NATIONAL LAW SCHOOL OF INDIA UNIVERSITY, BANGALORE

I YEAR MBL CORPORATE LAW - Model Answers

NOTE: The following model answers are only a suggestive and should neither be
treated as complete nor exhaustive answer to any question. The below is only a model
answer and not a perfect one. The objective of the model answer is to assist DED
scholars to comprehend the possible contents in an answer that may be considered
relevant by an examiner, given the length of the paper, marks allotted for each question,
time allotted to answer, speed of writing etc.

NLSIU does not hold itself liable for any undue reliance that a scholar may place on the
model answer. Students are expected to prepare their own answers in the preparation to
the examinations.

Problem:

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1. Zorbol Ltd., a company incorporated with the “sole purposes of manufacturing
and selling Construction grade steel rods and other construction equipment and to
perform the function of general contractors” now gets into the business of buying
and developing real estate. A considerable amount is invested and due to the
downward market trend a huge amount of loss is incurred. Minority
Shareholders bring an action against the directors claiming the actions are ultra
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vires the objects clause. Decide based on case law and determine the nature of
liability, if any of the directors.
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Answer: The facts of the given problem are similar to those in Ashbury Rly. Carriage &
iron Company v. Riche. This involves the interpretation of generic words in the objects
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clause and the import that these terms have on the actual functioning of the company and the
possible connotations that can be accorded to such terms in the light of other object that are
listed in the object clause of the memorandum of association. In order to better understand
this concept, the problem shall be broken down into issues, the research pertaining to those
issues shall be discussed, Analysis of the issues in light of the research presented, shall be
endeavoured and finally, conclusions upon each issue shall be drawn out.
Issues:
1. Do the minority Shareholders have a right to bring an action against the directors?
2. Does dealing in real estate fall within the purview of “general contractors” as
mentioned in the Objects clause of Zorbol?
3. Are the alleged actions ultra vires of the MOA?
Research:

Issue 1:
Sections 241 to 244 of The Companies Act, 2013, deal with the concept of oppression and
mismanagement and the right of minority shareholders to apply to the Tribunal for relief. The
right to apply is discussed under Section 244, as follows:

In case of company having sharing share capital:

(a) Not less than one hundred members of the company, or

(b) Not less than one – tenth of the total numbers of its members,

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Whichever is less shall have right to apply under Section 241.

However, any member or members holding not less than one – tenth of the issued share
capital of the company, subject to the condition that the applicant or applicants has or have
paid all calls and other sums due on his or their shares, shall also have right to apply under
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Section 241.

Section 241 says that an application may be filed for a complaint that:
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(a) The affairs of the company have been or are being conducted

1. In a manner prejudicial to the public interest, or

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2. In an manner prejudicial or oppressive to him or any other member or members, or

3. In a manner prejudicial to the interests of the company; or

The rule in Foss v. Harbottle:

This famous case on oppression laid down that “where there is an injury not to the plaintiff,
exclusively; but it is an injury to the whole corporation, In such cases the rule is that the
corporation should sue in its own name and in its corporate character” However there are
accepted exceptions to this rule, the primary exception is any action that Utra Vires the
Objectives, as laid down in Smith v Croft and Cockburn v. Newbridge Sanitary Steam
Laundry Co
Issue 2:

As per Section 2(56) of the Companies Act,2013 “memorandum” means the memorandum of
association of a company as originally framed or as altered from time to time in pursuance of
any previous company law or of this Act. Section 4 of the Act states that the Objects Clause
shall state the objects for which the company is proposed to be incorporated and any matter
considered necessary in furtherance thereof.

Moreover by virtue of Section 245 of the new Act, it allows the members to file an
application before the tribunal to prevent the company from doing any act that is ultra vires.

Ashbury Railway Carriage and Iron Co. vs. Riche,

When an act is performed or a transaction is carried out, which, though legal in itself, is not

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authorised by the object clause, in the memorandum of association, such an act is null and
void.

Attorney General vs. Great Eastern Railway Co.,

“Whatever may fairly be regarded as incidental or consequential upon those things specified
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in the memorandum of association as object ought not to be held ultra vires unless expressly
prohibited.”
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Lakshmanaswamy Mudaliar and Others V. LIC The Court after considering the well
established principle of English Law laid down guidelines on main, ancillary and incidental
objectives. It said that incidental objects proposed to be necessary for the attainment of the
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main objectives should have a proximate connection with the main object. It further said that
the Company must prove relevance of ancillary objectives establishing proximate but definite
connection. And any casual or remote connection cannot be construed as incidental or
ancillary and such acts constitute ultra vires of the powers and objects of the company.

