chapter 1 : foreign exchange management act, 1999 · 31 examine with reference to the provisions of...

Chapter 1 FOREIGN EXCHANGE MANAGEMENT ACT, 1999

© CA Darshan D. Khare

1.1

Chapter 1 : FOREIGN EXCHANGE MANAGEMENT ACT, 1999

1. Who is an Authorized Dealer?

a. any person specifically authorized by

the RBI u/s 10(1) of FERA, 1973, to deal

in foreign exchange or foreign securities

b. any person specifically authorized by the RBI u/s

10(1) of FEMA, 1999, to deal in foreign products or

foreign items

c. any person specifically authorized by

the RBI u/s 10(1) of FEMA, 1999, to deal

in foreign exchange or foreign securities

d. any person specifically authorized by the RBI u/s

10(1) of RBI Act, 1999, to deal in foreign exchange or

foreign securities

2. Any PROI, not being a citizen of Pakistan or Bangladesh, and visiting India: may take outside India

(including to Nepal & Bhutan) max Rs.

a. 25000 b. 50000

c. 100000 d. 500000

3 “Current account transaction” means a transaction other than a capital account transaction and

without prejudice to the generality of the foregoing such transaction includes

a. payments due in connection with foreign trade, other

current business, services and short term banking and

credit facilities in the ordinary course of business,

b. payments due as interest on loans

and as net income from

investments

c. remittances for living expenses of

parents ,spouse and children residing

abroad

d. expenses in relation to foreign travel, education

and medical care of parents, spouse and

children

e. All of the above

4. “Export” with its grammatical variations and cognate expressions means; or a. the taking out of India to a place

outside India any goods

b. provision of services from India to any person

outside India

c. Both d. None

5. Who is a “Person Resident outside India” as per the FEMA Act, 1999?

a. Who has taken birth out of India c. Who is gone out of India for 181 days

b. Who is not resident of India d. None of the above

6. Mr. Tom, an Indian national desires to obtain Foreign Exchange for payment of commission on

exports made towards equity investment in wholly owned subsidiary abroad of an Indian

Company. Advice whether Mr. Tom can obtain foreign exchange.

a. Prohibited b. Allowed

7. Mr. Alex had resided in India during the financial year 2016-17 for 183 days. He had come to

India again on April 1, 2017 for employment. What would be his residential status during the

financial year 2017-18?

a. Person resident in India b. Person resident outside India

8. Mr. John had resided in India during the financial year 2015-16 for more than 182 days. What is

his residential status under FEMA,1999 for 2016-17:



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9. A person left India on 1 August, 2016 for education for 3 years. What would be his residential

status for 2016-17 if he was residing in India for 200 days in FY 2015-16?


10 The following transactions are regarded as Capital Account Transaction

a. Any borrowing or lending in rupees in whatever form or by whatever name called between a

person resident in India and a person resident outside India

b. Export, import or holding of currency or currency notes

c. Deposits between persons resident in India and persons resident outside India

d. All of the above

11 Following transactions are prohibited under FEMA, 1999 unless permission of RBI is obtained:

a. to deal in or transfer of foreign exchange

or foreign security to any person other

than authorised person

b. make any payment to any person resident

outside India otherwise than authorised

person

c. receive any payment from any person resident outside India

otherwise than authorised person

d. All of the above

12 Shine Ltd. is a Korean company having manufacturing units in 4 countries. It is having it’s headquarter in Mumbai and Branch in Thailand. Headquarter at Mumbai controls branch of

manufacturing unit. What would be the residential status of manufacturing unit of Thailand?

a. Thailand Branch is ‘Person resident in India’ b. Thailand Branch is ‘Person resident outside India’ c. Thailand Branch is Foreign unit

d. Thailand branch is ordinarily resident

13 FEMA 1999 applies to all branches, offices and agencies outside India owned or controlled by a

person resident in India

a. True b. False

14 Authorised person contravenes any direction of RBI: penalty shall be

a. Upto 10000 b. Upto 10000 and 2000 per day if continuing

c. Upto 50000 and 5000 per day if continuing d. Upto 1 lakh

15 As per FEMA, a person residing for ------------------- in India is a person resident in India (subject to

exceptions)

a. for not less than 183 days b. for more than 182 days

c. for not less than 184 days d. for more than 181 days

16 For failure to pay penalty u/s 13 where such penalty < 1 crore: Civil Imprisonment shall be:

a. upto 6 months b. upto 1 year

c. upto 2 years d. upto 3 years

17 Under FEMA a person can undergo civil imprisonment u/s 14 if he fails to pay the full amount of



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penalty u/s 13:

a. within 60 days from service of notice to him b. within 90 days from order made to him

c. within 60 days from service of notice to him d. within 90 days from service of notice to him

18 For failure to pay penalty u/s 13 where such penalty > 1 crore: Civil Imprisonment shall be

a. upto 6 months b. upto 1 year

c. upto 2 years d. upto 3 years

19 ------ is not relevant for determining the residential status of a person in FEMA

a. Residence b. Place of Employment

c. Period of stay d. Citizenship

20 Champions Ltd. is Vietnam based company having several business units all over the world. It has

a unit for manufacturing toys with its headquarters in Pune. It has a branch in Singapore which is

controlled by the headquarters in Pune. What would be the Residential Status under FEMA, 1999

of unit in Pune?

a. Person resident outside India b. Person resident in India

c. Foreign Citizen d. None of the above

21 In continuation of the above question what would be the Residential Status under FEMA, 1999 of

unit in Singapore?



22 Friends are a Philippine company having several business units all over the world. It has a

manufacturing unit called Enemies with headquarters in Kolkata. It has a branch in Germany

which is controlled by the headquarters in Kolkata. What would be the residential status under

FEMA 1999 of Kolkata headquarter?




Germany branch?



24 In continuation of the question number 22 what would be the Residential Status under FEMA,

1999 of Friends?



25 Examine whether the following branch can be considered as a “person resident in India” under the Foreign Exchange Management Act,1999

EFG Ltd, a company incorporated in India established a branch at Paris on 1 January 2017.





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26 Examine whether the following branch can be considered as a “person resident in India” under the Foreign Exchange Management Act, 1999

STU, a foreign company, established a branch at Chennai on 1 January 2017. The Chennai branch

controls a branch at Greece. What is the status of Chennai Branch




branch at Greece?



28 Examine with reference to the provisions of the Foreign Exchange Management Act, 1999 the

residential status of the branch mentioned below.

Happy Ltd is an Indian company. It is having registered office at Bengaluru ,India and established

a branch at Melbourne on 1 April 2018





Fine goods Ltd, a company incorporated and registered in Adelaide established a branch at

Hyderabad in India on 1 April 2018





Fine Goods Ltd, a company incorporated and registered in Adelaide established a branch at

Hyderabad in India on 1 April 2018.

What is status of Hyderabad Branch





Quick Ltd has a branch office at Amsterdam which is controlled by its Raipur branch.


3

2

3

2

Examine with reference to the provisions of the Foreign Exchange Management Act, 1999 the


Disco Ltd. a company incorporated and registered in Athens established a branch at Jodhpur in

India on 1 January 2018.





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33 Mr. Gopal resided in India during the Financial Year 2016-2017 for less than 183 days. He came to

India on 1 April 2017 for employment. What would be his residential status during the financial

year 2017-2018 under FEMA,1999



34 Mr. Soham resided in India during the Financial Year 2016-2017. He left India on 1 August 2017

for higher studies for four years. What would be his residential status during the financial year

2017-2018 under FEMA, 1999?

a. Foreign Citizen b. Person resident outside India

b. Person resident in India c. None of the above

35 Mr. Ravi had resided in India during the financial year 2016-17 for less than 183 days. He again

came to India on 1 June, 2017 for business and stayed upto 15 August, 2018. State whether Mr.

Ravi can be considered “Person Resident in India” during the financial year 2017-18



36 Mr. Guru resided in India for a period of 150 days during the financial year 2016-2017 and

thereafter went abroad. He came back to India on 1 April 2017 as an employee of a business

organization. What would be his residential status under Foreign Exchange Management Act,

1999 during the financial year 2017-18?



37 The residential status of an individual for a particular financial year is determined with reference

to his residence in India in the immediately preceding financial year

a. True

b. False

38 Mr. T is an Indian citizen who has been residing in India since his birth. He left India for

employment in Russia on 25th February 2016. The contract of employment is for 2 years. He

comes back on 24th February 2018. What is his residential status for the financial year 2017-18?

a. Person Resident outside India b. Person resident in India

39 In continuation to the above question what would be residential status for the financial year

2017-18 if he would have gone abroad for higher studies?

a. Person resident in India b. Person Resident outside India

40 No person resident in India shall acquire, hold possess , own or transfer any foreign exchange ,

foreign security or any immovable property situated outside India ,except in accordance with the

Act, or by a general or special permission of RBI.

a. True b. False

41 Any PROI, not being a citizen of Pakistan or Bangladesh, and visiting India: May bring into India

(including from Nepal & Bhutan) max Rs.



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a. 25000 b. 50000 c. 100000 d. 500000

42 Foreign Currency means:

a. All currency excluding Indian Rs b. All currency excluding Indian Rs. & $

c. All currency excluding Rs. and Pakistani Rs d. None of the above

43 The Reserve Bank of India may revoke the authorization of authorized person if it is satisfied that

such revocation

a. will cause peace in the country b. will create employment

c. is in public interest d. will cause inflow of foreign currency

44 An authorised person shall in all his dealings in ------------ comply with such general or special

directions as the Reserve Bank of India may from time to time think fit to give

a. import export b. shares

45 What will authorized person do if any person refuses to make the declaration or to give the

information required by the authorized person or makes only unsatisfactory compliance

therewith?

a. The authorised person shall refuse in writing to undertake the transaction

b. The authorised person shall file a complaint against such person with Police

c. The authorised person shall complete the transaction as usual

46 In continuation of the above question, what if Authorised Person believes that certain

contravention or evasion is contemplated by the person?

a. The authorised person shall file a complaint

against such person with Police

b. The authorised person shall conduct

business as usual

c. The authorised person shall report the matter to

the Reserve Bank of India

d. None of the above

47 What is the penalty where an authorised person contravenes any direction given by the Reserve

Bank under this Act?

a. Fine not exceeding Rs 10000, if it is

continuing then Rs.2000 per day may be

levied

b. Fine not exceeding Rs 1000, if it is continuing

then Rs.200 per day may be levied

c. Fine not exceeding Rs 100000, if it is


levied

d. Fine not exceeding Rs 10000, if it is


levied

48 Quantum of Penalty for violation of Sec 13 shall be: if the sum involved is quantifiable:

a. 3x the sum b. 2x the sum

c. 1x the sum d. 10x the sum

49 Quantum of Penalty for violation of Sec 13 shall be: if the sum involved is not quantifiable:

a. upto 1 lakh b. upto 2 lakh

c. upto 3 lakh d. upto 10 lakh

50 Can the Reserve Bank at any time cause an inspection to be made by any specially authorized



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officer in writing in behalf of the business of any authorized person?

a. Yes b. No

51 Compounding of contravention under section 13 shall be done within the time limit of :

a. 180 days of receipt of application by

directorate of enforcement

b. 45 days of receipt of application by directorate of

enforcement

c. 90 days of receipt of application by

directorate of enforcement

d. 65 days of receipt of application by directorate of

enforcement

52 Appeals to Special Director shall be done within ……of receipt of order u\s 17

a. 80 days b. 45 days

c. 70 days d. 100 days

53 If central government or any person is aggrieved by an order made by adjudicating authority it

shall file an appeal to appellate tribunal & appellate tribunal should dispose the appeal within a

period of….days. a. 90 b. 180

c. 45 d. 100

54 Mr. X convicted an offence under the FEMA resulting the penalty of Rs. 65 lakhs. Later he learned

that he can compound under RBI the penalty amount. Can he?

