Doctrine of Constructive Notice
Download as PPTX, PDF6 likes3,626 views
The document discusses the doctrine of constructive notice as it relates to companies. It notes that a company's memorandum of association and articles of association, which are filed with the registrar of companies, become public documents. It is therefore the duty of anyone dealing with a company to inspect these documents first before entering into dealings with the company. This doctrine provides protection to companies against outsiders by assuming the outsiders have read and understood the memorandum and articles of association. Two case examples are provided that demonstrate how this doctrine was applied when a mortgage deed was invalid due to missing signatures as outlined in the articles of association.
Doctrine of Constructive Notice
- 1. DOCTRINE OF CONSTRUCTIVE NOTICE PRESENTED BY: CMA SNEHA AGRAWAL
- 2. KEY POINTS TO DOCTRINE: Memorandum of Association and Articles of Association are two main documents required for incorporation of a company. Same are to be registered with Registrar of company (ROC). Registrar of company is a public office. Consequently, Memorandum and Articles of company registered with ROC becomes public document. They are open and accessible to everyone. It is therefore, the duty of every person dealing with a company to inspect these documents before making any dealings with the company. This is nothing but Doctrine of Constructive Notice.
- 3. Doctrine of Constructive notice is a protection granted to company against outsiders dealing with the company. These Doctrine is an exception to Doctrine of Indoor Management as it provides protection to outsiders against company. (Royal British Bank v/s Turquand) Case law : Oak Oil Co. v/s Crum In this case, it was held that the person dealing with company read is presumed not only to have read MOA and AOA but also understood them properly. These documents are presumed to be notice to public
- 4. Case law : KOTLA VENKATSWAMY V/S RAM MURTHY In this case, the articles of company provides that for mortgage of assets a mortgage deed need to be signed by 3 officials i.e., MD, CS and Whole time director. A mortgage deed was executed by petitioner for mortgage of assets but the deed contain only two signatures of CS and Whole time director. When mortgage money became due the company refused to pay mortgage money as the mortgage deed was invalid. On petition, it held that refusal pay mortgage money on account of invalid mortgage deed is not wrong and applied this doctrine of constructive notice.
- 5. THANK YOU