Ultra Vires is a Latin word which literally means, ‘beyond the power’. In legal parlance it is used to describe when a person, whether natural or artificial, or a body have acted beyond the power granted to them by law. This phrase is widely used in different branches of law; in Administrative law it is mainly used with respect to an administrative body. In Criminal law it is used with respect to law enforcement agencies, in Company law it is used with reference to the corporate capacity of a company.
The Doctrine of Ultra Vires states that any act done by the company which is not the stated object of the company, or is beyond it corporate capacity is void for being Ultra Vires. Even in company law this Doctrine has a two- fold meaning; …show more content…
After the South Sea crash it was felt that concentration of economic power was very dangerous, thus in order to limit the scope of business so that no one company would have monopoly this doctrine was developed.
It was keeping these reasons in mind that the common law Doctrine of Ultra Vires was developed by the courts over a period of time. Part II of the paper discusses this development in context of India and UK. Part III deals with how in face of changing situation this doctrine eroded in UK and was finally abolished. Part IV focuses on contemporary Indian scenario and specific sections of Indian Company law which give effect to this doctrine. Part V critically evaluates the importance of this doctrine in present scenario.
History of Doctrine of Ultra …show more content…
These Statutory Companies were engaged were mainly involved in infrastructural works such as building railways, roads and canals meant this meant that there was a real risk of substantial infringement of private rights such as expropriation of property and hence the Doctrine of Ultra Vires was imported from public law. The first application of this doctrine in Company law was in Colman v Eastern Counties Railway Company ; Lord Langdale establishing the Doctrine held that, “ample powers are given for the purpose of constructing and maintaining the railway, and for doing all those things required for its proper use when made. But I apprehend that it has nowhere been stated that a railway company, as such, has power to enter into all sorts of other transactions… But it was been contended that they have a right to pleadge, without limit, the funds of the company for the encouragement of other transactions, however various and extensive, provided that the object of that liability is to increase the traffic upon the railway, and thereby to increase the profit to the shareholders. There is, however, no authority for anything of that kind. It has been stated that these things, to a small extent, have been frequently done since the establishment of railways; but unless the acts so
The Doctrine of Ultra Vires states that any act done by the company which is not the stated object of the company, or is beyond it corporate capacity is void for being Ultra Vires. Even in company law this Doctrine has a two- fold meaning; …show more content…
After the South Sea crash it was felt that concentration of economic power was very dangerous, thus in order to limit the scope of business so that no one company would have monopoly this doctrine was developed.
It was keeping these reasons in mind that the common law Doctrine of Ultra Vires was developed by the courts over a period of time. Part II of the paper discusses this development in context of India and UK. Part III deals with how in face of changing situation this doctrine eroded in UK and was finally abolished. Part IV focuses on contemporary Indian scenario and specific sections of Indian Company law which give effect to this doctrine. Part V critically evaluates the importance of this doctrine in present scenario.
History of Doctrine of Ultra …show more content…
These Statutory Companies were engaged were mainly involved in infrastructural works such as building railways, roads and canals meant this meant that there was a real risk of substantial infringement of private rights such as expropriation of property and hence the Doctrine of Ultra Vires was imported from public law. The first application of this doctrine in Company law was in Colman v Eastern Counties Railway Company ; Lord Langdale establishing the Doctrine held that, “ample powers are given for the purpose of constructing and maintaining the railway, and for doing all those things required for its proper use when made. But I apprehend that it has nowhere been stated that a railway company, as such, has power to enter into all sorts of other transactions… But it was been contended that they have a right to pleadge, without limit, the funds of the company for the encouragement of other transactions, however various and extensive, provided that the object of that liability is to increase the traffic upon the railway, and thereby to increase the profit to the shareholders. There is, however, no authority for anything of that kind. It has been stated that these things, to a small extent, have been frequently done since the establishment of railways; but unless the acts so