. As a result, an act which is ultra vires is void, and does not bind the company. Consequently, most of the Administrative law concepts and doctrines are Judge made law, which have to be read in conjunction with any statute delegating power to a official, body or tribunal. However, later on, the House of Lords held in other cases that the doctrine of ultra vires should be applied reasonably and unless it is expressly prohibited, a company may do an act which is necessary for or incidental to the attainment of its objects. But where on the footing of that article the directors are employed by the company and accept office the terms of art. Article 11 is concerned with the relationship between the plaintiff as a member and the defendants, not as directors, but as members of the company.
Thus, the contract entered into by the company was not a voidable contract merely, but being in violation of the prohibition contained in the Companies Act , was absolutely void. It was held that if the prices charged are sufficient to cover the cost so that no burden falls on taxpayers, such actions are lawful. But if the lender had lent the amount for discharging lawful expenses, he may recover the amount. To go outside those powers would be ultra vires; for example, although the court did not use the term in striking down a federal law in on the grounds that it exceeded the Constitutional authority of Congress, the Supreme Court still declared the law to be ultra vires. In no case, they can become independent objects by themselves.
Therefore I hold that the power of seizure conferred by section 123 includes the power, for the purposes of examination, to detain for a reasonable period any goods, which a Customs officer suspects to be liable to be as forfeited goods. But where it involves exercising discretion on any question delegated, then there is room for abuse and the doctrine of Ultra vires would apply if the discretion had been exercised unreasonably or in bad faith or on no proper evidence. If they had sanctioned what had been done without the formality of a resolution, that would have been perfectly sufficient. It is exactly in the same condition as if no contract at all had been made, and therefore a ratification of it is not possible. Case Laws on Doctrine of Ultra Virus The doctrine of ultra vires was first enunciated by the House of Lords in a classic case, Ashbury Railway Carriage and Iron Co.
Riche, a firm of railway contractors, to finance the construction of a railway line in Belgium. The doctrine also impaired the security of title to property in fully executed transactions in which a corporation participated. Either doctrine may entitle a claimant to various prerogative writs, equitable remedies or statutory orders if they are satisfied. The Courts have extended the judicial control of power by stretching the Doctrine of Ultra Vires. The House of Lords held the contract as ultra vires the company and, therefore, declare it null and void. The general rule is that an act which is ultra vires the company is incapable of ratification. Cas Mad 763, A borrowing beyond the power of the company i.
The application of the Doctrine of Ultra-vires was explained in details by the House of Lords in Ashbury Railway Carriage Co. For example, a company which has been authorized by its memorandum to purchaseland had implied authority to let it and if necessary, to sell it. It was held that distribution was intra vires since it was conducive to the continued growth of the company as chemical manufacturers. To go outside those powers would be ultra vires; for example, the court did not use the term in striking down a federal law in on the grounds that it exceeded the Constitutional authority of Congress, the Supreme Court still declared the law to be ultra vires. It was argued that a student could be prevented only under Section 131 1 of the Universities Act from entering the campus.
This invariably means, powers have to be delegated to sub-ordinate bodies for the smooth functioning and administration of these bodies and ventures, as the Parliament cannot run all these bodies on its own. Although this sounds simple, the Courts have developed this principle by extending and refining it over a long period of time. The House of Lords held that the contract was ultra vires the company and, therefore, null and void. Narrow ultra vires applies if an administrator did not have the substantive power to make a decision or it was wrought with procedural defects. In case if any director makes an unauthorised payment, he will be compelled to refund the money to the company.
For example, under traditional ultra vires doctrine, a corporation that had as its purpose the manufacturing of shoes could not, under its charter, manufacture motorcycles. Here the corporation had a statutory power to provide washhouses for residents to wash their own clothes. The principle underlying the exercise of such powers is that a company, in carrying on the business for which it is constituted, must be able to pursue those things which may be regarded as incidental to or consequential upon that business. The doctrine still applies in relation to other bodies such as local authorities. There are certain acts under the company law, which though not expressly stated in the memorandum, are deemed impliedly within the authority of the company and therefore they are not deemed ultra vires. The shareholders might have passed a resolution sanctioning the release, or altering the terms in the articles of association upon which releases might be granted.
If it is done without such authority, it is ultra vires. In such an instance, this ultra vires act allows creditors of the corporation to pierce the corporate veil and sue the shareholder personally as if he was the corporation. It is pertinent to add that the powers vested in the Board of directors, e. If on the other hand the application becomes too strict, local authorities will enjoy a narrower power than what the Parliament intended they should have; and ultimately they would exercise no independent power at all. Sometimes the expression ultra vires is used to describe the situation when the directors of a company have exceeded the powers delegated to them. Hector Riche 1875 of the Law Reports 653, the House of Lords considered the validity of a contract entered into by the directors of a company, which did not come within the objects of that company as stated in the Memorandum of Association. Broad ultra vires applies if there is an abuse of power e.