the same matter, it will fall within the category of -

• grievance
• complaint
• complaint-cum-grievance
• general complaint

Q.28:- During a fast track process, existence of dues can be proved in case of workmen-

• collectively only
• individually or collectively
• by resolution professional
• individually only

Q.29:- The Annual Status Report indicating progress of the voluntary liquidation is not required to include the ___________:

• developments in any material litigation.
• details of assets that are yet to be sold.
• cost of realization of the assets.
• distribution made to stakeholders.

Q.30:- Which of the following may not prove existence of debt due to an operational creditor under the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016?

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

Q.31:- Who enrolls an individual as a professional member?

• The Insolvency Professional Agency
• The Insolvency and Bankruptcy Board of India
• The Ministry of Corporate Affairs
• The National Company Law Tribunal

Q.32:- Where all financial creditors are related parties of the corporate debtor, the committee of creditors shall comprise

• 18 largest operational creditors by value and one representative each of workmen and of employees.
• insolvency resolution professional and operational creditors.
• all of the operational creditors.
• all of the debenture holders.

Q.33:- A corporate applicant is required to dispatch the application filed with the National Company Law Tribunal for initiation of corporate insolvency resolution to

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

Q.34:- 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 created any security interest over any property of the corporate debtor which has not been obtained on credit.
• fraudulently removed any part of the property of the corporate debtor of the value of three thousand rupees.
• wilfully made any false entry in any book or paper affecting or relating to the property of the corporate debtor or its affairs.
• wilfully concealed any property or part of such property of the corporate debtor of the value of three thousand rupees.

Q.35:- Which of the following members of the Insolvency and Bankruptcy Board of India may be included as Members of the Disciplinary Committee?

• Executive members
• Independent members
• Nominee members
• Whole time members

Q.36:- Which of the following is not a function of an Insolvency Professional Agency?

• monitor the performance of its members
• grant membership to persons who fulfil all requirements set out in its byelaws on payment of membership fee
• register insolvency professionals
• lay down standards of professional conduct for its members

Q.37:- An onerous property that a bankruptcy trustee may disclaim does not include-

• an unsaleable property
• a property that may give rise to a claim
• A readily saleable property
• an unprofitable contract

Q.38:- The report on premature end of a repayment plan submitted by a resolution professional to the Adjudicating Authority need not contain

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

Q.39:- Which of the following is an excluded asset for the purposes of Part III of the Insolvency and Bankruptcy Code, 2016 dealing with insolvency resolution and bankruptcy for individuals?

• Ornaments used by self and the spouse irrespective of their usage
• Unencumbered tools necessary for personal use of the debtor
• One pucca house irrespective of its value
• Money received from provident fund after retirement

Q.40:- 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 the period of years preceding the insolvency commencement date.

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

Q.41:- A resolution professional shall file an application to the adjudicating authority to extend the period of fast track resolution if instructed to do so by a resolution passed at a meeting of the committee of creditors by a vote of not less than percent of the voting shares.

• 51
• 66
• 75
• 90

Q.42:- The management of the affairs of a corporate debtor undergoing corporate insolvency resolution process vests in the

• Insolvency and Bankruptcy Board of India.
• Committee of Creditors.
• Board of Directors.
• Interim Resolution Professional.

Q.43:- In the above situation if a bankruptcy order is passed against “ManChow”, who shall prepare the list of creditors

• Adjudicating Authority
• Bankruptcy trustee
• Information Utility
• Insolvency Professional Entity

Q.44:- In priority of payment of debts who will be paid before the wages and unpaid dues of employees of the bankrupt?

• Workmen’s dues for 24 months preceding the bankruptcy commencement date and the debts owed to the secured creditors.
• Unpaid suppliers of food, liquor and utilities
• Debt owed to landlord Mr. Dhiraj Kumar
• Unpaid debt owed to the employees other than the workmen for a period of 12 months preceding the bankruptcy commencement date.

Q.45:- In the case, Macquarie Bank Ltd. Vs. Shilpi Cable Technologies Ltd., [CP (IB) No. 64/ (PB)/ 2017, NCLT (Principal Bench, New Delhi)], which one of the following was considered as ‘condonable fault on the part of the applicant’:

• The applicant has not filled up the name and address of the power of attorney
• The applicant has not paid the fee
• The applicant has not filled up the proposed name of the IRP
• The applicant has not filled up the details of the legal firm

Q.46:- In the matter of PK Ores Private Limited vs. tractors India Private Limited [Company Appeal (AT) (Insolvency) No. 56 of 2017], NCLAT set aside the order of NCLT on the ground of-

• non-existence of any default on the part of corporate debtor
• violation of principles of natural justice and existence of a dispute
• non-delivery of demand notice under section 8 of Insolvency and Bankruptcy Code, 2016.
• violation of principles of equality

Q.47:- Who will pay GST in case, the business in respect of which any tax, interest, or penalty is payable under CGST Act is carried on by a minor, or another incapacitated person on behalf of and for the benefit of such minor or another incapacitated person?

• Partner
• Guardian
• Exempted to pay tax
• Director

Q.48:- A firm can enhance its value by

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

Q.49:- Minimum wages must be paid in-

• either cash or in kind.
• cash ordinarily and in kind to the extent authorised by the appropriate government.
• cash only.
• kind only.

Q.50:- The Policy Repo Rate is the Reverse Repo rate.

• equal to
• higher than
• 75% of
• lower than