Fiduciary relationship means a relationship based on
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- Trust
- Money
- Contract
- Blood relation or incapacity
The Correct Option is A
Solution and Explanation
Top Questions on Company Law
The Companies Act, 2013 does not deal with insolvency and bankruptcy when the companies are unable to pay their debts or the aspects relating to the revival and rehabilitation of the companies and their winding up if revival and rehabilitation is not possible. In principle, it cannot be doubted that the cases of revival or winding up of the company on the ground of insolvency and inability to pay debts are different from cases where companies are wound up under Section 271 of the Companies Act 2013. The two situations are not identical. Under Section 271 of the Companies Act, 2013, even a running and financially sound company can also be wound up for the reasons in clauses (a) to (e). The reasons and grounds for winding up under Section 271 of the Companies Act, 2013 are vastly different from the reasons and grounds for the revival and rehabilitation scheme as envis aged under the IBC. The two enactments deal with two distinct situations and in our opinion, they cannot be equated when we examine whether there is discrimi nation or violation of Article 14 of the Constitution of India. For the revival and rehabilitation of the companies, certain sacrifices are required from all quarters, including the workmen. In case of insolvent companies, for the sake of survival and regeneration, everyone, including the secured creditors and the Central and State Government, are required to make sacrifices. The workmen also have a stake and benefit from the revival of the company, and therefore unless it is found that the sacrifices envisaged for the workmen, which certainly form a separate class, are onerous and burdensome so as to be manifestly unjust and arbitrary, we will not set aside the legislation, solely on the ground that some or marginal sacrifice is to be made by the workers. We would also reject the argument that to find out whether there was a violation of Article 14 of the Constitution of India or whether the right to life under Article 21 Constitution of India was infringed, we must word by word examine the waterfall mechanism envisaged under the Companies Act, 2013, where the company is wound up in terms of grounds (a) to (e) of Section 271 of the Companies Act, 2013; and the rights of the workmen when the insolvent company is sought to be revived, rehabilitated or wound up under the Code. The grounds and situations in the context of the objective and purpose of the two enactments are entirely different.
(Extracted, with edits and revision, from Moser Baer Karamchari Union v. Union of India, 2023 SCC Online SC 547)- CLAT PG - 2026
- Legal Studies
- Company Law
- A company is vested with a distinct legal personality separate from its members. This was held in which of the following case?
- CUET (PG) - 2025
- LLM
- Company Law
- Memorandum of Association is a:
- CUET (PG) - 2025
- LLM
- Company Law
- In which of the following business associations the liability of its members is joint and several?
- CUET (PG) - 2025
- LLM
- Company Law
- A company for charitable purpose may be incorporated as:
- CUET (PG) - 2025
- LLM
- Company Law
Questions Asked in CLAT exam
- In a language laboratory, students were given an interesting puzzle involving the word "ELECTROCARDIOGRAPH." The teacher explained that such exercises not only test logical skills but also sharpen attention to detail. According to the challenge, the word had to undergo a series of transformations. First, the class was asked to take the first half of the letters, reverse their order and make the arrangement of letters look quite different from the original. Next, the students were told to identify the last but one letter of the original word and place it at the very beginning, a step that changed the opening appearance of the sequence completely. Finally, as a finishing touch, they had to add the letter 'S' at the end. Following these steps carefully would lead them to the correct transformed word, and only those who adhered to each condition in the exact order could solve the puzzle successfully. (150 words)
- CLAT - 2026
- Coding Decoding
On the night of October 12th, the "Sunburst Medallion" was stolen from the highly secured display case in the city museum. The theft occurred sometime between the museum closing at 10:00 PM and the night guard, Mr. Hemant, completing his final round at 1:00 AM. Three primary suspects were identified, all of whom had recently been dismissed from their museum positions: Anjali, the former curator; Bharat, the former security expert; and Chitra, the former exhibits designer.
Here are the established facts and their alibis:
- The security system logs show that the display case was opened using a specific five-digit code, which only Anjali and the museum director (who was out of the country) knew.