Rolled Steel Products (Holdings) Ltd v British Steel Corporation A company has power
to do only those things which are within, or reasonably incidental to, its stated objects. If an
act is capable of being in pursuance of, or incidental to, the stated objects, it could not be
ultra vires and void because of the purpose or state of mind of the directors who authorised it.
Radhabari Tea Company Private Limited vs. Mridul Kumar Bhattacharjee and Other,

The doctrine of ultra vires provides that an action, taken by the board of directors of a
company or the company itself beyond the powers conferred on the company and/or its
directors by the memorandum of association of the company, is ultra vires.

White and another v South Derbyshire District Council,

An ultra vires act is not necessarily void for all purposes and the law would strive to protect
innocent third parties who had relied upon the apparent validity of such an act.

Issue 3:

The question becomes, primarily, if or not the said actions in this case are ultra vires. The
doctrine of ultra vires was recognised in Indian the case of Jahangir R. Mod i v.

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ShamjiLadhaand has been well established and explained by the Supreme Court in the case of
A. LakshmanaswamiMudaliarv. Life Insurance Corporation Of India. Even in India it has
been held that the company has power to carry out the objects as set out in the objects clause
of its memorandum, and also everything, which is reasonably necessary to carry out those
objects. For example, a company which has been authorized by its memorandum to purchase
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and had implied authority to let it and if necessary, to sell it. However it has been made clear
by the Supreme Court that the company has, no doubt, the power to carry out the objects
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stated in the objects clause of its memorandum and also what is conclusive to or incidental to
those objects, but it has no power to travel beyond the objects or to do any act which has not
a reasonable proximate connection with the object or object which would only bring an
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indirect or remote benefit to the company.

To ascertain whether a particular act is ultra vires or not, the main purpose must first be
ascertained, then special powers for effecting that purpose must be looked for, if the act is
neither within the main purpose nor the special powers expressly given by the statute, the
inquiry should be made whether the act is incidental to or consequential upon. An act is not
ultra vires if it is found:

(a) Within the main purpose, or

(b) Within the special powers expressly given by the statute to effectuate the main purpose, or
(c) Neither within the main purpose nor the special powers expressly given by the statute but
incidental to or consequential upon the main purpose and a thing reasonably done for
effectuating the main purpose.

Analysis:

Based on the above research, it is important to analyse each issue as it comes up based on the
facts of the case:

Issue 1: The facts merely sate that a minority of the share holders have approached the court,
it is pertinent to note that he number of shareholders or their shareholding percentages are
unclear and hence reliance will have to be laid to Section 244 of the New companies Act to
examine if or not the numbers fulfil the requirements therein. Section 244 states that in case

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of company having sharing share capital:

(a) Not less than one hundred members of the company, or

(b) Not less than one – tenth of the total numbers of its members,
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Whichever is less shall have right to apply under Section 241.

However, any member or members holding not less than one – tenth of the issued share
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capital of the company, subject to the condition that the applicant or applicants has or have
paid all calls and other sums due on his or their shares, shall also have right to apply under
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Section 241.

Since the case states Zorbol Ltd., it is hence a public limited company with share capital.

The application of Section 245 also needs to be looked into especially since the application is
concerning an Ultra Vires transaction. If section 245 is applied, the test is The requisite
number of depositors provided in sub-section (1)shall not be less than one hundred depositors
or not less than such percentage of the total number of depositors as may be prescribed,
whichever is less, or any depositor or depositors to whom the company owes such percentage
of total deposits of the company as may be prescribed.

