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Gulshan Prakash v. State of Haryana (2010) 1 SCC477

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Gulshan Prakash v. State of Haryana (2010) 1 SCC 477||Case Summary  Introduction  In this appeal, the Court has interpreted Article 15(4) of the Fundamental Right. It has been added by the 1st Amendment Act, of 1951. Facts The State of Haryana instructed Maharshi Dayanand University (MDU), Rohtak to conduct entrance examination for MD/MS/PG courses for the Session 2008-2009. The appellant made a representation to the Health Secretary for providing reservation for SC and ST in the Post Graduate courses, Since there was no response from the Health Secretary the Appellant filed a petition in the High Court.  The High Court dismissed the petition of the appellant therefore the appellant approached the Supreme Court by Special Leave Petition under Article 136. Appellant Contentions  MDU, Rohtak has provided 20% reservation for the graduate level courses or undergraduate courses therefore the said University should also provide reservation in for the PG courses.  The Government o
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In re (Jon) Beuforte (London) Ltd. (1953)

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Introduction

This case is related to the "Doctrine of Ultra vires" which states that a company cannot perform act beyond the scope of its stated objects in the "Memorandum of Association". 

Facts 

  • A company was authorized by the memorandum to carry on the business of costumiers, gown making, and other activities ejusdem generis (of the same kind). The company decided to undertake the business of making veneered panels and for this purpose, the company made three contracts with 

    1. Grainger Smith & Co. (Builders) Ld. to construct a factory.
    2. John Wright & Sons (Veneers) Ld. to supply veneers
    3. Lowell Baldwin Ld. to supply coke

  • The three creditors filed a suit in court when their demand for respective payments failed. The company consented, in court, to pay them in different installments. But again the company failed to pay.
  • Later when the company went on to liquidation, all three creditors filed their proof to recover their respective payments. The liquidator rejected their applications on the grounds that

    1. no judgment founded on an ultra vires contract could be sustained unless it embodied a decision of the court on the issue of ultra vires, or a compromise of that issue; Great North-West Central Railway Co. v. Charlebois [(1899) A.C. 114],  
    2. that the suppliers of the coke were fixed with clear notice of the purposes of the factory;
  • Then the creditors appealed to the higher court 

Issue

  1. Whether the consent decree or judgment makes an 'Ultra Vires' act intra vires?
  2. Whether the company be held liable for debt taken for the ultra vires act? 

Ratio Decidendi

  • We can not convert ultra vires act into intra vires by ratification or by consent decree.
  • "Great North -West Central Railway Co. V Charlebois, 1889, Court observed: we cannot remove invalidity of the act if it is beyond the power of the company by consent decree. 
  • King J:- The company cannot validly give consent to treat as valid an ultra vires act.
  • Russell J. said in the New York Corp. V Henry Ceetham and Sons Ltd.: "An ultra vires agreement cannot become intra vires because of estoppel, lapse of time, ratification or delay.
  • It is considered that the builder who contracts with the company has constructive knowledge of the company's memorandum. 
  • Hence the consent decree and judgment cannot make an ultra vires act intra vires and the company cannot be held liable for debt taken for the ultra vires act. 

Judgment 

  • Fuel merchant - The correspondence shows that they had notice of that, and as they had constructive notice of the contents of the memorandum of association, they had noticed that the transaction was ultra vires the company. Their proof was rightly rejected
  • Appeal Dismissed
  • It is quite clear that a company cannot do what is beyond its legal power by simply going into court and consenting. 

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Ashbury Railway Carriage and Iron Co. Ltd. v. Riche (1875)

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Ashbury railway carriage v riche|| Case Summary  Introduction   This case is related to the " Doctrine of Ultra Vires". In this case, the directors of the appellant company made an agreement with the plaintiff which was beyond the objectives, as mentioned in its MoA, of the appellant Company. Since the agreement was beyond its objectives, the appellant company repudiated the agreement later. Therefore the suit was brought by the plaintiff to recover the damages. Facts   The directors of the appellant company (Ashbury Railway Carriage) had contracted to obtain a concession from Gillon and Poeters Baerston, who obtained this right from the Belgian Government, to make a railway.  For this purpose, the directors of the appellant company again entered into a contract with Riche, a contractor, the purpose of which was to establish a société anonyme,  and as the plaintiff went on with the work, the appellant company had to pay into the hands of société anonyme,  Earlier the sharehol
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Workmen of Dimakuchi Tea Estate v. Dimakuchi Tea Estate, AIR 1958 SC 353

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Workmen of Dimakuchi Tea Estate v. Dimakuchi Tea Estate, AIR 1958 SC 353 Case Summary Introduction The case of Workmen of Dimakuchi Tea Estate v. Dimakuchi Tea Estate involved a dispute between the management of the Dimakuchi Tea Estate and its workers. This case has discussed and cleared the meaning of the expression "any person" used in S.2(K) of the Industrial Dispute Act, 1947. The Supreme Court ruled in favour of a limited interpretation of the term "any person" thereby excluding the present appellant from the ambit of the Industrial Disputes Act of 1947. This decision denied the jurisdiction of the Industrial Tribunal to adjudicate the dispute and extended the benefits and protections of the Act to the employers. Facts of the Case The dispute was raised over the termination of the service of Dr K.P. Banerjee, who was appointed as an Assistant Medical Officer in the Respondent's estate (Dimakuchi Tea Estate), on the grounds of being incompetent. Although th
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