a. Yes, as there is no prison involved b. No, amount 65 lakh exceeds compoundable amount

c. No, As offence can’t be compounded d. None

55 Mr. A was detained under civil imprisonment for contravention of the provisions of FEMA.

Demand was for an amount involving 92 lakh. Such detention shall be for a period of

a. 1 year b. 6 months

c. 3 years d. 10 months

56 Any person detained in civil prison as above may be detained for upto 3 years if demand amount

involved is more than

a. 90 lakh b. 1 crore

c. 50 lakh d. 10 crore

57 Any detained person in execution of certificate shall be released after

a. End of term b. Paying amount in warrant to officer-in-charge

c. appeal d. None of above

58 Mr. X was appointed as an authorized person contravenes directions by RBI and also failed to file

returns by RB . Penalty for such failure and contravention shall be:

a. upto Rs. 10000 and additional Rs.2000

per day for continuing offence

b. upto Rs. 5000 and additional Rs. 1000 per day for

continuing offence

c. upto Rs. 12000 and additional Rs. 2500

per day for continuing offence

d. upto Rs. 10000 and additional Rs. 4000 per day for

continuing offence

59 If any person contravenes any provisions of FEMA or any guideline, rule, notification direction or



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order subject to which an authorization issued shall be penalized when penalty is non-

quantifiable

a. 2 lakh b. 5 lakh

c. 10 lakh d. 15 lakh

60 If any person contravenes any provisions of FEMA or any guideline, rule, notification direction or

order subject to which an authorization issued shall be penalized when penalty is quantifiable:

a. 10 times the amount involved b. 5 times the amount involved

c. 3 times the amount involved d. 15 times the amount involved

61 If the person fails to pay the penalized amount exceeding 1 crore he shall be imprisoned for

a. 10 years b. 3 years

c. 6 months d. 2 months

62 For an offence committed under any provision of act or any rules ,regulations ,notification the

amount of penalty per day continuing offence if the penalty not paid is

a. Rs. 10000 b. Rs. 5000

c. Rs. 2000 d. Rs 1000

63 Mr. A authorized person was appointed by RBI and has set a limit to hold currency upto 20000 $

and such authorized person was holding currency marginally higher @ $ 21000 is the action of

Authorised Person valid?

a. Yes, in case of emergent need b. No, it is violation of RBI directions and punishable

c. Excess of upto 10% permissible d. RBI direction is guideline and not mandatory in nature

64 What is the restriction for possession foreign coins for ordinary person?

a. $ 1000 b. $ 2000

c. $ 3000 d. No limit

65 Person resident in India is permitted to retain aggregate foreign currency only upto

a. $5000 b. Rs 50000

c. Rs 10000 d. $2000

66 Person resident in India but not permanently resident can hold foreign currency acquired by him

outside India without any limit provided the same is disclosed to:

a. Income tax authority b. RBI

c. CG d. Customs authority

67 Realization and repatriation of foreign currency is exempted if such currency is acquired or

received before:

a. 15th August 1947 b. 8th July 1947

c. 26th January 1947 d. 15th July 1950

68 Foreign currency permitted to be retained upto amount of $2000 can be retained by way of:

a. Travellers Cheque b. Foreign Currency Notes

c. Bank Notes d. All of the above



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69 Mr. A returned from Demark to India on 1.5.2010.While flying he took 1000 kroner and could not

use 500 kroner out of 1000. By which date should he deposit that money to authorized person?

a. 30.6.2010 b. 31.5.2010

c. 29.7.2010 d. 31.5.2011

70 A person shall surrender unused portion of Foreign Exchange within…….from the date of it

acquisition to an authorised person



71 If the unspent amount is in form of travellers cheque such amount shall be returned within



72 What shall be the maximum interest rate payable on advance payment received by an exporter

from buyer outside India?

a. LIBOR +300 basis points b. 3%

c. LIBOR+100 basis points d. 10%

73 Can an exporter refund the amount which unused when the exporter fails to ship the goods after

the period of one year?

a. Yes, with approval of CG b. No

c. Yes only with approval of RBI d. None of the above

74 Which of the following exports require prior approval?

a. Exports of goods on lease, hire etc. b. Export under trade agreement/rupee credit

c. Export of good under special arrangement

between Indian & Foreign Government

d. All of the above

75 Date of export of software in non-physical form under FEMA shall be deemed to be the date of

a. Goods actually exported b. Goods received by buyer

c. Date of RBI approval d. Invoice covering such export

76 When goods are exported to a warehouse established outside India the amount representing

export value shall be paid to authorized dealer in any other case not later than

a. 16 months b. 15 months

c. 14 months d. 12 months

77 When the value of export is not ascertainable at the time of export such export value shall be

a. Cost of Production b. Value as given by authorized dealer

c. Prevailing market price d. Value as specified by RBI

78 Mr. P is running a business of aircraft and its engine and its spare parts. Due to its continual use

the engine of one aircraft got a little damaged result of which he sent it to Germany for repairing

which will be resent within 8 months. Is he required to furnish declaration for such export



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a. No declarations for export for repair b. Yes (declaration since more than 6 months)

79 Mr. X has sent gift to his daughter who resides in Japan of value of Rs. 700000.Is he required to

furnish declaration?

a. Yes (value exceed Rs50000) b. No restriction

80 Which of the following exports don’t require furnishing declaration

a. Goods & software value of 35000 $ b. Gift of Goods of value of more than 600000 Rs

c. Aircraft repairs sent abroad re-import

8 months

d. Trade samples of goods and publicity material

supplied free of payment



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Answers

Q. No Option No Q. No Option No

1. c 41. a

2. a 42. a

3. e 43. c

4. c 44. d

5. b 45. a

6. a 46. c

7. a 47. a

8. a 48. a

9. a 49. b

10. c 50. a

11. d 51. a

12. a 52. b

13. a 53. b

14. b 54. a

15. b 55. b

16. a 56. b

17. d 57. b

18. d 58. a

19. d 59. a

20. b 60. c

21. b 61. b

22. b 62. b

23. b 63. b

24. a 64. d

25. b 65. d

26. a 66. d

27. b 67. b

28. b 68. d

29. a 69. c

30. b 70. b

31. a 71. b

32. b 72. c

33. a 73. c

34. c 74. d

35. a 75. d

36. a 76. b

37. a 77. c

38. a 78. b

39. b 79. a

40. a 80. d

Chapter 2 INSOLVENCY AND BANKRUPTCY CODE, 2016


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Chapter 2 : INSOLVENCY AND BANKRUPTCY CODE, 2016

1. When did the Insolvency and Bankruptcy Code 2016 receive the President’s assent: a. 5 August 2016 b. 28 May 2016 c. 5 May 2016 d. 15 June 2016

2. What is the applicability of IBC:

a. Companies incorporated under the Companies

Act, 2013 or under any previous company law.

b. Limited Liability Partnerships incorporated

under Limited Liability Partnership Act, 2008,

c. Partnership firms and Individuals. d. All of the above

3. Who can initiate Corporate Insolvency Resolution Process (CIRP):

a. Only Corporate

Debtor

b. Financial Creditor and

Operational Creditor.

c. Financial Creditor,

Operational Creditor and

Corporate Debtor.

d. Corporate Debtor

and Financial

Creditor.

4. When can CIRP be initiated:

a. The minimum

amount of default is

Rupees Five Lakh or

such higher amount

which shall not exceed

Rupees Two Crore.

b. The minimum

amount of default is

Rupees One Lakh or

such higher amount

which shall not exceed

Rupees One Crore.

c. The minimum amount

of default is Rupees

Ten Lakh or such

higher amount which

shall not exceed

Rupees Three Crore.

d. The minimum amount

of default is Rupees

Eight Lakh or such

higher amount which

shall not exceed

Rupees Three Crore.

5. ‘Default’ under IBC is defined as : a. Non-payment of debt when

whole or any part or instalment

of the amount of debt has

become due and payable and is

not repaid by the debtor or the

corporate debtor.

b. Non-payment of

debt when whole or

part of the payment is

demanded by the

financial or

operational creditor.

c. Non-payment of any

amount, whether in full

or in part, on demand

by the creditors or

concerned authorities.

d. Any

payment to

the creditor

that

subsists.

6. ‘Debt’ under IBC is defined as :

a. Any amount of

money that is owed

or due to any party.

b. A liability or obligation in

respect of a claim which is due

from any person and includes a

financial debt and operational

debt.

c. Any liability arising in

respect of money

advanced by a

creditor to the

debtor.

d. Debts arising out

of loans

advanced by a

financial

institution.

7. ‘Financial Creditor’ under IBC is defined as: a. Any person to whom a financial

debt is owed and includes a person

to whom such debt has been

legally assigned or transferred to.

b. Any person that

has a claim on the

services of a

second party.

c. Any person to

whom a

financial debt is

owed.

d. Any person

who owes

financial debt

to another.

8. ‘Operational Creditor’ under IBC shall be defined as: a. A creditor whose

liability subsists

upto 6 months

and is listed in the

balance sheet.

b. A person to whom an

operational debt is owed and

includes any person to whom

such debt has been legally

assigned or transferred.

c. Any creditor

listed in the

balance sheet of

the corporate

debtor.

d. Any person

that has

advanced loan

to another

party.



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9. Whether an operational creditor can assign or legally transfer any operational debt to a financial creditor:

a. Yes. However, the

transferee shall be

considered as an

operational

creditor to such

extent of transfer.

b. Yes but the

transferee shall be

considered as a

financial creditor in

relation to such

transfer.

c. No. An operational

creditor cannot assign

or legally transfer any

operational debt to a

financial creditor.

d. No. An operational

creditor can assign or

legally transfer an

operational debt only

to an operational

creditor.

10 Who is a corporate debtor under IBC:

a. Any person that owes

debt to a company.

b. A company that

owes debt to any

person.

c. A corporate person

who owes a debt to

any person.

d. An entity that owes

money to a

financial institution.

11 Who are considered corporate persons under the provisions of IBC:

a. Companies and Limited

Liability Partnerships.

b. Companies and all

Partnership firms.

Companies, Limited

Liability Partnerships

and Trusts.

Companies, all

Partnership firms and

Societies.

12 Whether IBC is applicable to person resident outside India:

a. No, IBC is not applicable

to a person resident outside

India.

b. Yes, IBC is

applicable to a person

resident outside

India.

c. IBC is applicable to

a person outside India

with the prior approval

of the Board.

d. IBC is applicable to

person resident

outside India as well as

to foreign persons.

13 Who is the Regulator under IBC:

a. Reserve Bank of

India.

b. INSOL India. c. Insolvency and

Bankruptcy Board of India.

d. Indian Board for Insolvency

and Bankruptcy.

14 What is the time limit for an operational creditor to initiate insolvency resolution process from the date

of delivering of notice or invoice demanding payment:

a. 7 days b. 10 days c. 14 days. d. 12 days

15 How much is the extension period for completion of insolvency resolution process:

a. 90 days. b. 180 days. c. 120 days. d. 150 days.

16 Who shall declare a moratorium:

a. Insolvency

Professional

b. Insolvency Professional

Agency

c. Adjudicating

Authority

d. Insolvency and Bankruptcy

Board of India

17 Which of the following activities shall not be prohibited or terminated during the moratorium period:

a. Transferring,

encumbering,

alienating or

disposing of any

assets by the

corporate debtor.

b. The recovery of any

property by an owner or

lessor where such

property is occupied by or

in the possession of the

corporate debtor.

c. Any action to

foreclose, recover

or enforce any

security interest

created by the

corporate debtor.

d. Making sales in the

ordinary course of

business or rendering

services therein

18 Who is an applicant under Section 7 of IBC:

a. Corporate Debtor. b. Financial Creditor. c. Operational Creditor. d. Adjudicating Authority.



