This case states that the Doctrine of Constructive Notice mandates that before entering into a transaction with a company, one should be well aware of the rights and obligations of the directors of the company, all the more so, when the concerned documents are available for public access.
After their continuous absence and non-responsiveness to the notices of the Court, the court allowed plaintiff’s application for a default judgment The court allowed for recovery only under one statute because the offences under the two statures were essentially the same, and thus, allowing recovery under both the statutes would have been nothing less than ‘double recovery’ from the defendants. The Court pondered over damages under three heads – statutory damages, enhanced damages, and other fees related to Attorney’s costs and other costs so incurred.
A company is not bound by any contract that it may have entered into before the company was incorporated. this case clarified that the promoters can be held personally liable in the case where they are the one who have entered into the contract on behalf of the company, since the company could not have adopted or subsequently ratified the contract. In itself, the document would never be binding, since the company never existed in the first place.
Holland versus The Commissioners for her Majesty’s Revenue and Customs and Anr, (2010) UKSC 51 (Re Paycheck)
There was no one certain test which could be used to ascertain whether a person was a de facto director or not. Being a director of a sole corporate director does not mean that the fiduciary duties of being the director of the other companies underlying are imposed on the person as well.
The primary concern, in this case, was the restrictions being made on the trade of an individual. Moreover, this case is also known for elaborating the concept of lifting of the corporate veil to uncover fraud or a sham and hold the directors of the company personally liable for the wrongdoings done by them under the garb of the corporate identity.
The Article deals with the analysis of the rulings established by the Scottish Court of Sessions in Fergusson versus Wilson. The article gives a brief background about the facts of the case. It also deals with the rulings established and an analysis of those rulings in the light of the established jurisprudence on the issue.
The doctrine of ultra vires against third parties has been mostly done away with. This doctrine is only relevant to ascertain the object of any company who has registered the object clause as a part of its MOA. The case in itself holds little or no relevance in any other scenario due to changes made by the Companies Act of 2006.
A company was alleged to have breached of a contract by failing to maintain the promised standard of care at par with the industry standards. Opinions of the experts were relied upon to define the scope of ‘industry standards’.
If a director is responsible for causing a huge loss to the company, then such a director can be held liable for the loss so incurred.
The case held that a pre-incorporation contract entered into by the companywould not bind the company, subsequent to the incorporation of the company if the conditions of the pre-incorporation agreement have not been fulfilled by the other party. In this case, the company sought to remove the plaintiff after the incorporation, whereas the agreement prohibited the same, but the company was held to be free to do so.
This case reasserted the importance of the AOA of the company, wherein the Hon’ble Supreme Court of India reiterated this principle by calling these articles as a contract between the company and the members, and a contract among the members themselves.
If it appears that a company has been created solely for tax evasion and to avoid tax liabilities, then the Court must lift the corporate veil to see that the person responsible for such evasion is held accountable as such.
"When a requisition is made by a shareholder calling for a general meeting of the company under the provisions of the Companies Act, 1956 validly to remove a director and appoint another, an injunction cannot be granted by the Court to restrain the holding of a general meeting. The holders of the majority of the stock of a Corporation have the power to appoint, by election, directors of their choice along with the power to regulate them by a resolution for their removal. This is the essence of corporate democracy. "
This case gave a rather more concrete and segregated definition as to what all duties formed the body of fiduciary duty for a professional, and in what circumstances do these fiduciary duties arise and when are they are supposed to be followed by the professional in question. Although the solicitor as a professional had a fiduciary duty to uphold, but not every breach of care done by the solicitor as a professional can be counted as a breach of fiduciary duty. In the case of Mr. Mothew, the building society was made aware of all the risks involved, after which they had consented to the acts of Mothew. This, in turn, removed the causal link for the breach so alleged against Mr. Mothew.
The Supreme Court has given a concrete shape to the definition of ‘legal profession’ in India. After this judgment, legal profession is not only confined to appearing before the Courts but also includes the other works related to the legal profession, such as tending legal opinion, drafting instruments or even participating in conferences where any form of legal discussion is ongoing.