Presuming that the minority satisfy this test, we can proceed with the assumption that the
application will be entertained by the Tribunal.
Issue 2:

Once it is clear that the parties have a locus before the tribunal, the issue becomes, what is the
Object of the company as envisaged by the MOA and what action have been alleged to have
been committed that are outside the scope. The facts state that the objects of the company
were: “sole purposes of manufacturing and selling Construction grade steel rods and
other construction equipment and to perform the function of general contractors”

Based on the cases of Ashbury Railway Carriage and Iron Co. vs. Riche,

Where, its objects, as stated in the Memorandum of Association, were “to make, and sell, or
lend on hire, railway carriages and waggons, and all kinds of railway plant, fittings,
machinery, and rolling-stock; to carry on the business of mechanical engineers and general

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contractors ; to purchase, lease, work, and sell mines, minerals, land, and buildings; to
purchase and sell, as merchants, timber, coal, metals, or other materials, and to buy and sell
any such materials on commission or as agents.” The directors agreed to purchase a
concession for making a railway in a foreign country, and afterwards (on account of
difficulties existing by the law of that country), agreed to assign the concession to a
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Société Anonyme formed in that country, which société was to supply the materials for the
construction of the railway, and to receive periodical payments from the English company.
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The objects of this company, as stated in the Memorandum of Association, were to supply
and sell the materials required to construct railways, but not to undertake their construction.
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The contract here was to construct a railway. That was contrary to the memorandum of
association; what was done by the directors in entering into that contract was therefore in
direct contravention of the provisions of the Company Act, 1862

It was held that this contract, being of a nature not included in the Memorandum of
Association, was ultra vires not only of the directors but of the whole company, so that even
the subsequent assent of the whole body of shareholders would have no power to ratify
it. 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 they had
sanctioned what had been done without the formality of a resolution, that would have been
perfectly sufficient. 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.

The same analogy can be applied to this case, wherein the purpose of the company was to
manufacture construction equipment, primarily steel and not get into real estate and
construction itself, hence all and any contracts that it entered into for tht purpose must be
deemed void. The rule in Attorney General vs. Great Eastern Railway Co., “Whatever
may fairly be regarded as incidental or consequential upon those things specified in the
memorandum of association as object ought not to be held ultra vires unless expressly
prohibited.” Cannot be applied in this case as it is not in any way incidental or consequential
to the main objects of the company.

The facts also show that the company’s real estate dealings fail the test laid down by the apex

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court Lakshmanaswamy Mudaliar and Others V. LIC It said that incidental objects
proposed to be necessary for the attainment of the main objectives should have a proximate
connection with the main object.

Issue 3:
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The main part under issue three is to see if these transactions are ultra vires of the
directors or the company itself. Here the effects of any Utra vires transaction may be
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looked into:
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Effects of Ultra Vires Transactions

1. The ultra vires transactions are null and void ab initio
3. It is the duty of the director to ensure that the corporate capital is used only for the
legitimate business of the company, In case of such capital being diverted, the directors are
personally liable to replace it. The directors and other officers are personally accountable to
third parties in case of ultra vires transactions.
4. Where a company’s money has been used ultra vires to acquire some property, the
company’s right over such property is held secured.

Now, applying the test for ultra vires transactions laid down in Lakshman Swamy Mudaliar
V. LIC, which is:
To ascertain whether a particular act is ultra vires or not, the main purpose must first be
ascertained, then special powers for effecting that purpose must be looked for, if the act is
neither within the main purpose nor the special powers expressly given by the statute, the
inquiry should be made whether the act is incidental to or consequential upon. An act is not
ultra vires if it is found:

(a) Within the main purpose, or

(b) Within the special powers expressly given by the statute to effectuate the main purpose, or

(c) Neither within the main purpose nor the special powers expressly given by the statute but
incidental to or consequential upon the main purpose and a thing reasonably done for
effectuating the main purpose.

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Here the main objects f Zorbol are the manufacture and sale of Construction grade steel and
other construction equipment. The investment into real estate, meaning the buying and selling
of land, is neither incidental nor consequential to the main objects and hence the action of the
members is justified and this is an Ultra vires act.
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Conclusion:
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Based on the above research and analysis, we can conclude that the minority members have a
right to bring this action, both under Section 244 and Section 245 of the Companies Act,
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provided their number meets the requirement specified in the Act.

We can also conclude that that the acts of the directors of Zorbol are ultra vires and they must
make good any loss caused to the company as a result. This stems not just from the fact that
the acts are ultra vires the objects but also from the fact that they owe a fiduciary duty to the
company as held in Percival v. Wright.

It therefore abundantly clear that, if the tribunal were to accept the application of the minority
shareholders, it would find in favour of the company and against the directors by virtue of
their actions being ultra vires the company itself.
 ESSAY TYPE

2.
a) Discuss in detail the provisions for winding up of a company and who may
apply for winding up and how.

