ROUGH DRAFT FOR COMPANY LAW PROJECT ON THE DOCTRINE OF CONSTRUCTIVE NOTICE PRELLIMINARY STAGE CONTENTS
Historical Analysis: A Preview Of The Doctrine Of Constructive Notice The doctrine of constructive notice owes itâ€™s origins to the United Kingdom where it was evolved on the demands of the companies so as to protect their interest against the dealings with third parties, The historical background of the doctrine is divided into two parts which is before and after 1855, since the concept of limited liability was made applicable in this year, that time unlimited liability concept of shareholders ended and thus there was an urgent need felt to safeguard the companies liability. â€œIn that they presumed to have knowledge of companyâ€™s document filed with the registrar, which are open to public for inspection and with the right to have certified 9 copies of relevant extract from them. Section 610 of our Companies Act 1956 contains this provision, irrespective of the fact, whether the third parties have the knowledge or not.â€ Constructive notice refers to a legal fiction so that in a case concerning a person that person is deemed or construed to have prior information about the case even if he does not, however later it was understood that is such a procedure is to be followed than the law would be a little harsh on the less observant ones. The brutality of the Doctrine of Constructive notice is to some degree lessened by the ‘Tenet of Indoor administration’ or ‘Turquand’s Rule'. Initially the common law doctrine of constructive notice was laid in the case of Ernest v. Nichollsand it was further explained in the case of Mahony v. East Holyford Mining Co case, Master Wensleydale in Ernest case took the view that the tenets of organization would apply without the convention of helpful risk. The destination was to hold the shareholders obligated. The perception of Lord Wensleydale is not clear. Then again, it gives the idea that he appears to have recognized that it was to dodge this come about that the lawmaking body wanted to oblige an organization to enroll articles along these lines to make accessible the world data in order to make accessible to the world data in respect to who were the persons commissioned to tie the shareholders. Thus after itâ€™s initial years of explanation it became a valid point of argument for the third parties that the doctrine was still a bit harsh on them and the courts both in India and abroad grew reluctant about itâ€™s application. There grew to be many instances in which it was not practical enough to ascertain whether the sanctions for the companyâ€™s actions was there in the MOA and AOA or not and also the third parties were very fearful to ask the directors about it in the first place thus as a substitute the doctrine of Indoor management was culled out in the case of Royal Bank vs.
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