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19 Can Civil Court enter into the matters of IBC?

a. Yes b. No c. With approval of IBBI d. With approval of AA

20 Which authority can adjudicate for the matters of insolvency resolution for an Individual?

a. NCLT b. RBI c. DRT d. MCA

21 Are the rights of Women and Employees protected under the IBC Act during the Liquidation?

a. No b. Yes c. Partly No d. Partly Yes

22 If the process of IBC is not completed within ............. days it can be extended by.......days.

a. 180, 90 b. 120, 60 c. 90, 60 d. None of the above

23 Which of the following is not purpose of the Act?

a. For the period for

execution of law in a

time bound manner.

b. Promote

Entrepreneurship

c. Increase availability

of credit.

d. Closing down any

business venture

24 The whole process of IBC should be completed within

a. 60 days b. 90 days c. 180 days d. 120 days

25 Is there any provision for speedier process of Corporate Insolvency?

a. Yes b. No c. Can’t Say d. Partly Yes

26 Only ...... has an authority to run debtors business during the moratorium period?

a. Insolvency Professionals b. DRT c. NCLT d. RBI

27 The main feature of Information Utility is to ......... information

a. Collect b. Authenticate c. Collate d. All of the above

28 Which of the following is an Adjudicating Authority in case of an insolvent company?

a. DRT b. NCLT c. DRAT d. RBI

29 Which of the following is Dissolution?

a. Means closing down any

business venture. It

includes everything from

appointment of

Liquidation

b. Is similar to dying of companies in

which the legal identity if company

comes to an end and it ceases to be

a legal person and hence cannot

contract in its own name.

c. Both of above d. None

30 Which of the following is purpose of IBC Act?

a. Promote

Entrepreneurship

b. Increase availability

of credit.

c. Fix time period for execution of

law in a time bound manner.

d. All of the

above

31 The AA can attend the period of Fast Track CIRP beyond 90 days only if supported by ...... of voting share.

a. 50% b. 75% c. 90% d. 60%

32 A person to operational debt is owed and includes any person to whom such debt has been legally

assigned or transferred is.......

a. Financial Creditor b. Operational Creditor c. Corporate Debtor d. KMP



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33 Any person to whom a financial debt is owed and includes a person to whom such debt has been legally

assigned or transferred to..............

a. Financial Creditor b. Operational Creditor c. Corporate Debtor d. KMP

34 Which of the following is a related party?

a. A person controlling

more than 30% of

voting rights in

Corporate Debtor.

b. A person controlling

more than 20% of

voting rights in

Corporate Debtor.

c. A person

controlling more

than 25% of voting

rights in Corporate

Debtor.

d. A person

controlling more

than 10% of

voting rights in

Corporate Debtor.

35 Within 7 days of admission or rejection the AA shall.....

a. Communicate order b. Obtain NOC c. Issue Show Cause Notice d. Advertise in News

36 The order of an AA shall be communicated to Operational Creditor & Operation Debtor within....days.

a. 10 b. 14 c. 30 d. 60

37 Which of the following can be termed as bankrupt?

a. (Liabilities >

Assets) +

Unable to pay

debts

b.[(Liabilities > Assets) + Unable to pay

debts] + Corporate Debtor +

Untreated + Insolvency Resolution

Process (Unsuccessful)

c. [(Liabilities > Assets) +

Unable to pay debts]

+ Non-Corporate

Debtor + Untreated

d. None of

the

above

38 Which of the following can be termed as bankrupt?

a. (Liabilities >

Assets) +

Unable to pay

debts

b.[(Liabilities > Assets) + Unable to pay

debts] + Corporate Debtor +

Untreated + Insolvency Resolution

Process (Unsuccessful)

c. [(Liabilities > Assets) +

Unable to pay debts]

+ Non-Corporate

Debtor + Untreated

d. None of

the

above

39 On occurrence of default on Operational Creditor shall first send a demand notice and ...... to Corporate

Debtor.

a. Copy of agreement b. Copy of deed c. Copy of invoice d. Copy of notice

40 The Corporate Debtor shall within ............ of receipt of demand notice bring to notice of Operational

Creditor about existence of dispute.


41 Which of the following is Corporate Applicant?

a. Corporate

Debtor

b. Individual in charge of Managing

operations & resources of

Corporate Debtor

c. A person having control

& supervision over the

affairs of the Company.

d. All of the

above

42 In which of the following cases related party exists:

a. Private Company in

which director,

partner or manager

hold more than 2% of

PUC.

b. Private Company in

which director,

partner or manager

hold more than 2%

of Net Worth.

c. Public Company in

which director,

partner or manager

hold more than 2%

of PUC.

d. One Person

Company in which

director, partner or

manager hold more

than 2% of PUC.

43 Any person in whom the Corporate Debtor controls more than.... on account of Partnership or voting

agreement.



2.5

a. 40% b. 20% c. 30% d. 50%

44 Any person who is associated with Corporate Debtor can be said to be related party when:

a. Having more than 2

directors in common

between the Company

and such person

b. Interchange of Managerial

Personnel between the

Corporate Debtor and

such person.

c. Provision of essential

technical information

to or from Corporate

Debtor.

d. All of the

above

45 The FTCIRP shall be completed within.....days of insolvency commencement date.

a. 30 b. 60 c. 120 d. 90

46 The Related Party shall file an application to.....to extend the period beyond ....days of FTCIRP.

a. RBI, 30 days b. AA, 90 days c. CBI, 100 days d. IT, 120

days



2.6

Answers

QUES. ANSWER QUES. ANSWER QUES. ANSWER

1 B 7 A 13 C

2 D 8 B 14 B

3 C 9 A 15 A

4 B 10 C 16 C

5 A 11 A 17 D

6 B 12 B 18 B

19 B 20 C 21 B

22 A 23 D 24 C

25 A 26 A 28 B

29 B 30 D 31 B

32 B 33 A 34 B

35 A 36 B 37 C

38 B 39 C 40 A

41 D 42 A 43 B

44 D 45 D 46 B

Chapter 3 FOREIGN CONTRIBUTION (REGULATION) ACT, 2010


3.1

Chapter 3 : FOREIGN CONTRIBUTION (REGULATION) ACT, 2010

Q1.

FCRA 2010 regulates:

a. Foreign Hospitality b. Foreign Contribution c. Both a. and b. d. Neither: as they are

regulated by FEMA

Q2.

FCRA applies to:

a. Whole of India b. Indian Citizens

Outside India

c. Branches of Indian Registered Co’s outside India

d. All of these

Q3.

Minc Inc. of USA had subsidiaries in the European Union at Germany and France having less than 5% of

its turnover contributed from these regions: Is it an MNC.

a. Yes as turnover is not a criteria for such a

determination of MNC status

b. No, as turnover is below specified limits u/s 2(g)

Q4.

Mr. Freeman of Delhi was gifted for his personal use, a pen worth 30,000/- by the organizers of the

event which he was an invitee for: Is it a Foreign Contribution?

a. Yes, amount

exceeds 25000/-

b. Yes, contribution

is made by a

foreign source

c. No, is in nature of

gift for personal

use

d. No, as gift by a professional

body not classified as

foreign source

Q5.

Mr. Chachaji (US citizen) gave Ms Bhateeji who is his niece, US Dollars just before she left for India

after having stayed on vacation in US for a month: Is this a Foreign Contribution?

a. Yes u/s 2(h) all

conditions are fulfilled

b. No, transfer of

currency between

relatives

c. Yes, as transfer takes

place outside India

d. No, as it is without

consideration

Q6.

Foreign Contribution means donation delivery or transfer by foreign source of :

a. Article (not gift for personal use) >

25000/-

a. Currency b. Security c. All of these

Q7.

Mr. Giver gave gift to Mr. Taker (curator of Baseball Museum of Mumbai) a rare signed Lou Gehrig T-

Shirt to be placed at the Baseball Museum: Is this a Foreign Contribution

a. Not a Foreign

Contribution being a gift

specifically excluded

from definition

b. Is a Foreign

Contribution if

amount >

25000/-

c. Not a Foreign

Contribution as it

is Not For Sale but

museum/storage

d. Is Foreign Contribution

irrespective of

monetary value thereof

Q8.

Maggi who received a BMW as a gift from her uncle (US citizen) for her personal use: Used the same

to provide rides to customers on OLA Ride-hailing service : Is the Income derived from the same a

Foreign Contribution

a. Yes, as income derived

from a Foreign

Contribution (Car) shall

be Foreign Contribution

as well

b. No, as Income

derived is not from

Foreign

Contribution (as

car is gift for

personal use)

c. No, as income derived

from Foreign

Contribution doesn’t qualify as Foreign

Contribution too

under Act

d. Specific

exemption in

given case exists

for luxury cars,

and hence is

exempt

Q9.

Which of these are ‘Foreign Source’: a. Government of Foreign

Country

b. International

Monetary Fund

c. Both a. and b. d. Neither a. nor b.



3.2

Q10.

Which of these are ‘Foreign Source’: a. Trade Union of Farmers of

USA, Registered in USA

b. Unregistered Trade Union

of Soy Growers in USA

c. Both a.

and b.

d. Neither a. nor

b.

Q11.

Which of these are ‘Foreign Source’: a. Club exclusively made up of

NRI’s, formed and registered outside India

b. Club exclusively made up of

NRI’s formed and registered in

India

c. Both a.

and b.

d. Neither a.

nor b.

Q12.

Which of these are Foreign Source:

a. Club exclusively made up of

Indian Citizens, formed and

registered outside India

b. Club exclusively made up of Indian

Citizens, formed and registered

inside India

c. Both a.

and b.

d. Neither

a. nor

b.

Q13.

Which of these are Foreign Source:

a. Company exclusively made up

of Foreign Citizens, formed

and registered outside India

b. Company exclusively made up of

Foreign Citizens, formed and

registered inside India

c. Both a.

and b.

d. Neither

a. nor

b.

Q14.

Arnab, an editor of Never-ever Magazine, a bi-monthly registered publication magazine, with national

circulation, took money from Foreign Source: Is this permissible u/s 3 of FCRA?

a. Yes, as it’s a magazine and not a

registered

newspaper

b. No, as no distinction is

made between a

Magazine or any other

publication u/s 3 of FCRA

c. Yes, as it is not a

daily issue and

prohibition applies

to daily issues only

d. No, as it is a

nationally

circulated

magazine

Q15.

Mr. Hari Patti, accepted funds from a MNC. Mr. Hari is a Government Servant. Considering that there

are no issues related to the MNC pending for Mr. Hari’s approval as a Government Servant: Is such acceptance of money permissible

a. Yes, Mr. Hari is not expressly

prohibited from such

acceptance

b. No. Mr. Hari is

expressly prohibited

from such an act

c. Yes, as there is no conflict or issue of

bribe as there is no file requiring his

assent pertaining to MNC

Q16.

Mr. Arnab, an editor of Times Now News Channel for its Audio Visual News show: Can he accept

Foreign Contribution?

a. Yes, as there is no

specific prohibition on

editors in case of

News transmitted

through electronic

mode but only on the

Company/Association

b. No, as editors for

the aforesaid

case are also

prohibited u/s 3

c. Yes, as prohibition

exists only on

editors of

registered

newspapers and

not on News

Channel

d. Yes, as there is no

specific prohibition on

editors in case of News

transmitted through

electronic mode but

only on the

Company/Association

Q17.

Mr. Ajab, PRI accepts Perfume bottle worth a 2 lakh on behalf of Mr. Arnab who is editor of a

registered newspaper: Is it permissible?

a. Yes, this is permissible as there is no prohibition

on Editor/Person u/s 3(1) to let PRI accept

Foreign Contribution on their behalf

b. No, Acceptance of Foreign Contribution by PRI

on behalf of an Editor/Person u/s 3(1) is

prohibited expressly

Q18

Mr. Ajab, PRI accepts perfume bottle worth a 2 lakh from a foreign source to be given to Mr. Ghajab,

who he knows will pass over the same to Mr. Arnab. Mr. Arnab is an editor of a registered newspaper:



3.3

Is this permissible?

a. Yes, this is permissible as

there is no prohibition on PRI

to deliver accepted Foreign

Contribution to a person

other than Editor/Person u/s

3(1), whether or not that

person eventually transfers to

the Editor/Person u/s 3(1)

b. No, this is not

permissible as there is

prohibition on PRI to

deliver accepted

Foreign Contribution to

a person if such person

then transfers the same

to Editor/Person u/s

3(1)

c. Yes, this is permissible as there is

no prohibition on PRI to deliver

accepted article to a person other

than Editor/Person u/s 3(1),

whether or not that person

eventually transfers to the Editor

/Person u/s 3(1) . Prohibition

applies to a delivery of currency

only

Q19.

