GALGOTIAS UNIVERSITY

SCHOOL OF LAW

Course Module

CORPORATE LAW – I
Course Code: BAL/BBL 513 / LLB 234

Course Coordinator(s):
Mr. Nizam Khan Mr. Adwitiya Prakash Tiwari Mr. Victor Nayak
Assistant Professor Assistant Professor Assistant Professor

E-mail i.d.: [email protected]

[email protected]
[email protected]
Contact Timings:
 BAL 513 L T P C
Corporate Law-I

Version1.1 4 1 0 5
Pre-requisites//Exposure Economics, Indian Contract Act, 1872
co-requisites None

Course Objectives
1. To develop an understanding ofthe importance of company as a form of business enterprise
2. To develop the argumentative skills of corporate professionals amongst the students
3. To provide an insight in the manner of functioning of the companies and the key managerial
personnel of the organisation.
4. To portray the applicability of the doctrines in context of the changing dimensions of the company
legislation.

Course Outcomes
On completion of this course, the students will be able to
1. Understand viability of various forms of company in doing business.
2. Learnthe process of incorporation of companies as laid down under the Companies Act 2013
3. Analyse the applicability of the common law doctrines in context of the changes brought in by the
Companies Act, 2013.
4. Understand the role of directors and key managerial personnel in companies and discuss duties
imposed by thenew Companies Act on them.
5. Develop the argumentative and research skills required of a professional in corporate litigation.
Catalog Description
In view of increasing emphasis on adherence to the norms of good governance, company Law assumes a
pivotal position in the regulation of corporations at it deals with the formation, incorporation, structure,
management, administration of affairs of a company. There has been a significant development in
ownership of shareholdings of a company. The history of Indian Company Law begins with the Joint Stock
Companies Act of 1850. Since then there has been continuous process of amendment and consolidation
which has resulted into most comprehensive piece of Legislation, the Companies Act, 1956 and more
recently the Companies Act, 2013, which contains a modified version of the Companies Law. The
Companies Act is divided into two parts: Corporate Law-I and Corporate Law-II. Corporate Law-II will
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contain the topics of Majority Rule, Oppression and Mismanagement, Reconstruction and Amalgamation
of Companies and Winding up of Companies.

Text Books
1. T1. G.K. Kapoor & Sanjay Dhamija, “Taxmann’s Company Law and Practice”, 21st edition,
Taxmann Publication, Delhi, 2016
2. T2. Avtar Singh, “Company Law”, 16th Edition, Eastern Book Company, 2016

Reference Books
1. S.C.Tripathi, “Modern Company Law”, 5th Edition, Central Law Publications, 2012
2. A. Ramaiya, “Guide to the Companies Act”, 18th Edition, Lexisnexis Butterworth Wadhawa, 2013
3. H.K. Saharay, “Company Law”, 6th Edition, Universal Law Publications , 2012
4. K.R. Chandratre, “Company Law Procedures”, 6th Edition, Bharat Publication, 2009
5. K.S. Anantharaman, “Lectures on Company Law”, 12th Edition, Lexisnexis Butterworth Wadhawa,
2015
6. N.D. Kapoor, “Elements of Company Law”, 29th Edition, Sultan Chand & Sons, 2015
7. Sir Francis Beaufort Palmer, “Palmer’s Company Law”, 22nd Edition, Sweet and Maxwell, 1976
8. L.C.B. Gower, “Principles of Modern Company Law”, Sweet and Maxwell Publication, London
9. Dr. N.V. Pranjape, “The New Company Law”, 6th Edition, Central Law Agency, 2014
10. C.R. Datta & Kamal Gupta, “Datta on Company Law”, Orient Law House, 5th Edition, 1992