Winding up refers to a process which effectively brings to an end, the existence of a

company. In normal course of business, it is not foreseen or contemplated that a company
will need to close down or end, but that stage when it is a reality, is known as winding up of
a company. It is the last stage of company in which its existence years is dissolved and all its
assets are used to pay off the creditors, shareholders and other liabilities.

As per section 270 of the Companies Act 2013, the procedure for winding up of a company

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can be initiated either –

a) By the tribunal or,

b) Voluntary.
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WINDING UP OF A COMPANY BY A TRIBUNAL:-
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As per Companies Act 2013, a company can be wound up by a tribunal in the below
mentioned circumstances:
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1. When the company is unable to pay its debts

2. If the company has by special resolution resolved that the company be wound up by the
tribunal.

3. If the company has acted against the interest of the integrity or morality of India, security
of the state, or has spoiled any kind of friendly relations with foreign or neighboring
countries.

4. If the company has not filled its financial statements or annual returns for preceding 5
consecutive financial years.
5. If the tribunal by any means finds that it is just & equitable that the company should be
wound up.

6. If the company in any way is indulged in fraudulent activities or any other unlawful
business, or any person or management connected with the formation of company is found
guilty of fraud, or any kind of misconduct.

FILING OF WINDING UP PETITION:-

Section 272 provides that a winding up petition is to be filed in the prescribed form no 1, 2 or
3 whichever is applicable and it is to be submitted in 3 sets. The petition for compulsory
winding up can be presented by the following persons:

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• The company
• The creditors ; or
• Any contributory or contributories
• By the central or state govt.
• By the registrar of any person authorized by central govt. for that purpose
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At the time of filing petition, it shall be accompanied with the statement of Affairs in form no
4. That petition shall state the facts up to a specific date which shall not more than 15 days
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prior to the date of making the statement. After preparing the statement it shall be certified by
a Practicing Chartered Accountant. This petition shall be advertised in not less than 14 days
before the date fixed for hearing in both of the newspapers English and any other regional
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language.

VOLUNTARY WINDING UP OF A COMPANY:-

The company can be wound up voluntarily by the mutual decision of members of the
company, if:

• The company passes a Special Resolution stating about the winding up of the
company.
• The company in its general meeting passes a resolution for winding up as a result of
expiry of the period of its duration as fixed by its Articles of Association or at the
occurrence of any such event where the articles provide for dissolution of company.
PROCEDURE FOR VOLUNTARY WINDING UP:-

1. Conduct a board meeting with 2 Directors and thereby pass a resolution with a declaration
given by directors that they are of the opinion that company has no debt or it will be able to
pay its debt after utilizing all the proceeds from sale of its assets.

2. Issues notices in writing for calling of a General Meeting proposing the resolution along
with the explanatory statement.

3. In General Meeting pass the ordinary resolution for the purpose of winding up by ordinary
majority or special resolution by 3/4th majority. The winding up shall be started from the date
of passing the resolution.

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4. Conduct a meeting of creditors after passing the resolution, if majority creditors are of the
opinion that winding up of the company is beneficial for all parties then company can be
wound up voluntarily.

5. Within 10 days of passing the resolution, file a notice with the registrar for appointment of
liquidator.
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6. Within 14 days of passing such resolution, give a notice of the resolution in the official
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gazette and also advertise in a newspaper.

7. Within 30 days of General meeting, file certified copies of ordinary or special resolution
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passed in general meeting.

8. Wind up the affairs of the company and prepare the liquidators account and get the same
audited.

9. Conduct a General Meeting of the company.

10. In that General Meeting pass a special resolution for disposal of books and all necessary
documents of the company, when the affairs of the company are totally wound up and it is
about to dissolve.

11. Within 15 days of final General Meeting of the company, submit a copy of accounts and
file an application to the tribunal for passing an order for dissolution.
12. If the tribunal is of the opinion that the accounts are in order and all the necessary
compliances have been fulfilled, the tribunal shall pass an order for dissolving the company
within 60 days of receiving such application.