Mr. Ajab, PRI accepts perfume bottle worth 2 lakh from a foreign source to be given to Mr. Ghajab,

who delivered the same to Mr. Arnab. Mr. Ajab was not aware that Mr. Ghajab will deliver same to

Mr. Arnab. Mr. Arnab is an editor of a registered newspaper:

a. Yes, this is permissible as

there is no prohibition on

PRI to deliver accepted

Foreign Contribution to a

person other than

Editor/Person u/s 3(1),


eventually transfers to the

Editor/Person u/s 3(1)

b. No, this is not

permissible as there is

prohibition on PRI to

deliver accepted Foreign

Contribution to a person

if such person then

transfers the same to

Editor/Person u/s 3(1)

c. Yes, this is permissible as there is

no prohibition on PRI to deliver

accepted article to a person other

than Editor/Person u/s 3(1),


eventually transfers to the

Editor/Person u/s 3(1). Prohibition

applies to a delivery of currency

only

Q20 Mr. Ajab, PRI accepts currency from a foreign source to be given to Mr. Ghajab, who delivered the

same to Mr. Arnab. Mr. Ajab was not aware that Mr. Ghajab will deliver same to Mr. Arnab. Mr. Arnab

is an editor of a registered newspaper: Is there any prohibition for the same?

a. Yes, expressly

prohibited u/s

3(2)(b)

b. No, as prohibition exists in case

where the person is aware that the

transferee will further transfer to

Person referred u/s 3(1)

c. No Prohibition, irrespective of

whether or not such PRI is aware

that the transferee will further

transfer to Person referred u/s 3(1)

Q21. Mr. Michael Bloomberg, a U.S Citizen resident in India who operates the Bloomberg business TV

channel operations in India, pays to Mr. Arnab, Editor of a daily news show on Bloomberg business TV,

a salary of $200000/- . Mr. Michael received such a payment from parent Company Bloomberg Inc of

USA. Is this a payment made in violation of Sec 3?

a. Yes, as payment is

made to a person u/s

3 from Foreign

Source amounting to

Foreign contribution

b. No, as payment is made by a PRI

to a person u/s 3 after receiving

such amount from Foreign

Source and for the purpose of

Salary which is specifically

excluded.

c. No, as payment is made by

person resident in India, hence

source ceases to be a Foreign

Source and hence transaction

done even with a person u/s 3

shall be permitted.

Q22.

Mr. Advertiser, an Indian Citizen resident outside India who operates advertising agency in India, pays

to Times Now, $200000/- for Ads to be run on that network. Ads are run for Tesla Inc who paid the

money to Mr. Advertiser. Is this a payment made in violation of Sec 3?


made to a person

u/s 3 from Foreign

Source amounting

to Foreign

contribution

b. No, as payment is made by a

Citizen resident outside India to a

person u/s 3 after receiving such

amount from Foreign Source and

for the purpose of ordinary

business transaction is specifically

excluded.

c. Yes, as payment is made by Citizen

Resident outside India, hence

source is a Foreign Source and

hence transaction done even with

a person u/s 3 shall be violation as

no specific exclusion is given.



3.4

Q23.

Lockheed Martin Aviation Inc of USA has an appointed agent named Mr. Unlock. This agent deals with

issues pertaining to the Government of India. Mr. Unlock is a Person Resident in India. All Lockheed

Martin Aviation payments to GOI are made through Mr. Unlock. Does this violate Sec 3?


made to a person u/s

3 from Foreign

Source amounting to

Foreign contribution

b. No, as payment is made by a PRI

and such payments are made as

agent for Foreign Source, to the

CG/SG, and hence is specifically

excluded

c. No, as payment is made by a PRI

who is acting as an independent

agent, hence payment made to

CG/SG shall be payment made by

Indian source not Foreign Source.

Q24.

Judge Brett Kavanaugh, received from his relative a US citizen certain amount of money. Is the judge

then in violation of Sec 3?

a. Yes, as he has received

Foreign Contribution and

being a Judge is in direct

violation of Sec 3

b. Yes, as the receipt is from a

foreign citizen so being a

relative is immaterial in

application of Sec 3

c. No, as being a receipt from a

relative Judge shall be

excluded from Application of

Sec 3

Q25. Would Judge Brett be in violation if instead of money he received Security instead?

a. Yes, as the prohibition is applicable

based of the Foreign Source and Foreign

Contribution, both of which are present.

b. No as even though Judge is prohibited from accepting

Foreign Contribution from Foreign Source, the same

is condoned (allowed) if such is given by a relative

Q26.

Would Judge Brett be in violation if instead of Judge Brett his wife Ashley who is an Indian Citizen but

resident outside India received the currency on Judge Brett’s behalf?

a. Yes, as exemption to

relative is available only

for people referred to in

Sec 3(1) and not 3(2).

b. No, Acceptance of Foreign Contribution by Citizen of India Resident

outside India on behalf of an Editor/Person u/s 3(1) is prohibited

expressly, but since the amount is being received on behalf of

recipient u/s 3 and from a relative, same is excused specifically.

Q27.

Mr. Prakash fell ill on US trip and received Foreign Hospitality from the US Government by virtue of

medical aid. Mr. Prakash is a Government Servant and hence prohibited u/s 6. What shall be his

course of action?

a. Inform CG

within 60

days

b. Inform CG within 60

days if amount

exceeds Rs. 100000

c. No need to inform CG as emergent

medical aid received is outside

purview of Sec 6 prohibition

d. Inform SG

within 30 days

Q28. ‘Foreign Hospitality’ means offer made in: a. Cash only b. Kind only c. Both a. and b. d. Either a. or b. exclusively at a time

Q29. ‘Foreign Hospitality’ includes providing costs of: a. Foreign Travel b. Boarding Lodging Transport

on Foreign Travel

c. Medical Treatment

on Foreign Travel

d. All of the above



3.5

Answers

Q. NO ANS.

NO

Q. NO ANS.

NO

Q. NO ANS.

NO

Q. NO ANS.

NO

Q. NO ANS.

NO

1. c 2. d 3. a 4. c

5. a 6. d 7. b 8. q 9. c

10. C 11. a 12. a 13. c 14. a

15. B 16. b 17. b 18. c 19. c

20. b 21. b 22. b 23. b 24. c

25. b 26. b 27. b 28. c 29. d

Chapter 4

SECURITISATION & RECONSTRUCTION OF FINANCIAL ASSETS AND ENFORCEMENT

OF SECURITIES INTEREST ACT, 2002


4.1

Chapter 4: Securitisation & Reconstruction of Financial Assets and

Enforcement of Securities Interest Act, 2002

1. Whether any Stamp duty is levied on the transfer of security interest from the Banks/Financial

Institution to Asset Reconstruction Company?

A. Depends from state to state B. Stamp duty is exempted C. Levied if the amount of transfer exceeds 100

Crore

D. Rs. 100 on every Rs 1,00,000 of security

interest

2. If the registration certificate of the ARC is cancelled, in how many days can it make an application to

the Central Government (Ministry of finance)?

A. 30 days B. 60 days

C. 90 day D. 180 days

3. The Asset Reconstruction company can make an application against the RBI within 30 days of RBI

cancelling its registration certificate to______________

A. Governor of RBI B. Government of India

C. Central Government (Ministry of Finance) D. Prime Minister

4. Any dispute arising between Bank or financial institute & ARC or QIB shall be resolved by making an

application to

A. National Company Law Tribunal B. High Court

C. Arbitrator under Arbitration & Conciliation Act,1996 D. Regional direct

5. The Asset Reconstruction company after acquiring the financial assets shall replace __________in

terms of obligations, terms and conditions

A. Secured Creditor B. Bank or financial Institution

C. Special Purpose Vehicle D. Guarantor

6. An Asset Reconstruction company Works as

A. Agent, manager &

receiver

B. Principal, manager

& receiver

C. Manager, receiver

& administrator

D. Gent, manager

& obligator

7. On the basis of period for which the asset remained non-performing assets are classified into 3

categories_______

A. Standard, sub-

standard and

default assets

B. Sub-standard,

doubtful and loss

assets

C. Standard, doubtful

and loss assets

D. Standard, doubtful

and irrecoverable

assets

8. Type of registrations which is required by ARC

A. Registration under

Companies Act

and RBI

B. Only

Registration

under RBI

C. Only to be formed

as Company under

Companies Act

D. Can start the business of

ARC just by registering with

SEBI and issuing securities.

9. If there are more than one borrower, how should the demand notice be served

A. Demand notice must be

served only on those

borrowers whose

borrowing is more than

B. Demand notice

must be served

on any one of

the borrowers

C. Demand notice must

be served on the

person whose name

appears first in the

D. Demand

notice must

be served on

all borrowers

Chapter 4




4.2

40% of the debt list

10. If the payment is not made by the borrower in the prescribed time after receipt of notice, which of the

following steps cannot be taken by the secured creditor:

A. Take possession of

the secured assets of

the borrower

including the right to

transfer by way of

lease, assignment or

sale for realising the

secured asset

B. Appoint any person

(manager) to

manage the secured

assets, the

possession of which

has been taken over

by the secured

creditor

C. To sell the assets of the

borrower without further

procedures that is in the

possession of the secured

creditor and utilize the

amount against the

amount due by the

borrower

D. Takeover

the

managem

ent of

business

of the

borrower

11. What is the purpose of Central Registry

A. Registration of transaction

of securitisation and

reconstruction of financial

assets and creation of

security interest

B. Storehouse of

information

relating to

securitized

assets

C. Registration of

information relating

to secured creditors

and related

borrowers

D. Collection of

information

related to

securitization

cases

12. Which of the following is not a security interest

A. Any security

Interest created

in agriculture

land

B. Any security interest

for securing repayment

of any financial asset

exceeding Rs. 1 Lac

C. Any

unconditio

nal sale

D. Any case in which the amount

due is more than 20% but less

than 30% of the principal

amount and interest thereon

13. Which of the following is not a condition that is considered by the RBI in case of application for

registration or carrying on business by an Asset Reconstruction Company (ARC):

A. that the ARC has

not incurred

losses in any of

the three

preceding

financial years

B. that the

directors of ARC

have not

entered into

related party

transactions

C. that the directors of ARC

have adequate

professional experience in

matters related to

finance, securitisation

and re-construction

D. That a sponsor of an

ARC is a fit and

proper person in

accordance with the

criteria issued by RBI

14. When does an asset become non-performing

A. When the

instalments and/or

interest is not paid

for a period

exceeding 60 days

B. When the

instalments and/or


for a period

exceeding 120 days

C. When the

instalments and/or


for a period

exceeding 90 days

D. When the

instalments and/or


for a period

exceeding 180 days

15 In case of joint financing under this Act, a creditor can

A. Take any

action

independentl

y

B. Take action only when it

is agreed upon by

creditors holding 60% of

the amount outstanding

on record date

C. Take action only when it

is agreed upon by

creditors holding 40% of

the debt outstanding as

on that date

D. Take action with

the permission

of all the other

creditors involve

16 What is the time limit within which any person aggrieved by any measure taken by secured creditors

file an application to the Debt Recovery Tribunal:

Chapter 4




4.3

A. Within 45 days from

the date on which such

measure had been

taken

B. Within 30 days

from the date on

which such

measure had been

taken

C. Within 15 days

from the date on

which such

measure had

been taken

D. Within 60 days

from the date on

which such

measure had

been taken

17. Under the provision of SARFAESI Act 2002, where a transaction of securitisation is registered

A. Registrar of

Companies

B. Registrar of Firms C. Registrar of

Assurances

D. Registrar of

Central Registry

18 In the process of securitisation the non-liquid financial assets (NPA) are converted into marketable

securities in the form of:

A. Share B. Debenture C. Pass through certificates D. Receipts

19 At the time of take over the bad loans from 3 banks it is found that these banks have filed suits in

different DRTs. Securitisation company wants to get these cases in one DRT, which can be permitted

by:

A. Central Govt. B. Supreme Court C. High Court D. DRAT

20 What is the name of Central Registry formed under SARFAESI Act, 2002

A. Central Registry of

Securitisation Asset

Reconstruction and

Security Interest

(CERSAI)

B. Central Registry of

Secured Asset

Reconstruction and

Security Interest

(CERSAI)

C. Central Registry of

Securitisation Asset

Reconstruction and

Security Asset

Interest (CERSAI)

D. None of the

Above

21. Before which of the following can an asset reconstruction company file an application for enforcement

of its security interest:

A. Debt Recovery

Tribunal

B. High Court C. District Court D. National Company Law

Tribunal

22. An application under Section 5A of the SARFAESI Act for transfer of applications pending before two or

more Debt Recovery Tribunals may be filed by an Asset Reconstruction Company before

