Cases on Company Law

Company – Meaning and features

 1
During the war all the members of a
private company, while in general meeting,
were killed by a bomb. Does the company
cease to exist because all the members
died ? State reasons.
 2
A, B and five others are the only
shareholders of the fully paid-up shares of
a public company. A’s shares are sold in a
court auction and B purchases them.
Assuming that this fact is known to other
shareholders, what are the consequences
if the company continues to carry its
business thereafter ?
 3
M is the holder of nearly all the shares,
except one, of a timber company . He is
also a substantial creditor of the company.
He insured the company’s timber in his
own name. The timber having been
destroyed by fire, he claimed the loss from
the insurance company. Is the insurance
company liable to M ?
 4
Ram, a trader, carries on business under
the name of “Ram & Co. Ltd.,” without
being registered as a company with limited
liability under the Companies Act. Discuss
the consequences of Ram’s acts.
 5
Some persons owned a tea estate. They
formed a company, became its
shareholders and transferred their tea
estate to the company. They claimed
exemption from import duty on the ground
that they themselves were the
shareholders in the company and,
therefore, it was nothing but a transfer
from them to themselves under another
name. Is their contention valid ?
 6
5 persons are the only members of a
private company. All of them go in a boat
on a pleasure trip into the open sea. The
boat capsizes and all the 5 die being
drowned. Does the private company cease
to exist ?
 7
A husband and wife, who were the only 2
members of a private limited company, are
shot dead by dacoits. Does the company
also die with them ?
 8
The number of members in a public
company became reduced to 6 on 10th
November 2006. The company incurs
trade debts on 11th November,2006 ; 2nd
April 2007 ; 17th May 2007 and 10th
June,2007. How far are the remaining 6
members liable for the debts ?
 9
A and B sold a certain business to C and
agreed not to compete with him for 5
Years period. After 2 years they organised
a private limited company becoming the
principal shareholders and directors and
started a similar business. What right is
available to C ?
 10
A private company is registered with a
share capital of Rs. 5,00,000 divided into
5,000 shares of Rs.100 each. Of these
shares 4,999 are held by A and one share
is held by A’s wife i.e. B
Is the company legal? Comment on its
type..
 Yes as under The Companies Act,2013
one member can form a one person
company. So, A is right in his attempt.
 15
A public company was carrying on T.V
manufacturing business. On 1.1.17, the
membership of the company was reduced to
6. But the company continued the business
with 6 members. On 1.12.17 the company
took a loan of Rs.12 lacs from a bank.
Subsequently, due to depression in trade the
company went in liquidation, and the
company assets were not sufficient to pay its
outstanding liabilities.
Are members personally liable ?
• Yes, as the statutory minimum number of
members has fallen and the existing
members did not raise the number.
• So, under Lifting up the corporate veil
they will be liable as and when the liability
gets due.
 16
A construction company advertised a
scheme for booking of flats. Many people
deposited their hard earned money with
the company under scheme. The scheme
was operated with utter dishonesty and
fraud, and no flat was given under the
scheme. In this way, large no.of people
were deceived by the company.
Can the defaulters be held liable?
• Yes, the defaulters will be held liable as
the situation relates with Fraudulent
trading and the rule of lifting the corporate
veil applies here.