Ultra vires the company
This query is : Resolved
21 March 2012
Hi friends,
I need your valuable advise for the following case.
The object clause of the company is authorized to trade in mangoes. The co. entered into partnership with Mr. A and trading in mangoes. On that the co. incurred liability of Rs.20000/- to Mr.A but it refuses the liability on the ground of ultra vires the company.
kindly tel me whether the company is liable or not with provisions
I need your valuable advise for the following case.
The object clause of the company is authorized to trade in mangoes. The co. entered into partnership with Mr. A and trading in mangoes. On that the co. incurred liability of Rs.20000/- to Mr.A but it refuses the liability on the ground of ultra vires the company.
kindly tel me whether the company is liable or not with provisions
21 March 2012
The Company entering into a partnership for expansion of its existing business (trading in mangoes). It is not invalid merely because the MOA does not authorize it. Expanding the existing business of the Company is inherent power of the Company and therefore does not require for any specific permission in object clause. Hence the transaction does not become ultra vires the Company as the Company has inherent power for expansion of business. Therefore the Company cannot refuse the liability on the ground of ultra vires act.
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