0COMPANY LAW
CHP - 1
COMPANY = COM + PANIS
It is called a body corporate because the persons comprising it are made into a single entity by incorporating it according to the law and clothing it with legal personality.
The word ‘corporation’ is derived from the Latin term ‘corpus’ which means ‘body’. Accordingly, ‘corporation’ is a legal person created by a process other than natural birth. It is, for this reason, sometimes called the artificial juridical person. As a legal person, a corporation is capable of enjoying many rights and incurring many liabilities of a natural person.
U/s 2(20) COMPANY MEANS INCORPORATED UNDER THIS ACT OR ANY PREVIOUS ACT.
Characteristics of company
Corporate personality: So redundant bears own name/ under own name/ separate property from members
incurring debts, borrowing money, employ people, have to Bank a/c.
CASE LAW:
Salomon vs Salomon and Co Ltd. – 1897 (Salomon, four sons, wife & daughter -$ 38782, 20K shares/10K debs secured with floating charge/ 8782 cash, creditors claimed but lordship of the house of lords observed.)
Lee vs Lee Air farming Ltd. - 1961(the same person can be employee & owner)
Kandoli tea Co Ltd. (1882)(transferred TEA estate to claim exemption from ad Valero)
New Horizon Ltd vs Union of India (1994):: Experience of shareholder are generally not consider but in this case ARUN PURIEE & TPI ltd, LMI ltd & WM Ltd + IIP Ltd (Singapore) tender for telephone directory – evaluation committee refused – Delhi HC upheld -=- Supreme court reversed
Artificial Person: enjoy rights & obligation of duties::--Union bank of India VsKhader international construction & Others: indigent Person Order 33 rule 1 CPC1908
Not citizen: Rights of shareholder not impugned with action against the company: RC COOPER vs UOI
Bennet Coleman co vs UOI: SC observed if fundamental rights of a shareholder are impaired by state legislation their power as shareholders are protected.
Has Nationality and Residence: GaaqueVs Inland water revenue commissioners (1940) &
Tulika v Parry & Co (1903) place of registration + residence & domicile
JV company resides where it meets in general presence of persons who represent it.
Limited Liability: Buckley, J in London& globe finance Corporation (1903)observed in last 50 yrs legislation of limited liability has done well to the economy
Exceptions of Limited liability:
Section 3(2)(c) : Unlimited Lia. Co
Section 7(7) : fraudulent doc for incorporation
Section 35(3): Fraudulent Prospectus
Section 75(1): Deposit
Section 224(5): During Investigation by an officer
Section 339(1): During winding up
Section 251(1): Fraudulently removal of the name
Perpetual Succession: LCB Gower ( Hydrogen Bomb)
Separate Property: Member even doesn’t have an insurable interest in property of the company.
Bacha f Guzdar V income tax commissioner(1955)
SC observed that tea company to have 60% exemption in its income but not shareholders
Transferability of shares: re Balia and San Francisco Railway co (1968), Section 44 provides that shares held by members are moveable property in the manner provided by AOA if AOA is silent that by TABLE F Schedule 1.
Capacity to sue and be sued: TVS Employees Fed. V TVS & Sons Ltd. : workers allowed to realise film of their struggle
LalitSurajmalKanodia v Office Tiger Database India (Pvt) Ltd ( 2006) co not liable for contempt by officers
Contractual Rights: shareholder cannot enforce any contract nor derive benefit not a party to contract, co is not a trustee of shareholders and shareholder cannot be sued for deals by the company.
British Thompson Huston co. v Sterling Accessories Ltd (1924)
Limitation of action MOA AOA
Separate Management:
Voluntary association for profit
Termination of existence
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