i. Can the MD be held punishable for his act? ii. Under which Doctrine can Mr. X take action against the company?

Question

i. Can the MD be held punishable for his act? ii. Under which Doctrine can Mr. X take action against the company?

Study the following case and express your opinion:

The Articles of a company stated that while borrowing any money from outsiders, the document must have the signatures of the Managing Director (MD) and any one of the Director. The Articles of Association clearly stated the procedure to be followed while borrowing money. The Managing Director did not follow all the procedures but still borrowed money from Mr. X. Mr. X assumed that the MD has followed the required procedures.

i. Can the MD be held punishable for his act?

ii. Under which Doctrine can Mr. X take action against the company?

iii. Explain the Doctrine.

Monjur Alahi

9 views

2025-01-04 04:42

1 Answers

Related Questions

Use of Accounting Package to create a company. Create a company with the following particulars. Company Name: B.B Enterprises

2 Answers 8 Views

i. A company is a creation of law, hence it is called as _________ ii. A company which is incorporated under a Special Act is called as _________

2 Answers 5 Views

i. Can the company ask Mr. John to pay any further money to the company? ii. Which feature of a Joint Stock company is referred to in this example?

2 Answers 8 Views

i. The primary document of a company states the aims and objectives of a company. ii. The document establishes the company’s relationship

2 Answers 5 Views

i. The documents which state the aims and objectives of a company is called as ______ ii. Any act done by the company which goes beyond

2 Answers 9 Views

The doctrine of Indoor Management protects outsiders who are unaware of the correctness of the internal proceedings of a company.

2 Answers 5 Views

i. Can M/s ABC buy the shares of the company? ii. Can profits of M/s. ABC be invested in shares held in the names

2 Answers 9 Views

A company formed by passing a special act in the parliament or legislature is ………………… company.

2 Answers 4 Views

Indian Contract Act 1872, Indian Partnership Act 1932, Industrial Dispute Act 1947.

2 Answers 7 Views

i. A director can be removed before the expiry of his term. ii. Directors act as trustees of the company.

2 Answers 5 Views

Salim Ahmed Kawsar · Accepted Answer · 2023-02-05T15:29:48+06:00

i. He can be held liable for his actions and can be insisted to pay back the loan amount.

ii. Under Doctrine of Indoor Management

iii.

According to this doctrine, persons dealing with the company need not inquire whether internal proceedings relating to the contract are correctly followed.
They are satisfied that the transactions are in accordance with the memorandum and articles of association.
If there are any internal irregularities then the company will be liable as the person has acted in good faith and he did not know about the internal arrangement of the company.
Similarly with X as he has acted in good faith and lent money to the managing director, but the managing director did not follow the procedure. So there is an irregularity that can make the director liable for his actions.