Kotla Venkataswamy v. Chinta Ramamurthy, (1934) Case Summary
This case summary of Kotla Venkataswamy case is written by Ms. Swati Sharma, student of the Faculty of Law (Delhi University) and edited by Mr. Sonu Choudhary. If you also want to publish your articles or case summaries or research paper or any legal experience, send it to niyamskanoon09@gmail.com.
Introduction
This case deals with "Doctrine of constructive notice" which is an exception of 150 year old doctrine named the 'Doctrine of Indoor Management'.
Facts
The plaintiff (Kotla Venkataswamy) assigned the interest of the mortgage deed that had been signed by the company, by the working director and the secretary of the South Indian agriculture and Industrial Co. Limited (def 1 and 2). Subsequently the company went into voluntary liquidation then the plaintiff appealed to enforce a mortgage deed of rupees 1000.
Plaintiff argued
- We presumed that the Money was given in accordance with the power and authority possessed by the said director and secretary as per article of association.
Issue
- Whether the mortgage bond was validly executed so as to make the company liable ?
Decision & Ratio Decidendi
- As the company get registered, the memorandum of association and article of association becomes 'public document' and it is presumed that All the person who is dealing with the company have knowledge of these documents.
- Article 15 of the company's 'Article of association' says : All deeds, hundies, cheques, certificate and other instruments shall be signed by managing director, the secretary and the working Director on the behalf of the company, shall be considered valid.
- The suit document has only signed by the secretary and and the working director, not by managing Director.
- Action 67 of the companies act provides that the contract by law required to be in writing signed by express or implied authority of the company.
- In the "Royal British Bank V Turquand , 1843 -60 : court says : If an illegality does appear on the face of the bond, the plaintiff will not be protected but as there was no fault of plaintiff.
- In the present case, the plaintiff did not follow the article of association properly therefore it will be consider the fault of plaintiff.
- Therefore, the appeal dismissed.
