This case is authorized for the proposition that a registered company’s capacity is restricted to the transactions set forth in the objects clause of the memorandum other transactions are ultra vires and therefore null and void.
Discuss
In this case the transaction in question i.e. purchase of concession and construction of railways was not authorized by the objects and was therefore declared ultra vires.
• This case interpreted the doctrine of ultra vires very restrictively thereby limiting corporate capacity.
• However, in Attorney General V. Great Eastern Railway Co. it was held that a transaction reasonably incidental to the attainment or pursuit of the objects of the company was Ultra Vires the company. In the words of Lord Selbourne “whatever may be regarded as fairly incidental to or consequential upon”
• The second aspect of ruling relates to ratification of an ultra vires transaction. In Ashburys case although members in general meeting purported to ratify the transaction it was held that the ratification had no legal effect since the transaction was void. This ruling is correct in that a void transaction is incapable of ratification. This principle was upheld in Rolled Steel Products (Holdings) Ltd V. British Steel Corporation and Others (1986) where Slade L. J. was emphatic that an ultra vires transaction cannot be rendered intra vires by ratification, delay acquiescence estoppel or lapse of time.
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