Document Fragment View
Fragment Information
Showing contexts for: valid ratification in T.R. Pratt (Bombay) Ltd. vs E.D. Sassoon And Co. Ltd. And Anr. on 18 September, 1935Matching Fragments
6. Article 73 of the articles of association contained in Table A is similar in terms to the article in Irvine v. Union Bank of Australia (1877) 3 Cal 280 and supports the contention that when there is a prohibition against borrowing contained in the article, it is not a case of internal management as decided in 1. Royal British Bank v. Turquand (1856) 6 El and Bl 327. Under the circumstances, and it being common ground that no resolution at any general meeting of the company was passed, the directors were not authorised to borrow money beyond the amount of the issued share capital of the company. As the original dealings giving rise to the debt were between M.T.Ltd. and the company, it would be convenient to consider the claim of M.T.Ltd. first. Their claim is a money claim. Relying on Irvine v. Union Bank of Australia (1877) 3 Cal 280 the liquidator contends that if the borrowing is ultra vires the directors, no debt binding on the company is created except when the company ratifies it. It is urged that there is no valid ratification of the borrowing because the attention of the shareholders was never expressly drawn to the fact that the directors having no authority to borrow in excess, had so borrowed and at the meeting they were called upon to confirm that unauthorised borrowing of the directors. In this connexion also the liquidator relies on the observations in Irvine v. Union Bank of Australia (1877) 3 Cal 280 to the effect that 1. Royal British Bank v. Turquand (1856) 6 El and Bl 327 does not apply. The liquidator further relies on the decision in Sinclair v. Brougham (1914) A C 398. in which it was held that if a company is not authorised to borrow any money and if money in fact is borrowed, no claim can be maintained by the lender against the company on the footing either of debt or of money had and received. In that case, Viscount Haldane L.C., while consideringan unauthorised borrowing by a company which was a statutory society and had no power to borrow, observed as follows (p. 414):