Course Content
Module 1: Company as a Form of Business Enterprise 11 lecture hours
 Definition of a Company; Evolution and development of Company Law in England and India
 Company and other business entities such as partnership, limited liability partnership, Joint Hindu
family business, Changes in business environment and developments of Modern Company Law
 Kinds of Companies – One Person Company- Definition, Characteristics, Public and Private
Companies; Limited and Unlimited Liability Companies - limited by shares and limited by
guarantee; Holding and Subsidiary Companies; Foreign Companies; Government Companies;
Producer Companies
 Concept of Corporate Personality: Company as a juristic (or legal) person Consequences;
Advantages and Dis-advantages of Incorporation
 Piercing the Corporate Veil – Judicial and Statutory grounds.
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Case Laws:

 Salomon v A Salomon and Co Ltd [1897] AC 22

 Lee v. Lee’s Air Farming Ltd.(1961) A.C.12(P.C)
 Re Kondoli Tea Co Ltd., (1886) ILR
 Daimler Co Ltd v. Continental Tyre & Rubber Co Ltd., (1961) 2 AC307
 Dinshaw Maneckjee Petit, re, AIR 1927 Bom 371
 CIT v Associated Clothiers Ltd., AIR 1963 Cal 629
 PNB Finance Ltd. V Shital Prasad Jain, (1983) 54 Comp Cas 66
 LIC v Escorts Ltd, (1986) 1 SCC 264
Module 2: Incorporation and Promotion of a Company 5 lecture hours
 Promoters – Duties, powers and liabilities, Legal position of a promoter, Pre-incorporation
contracts.
 Formation of Company: Important steps, Procedure of registration, Corporate Identity Number
(CIN)
 Certificate of Incorporation and its conclusiveness, Certificate of Commencement of Business and
its conclusiveness
Case Laws:

 Emile Erlanger v. New Sombrero Phosphate Co.(1878) 3 App Cas 121

 Natal Land & Colonisation Co. V Pauline Colliery Syndicate, 1904 AC 120
 Kelner v Baxter, (1866) LR 2 CP 174
 Ramkumar Potdar v Sholapur Spinning and Weaving Company Ltd, AIR 1934 Bom 427
 T.R.Pratt Ltd. V. E.D. Sasson & Co Ltd., A.I.R.1963 Bom.62
 Gramphone and Typewriter Co. v. Stanley(1906) 2K.B.856
 Short v. Treasury Commissioners,(1948) A.C.534

Module 3: Memorandum of Association, Article of Association and Prospectus

16 lecture hours
 Memorandum of Association: Need, Contents of Memorandum, Printing and Signing of
Memorandum. Name Clause, Object Clause, Registered Office Clause, Capital Clause and Liability
Clause and Procedure for alteration.
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  Doctrine of Ultra Vires – its origin, erosion and evasion, consequences of an Ultra Vires transaction
 Articles of Association: Contents, Relation with Memorandum,
 Doctrine of Constructive Notice and Doctrine of Indoor Management – Turquand Rule – origin,
application and exceptions
 Prospectus: Definition, Contents, Red-Herring Prospectus, Shelf Prospectus, Remedies for
misrepresentation in Prospectus: Civil and Criminal Remedies, filing of prospectus with SEBI
Case Laws:

 Society of Motor Manufacturers and Traders Ltd v Motor Manufacturers and Traders Mutual
Insurance Co Ltd., (1925) 1 Ch 675
 Orissa Chemicals and Distilleries (P) Ltd., re, AIR 1961 Ori 62
 Mackinnon Mackenzie & Co, re(1967) 1 Comp LJ 200
 Re Jon Beauforte Ltd. [1953] Ch. 131
 Ashbury Railway Carriage & Iron Co. Ltd. V. Riche (1875) L.R. 7 H.L.653
 Dr Lakshmanaswami Mudaliar A. v. LIC (1963) Comp LJ 248
 Bell Houses Ltd. V. City Wall Properties Limited (1966)
 Royal British Bank v. Turquand (1856) 119 E.R.886
 Howard v. Patent Ivory Co (38 Ch. D156)
 Anand Bihari Lal v Dinshaw & Co., AIR 1942 Oudh 417
 Ruben v. Great Fingall Consolodated,1906 AC 439
Module 4: Shares and Debentures 10 lecture hours
 Types of securities investment, Share, stock, stock option, share warrant
 Kinds of Share Capital, Member- who may be a member
 Statutory Restrictions on Allotment, General Principles as to allotment, Private Placement of
Shares, Certificate of shares, Object and effect of share, Transfer of shares- Restrictions on transfer
of shares.
 Issue of shares at Discount, Sweat Equity Shares, Issue of shares at Premium
 Forfeiture of Shares, Surrender of Shares, transfer and transmission of shares
 Debentures- Definition, Kinds and differences between shares and debentures
Case Laws:
 Pramatha Nath Sanyal v Kali Kumar Dutt AIR 1925 Cal 714.
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  Sundaram Finance Service & Ltd. v. Grandtrust Finance Ltd. (2003) 42 SCL 89 (Mad.)
 Peek v. Gurney (1873) LR 6 (HL) 377
 SEBI v Sterlite Industries (India) Ltd. [2004] 45 SCL 475 (Bom).
 Aska Investment Pvt. Ltd. v Grob Tea Company Ltd. [2005] 61 SCL 134.
 Advanced Medical Optics India P. Ltd., In Re. [2009] 150 Comp. Cas. 230 (Kar.)
 JK Industries Ltd. v Union of India [2007] 80 SCL 283.
 Mathrubhumi Printing & Publishing Co. Ltd. v. Verdhaman Publishers Ltd. [1992] 73 Comp. Cas.
80
 McDowell & Co. Ltd. v. Shaw Wallace & Co. Ltd. (2002) 35 SCL 444
Module 5: Meetings of a Company 6 lecture hours

 Meetings – Kinds of meetings- annual, extraordinary general meeting, Board of Directors meeting
 Procedure and requisites of a valid meeting Notice, Quorum, Adjournment, Proceedings, Voting,
Proxy
 Resolutions – kinds, circulation of members’ resolutions, resolutions by circulation, minutes
Case Laws:
 Tapan K. Chowdhury Vs. Registrar of Companies, (2003) 55 CLA 80
 T. V Mathew Vs. Nauokkara Agro Processing Co. Ltd, (2002) 46 CLA 101
 Pranchi Insurance Company Ltd. Vs. Chaudhary Madhusudan Das, (1964)2 Comp.L.J.157
 Rajpal Singh Vs. State of UP (1968) 1 Comp .L. J

 Madan Gopal Dey Vs. State of West Bengal, AIR 1968 Cal 79

Mode of Evaluation: The theory and practical performance of students are evaluated separately.

Theory
End Term
Components Internal
Examination(ETE)
Marks 40 60
Total 100

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Internal Component CAT Company’s Document Drafting Exercise /
Case Presentation and Submission
Marks 20 20

Internal Component
A. Document Review
It shall be an exercise based on group activity (comprising of 05 to 06 students) but assessment shall be
done on individual basis. In this exercise the assessment shall be done based on the drafting documents,
and examination of the same, the contents of the legal provisions in the documents. All the details shall be
periodically evaluated after proper consultation with the concerned faculty. The exercise has been divided
into 2 Phases starting from 15.08.2017 to 15.11.2017.
The Drafting of documents shall be divided into the following stages:-
 Incorporation of Company
 Raising of capital of the Company
 Organising Company meetings and Appointment of officials to run the company

The nature of the documents to be drafted are indicated (may be modified as per your requirement) in the
table below:
Stage No. Details of the Documents Drafted Submission Dates
1. MOA
2. AOA
3. Application for Finalising the name of the
Company
Stage 1
4. Power of Attorney by Company in favour of
(Incorporation
Directors
of Company)
5. Notice of Registered Address
6. Statutory Declaration
7. Certificate of Incorporation

1. Share Certificates;
Stage 2 2. Private Placement Offer
(Raising of 3. Share Transfer and Share Purchase Agreement;
capital of the 4. Share Application;
Company) 5. Notice of Allotment;

