company law kls lecture 1

Friday, April 14, 2023

Dr. Tabrez Ahmad KLS, KIIT, BBSR, Company Law-I

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Company Law-ICompany Law-ICompany Law-ICompany Law-I

Module -1 IntroductionModule -1 Introduction



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Meaning and characteristics

• The word ‘company’ is derived from the Latin ( com= with or together; panis = bread), and originally referred to an association of persons who took their meals together.

• It may be assumed- since human nature does not change- that in the leisurely past, no less than in the speedy present, merchants took advantage of festive gatherings, to discuss business matters. Now a days business matters have become most complicated and cannot be discussed at length on festive gatherings.



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Cont…• In a popular parlance, company denotes an association

of like minded persons formed for the purpose of carrying on same business or undertaking. Though an association may be brought into existence for multifarious purposes, in company law it figures predominantly as a business association with a large and fluctuating membership formed for acquisition of gain.

• There may also be non-profit trading concerns like a club or a society.

• In Smith v Anderson, ( 1880) 15 Ch. D. 247, it was observed that “ a company, in a broad sense may mean an association of individuals formed for some purpose.”



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• A company may be incorporated or unincorporated

• A company is a corporate body and a legal person having status and personality distinct and separate from that of the members constituting it.

• It is called a body corporate because the persons composing it are made into one body by incorporating it according to the law and clothing it with legal personality, and so turn it into a corporation. ( The word corporation is derived from the Latin term ‘corpus’ which means ‘body’)



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• Accordingly corporation is legal person created by the process other than natural birth. It is for this reason something called artificial legal person.

• As a legal person this corporate being is capable of enjoying many of the rights and incurring many of the liabilities of a natural person- a human being.

• But the company is not merely a legal institution. It is rather a legal device for the attainment of any social or economic end. It is therefore a combined political, social, economic and legal institution.



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Company is not a citizen

• Company though a legal person is not a citizen either under the Constitution of India or under the Citizenship Act. This has been the conclusion of a special bench of the Supreme Court in State Trading Corpn. Of India Ltd. v CTO AIR 1963 SC 1811.



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In R. C Cooper v Union of India AIR 1970 1 SCC 564

• , also known as the Bank Nationalisation case, the Supreme Court held that where the legislative measures directly touch the company of which the petitioner is a shareholder, he can petition on behalf of the company, if by the impugned action, his rights are also infringed. In that case, the court entertained the petition under Art. 32 of the constitution at the instance of a director and shareholder of a company and granted relief. It is, therefore, to be noted that an individual rights is not lost by reasons of the fact that he is a shareholder of the company.



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Bennet Coleman Co. v Union of India AIR 1973

SC 106• It is now clear that the fundamental rights of

share holders as citizens are not lost when they associate to form a company. When their fundamental rights as shareholders are impaired by state action their rights as shareholders are impaired by state action their rights as shareholders are protected. The reason is that the shareholders rights are equally and necessarily affected if the rights of the company are affected.



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D.C.M Company Ltd. V Union of India

and others 1983 5 comp. cas. 674. • Court took the similar view on the matter

• Daimler Co Ltd v Continental tyre co. (1916)2 A.C 307 HL

• Held that a company will be regarded as having enemy character, if the persons having de facto control of its affairs are resident in an enemy country, or wherever they may be, are acting under instructions from or on behalf of the enemy.



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Thanks, We will continue…

company law kls lecture 1

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