13. The appointed liquidator would then file a copy of order with the registrar.

14. After receiving the order passed by tribunal, the registrar then publish a notice in the
official Gazette declaring that the company is dissolved.

b) Explain the concept of private placement in the light of the Sahara Case.
A popular mode of raising funds for unlisted companies is through private placement. A
private placement is where the offer of share subscription is made to a limited group of
persons who comprise a number less than 50 according to Proviso to Section 67(3) of the

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erstwhile Companies Act, 1956 (“1956 Act”) as opposed to a public offer where the shares
are offered to the public at large. Since private placement involves raising capital from a
small group investors, companies raising money through this mode are exempt from the
jurisdiction of Securities Exchange Board of India (“SEBI”) and its disclosure requirements.
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However, the Sahara case has demonstrated how unlisted companies can circumvent the
provisions of private placement to escape SEBI disclosure requirements and investor
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protection norms to raise money from a large number of people.

Two unlisted companies of the Sahara group - Sahara Real Estate Corporation Ltd.
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(“SIRECL”) and Sahara Housing Investment Corporation Limited (“SHICL”)- under the garb
of raising money through private placement, raised INR 20,000 crores from almost 22 million
investors between 2008 and 2011. Their defense was that the offer of subscription was
addressed to only close friends and relatives of the promoters and directors of the Sahara
group and only they could accept or reject the offer. It was argued that it was not a public
offer and hence was exempted from the jurisdiction of SEBI under Section 55-A of the
erstwhile Companies Act, 1956 and compliance with its disclosure-related and investor
protection norms.

The Supreme Court did not accept Sahara’s arguments. It noted that, by virtue of the Proviso
to Section 67(3) of the 1956 Act, any offer made to more than 49 persons is deemed to be a
public offer irrespective of the fact that it may be addressed to specific people. The Court
held that Sahara had made a public offer under Section 67(3) and therefore the company’s
shares were mandatorily required to be listed on any of the stock exchanges The Court was of
the view that the offer made by Sahara fell within the purview of SEBI jurisdiction by virtue
of Section 55A of 1956 Act.

In the guise of private placement, a large number of people were offered Optionally Fully
Convertible Debentures (“OFCDs”) while bypassing all disclosure and investor protection
norms. While the Supreme Court has recently passed directions against Sahara to pay back all
the investors with an interest of 15%, the 2013 Companies Act has introduced and
specifically incorporated provisions relating to private placement in order to prevent another
Sahara debacle.

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Section 42 of the Companies Act, 2013 allows for private placement of shares and has to be
read together with Rule 14 of the Companies Prospectus and Allotment of Security Rules,
2014.

A conjoint reading of the provision and the rule suggests that the new rules allow for private
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placement of shares to up to 200 people in an aggregate financial year. This number
excludes the qualified institutional buyers such as banks, financial institutions etc. and
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employees of the company given shares under Employee Stock Option Plans (“ESOPs”).

However, according to Section 42 of the Act, an offer to invitation to subscribe through

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private placement mode cannot be made to more than 50 persons in one go. If at a single
instance it is made to more than 50 people, then irrespective of the fact that payment for
securities has been received or not or the company is willing to list its securities on a stock
exchange, it will be deemed to be a public offer. This number excludes the securities offered
to qualified institutional buyers and employees.

If a company intends to raise capital through a further issue of securities within the limit of
200 persons, Section 62(1)(c) of Act, 2013 will applicable. According to this section, if
authorized by a special resolution existing shareholders have a pre-emptive right to purchase
the new shares offered which includes the right to renounce the shares in favor of someone
else.
According to Rule 14 of the Companies Prospectus and Allotment of Securities Rules, 2014,
the value of such offer per person should be a minimum investment size of INR 20,000 of
face value of securities.

The procedure set out within the relevant rule and provision is as follows-

• A private placement letter of offer is addressed to specific persons.

• This letter is required to be filed with the Registrar within 30 days
• All money payable is required to be paid through a banking channel and not by way
of cash.
• Within 60 days of invitation of offer of shares such shares must be allotted; if unable
to so after the expiry of 60 days, the money should be returned within a period of 15

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days.
• Within 30 days the letter of allotment of shares should be filed with the Registrar.
• If the money is not repaid within 15 days then interest payable at 12% is imposed.
• Non-compliance with the above provisions will make the company liable to pay a
penalty that may extend to the amount of offer or invitation or INR 2 crore, whichever
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is higher. This amount is payable within 30 days.
• According to the Rule 14 of the Companies Prospectus & Allotment of Security
Rules, 2014, minimum investment by each purchaser should be to the tune of INR
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20,000.
• Shares must be valued by an independent expert to determine their price.
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The 2013 Act when supplemented with the Companies Prospectus and Allotment of
Securities Rules, 2014 has brought clarity in the provision of private placement in the Act and
is a welcome change that is likely to result in transparency and accountability in the system.