A. High Court B. National Company Law

Appellate Tribunal

C. Special Court D. Debt Recovery

Appellate Tribunal

23. When a secured creditor takes over the management of business of a borrower, he may appoint:

A. As many persons as it thinks

fit to be the

directors/administrators of

the business of that

borrower, as the case may be

B. As many persons as it

thinks fit to be the

registered valuers of

the business of that

borrower

C. The auditors

of the

business of

that

borrower

D. The liquidator

who shall take

over the

liquidation

proceedings

24 Prior approval of RBI is not required in the following case to an ARC

A. Chang

e in its

name

B. Any substantial change in the

management , including appointment of

any director, managing director, or chief

executive officer

C. Enforcement of

security interest

D. Change of

location of its

registered

office

25 One of the following ground is not the criteria for cancellation of Registration Certificate of ARC

A. Ceases to carry on the B. Has failed to comply C. Fails to maintain the D. has incurred

Chapter 4




4.4

business of

securitization or asset

reconstruction company

with the conditions

specified by RBI

accounts in

accordance with the

requirement of the Act

loss in the

preceding

financial year

26. RBI has power to determine policy and issue directions to the ARC in particular or it should be uniform

for all the ARC’s

A. RBI has power to issues

such directions only

generally, uniformly for

the all the ARC’s

B. RBI can issue

directions only

to particular

ARC

C. RBI can issue in public interest to

the ARC’s and also to the ARC in particular directions and

determine policies

D. None of

the

above

27 Which of the following is not the Pre-conditions for enforcement of security interest

A. There should

be a default

in repayment

of secured

debt

B. The account in

respect of

such debt is

classified as

NPA

C. Notice in writing is

issued to the borrower

to discharge its liabilities

in full within 60 days

from the date of notice

D. There is no mandatory

requirement for borrower

liability to a secured

creditor to be under a

security agreement

28. Can director or managing director or manager or any other person incharge of management can claim

to tribunal for recovery of compensation for loss of its office:

A. It can claim for compensation if the director,

managing director, manager or person incharge is

not guilty of any fraud

B. Director or managing director or

manager or any other person incharge

of management cannot claim

compensation for loss of office

C. Director or managing director or manager or any other person

incharge of management cannot claim compensation for loss of

office but has the right to recover from the business of the

borrower, moneys recoverable otherwise than by way of such

compensation

D. Can make an

application to Tribunal

within 30 days to claim

for loss of office

29. The Act is extends to

A. Whole of India B. Whole of India

except Jammu

and Kashmir

C. Whole of India but excluding

the states of J&K, Telengana

and West Bengal

D. Whole of India

except the Union

Territories

30. The time-limit within which the DRT is supposed to dispose off the application

A. As

expeditiously

as possible

B. Within 60 days

from the date

of application

C. Within 60 days from the date of

application but can be extended

to max of 4 months for reason to

be recorded in writing

D. Within 180

days of the

date of

application

31. An asset reconstruction company shall not commence the business of securitisation unless

A. It has obtained a certificate of

registration

B. It has obtained a certificate of

registration

C. A and B D. A or

B

32. RBI has specified that the Net Owned Fund for Asset Reconstruction Companies shall be minimum ------

------- on an ongoing basis with effect from 28 April,2017

A. Rs 50 Crore B. Rs 100 crore C. Rs. 150 crore D. No such limit

33. An asset reconstruction company existing on the commencement of this Act, shall make an application

for registration to the RBI before the expiry of -------- from such commencement

Chapter 4




4.5

A. 30 days B. 120 days C. 3 months D. 6 months

34. Before granting a certificate of registration , the RBI shall itself satisfy that-------

A. Such company has

not incurred losses in

any of 3 preceding

financial years

B. That no director of such

company has been

convicted of any offence

involving moral

turpitude

C. that such company has

complied with or is in a

position to comply

with prudential norms

specified by the RBI

D. All of

the

Above

35. Before granting a certificate of registration , the RBI shall itself satisfy that-------

A. That the directors of

such company have

adequate professional

experience in matters

related to finance ,

securitisation and

reconstruction

B. That such

company has

complied with

such conditions as

may be specified

in the guidelines

issued by the RBI

C. That a sponsor of an asset

reconstruction company is a

fit and proper person in

accordance with the criteria

as may be specified in the

guidelines issued by the RBI

for such persons

D. All of

the

above

36. Sponsor means---

A. Any person holding

not less than 10%

of the paid up

equity capital of an

asset

reconstruction

company

B. Any person holding

not less than 20% of

the paid up equity

capital of an asset

reconstruction

company

C. Any person

holding more than

20% of the paid up

equity capital of

an asset

reconstruction

company

D. Any person

holding any

amount of the

paid up equity

capital of an asset

reconstruction

company

37. Can an asset reconstruction company appoint any director on the board of directors of the asset

reconstruction company

A. No B. Yes, on obtaining prior approval of RBI

38. Every asset reconstruction company shall obtain prior approval of RBI for change of location of its

registered office

A. True B. False c. Partly True d. Partly False

39

High ltd. is an asset reconstruction company, of which certificate of registration was cancelled. Which

authority can cancel the registration?

A. Supreme court B. High Court C. RBI D. Any of the above

40 Mudra Ltd. is an asset reconstruction company. This company has failed to comply with any direction

issued by the RBI under the provisions of this Act. What action will RBI take now?

A. No action B. Cancellation of certificate C. Suspension of certificate D. None of the above

41. M Ltd. is an asset reconstruction company. This company ceased to carry on the business of

securitisation under the provisions of this Act. What action will RBI take now?

A. Cancellation of certificate B. Suspension of certificate

42. The RBI may cancel the certificate of registration of any asset reconstruction company, without giving

any opportunity being heard, if it is of opinion that the delay in cancelling the certificate of registration

shall be prejudicial to the public interest or the interest of the investors of such company.

Chapter 4




4.6

A. True B. False

43. The RBI may cancel the certificate of registration of any asset reconstruction company, without giving

any opportunity being heard, if it is of opinion that the delay in cancelling the certificate of registration

shall be prejudicial to the public interest or the interest of the investors of such company.

A. High court B. Appellate Tribunal C. State Government D. Central Government

44. What is the time limit for filing an appeal by the asset reconstruction company?

A. 15 days B. 30 days C. 45 days D. 60 days

45. Any document executed by any bank or financial institution in favour of the asset reconstruction

company acquiring financial assets for the purpose of asset reconstruction shall be--------------

A. Liable to pay stamp

duty

B. Exempted from stamp

duty

C. Any of the above D. None of the

above

46. Under the provision of SARFAESI Act 2002, where a transaction of securitisation is registered

A. Registrar of

Companies

B. Registrar of

Assurances

C. Registrar of Firms D. Registrar of

Central Registry

47. Under section 14,compulsory filing of ------------- by the secured creditor through their authorised

officer with the District magistrate to take possession of the secured assets

A. Certificate B. Affidavit C. Report D. None of the above

48. Where the sale of an immovable property, for which a reserve price has been specified, has been

postponed for want of a bid of an ------------------- such reserve price, it shall be lawful for any officer of

the secured creditors to bid for the immovable property on behalf of the secured creditor at any

subsequent place

A. Amount not less than B. Amount not more than C. Amount equal to

49 Where the secured creditor is declared to be the purchaser of the immovable property at any

subsequent sale, the amount of the purchase price shall be ------------------- of secured creditor.

A. adjusted towards the

selling price

B. adjusted towards the amount of

the claim

C. adjusted towards the

amount of auction

50 Any amount which is received by the secured creditor shall be applied , firstly, in payment of such costs

and secondly , in discharge of the dues of the -----------, and if any amount remains after such

payments, such amount shall be paid to the borrower

A. secured creditor B. unsecured creditor C. liquidator

51 Where dues of the secured creditor are not fully satisfied with the sale proceeds of the secured assets,

the secured creditor may file an application to the -------- for recovery of the balance amount from the

borrower.

A. Debts recovery

appellate tribunal

B. State government C. Debts recovery

tribunal

D. Central

government

52. No act of the CMM or DM be called in question in any court or before any authority

A. True B. False

53. The act allows taking the matter to high courts only in some matters related to the implementation of

Chapter 4




4.7

the act in Jammu & Kashmir

A. True B. False

54. The Jammu and Kashmir High Court shall not entertain any appeal by the borrower unless the

borrower deposits with the Jammu and Kashmir High Court,------------------- due from him as claimed by

the secured creditor or determined by the court of District Judge, whichever is less.

A. 20 B. 25 C. 50 D. 40

55. The Jammu and Kashmir High court may for the reasons to be recorded in writing, reduce the amount

it be deposited by the borrower to such amount as the Jammu and Kashmir High Court may deem fit,

but such amount shall not be less than 30%

A. True B. False

56 The particulars of every transaction of securitisation, asset reconstruction or creation of security

interest shall be filed , with the --------------- in the manner and on payment of such fee as may be

prescribed

A. High Court B. State Government

C. Central Government D. Central Registry

57 It shall be the duty of ------------ , as the case may be , to send to the Central Registrar , the particulars of

modification of security interest

A. Asset Reconstruction Company B. Bank C. Financial Institution

58

The asset reconstruction company shall within 30 days give intimation of such payment or satisfaction

in full of the security interest to the ------------

A. .High Court B. State Government C. Central Government D. Central Registrar

59 The particulars of securitisation entered in the Central Register shall be open during business hours for

inspection by ------- on payment of prescribed fees

A. Director B. Any Person C. Central Registrar D. Concerned Bank

60 Debenture is an ---------------

A. Capital B. Type of bonds C. Acknowledgement of debt

61. the management of business of a borrower is taken over by a secured creditor , the secured creditor

may appoint as many person as is thinks fit to be the ---

A. Directors ,in case the

borrower is a

company;

Administrator of the

business of the

borrower ,in any other

case

B. Administrators ,in

case the borrower is

a company;

Directors, of the

business of the

borrower ,in any

other case

C. Central Registrar ,in

case the borrower is a

company;

Administrator of the

business of the

borrower ,in any other

case

D. None of the

above

62 In addition to the above question, how the above appointments shall be made?

A. By sending circular to the

concerned person

B. By telephonic

conversation

C. By publishing in English and

vernacular newspaper

63 On publication of such above notice, following consequences shall follow:

A. Any contract of B. All the properties of the C. All of the D. None of the

Chapter 4




4.8

management between

the borrower and any

director or manager shall

be deemed to be

terminated

business of the borrower

shall be deemed to be in the

custody of the directors

appointed by the secured

creditor

above above

64 On realization of his debt in full, the secured creditor shall-------------

A. Proceed for the winding up B. Appoint any person to be a director

C. Restore the management to the borrower

D. Control interest in the management

65 If any secured creditor jointly with other secured creditors has converted part of its debt into shares

of a borrower company and thereby acquired controlling interest in the borrower company , such

creditors shall not be liable to restore the management of the business to such borrower

A. True B. False

66 Section 16 of the said Act disentitles any director, manager or person in charge of the borrower from-

--------------

A. receiving any compensation for premature

termination of his contract with the borrower

B. paying any compensation for premature

termination of his contract with the

borrower

C. waiving off any compensation for premature

termination of his contract with the borrower

D. accepting any compensation for

premature termination of his contract

with the borrower

67 The DRT may extend the said period of 60 days , that the total period of pendency of the application

shall not exceed ----------


C. 1 month D. 4 months

68

In the case of a borrower residing in the State of Jammu and Kashmir , the application under section

17 shall be made to the------------ in that state having jurisdiction over the borrower which shall pass

an order on such application

A. Court of District Judge B. High Court

C. Central Registrar D. Any Of Above

69 No appeal shall be entertained unless the borrower has deposited with the Appellate Tribunal 50% of

the amount of debt due from him, as claimed by the ------------

A. secured creditors or determined by the Debts

Recovery Tribunal , whichever is more

B. secured creditors or determined by the

Debts Recovery Tribunal

Secured creditors or determined by the Debts Recovery Tribunal, whichever is less.

70 Where a caveat has been lodged, such caveat shall not remain in force after the expiry of the period

of 90 days ---------------- unless the application or appeal has been made before the expiry of the

period.

A. from the date on which it was lodged B. from the date on which it was served

71 What would be the location of the head office of Central Registry?

A. Delhi B. Chennai

C. At such place as the Central Government may specify D. Mumbai

Chapter 4




4.9

72 Central Registry of Securitization Asset Reconstruction and Security Interest of India is a ----------------

with Government of India having a shareholding of 51% by the Central Government and select public

sector banks and the national housing bank also being shareholders of the company

A. Government of India Company licensed

under section 8 of the Companies Act, 2013

B. Charitable trust under section 8 of the

Companies Act,2013

C. Public Company

73 The Central Government may by notification appoint a person for the purpose of registration of

transactions relating to securitization, reconstruction of financial assets and security interest created

over properties who shall be known as the -----------

A. Administrator B. Secured Creditor

C. Central Registrar D. Any of the above

74 A record called Central Register shall be kept at the head office of the Central Registry for entering the

particulars of the transactions relating to –

A. Securitization of the financial assets

B. Creation of security interest

C. Reconstruction of the financial assets

D. All of the above

75 Section 24, provisions relating to modification of security interest applies whenever

A. The terms or conditions of any security

interest registered under chapter IV are

modified

B. The extent or operation of any security interest

registered under chapter IV is modified

C. Both of the above D. None of the above

76 The particulars of such above modifications are to be sent to the Central Registrar under this Act.

Whose duty is it to send to the Central Registrar

A. ARC or the secured creditor B. Borrower

77 Can inspection of Central Register maintained in electronic form be done by any person?

A. Yes B. No

78 Where the CG is satisfied that there was an omission to file with the Central Registrar , intimation of

satisfaction of security interest under section 25; and such omission was accidental it is just and

equitable to grant relief the CG may direct the time for such filing shall be extended.