Stage 3 1. Convening an Extraordinary General Meeting;

(Organizing 2. Resolution adopted in Extraordinary General
Company Meeting;
meetings and 3. Voting by Postal Ballot;
Appointment 4. Voting By Proxy;
of officials to 5. Minutes of Meeting;
run the
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 company)

FINAL SUBMISSION (Compiled Report of all the phases)

Assessment Criteria
Components Marks
Drafting and veracity of the documents 05 marks
Content 10 marks

Reference used and nature of research undertaken 03 marks

Consultation 02 marks

TOTAL = 20 marks

B. Case Presentation and Submission

Each student undertaking the case presentation shall be required to make a PowerPoint presentation. The
power point presentation shall be made in the class and the presenter shall have to submit the slide one day
in advance to the faculty member so that it may be circulated amongst the audience. The scheme of
evaluation shall be as follows:

Assessment Criteria
Components Marks
Narration of facts 05 marks
Analysis of the issues 04 marks

Ability to answer questions 04 marks

Presentation of the slide 07 marks

TOTAL = 20 marks

The topics for case presentation have been provided hereunder:

Admission Student
Sl. No. Case Details
Number Name

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1. Salomon v A Salomon and Co Ltd [1897] AC 22

2. Lee v. Lee’s Air Farming Ltd.(1961) A.C.12 (P.C)

State of U.P. and Ors. v. Renusagar Power Co. and

3.
Ors. AIR 1988 SC 1737

Erlanger v. New Sombrero Phosphate Co. (1878) 3

4.
App. Cas. 1218

Needle Industries (India) Ltd. v Needle Industries

5. Newey (India) Holding Ltd. [1981] 51 Comp. Cas.
743

6. Royal British Bank v Turquand [1856] 6 E & B 327

Ashbury Railway Carriage and Iron Co. Ltd v. Riche

7.
(1875) 44 LR 7 HL 653

Official Liquidator v Velu Mudaliar [1938] 8 Comp.

8.
Cas 7

Radhabari Tea Company Private Limited v. Mridul

9. Kumar Bhattacharjee and Others [2010] 153 Comp
Cas 579

Sahara India Real Estate Corporation Limited & Ors.

10. v. Securities and Exchange Board of India & Anr
(2011)

DLF Ltd vs Securities & Exchange Board of India

11.
(2012)

SEBI v Sterlite Industries (India) Ltd. [2004] 45 SCL

12.
475 (Bom)

Mathrubhumi Printing & Publishing Co. Ltd. v.

13. Verdhaman Publishers Ltd. (1992) 73 CompCas 80
Ker

JK Industries Ltd. v Union of India (19 November,

14.
2007)

Central Bank of India v. Asian Global Ltd., (2010)

15.
11 SCC 203

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 National Small Industries Corpn. Ltd. v. Harmeet
16.
Singh Paintal, (2010) 3 SCC 330

Cyrus Investments Pvt. Ltd. & Anr. v. M/s. Tata

Sons Ltd. & Ors c.p. No. gu
17. 241,,242,244NCLT/MAHI z0rc available at
www.nclt.gov.in/Publication/Mumbai_Bench/2017/3
97_398/Tata%20Sons%20Ltd..pdf

Sudhir Gopi v. Indira Gandhi National Open

18.
University (2017)

19. Rajeev Saumitra v. Neetu Singh (2017)

LESSON PLAN

Fall 2015-2016
BAL 513 (CORPORATE LAW - I)
B.A. LL. B FIFTH
SEMESTER

Faculty Name: Mr. Victor Nayak

Reference
Lecture Learning Topics and Sub Course Total
Chap./Sec.
No. Objectives Topics to be covered Module Lectures
(Book)

