Critical Analysis Of The Doctrine Of Ultra Vires

Shrishti Goel, Bennett University

ABSTRACT:

The word comes from Latin and combines the words "ultra," which means beyond, and "virus," which means power or authority. One of the foundational laws of the Indian Companies Act is the ultra-virus doctrine. It states that any action taken by the company or any agreement made by the directors on the company's behalf that exceeds the authority granted to the directors and company by the MOA's object clause will be deemed void.

The paper highlights the judicial perspective on the Doctrine and explains its necessity and scope. It also depicts the path the Ultra Vires Doctrine took in India, from its inception to its demise, as well as the different measures businessmen took to avoid or flee the Doctrine. In addition, it illustrates the ramifications and outcomes of the same and sheds light on the different challenges that businesses encounter when fulfilling their social responsibility. There are numerous exceptions to the Ultra Vires doctrine, which are covered in this paper as well. The application of the ultra vires rule, which was intended to limit contractual capacity to specific purposes specified in the company's memorandum of association, will be the main topic of discussion in this paper. The study concludes with a comparison to the United Kingdom and provides an update on the state of the Doctrine of Ultra Vires in India. Keywords: doctrine of ultra vires, company, MOA, contractual capacity.