The articles of XYZ Ltd. contained a clause that on the bankruptcy of a member his shares would be sold to other persons and at a price fixed by the directors. Kush, a shareholder was adjudicated bankrupt. His trustee in

The memorandum and articles constitute a contract binding on the members of the company. The members, as members, are bound to the company. Each member must, therefore, observe the provisions of the memorandum and articles. Each member is bound by the covenants of the Memorandum as originally made and as altered from time to time [Malleson v. National Insurance Co.]. In another case, the shareholders could not enter into an agreement which was contrary to or inconsistent with the articles of association of the company [V.B. Rangaraj v. V.B. Gopalkrishnan (1992)] In Boreland's Trustee v. Steel Brother and Co. Ltd. (1901), the articles of a company contained a clause that on the bankruptcy of a member his shares would be sold to other persons and at a price fixed by the directors. B, a shareholder was adjudicated bankrupt. His trustee in bankruptcy claimed that he was not bound by these provisions and should be at liberty to sell the shares at their true value. It was held that the trustee was bound by the articles, as the shares were purchased by B in terms of the articles. In view of the above, the claim of trustee of Kush is not valid.