To develop an Case law discussion of

understanding Salomon, Lee’s Air
1.
of the Farming and Kondoli
importance of Tea Leaves Case
company as a Concept of Corporate
2.
form of Personality
business Theories of Corporate T1
3.
enterprise; Personality MODULE 1 11 Chapter 2 and
Concept of Corporate 3
4.
To provide an Veil
insight in the Piercing the corporate
5.
functioning of veil
the companies Piercing the corporate
6.
and the key veil
7. managerial Piercing the corporate
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 veil
Company and other
8.
business entities
9. Kinds of Companies
personnel of Kinds of Companies –
10.
the OPC
organization. Kinds of Companies –
11. Holding and
Subsidiary; other types
Steps to incorporate a
12. company; relevant
forms and process
To develop an
13. understanding Role of promoters
of the
Duties, Powers and
14. importance of T1
liabilities – Promoter MODULE 2 05
company as a Chapter 4
Liabilities of promoters
form of
15. and Pre-incorporation
business
contracts
enterprise;
Incorporation and
16. Commencement of a
company’s functioning
To portray the Memorandum of MODULE 3 16 T1
applicability of Association: Need, Chapter 5, 6
17.
the doctrines Contents of and 7
in context of Memorandum
the changing MOA: Name Clause,
dimensions of Object Clause,
18.
the company Registered Office
legislation Clause
Object Clause and
19.
Doctrine of Ultra Vires
Object Clause and
20.
Doctrine of Ultra Vires
Effect of ultra vires
21.
transaction
Capital Clause and
22. Liability Clause and
Procedure for alteration
Articles of Association:
23. Contents, Relation with
Memorandum
Doctrine of
24.
Constructive Notice
25. Doctrine of Indoor
Management –
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 Turquand Rule –
origin, application
Doctrine of Indoor
Management –
26.
Turquand Rule –
exceptions
Prospectus:Definition,
27.
Contents
Prospectus:Definition,
28.
Contents
Prospectus:Sample
29.
copy of prospectus
Red-Herring
30. Prospectus, Shelf
Prospectus
Procedure of filing of
31.
prospectus with SEBI
Remedies for
misrepresentation in
32.
Prospectus: Civil and
Criminal Remedies
Remedies for
misrepresentation in
33.
Prospectus: Civil and
Criminal Remedies
Types of securities
investment, Share,
34.
stock, stock option,
share warrant
Kinds of Share Capital,
35. Member- who may be a
member
Restrictions on
  Allotment, General
36. To provide an Principles as to T1
insight in the allotment MODULE 4 10 Chapter 9, 10
manner of General Principles as to
37. 12
functioning of allotment
the companies Private Placement of
38.
Shares
Certificate of shares,
Object and effect of
39. share, Transfer of
shares- Restrictions on
transfer of shares
40. Restrictions on transfer
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 of shares; Forfeiture of
Shares, Surrender of
Shares
Transmission of shares;
Issue of shares at
41.
Discount, Sweat Equity
Shares
Issue of shares at
Premium; Debentures-
42.
Definition, and
difference from shares
43. Kinds of debentures
Meetings – Kinds of
44.
meetings and purpose
Types of meetings
Annual, extraordinary
45.
general meeting, Board
of Directors meeting
Types of meetings
Annual, extraordinary
46.
To provide an general meeting, Board
insight of Directors meeting
T1
in the manner Steps to hold a valid
MODULE 5 06 Chapter 16, 17
47. of meeting – notice,
and 18
functioning of quorum, proxy
the companies Steps to hold a valid
48. meeting – adjournment
and voting
Resolutions – kinds,
49. circulation of members’
resolutions
Resolutions by
50. circulation; Minutes of
meetings
51. REVISION

Examination Syllabus

Examination Nature Syllabus

CAT-I Module 1
CAT-II Module 2, 3 and 4
ETE Module 1, 2, 3, 4, 5 and 6

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Relationship between the Course Outcomes (COs) and Program Outcomes (POs)
Mapping between COs and POs
Mapped
Sl. No. Course Outcomes (COs) Programme
Outcomes
Understand viability of various forms of company in
1 1, 3
doing business
Learn the process of incorporation of companies as laid
2 1, 3
down under the Companies Act 2013
Analyse the applicability of the common law doctrines in
3 context of the changes brought in by the Companies Act, 1, 2
1= 2013. addre
ssed to
Understand the role of directors and key managerial
small 4 personnel in companies and discuss duties imposed by the 1, 2, 5
new Companies Act on them.