Short Note:
1. Turquand rule
The Doctrine of Indoor management or the Turquand rule was laid down in Royal British
Bank v Turquand by the English courts. The doctrine essentially protects outsiders who deal
with a company, when a question arises as to internal procedure that the company ought to
have followed. A positive presumption is raised in favour of the outsider who acts in genuine
belief that such procedure has been followed.

The rule lays down that:

"a person dealing with a corporation has no obligation to ensure that a corporation has gone
through any procedures required by its articles, by-laws, resolutions, contracts, or policies to
authorize a transaction or to give authority to a person purporting to act on behalf of the
corporation."
Indeed, "compliance with such procedure is a matter of internal or 'indoor' management with
which outsiders do not have to concern themselves".

This general principle was first articulated in the seminal decision in Turquand. In that case,
the company's registered deed of settlement authorised its directors to borrow such funds as

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might from time to time be authorised by a general resolution of the company. The directors
borrowed money from the plaintiff bank and issued a bond under the seal of the company.
However, no resolution was adopted by the company authorising the loan or the bond.
The issue before the Court of Exchequer Chamber was whether the bank was required to
determine whether the general resolution of the company had actually been adopted.
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This is rule is in direct contravention, or serves to act as an exception to the rule of
constructive notice which lays down that any person dealing with a company is deemed to
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have notice of its Memorandum and Articles. Turquand served to qualify the harsh
implications of the 'constructive notice' doctrine.
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Exceptions To The Rule:

The rule of doctrine of indoor management is however subject to certain exceptions. In other
words, relief on the ground of ‘indoor management’ can’t be claimed by an outsider dealing
with the company in the following circumstances:

 Where the outsider has knowledge of Irregularity:

The first and the most obvious restriction is that the rule has no application where the
party affected by an irregularity had actual notice of it. Knowledge of an irregularity may
arise from the fact that the person contracting was himself a party to the inside procedure.
As in Devi Ditta Mal v The Standard Bank of India, where a transfer of shares was
approved by two directors, one of whom within the knowledge of the transferor was
 disqualified by reason of being the transfer himself and the other was never validly
appointed, the transfer was held to be ineffective.

 Suspicion of Irregularity
The protection of the “Turquand Rule” is also not available where the circumstances
surrounding the contract are suspicious and therefore invite inquiry. Suspicion should
arise, for example, from the fact that an officer is purporting to act in matter, which is
apparently outside the scope of his authority. Where, for example, as in the case of Anand
Bihari Lal v. Dinshaw & co., the plaintiff accepted a transfer of a company’s property
from its accountant, the transfer was held void. The plaintiff could not have supposed, in
absence of a power of attorney, that the accountant had authority to effect transfer of the
company’s property.

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 Forgery

 Representation through Articles

In India, the case of Lakshmi Ratan Lal Cotton Mills v J.K. Jute Mills Co applied
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the Turquand rule and also got into teh concept of delegated authority. It explains the
meaning and effect of a “delegation clause”.
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Here one G was director of the company. The company had managing agents of
which also G was a director. Articles authorised directors to borrow money and also
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empowered them to delegate this power to any or more of them. G borrowed a sum of
money from the plaintiffs. The company refused to be bound by the loan on the
ground that there was no resolution of the board delegating the powers to borrow to
G. Yet the company was held bound by the loans. “Even supposing that there was no
actual resolution authorizing G to enter into the transaction the plaintiff could assume
that a power which could have been delegated under the articles must have been
actually conferred. The actual delegation being a matter of internal management, the
plaintiff was not bound to enter into that.”

Thus the effect of a “delegation clause” is “that a person who contracts with an
individual director of a company, knowing that the board has power to delegate its
 authority to such an individual, may assume that the power of delegation has been
exercised.”
 Acts outside apparent authority
Lastly, if he act of an officer of a company is one which would ordinarily be beyond the
power of such an officer, the plaintiff cannot claim the protection of the “Turquand rule”
simply because under the articles power to do the act could have been delegated to him. In
such a case the plaintiff cannot sue the company unless the power has, in fact, been
delegated to the officer with whom he dealt

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