A. True B. False

79 If any person contravenes or attempts to contravene the provisions of this Act, he shall be punishable

with-----

A. Imprisonment which may extend to 1 year B. Fine

C. Fine and imprisonment D. Any of the above

80 No court shall take cognizance of any offence punishable u/s 27 in relation to the non-compliance with

the provisions of section 23 or 24 or 25 or 28 or 29 or any other provisions of the Act otherwise than

an exception

A. True False

81 Where any ARC or any person fails to comply with any direction issued by the RBI under this Act,

penalty is imposed---

A. Not exceeding Rs. 1 crore or twice the B. Not exceeding Rs. 50 lakh or twice the amount

Chapter 4




4.10

amount involved in such failure, whichever is

more

involved in such failure, whichever is more

C. Not exceeding Rs. 1 crore or twice the

amount involved in such failure, whichever is

less

D. Not less than Rs. 1 crore or twice the amount

involved in such failure, whichever is more

82 Any penalty imposed under section 30A shall be payable within a period of ----------


C. 45 days D. 60 days

83 What if penalty is not paid within the specified period

A. Cancellation of registration B. Postponement of registration

C. Interest is to be paid with penalty D. None of the above

84 A person in default aggrieved by an order of Adjudicating authority imposing penalty may within a

period of 30 days from the date on which such order is passed prefer an appeal to the-------------

A. High court B. Tribunal

C. Appellate Authority D. Central Government

85 Does an Appellate authority has a right, by an order, stay the enforcement of the order passed by the

adjudicating authority u/s 30 A?

A. Yes B. No

86 What is the consequence where it is found that statement on oath made by the person is false in

material particulars?

A. Fine B. Imprisonment

C. Personally liable to the Reserve Bank D. None of the above

87 In what cases are the provisions of the Act not applicable?

A. Any security interest created in

agricultural land

B. Any security interest for securing repayment of any

financial asset not exceeding Rs. 1 Lakh

C. Any rights of unpaid seller u/s 47 of the Sale of Goods Act,1930 D. All of the above

88 A copy of every notification u/s 31A proposed to be issued shall be laid in draft before---------------,

while it is in session , for a total period of 30 days

A. State government B. High Court

C. ARC D. Each House Of Parliament

89

Does Civil Court have the jurisdiction to grant an injunction in respect of any matter which the Debts

recovery Tribunal or the Appellate Tribunal is empowered to determine

A. Yes B. No

90 The communication of the reasons to the borrower by the secured creditor for not having accepted his

representation or objection or the likely action of the secured creditor shall not entitle the borrower to

make an application to the-----------.

A. Court of District Judge B. Central Government

C. State Government D. ARC

Chapter 4




4.11

91 RGB bank which holds charge on all assets of the ABC Ltd. company. ABC Ltd. company failed to repay

the amount. Bank took over control of the company in compliance of the provisions of the SARFAESI,

2002. By appointing 5 persons as directors. Mr. B as managing director, is managing the company.

Whether Mr. B is entitled to compensation for loss of office?

A. YES B. NO

92 S ltd is a securitisation and reconstruction company as per provisions of SARFAESI, 2002. The certificate

of registration was cancelled. State the authority which can cancel

A. RBI B. Central Registry

C. High Court D. District Judge

93 In continuation to the above case, what are the rights of S Ltd against such cancellation

A. No rights B. Appeal to the Central Government

C. Appeal to the Appellate tribunal D. None of the above

94

Sofa ltd. is a securitisation company. In the due course, Sofa Ltd. failed to maintain accounts in

accordance with the requirements of any law or any direction or order issued by the RBI under the

provisions of this Act. Thus, this action of SOFA ltd. is contravention of SARFAESI 2002. Advice as per

the Act what could be done now.

A. Suspension of certificate of registration B. Cancellation of Certificate of registration

C. None of the above D. None of the above

95 Section 13(13) states that, no borrower shall after receipt of notice u/s. 13(2) transfer by way of sale,

lease or otherwise any of his secured asset referred to in the notice, without prior written consent of

the secured creditor

A. True B. False

96 Does SARFAESI, 2002 apply in the following situations?

a. A pledge of movables within the meaning of section 172 of the Indian Contract Act,1872

b. Creation of any security in any aircraft as defined in clause (1) of section 2 of the Aircraft

Act,1934

A. Apply B. Does not apply

97 EFG Ltd. issued listed bonds 5 years ago, which is due to be redeemed in the current year worth 50

crore Rs. The single largest bond holder NM ltd. wants to know options under SARFAESI Act 2002 in

case EFG Ltd. fails to repay the debt. Advice

A. Recourse to all options as available to

secured creditors

B. No Recourse to all options as available to

secured creditors

98 What is the threshold of assets for applicability of SARFAESI,2002

A. 100 CR B. 400 CR

C. 200 CR D. 500 CR

99 No secured creditor shall be entitled to exercise the right of enforcement of securities under Chapter

III unless the security interest create under in its favour by the borrower has been registered with the

Central Registry

A. True B. False

100 The provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained

in any other law for time being in force or any instrument having effect by virtue of any such law.

Chapter 4




4.12

A. True B. False

109 An ARC registered with RBI to carry on the business of asset reconstruction are deemed to be

____________ which can invite any number of qualified institutional buyers to subscribe its

debentures, bonds etc.

101 An Asset management company proposes to change its registered office address. Is RBI approval

mandatory?

A. Yes B. no

102 XY Ltd has defaulted in payment of its loan which was acquired through joint financing from A Ltd and

B Ltd in the ratio of 35:65. XY Ltd has not responded to the written notice issued by both the

borrowers. A Ltd wishes to enforce its security interest to recover his debt. Can A Ltd exercise his right

to enforce security interest alone?

A. Yes B. no

C. Both a & b D. Both B & c

103 As per Change in or takeover of management of business (RBI) Guidelines, 2010, a Securitization

Company may effect change or takeover of management if the amount due from borrower exceeds :

A. 35 B. 45

C. 25 D. 55

104 The SARFAESI Act, applies to

A. A lien on goods, money or security given

under Indian Contract Act 1872 or Sale of

Goods Act 1930

B. Creation of any security in any aircraft as per the

Aircraft Act 1934

C. Any security interest for securing

repayment of any financial asset

exceeding Rs 1,00,000

D. Any case in which the amount due is less than

20% of the principal amount and interest

thereon

105 In a landmark case of BPV Classic Tea Factory Pvt Ltd v. Corporation Bank, the judgment given with

regard to enforcement of security interest was

A. SARFAESI Act prevails over Companies

Act 2013

B. Companies Act prevails over SARFAESI Act

C. Both are to be abided D. No such Judgment was passed

106 As per Security Interest (enforcement) Rules,2002, on sale of immovable property by the secured

creditor, the purchaser shall pay a deposit of _____ of the amount of sale price immediately and

balance within ______ days of such sale.

A. 15% , 15 days B. 35%, 20 days

C. 25%, 15 days D. 50%, , 30 days

107 As per the judgement passed in Mardia Chemicals v. UOI, is SARFAESI Act Unconstitutional on grounds

that it is heavily in favour of lenders.

A. Yes B. The act has been amended in view of the case

C. The act is regarded as unconstitutional D. No

108 The definition of Bank has been amended to include

A. Nationalized banks B. Multi-state Co-operative banks

C. Private banks D. None of the above

Chapter 4




4.13

A. Public Financial Institution B. Bank

C. Non-banking Financial Corporation D. Merchant banker

110 Every company functioning as securitization company or reconstruction company shall have net owned

funds of _____ or _____ % of financial assets, whichever is higher.

A. 100 Crores or 25% of financial assets B. 50Crores or 10 % of financial assets

C. 100 Crores or 15% of financial assets D. 2 Crores or 15% of financial assets

111 What is Principle of Subrogation

A. When ARC acquires financial assets of any

bank or financial institution it is deemed as

lender

B. When ARC enforces its interest on the assets

C. When ARC takes over the management of

the borrower, it is deemed owner of the

company.

D. None of the above

112 Which all measures an ARC can take for the purpose of asset reconstruction

A. Proper Management of Business of borrower B. Sale or lease of a part or whole of business of

the borrower

C. Waiver of dues payable by borrower D. All of the above

113 XY Ltd has raised a loan of Rs 10 lakhs and has defaulted in payment of Rs 5000 on the due date.

Written notice has been given to XY Ltd demanding the payment of his liability in full within 60 days. Is

the account of XY Ltd classified as NPA ?

A. Yes even a debt of Rs 1 outstanding is

classified as NPA

B. No debts are classified as NPA only if they

exceed 1,00,000

C. No Debts are classified as NPA only if they

exceed 10,000

D. None of the above

114 XY Ltd has defaulted in payment of its debt; ARC has taken action to realize its assets through auction

and has incurred expenses related to realization of assets. Can ARC recover the expenses incurred from

borrower on realization of such assets?

A. No ARC has to bear the cost and expenses B. ARC can recover 50% of the expenses and cost

incurred

C. ARC can recover full expense and cost incurred D. ARC and Borrower can mutually decide

115 The debts of AB Ltd are not fully satisfied even after enforcement of security interest of all secured

assets, the secured creditor can file an appeal to which of the following authorities ?

A. Debt Recovery Tribunal B. High court

C. Debt Recovery Appellate Tribunal D. Any of the above

116 What is the effect when the secured creditor has taken over the management of the borrower

A. No Director shall be nominated or appointed

by shareholders of borrower company

B. No resolution passed in the shareholders meeting

shall be given effect without the approval of

secured creditor.

C. No winding up of the borrower’s company shall lie in any court except with the consent of secured creditor

D. All of the above

117 What are the penal provisions if the ARC fails to comply with the directions issued by RBI?

Chapter 4




4.14

A. 5000 per day during which the default

continues

B. 10,000 per day during which the default

continues

C. 5,00,000 D. 1,00,000

118 An Injunction granted by the civil court to stop the secured creditor from selling or leasing the

secured assets is valid?

A. Yes B. No

119 Can a secured creditor take measures to claim his interest in the secured assets of the borrower if a

period of 12 years has been lapsed

A. No the period of limitation applies as per

the Limitation Act 196

B. Yes the limitation act 1963 does not apply to

claims under SARFAESI Act.