Develop the argumentative and research skills required of

5 a professional in corporate litigation. 1, 2, 5

extent
2= addressed significantly
3=major part of course

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 BBL/BAL- 513
Corporate Law-I
3
1

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Integrate Theory, Doctrine and Practice

2
2
Quest for Research and Inquiry

2
3
4 Develop Ethical, Social and Professional Understanding

Commitment for Scholarly engagement and societal reform

2
5

Ensure Professional Preparation

 Model Question Paper

Galgotias University, Greater Noida

School of Law
End Term Examination
BA/BBA LLB (H) [IIIrd Year][Vth Semester][2016]

Course Name: Corpoarate Law - I Max Marks: 100

Course Code: BAL/BBL 513 Time: 03.00 hrs.

Instructions: Attempt all sections.

Section A (20 Marks)
Q.1 (a) How many Directors of a Company retire every year by rotation at the AGM?
(b) In which case the Doctrine of Indoor Management was evolved?
(c) What is a Red-Herring Prospectus?
(d) How many Woman Director/s are mandated by the Companies Act, 2013 for the Board of
Directors of a Company?
(e) What is the effect of an Ultra Vires transaction?
Section B (20 Marks)
Q. 2 “Separate legal entity of a company is bedrock of the whole company law and piercing the
corporate veil of a company is permissible only in exceptional circumstances”. Critically analyze
the statement in light of various provisions of the Companies Act providing for personal liability
upon Directors of a company. Also, discuss the judicial exceptions to the rule.
Q.3 (a) Who is a Promoter? Briefly point out his position in a company.
(b) Identify the differences between the MOA and AOA of a company.
Section C (30 marks)
Answer any two of the following:
Q.4 “It is the duty of Directors of companies to use their best exertions for the benefit of those whose
interests are committed to their charge, and that they are bound to disregard their own private
interests whenever a regard to them conflicts with the proper discharge of such duty”. Critically
examine the statement in light of duties imposed upon directors by the Companies Act, 2013.
Q.5 A Company is empowered under its MOA “to make and supply gas, to manufacture and sell
residuals arising from gas making, and to provide such apparatus, materials, etc. as may be
necessary for its purposes”. It requires caustic soda to convert a particular residual into a
marketable product, and therefore purchased it from outside manufacturers for a number of
years. Therefore the company resolved to manufacture it in its own factory. Is the company’s
action Ultra Vires? Decide with the help of judicial precedents. Point out the implications of ultra
vires transactions.

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Q.6 Y Ltd. issued a prospectus stating that the money received from public would be converted into
debentures and would be used by the company for construction of new buildings and for
developing business of the company. It was later found out that the company used the money for
paying off its liabilities. Decide whether the company and its directors would be liable for mis-
statements in prospectus. Also, identify the provisions under which the Directors would be
personally liable for such acts.
Section D (30 marks)
Q. 7 “The AOA of a Company authorized its Board of Directors to borrow such sums as are authorized
from time to time by resolution of the members at general meetings and to issue bonds signed by
two directors. P and Q, two directors of the company borrowed Rs. 50 lakhs from TBI bank and
issued bonds in the name of the company though no resolution had been passed by the members.
Can ABC Company be made liable on the bonds to the TBI bank? Refer to decided cases.
Q.8 A and B, who constitute a partnership firm sell 1000 sq. yds. of land belonging to the firm to a
private company, X Y Pvt Ltd, which they formed. They claimed exemption from stamp duty on the
ground that it is a sale by them in one name to themselves under another name. Will they
succeed? Decide with the help of relevant case laws.

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