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confused....???????????SAMJHAO

yamin (bisuness) (131 Points)

22 November 2007

HI...
AOA N MOA are the public documents. this means anybudy can read this. it was also held in doctrnine of constructive notice that a person dealing with the company are required to read the documents.This simply means that the person dealing with the company should know all the facts...
SO y in this case[ELEY VS. THE POSITIVE GOVERNMENT LIFE ASSURANCE COMPANY LTD.] he cannot sue the company as he was removed from the company without any charge of misconduct...

AOA does not constitute any contract between the company and the outsiders....i am not getting this.

if it is so....then y in 'ROYAL BRITISH BANK CASE' the court favored T...???

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8 Replies

Prakash Popat (3134 Points)
Replied 22 November 2007

Query?

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Prakash Popat (3134 Points)
Replied 22 November 2007

Confused,Really.

KAAPIL (COACHING ) (11717 Points)
Replied 22 November 2007

Please clarify.

yamin (bisuness) (131 Points)
Replied 23 November 2007

my point that y the law does not favour Eley as he was removed from the company without any charge of misconduct... Eley can read the document so...he must be knowing that he cannot be dischargeds frm the service so y he cant sue the company???

yamin (bisuness) (131 Points)
Replied 24 November 2007

haan ji now pls help me to clear my points..

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gargi (Chartered Accountant) (152 Points)
Replied 24 November 2007

hi yamin, i think this will clear ur confusion. read this - The MOA and AOA constitutes a contract bet. the company and the members in so far as they confer rights or duties on the member in their capacity as a member but not in so far as they confer rights or obligations on members in some other capacity. The Articles of the co. provided that eley should be the solicitor of the co. for life and could be removed from office only for misconduct. eley took office and became a shareholder. here eley is appointed in the capacity of a solicitor, who is an outsider for the company. he becomes the shareholder but his contract with the company is in his capacity as an outsider and not as a member. so he cannot sue company for removing him. if any right is conferred by the articles on a person in any capacity other than that of the member, it cannot be enforced against the co. the doctrine of indoor management is the limitation or say an exception to the doctrine of constructive notice. (in the doctrine of constructive notice) - the outsider has the access to the public docs. of the co. such as MOA & AOA, etc. (in doctrine of indoor mngt.) - but he doesn't have any right to know abt. the internal proceedings of the company. every outsider dealing with the co. is presumed to be aware of the internal proceedings of the co. which are required to be duly completed for the purpose of the contract. so in case of royal british bank - T entered in contract with the co. by purchasing the deb. bonds in good faith, this means he presumed that the necessary resolution authorising the director to issue bonds was passed as required by the articles. but in fact the resolution was not passed. without passing the res. the directors issued the deb. bonds which the co. duely authorised. hence by ratifying the issue the co. is bounded by the contract and hence T can very well enforce the contract and recover the damages.

yamin (bisuness) (131 Points)
Replied 26 November 2007

ok...got it thanks bt wat if :- AOA has the clause that ELey can be removed for misconduct only after passing a resolution bt actually without passing it.... then wat??

gargi (Chartered Accountant) (152 Points)
Replied 26 November 2007

i think if the directors have been authorized by AOA of the company to remove the Eley for misconduct subject to resolution in gen. meeting and eley is removed without passing resolution in gen. meeting then eley can enforce the contract with his right under indoor management.