120 Which of the following does not require a public notice in newspaper

A. Sale of immovable Property by the

secured creditor

B. Sale of Movable property by the secured creditor

C. Demand Notice to the borrower D. Both (b) and (c).

Chapter 4




4.15

ANSWERS

1. B 2. A 3. C 4. C 5. B 6. A

7. B 8. A 9. D 10. C 11. A 12. B

13. B 14. C 15. B 16. A 17. D 18. D

19. D 20. A 21. A 22. D 23. A 24. C

25. D 26. C 27. D 28. C 29. A 30. C

31. A 32. B 33. D 34. D 35. D 36. A

37. B 38. A 39. C 40. B 41. A 42. A

43. D 44. B 45. B 46. D 47. B 48. A

49. B 50. A 51. C 52. B 53. A 54. C

55. B 56. D 57. A 58. D 59. B 60. C

61. A 62. C 63. C 64. C 65. A 66. A

67. D 68. A 69. C 70. A 71. C 72. A

73. C 74. D 75. C 76. A 77. A 78. A

79. D 80. A 81. A 82. B 83. A 84. C

85. A 86. C 87. D 88. D 89. B 90. A

91. B

(As per section 16, no compensation to directors,

manager or person in charge)

92. A 93. B 94. B 95. A 96. B

97. A 98. D 99. A 100. A 101. A 102. C

103. C 104. C 105. A 106. C 107. D 108. B

109. A 110. C 111. A 112. D 113. A 114. C

115. A 116. D 117. C 118. B 119. A 120. D

Chapter 5 PREVENTION OF MONEY LAUNDERING ACT, 2002


5.1

Chapter 5 : PREVENTION OF MONEY LAUNDERING ACT, 2002

1 When did the Prevention of Money Laundering Act come into force?

a. 1 April 2009 b. 1 July 2005 c. 1 August 2005 d. 1 August 2009

2 Which of the following acts can be considered as acts of Money Laundering in the act?

a. Illegal arms sales b. Drug trafficking c. Insider trading d. All of the above

3 Whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is

actually involved in any process or activity connected with the proceeds of crime and ________________

shall be guilty of offence of money-laundering.(Section 3 of PMLA)

a. Intentionally Participates b. Unknowingly participates c. Projecting it as untainted property

4 What is a `scheduled offence’?

a. Circulation of Fake

Indian Currency Notes

b. Offences relating to

Narcotic Drugs

c. Waging war against

the Nation

d. All of the Above

5 Mr. P was found guilty as per the provisions of Prevention of Money Laundering Act, 2002. Who can

investigate his case of Money Laundering?

a. Director/Officer u/s 48 b. Police Inspector c. Officer of Supreme Court d. None

6 Financial Institutions as per clause c of section 45 I of the Reserve Bank of India Act, 1934 include

a. A chit fund company b. Housing finance

Institutions

c. Non-Banking financial

company

d. All of the above

7 Mr. X was found guilty of money laundering as per provisions of Money Laundering Act, 2002. What are

the possible actions which can be taken against Mr. X?

a. 3 to 7 years Imprisonment

and Fine

b. 3 to 7 years

Imprisonment

c. Only Fine d. upto 3 year

Imprisonment

8 Mr. Y was found guilty under Narcotic drugs and Psychotropic Substances Act, 1985. What are the

possible actions which can be taken against Mr. Y for money laundering of the sum therefrom?

a. 3 to 10 years Imprisonment

and Rs. 1,00,000 Fine

b. 3 to 7 years

Imprisonment

c. 3 to 10 years

Imprisonment and Fine

d. upto 3 years

imprisonment

9 Every reporting entity u/s 12 (Banking Company, Financial institution, Intermediary or a person carrying

on a designated business or profession) is required to maintain records after the end of an relationship

with a client for :

a. 1 year b. 3 years c. 5 years d. 10 years

10 Section 12 of the Prevention of Money Laundering Act, 2002 lays down following obligations on banking

companies, financial institutions and intermediaries

a. Maintain a record

of all transactions

b. Verify and maintain the

records of the identity

of all its clients

c. Furnish information of

transactions referred to in

clause (a) to the Director

d. All of the

above

11 Every reporting entity u/s 12 (Banking Company, Financial institution, Intermediary or a person carrying

on a designated business or profession) is required to maintain records after the transaction with a client

for :

a. 1 year b. 3 years c. 5 years d. 10 years



5.2

12 Director (Adjudicating Authority) has reason to believe that Mr T is in possession of proceeds of crime

and such proceeds of crime are likely to be transferred which may result in frustrating any proceedings

relating to confiscation of such proceeds of crime. So for how many days such property can be attached?

a. Not exceeding 90 days b. Not exceeding 180

days

c. Not exceeding 1

month

d. Not exceeding 60

days

13 The officer attached Property of Mr A as per Section 5(1) of Prevention of Money Laundering Act 2002.

Upto how many days from such attachment, the officer is required to file complaint before the

adjudicating authority?

a. 45 days b. 60 Days c. 90 Days d. 30 Days

14 Central Government appoints an Adjudicating Authority comprising of Mr X as chairperson, Mr B and Mr

D as members. Mr. B is experienced in the field of Accountancy. Is the appointment in lines of the

provision of Prevention of Money Laundering Act, 2002?

a. Yes b. No

15 Adjudication authority has reason to believe that Mr. B is in possession of proceeds of crime. What is the

next course of action to be taken by Adjudicating Authority?

a. Arrest Mr. B b. Serve a notice of not less

than 30 days, to indicate

source

c. Serve a notice of not

less than 45 days to

refund

d. Make him pay fine

RS.10000

16 Mr. Santosh is aggrieved by an order made by the Adjudicating Authority under the Prevention of Money

Laundering Act, 2002. He wants to file an Appeal. Which is the Appellate Authority against the order

passed by Adjudicating Authority?

a. Appellate Tribunal b. High Court c. Supreme Court d. None of the above

17 In addition to the above question, what is the time limit to file appeal after making of order by

Adjudicating Authority?


18 Mr Dev wants to file appeal before Appellate Tribunal. But he could not file appeal within 45 days from

the date on which copy of order made by Adjudicating authority is made. Can Appellate Tribunal may

entertain an appeal after the expiry of the said period of forty-five days if sufficient cause for not filing it

within that period is shown. (Section 26)

a. Yes b. No

19 Appellate Tribunal passed an order against Mr. G. Mr. G is aggrieved by the same. He wants to file appeal

against order passed. To whom can he appeal against the order passed by Appellate Tribunal?

a. Adjudicating Authority b. High Court c. Supreme Court d. Parliament

20 In addition to the above question, what is the time limit to file an appeal against the order passed

Appellate tribunal?

a. 15 Days b. 30 Days c. 45 Days d. 60 Days

21 Mr Jack is a drug trafficker who deals in banned drugs. This offence is categorised under which part of

the Schedule?

a. Part A b. Part B c. Part C d. Part D

22 Cash Limited is Banking Company. One of the obligations of the Banking Companies is to maintain and



5.3

submit records. Cash Limited did not maintain and submit the records. What are the penalties that can

be imposed on banking company, financial institution and intermediary for non-maintenance of records

or non-submission of aforesaid information?

a. Fine more

than 10000

Rs for each

failure

b. Imprisonment of 7

years and fine

exceeding 100000 Rs

for each failure

c. Fine not be less than ten

thousand rupees but may

extend to one lakh rupees for

each failure. (Section 13)

d. Fine not less than

20000 Rs and

Imprisonment 7

Years

23 What are special Courts under Prevention of Money Laundering Act, 2002?

a. Designated one or

more Courts of Session

b. Designated Municipal

Corporation

c. Designated

Committee

d. Designated High

Court

24 Which is the Appellate Authority against the order passed by Special Court?

a. No Appellate Authority b. High Court c. Other Sessions Court d. Supreme Court

25 Mr Y was found guilty under the provisions of the Prevention of Money Laundering Act; 2002.He was

imposed with fine under section 63 of the Act on 1 January 2018. Upto what date he should pay

aforesaid fine?

a. 1 April 2018 b. 30 December 2018 c. 1 June 2018 d. 30 June 2018

26 In addition to the above question, if Mr Y does not pay fine within prescribed time then what is the

mechanism to recover the fine imposed on any person under Section 13 or Section 63?

a. Recover

with interest

b. File Case with

the Police

c. Arrest

Mr Y

d. Same manner as prescribed in Schedule II of the

Income-tax Act, 1961 for the recovery of arrears.

27 EF Limited, a company, found guilty under the provisions of Prevention of money laundering Act, 2002.

Mr. Ved was one of the directors, who was responsible for the business of the company when the crime

was committed. Later he resigned. Shall he be deemed to be guilty of the contravention and be liable to

be proceeded against and punished accordingly? Advice.

a. Yes b. No

28 EF Limited, a company, found guilty under the provisions of Prevention of money laundering Act, 2002.

Mr. Ved was one of the directors who was responsible for the business of the company when the crime

was committed. Later he resigned. During the proceedings under the said Act he proved that the con-

travention took place without his knowledge and that he exercised all due diligence to prevent such

contravention. Shall he be deemed to be guilty of the contravention and be liable to be proceeded

against and punished accordingly? Advice.

a. Yes b. No

29 Mr.X convicted as per the Provisions of the Prevention of Money Laundering but under Contract Act he is

not guilty. Under such circumstances what will happen if there is conflict between the provisions of

PMLA, and other Acts / laws?

a. Decision is taken as

per the severity of

crime committed

b. The provisions of PMLA have over-riding effect,

notwithstanding anything inconsistent therewith

contained in any other law for the time being in force.

c. Not

Applicable

30 Proceedings under Prevention of Money Laundering Act, 2002 were initiated against Mr. Satya. During

the Proceedings he suffered cardiac arrest and died. What will happen to the proceedings initiated under

PMLA in the event of death of Mr. Satya?

a. Proceedings discarded

by authority

b. Legal Representatives are

not recognised in PMLA

c. Legal representatives continue Appeal

to the Appellate Tribunal / High Court



5.4

31 Mr. Adi, an Accountant of Orchids Co. steals heavy cash from the business. To avoid detection of his

steal, instead of depositing large amount of money into his bank account, he deposits the money in small

amounts in his bank account on regular time interval. Can this transaction be considered under the

definition of Money Laundering?

a. Yes b. No c. Don’t Know d. May be

32 As per the provisions of the Prevention of Money Laundering Act, 2002, proceedings were initiated

against Mr. Yadav for a scheduled offence. His property was attached. Mr. Yadav was later acquitted on

conclusion of trial. What will happen to the attached properties, after conclusion of trial for the

scheduled offence?

a. His property will be released on

surety. Surety will be cancelled later,

if no Appeal is made.

b. His Property will remain confiscated

and an equivalent amount of money

will be paid instead in lieu thereof

c. Attachment

shall cease to

have effect

33 In the case of Mr. R after the conclusion of trial for the scheduled offence the attachment of property

becomes final. The Adjudicating Authority after giving an opportunity of being heard to the person

concerned, made an order confiscating such property. After an order of confiscation what will happen to

the attached properties after conclusion of trial for the scheduled offence?

a. The order of

attachment of

property will

become final

b. The Property will

be released and

equivalent amount

of cash will be

obtained

c. The attachment of

the property and

net income, if any,

shall cease to have

effect.

d. All the rights and title in

such property shall vest

absolutely in the Central

Government free from all

encumbrances. (Section 9)

34 Whether the persons claiming or entitled to claim any interest in the enjoyment of immovable property

can enjoy the property during the period of provisional attachment?

a. Yes b. No

35 An officer believed that Mr O was in possession of proceeds of crime and such proceeds of crime are

likely to be transferred. The Officer, by an order in writing, provisionally attaches such property for a

prescribed period. How long will this order of provisional attachment of property remain valid?

a. Period <= 150 days

from the date of the

order

b. Period <= 120 days

from the date of

the order

c. Period <= 180

days from the

date of the order

d. Period <= 90 days from

the date of the order

36 “Attachment” means, -------------------------------------------- or movement of property by an order issued

under Chapter III of the Act. [Section 2(d)]

a. Prohibition of transfer b. Conversion, c. Disposition d. All of the above

37 Mr. A was found involved routing illegal proceeds by sale of banned drugs through various bank accounts

and moving cash from Mumbai to Delhi. Is this transaction considered as Money Laundering

Transaction?

a. Yes b. No



5.5

Answers

Q. No. Option No. / Reason

1. b

2. d

3. c

4. d

5. a Sec 48 & 49

6. d

7. a Sec 4

8. c Sec 4

9. c Sec 12

10. d

11. c Sec 12

12. b Sec 5

13. d Sec (5)

14. a Sec 6

15. b Sec 8

16. a Sec 26

17. b Sec 26

18. a Sec 26

19. b Sec 42

20. d

21. a

22. c

23. a Sec 43

24. b

25. d Sec 69

26. d Sec 69

27. a Sec70

28. b Sec 70

29. b Sec 71

30. c Sec 72

31. a

32. c Sec 8(5)

33. d Sec 8(3)

34. a Sec 5(4)

35. c Sec 5

36. d

37. a

Chapter 6 ARBITRATION AND CONCILIATION


6.1

Chapter 6 : ARBITRATION AND CONCILIATION

1.

Which of the following are Alternate Methods of Dispute Resolution (ADR method):

a. Arbitration b. Conciliation c. Both a. and b. d. Neither a. nor b.

2. Which of the following are benefits derived from use of ADR methods:

a. Lower Costs b. Greater procedural flexibility c. High likelihood of settlement d. All of these

3. Which of the following is not a method of ADR:

a. Panchayat b. Lok Adalat c. Permanent Lok Adalat d. Judicial Settlement

4. ‘Arbitral Award’ means: a. Only final award

from Arbitration

b. Only Interim Award

from Arbitration

c. Both Final and Interim

awards

d. None of these

5. ‘Arbitral Tribunal’ refers to:

a. Sole Arbitrator b. Panel of Arbitrators c. Both a. & b. d. Neither a. nor b.