- Bharat's alibi is that he was at a distant relative's birthday party from 8:00 PM to 1:30 AM. Multiple independent witnesses confirmed his presence throughout the entire period.
- Chitra's alibi is that she was working late at a downtown graphic design studio. A time-stamped security camera from the studio's entrance shows her entering at 7:00 PM and exiting at 11:45 PM. The studio is a 20-minute drive from the museum.
- Mr. Hemant, the night guard, stated he checked the medallion at 10:30 PM, and it was still there.
Further investigation revealed that a small, distinctive silver button was found near the display case. Anjali is known to frequently wear a coat with similar unique silver buttons. The security expert, Bharat, had previously boasted that he could remotely disable a certain type of magnetic lock—the same type used on the medallion's case—without needing the code, though the log suggests the code was used. (269 words)
- CLAT - 2026
- Assertion and Reason
In a small town lived a close-knit family where every relation could be expressed through simple symbols. For instance, when they said \( A \times B \), it meant \( A \) is the father of \( B \), while \( A \div B \) meant \( A \) is the mother of \( B \). The younger ones were often introduced with \( A + B \), meaning \( A \) was the daughter of \( B \), and the bond of brotherhood was shown by \( A - B \) (A is brother of B).
One day, the children in the family turned these symbols into a playful code. Instead of introducing their parents and siblings in words, they spoke only in symbols. “Look,” giggled little Meena, “\( M + N \div O \)!” Everyone laughed, because they knew it meant Meena was the daughter of \( N \), and \( N \) was the mother of \( O \), making her \( O \)’s sister. What started as a code soon became a family game, making the bonds of father, mother, daughter, and brother not just relations, but symbols of love and togetherness. (165 words)
- CLAT - 2026
- Blood Relations
Four teams – Red (R), Blue (B), Green (G), and Yellow (Y) – are competing in the final four rounds of the Inter-School Science Olympiad, labeled Round A, Round B, Round C, and Round D. Each round consists of one match between two teams, and every team plays exactly two matches. No team plays the same opponent more than once.
The final schedule must adhere to the following rules:
- Rule 1 (Consecutive Play): The Green team (G) must play their two matches in consecutive rounds.
- Rule 2 (Fixed Appearance): The Yellow team (Y) must play in Round B.
- Rule 3 (Positional Constraint): The Red team (R) must play against the Blue team (B) in a round that is immediately before a round in which neither R nor B is playing.
- Rule 4 (Timing): The Blue team's (B) first match must occur in an earlier round than the Green team's (G) first match.
- Rule 5 (Opponent Link): The team that plays against the Red team (R) in the round that is not against the Blue team (B), is the same team that plays in Round D.
(193 words)
- CLAT - 2026
- Seating Arrangement
Health insurance plays a vital role in ensuring financial protection and access to quality healthcare. In India, however, the extent and nature of health insurance coverage vary significantly between urban and rural areas. While urban populations often have better access to organized insurance schemes, employer-provided coverage, and awareness about health policies, rural populations face challenges such as limited outreach of insurance schemes, inadequate infrastructure, and lower awareness levels. This urban-rural divide in health insurance coverage highlights the broader issue of healthcare inequality, making it essential to analyze the factors contributing to this gap and explore strategies for more inclusive health protection. A state-level health survey was conducted.
The survey covered 1,80,000 adults across urban and rural areas. Urban residents formed 55% of the sample (that is, 99,000 people) while rural residents made up 45% (that is, 81,000 people). In each area, coverage was classified under four heads – Public schemes, Private insurance, Employer-provided coverage, and Uninsured. In urban areas, Public coverage accounted for 28% of the urban population, Private for 22%, Employer for 18%, and the remaining 32% were Uninsured. In rural areas, where formal coverage is generally lower, Public coverage stood at 35%, Private at 10%, Employer at 8%, while 47% were Uninsured.
For this survey, “Insured” includes everyone covered by Public + Private + Employer schemes, and “Uninsured” indicates those with no coverage at all. Officials noted that public schemes remain the backbone of rural coverage, while employer and private plans are relatively more prevalent in urban centres. (250 words)
- CLAT - 2026
- Ratio and Proportion