6. Arbitrator is selected by:

a. SG b. CG c. Ministry of Justice d. Parties themselves

7. Features of Arbitration include:

a. Consent of Parties b. Selection of Seat of

Arbitration

c. Confidentiality of

Arbitration proceedings

d. Appointment of

Arbitrator by CG

8. Arbitration proceedings are to be conducted at:

a. Sessions Courts b. High Courts c. Municipal Council d. Place chosen by parties

9. Arbitrator is assigned to the Arbitration Proceedings by:

a. Parties to the

Arbitration Proceeding

b. Bench of Judges of

Supreme Court

c. Council of Ministry of

Justice

d. Expert

Committee of CG

10. Arbitration Proceedings strictly adhere to:

a. Code of Civil

Procedure

b. Code of Criminal

Procedure

c. Parties choose their

procedure to suit them

d. Code of the International

Court of Justice

11. Proceedings are conducted:

a. Open to public b. Open to parties and their

lawyers only

c. Both a. and b. d. Only lawyers of parties.

12. Arbitration decisions i.e. award is easy to enforce in Foreign Countries compared to Court rulings

a. Yes, as it is governed by

International treaties

b. No c. N.A as Arbitration is only

for Domestic disputes

d. Depends on the

of award

13. Powers under the Arbitration and Conciliation Act 1996 are granted to:

a. Judicial Authority b. Court c. SC/HC d. All of these

14. For International Commercial Arbitration, the term ‘Court’ means

a. Lok Adalat b. Sessions Court c. High Court d. None of these

Chapter 6 Arbitration and Conciliation


6.2

15. For Arbitration other than International Commercial Arbitration, the term ‘Court’ means

a. District Court b. High Court c. Both a. and b. d. Neither a. nor b.

16. On a request for appointment of Arbitrator, the High Court shall appoint Arbitrator for:

a. International Commercial

Arbitration

b. Domestic Arbitration c. Both a. and

b.

d. Neither a. nor

b.

17. On a request for appointment of Arbitrator, the Supreme Court shall appoint Arbitrator for:

a. International Commercial

Arbitration

b. Domestic

Arbitration

c. Both a. and b. d. Neither a. nor b.

18. A person or Institution can be designated by SC/HC to appoint arbitrators:

a. True, for both SC/HC b. False, for both SC/HC c. True, only for SC d. True, only for HC

19. Arbitration agreement shall be in form of:

a. Arbitration Clause in

a contract

b. Separate document

itself

c. Both a. and b. d. As per Govt

defined format only

20. Arbitration agreement can be in:

a. Written form only b. Oral form only c. Both a. and b. d. Even tacit form is permitted

21. Arbitration Agreement shall be in writing if:

a. it’s a document signed by both parties

b. it is contained in letters

and other non-electronic

communications

c. it is contained in letters

and other electronic

communications

d. All of

these

22. Document 1 consists of an Arbitration Contract. Document 2 merely refers to using the terms in

Document 1. Does reference qualify as an Arbitration Contract?

a. Yes b. No

23. ‘Arbitration Clause’ and ‘Submission Agreement’ differentiate the Arbitration Agreement on the basis

of:

a. The time when

the dispute arises

b. The time taken for

the dispute to be settled

c. The mode

(physical/electronic) of the

agreement

d. The number of

pages of the

agreement

24. ‘Arbitration Clause’ Arbitration Agreement makes the following disputes available to Arbitration:

a. Disputes arising after

making the Agreement

b. Disputes arisen before


c. Disputes arising in

International Commercial

Arbitration

d. Disputes arising

for values less than

10% of turnover

25. ‘Submission Clause’ Arbitration Agreement makes the following disputes available to Arbitration: a. Disputes arising after


b. Disputes arisen before


c. Disputes arising in

International Commercial

Arbitration

d. Disputes arising

for values less than

10% of turnover

26. What shall happen if one of the 2 parties in an Arbitration unilaterally seeks to proceed to court to

litigate the matter:

a. The matter shall be

admitted and the

b. The matter shall be

referred back to

c. The matter shall be

admitted and fine shall be

d. Both proceedings

shall proceed



6.3

arbitration shall

cease

arbitration imposed for breach of

contract

simultaneously, Court

decision prevails

27. The contract which contained the Arbitration Agreement was invalid. Will the Arbitration Agreement be

invalidated by this mere fact as well:

a. Yes, as it is a part

of the agreement

to which consent is

given

b. No, as it is not part of the

agreement , as Arbitration

agreement shall be made

and agreed to separately

c. No, as there is ‘Doctrine of Separability’ which allows both Contracts to perform

independently

d. None of the

above

28. The question arose before Arbitrator as to the validity of a contract which contained the Arbitration

Agreement. The contract was principal to the Arbitration Agreement. The ruling on the validity of

contract indirectly was a ruling on the Arbitrator’s own jurisdiction: Is this valid?

a. Yes, as per

the Act this is

valid

b. No, as generally a judge

cannot pass judgement on the

validity of his own appointment

c. No, as the Arbitrator is

required to arbitrate only

valid contracts under law

d. Yes, but only

after obtaining

permission of CG

29. Can one of the parties to the Arbitration Agreement themselves be the Arbitrator:

a. Yes, in case of

Government

Company, it can be a

Arbitrator in own

case

b. No, since the aspect of

neutrality is missing, such

Arbitration Agreement is

not covered in

Arbitration

c. Yes, provided that

Arbitrator is an officer of the

Government holding

specified Grade

d. Yes, provided that

if the ruling is in it’s own favour, the

other party forgoes

right to appeal

30. A Ltd and B Ltd agreed to Arbitration by a retired Judge in their joint venture. In pursuit of their Joint

venture, they dealt in certain Prohibited drugs, and divided the gains thereof. Later A disputed the

division of gains. Can this contract be arbitrated?

a. Yes, as conditions for

Arbitration are fulfilled

and that is only criteria

b. No, as the subject

under Arbitration is

strictly to be exercised

upon in Court

c. Yes, as the Judge is

competent to provide

judgement in matters of

Criminal nature

d. No, as the

Arbitrator is a retired

Judge and as such not

qualified

31. Principal Agreement was discharged after the completion of the duties thereunder. Will the Arbitration

Agreement made thereunder continue?

a. Yes, as Doctrine of Separability

applies making the Principal Contract

and Arbitration Agreement

independent

b. No, as the agreement is

completed and as such the

arbitration agreement also

terminated with the contract

c. Yes, as Arbitration

Agreement is always without

a limit on its time/tenure and

valid forever

32. Principal Agreement was terminated due to breach of Contract. Will the Arbitration Agreement made

thereunder continue?

a. Yes, as Doctrine of Separability

applies making the Principal Contract

and Arbitration Agreement

independent

b. No, as the agreement is

completed and as such the

arbitration agreement also

terminated with the contract

c. Yes, as Arbitration

Agreement is always without

a limit on its time/tenure and

valid forever.

33. In case of Death of the parties, the Arbitration Agreement shall:

a. be discharged b. be enforceable by or

against the legal

representative

c. be enforceable by the

legal representative but

not against him

d. be enforceable against

the legal representative

but not by him

34. Are even number of Arbitrators (i.e. 2,4,6…) on a Arbitral Tribunal permitted:



6.4

a. Yes, as per decision

upheld in a case

b. No, the Act prohibits

even number of

Arbitrators

c. Both a. and b. The Act clearly provides that

there can be any number of

Arbitrators.

35. What is the default appointment procedure u/s 11 in case no procedure is decided by the parties and

the maximum arbitrator shall be 1:

a. Parties appoint

jointly one arbitrator

b. Both appoint one

each, and the appointees

appoint a third

c. Appointment to be made

by an unrelated person or

institution

d. All of the above

36. What is the default appointment procedure u/s 11 in case no procedure is decided by the parties and

the maximum arbitrator shall be 3:

a. Parties appoint

jointly one arbitrator

b. Both appoint one

each, and the appointees

appoint a third

c. Appointment to be made

by an unrelated person or

institution

d. All of the above

37. Mr. Brainiac was a minor but highly rated by both the parties to arbitration, and hence appointed

arbitrator. What is the age limit to be appointed as an Arbitrator?

a. A minor cannot be arbitrator

as he is unable to contract

b. 45 years to

70 years

c. There is no age limit, or

inability imposed on

minors

d. Upper limit only of

70 years, no lower

limit

38. What is the default appointment procedure u/s 11 in case appointing authority to which duty to make

arbitrator appointment was given, failed to execute:

a. Parties

appoint jointly

one arbitrator

b. Both appoint

one each, and the

appointees

appoint a third

c. Appointment to be made by an

unrelated person or institution,

different from the first

person/institution that failed

d. Approach the SC/HC for

appointment based on type

of arbitration (i.e. Domestic/

International)

39. What are the instances in which an Arbitrator may be terminated

a. Voluntary decision

to step down

b. Unanimous decision

of parties to remove

c. Operation of Law (inability or

process ends)/ Termination by

Court in case of bias

d. All of

these

40. Course of action on termination of Arbitrator:

a. Appoint new arbitrator

under original scheme of

appointment

b. Parties to approach SC/ HC

based on the type of arbitration

(domestic/international)

c. First a. then b. d. First b. then a.

41. For termination of Arbitrator, whom should the first challenge be raised against:

a. Arbitrator himself b. District Court c. High Court d. Supreme Court

42. For termination of Arbitrator in case of Domestic Arbitration, whom should the challenge be raised

against (after the Arbitrator):

a. Panchayat/ Municipal Council b. District Court c. High Court d. Supreme Court

43. For termination of Arbitrator in case of International Commercial Arbitration, whom should the

challenge be raised against (after the Arbitrator):

a. Panchayat/Municipal Council b. District Court c. High Court d. Supreme Court

44. Arbitral Award is sought to be challenged by A. Ltd who was a party to the Arbitration along with B Ltd.



6.5

In case of a Domestic Arbitration who can the challenge be made to?

a. Panchayat/Municipal

Council

b. District Court/High

Court

c. Only High Court d. Supreme Court

45. Arbitral Award is sought to be challenged by A. Ltd who was a party to the Arbitration alongwith B Ltd.

In case of an International Commercial Arbitration who can the challenge be made to?

a. Panchayat/Municipal Council b. District Court/High Court c. Only High Court d. Supreme Court

46. What is the Maximum time within which a challenge against the Arbitral Award can be made:

a. 1 month from the

date when Award is

received

b. 3 months from

the date when

Award is received

c. 1 month from the date

when Award is received .

Maximum extension of

further 30 days by Court

d. 3 months from the date

when Award is received .

Maximum extension of

further 30 days by Court

47. At what time is an Additional Award made:

a. After Settlement Award

but before expiry of 30

days thereof

b. After Interim

Award but before

Final Award

c. After Final Award but

before expiry 30 days

thereof

d. After Interim Award

but before expiry of 30

days thereof

48. What are the types of Interim Award:

a. Interim Award which remains

in force till Final Award is made

b. Interim Award which is Final as

far as the matters it deals with

c. Both a.

and b.

d. Neither a.

nor b.

49. What is a Settlement Award?

a. Matter adjudicated

by the Arbitrator, but

settled at lesser value

by parties than what is

decided by arbitrator

b. Parties choose to settle

the matters and not involve

the Arbitrator to adjudicate

the same. Once settled, if

the Arbitrator agrees, it is

made into an award

c. Claims not settled

previously in Final Award

are put forth to the Arbitral

tribunal within a time frame

in order to cover such left

out issues

d. None of

these

50. What is an Additional Award?

a. Matter adjudicated

by the Arbitrator, but

settled at lesser value

by parties than what is

decided by arbitrator

b. Parties choose to settle the

matters and not involve the

Arbitrator to adjudicate the

same. Once settled, if the

Arbitrator agrees, it is made into

an award

c. Claims not settled previously

in Final Award are put forth to

the Arbitral tribunal within a

time frame in order to cover

such left out issues

d. None

of these



6.6

Answers

Q. No. Ans. Q. No. Ans. Q. No. Ans. Q. No. Ans. Q. No. Ans.

1 c 11 b 21 d 31 b 41 a

2 d 12 a 22 a 32 a 42 b

3 a 13 d 23 a 33 b 43 c

4 c 14 c 24 a 34 c 44 b

5 c 15 c 25 b 35 a 45 c

6 d 16 b 26 b 36 b 46 d

7 d 17 a 27 c 37 a 47 c

8 d 18 a 28 a 38 d 48 c

9 a 19 c 29 b 39 d 49 b

10 c 20 a 30 b 40 c 50 c

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