Could you explain with certain citations indicating exceptions to the Majority Rule Held in Foss Vs Harbottle (1843) 2 Hare 461 (Ch.)?

CS Professional · Corporate Restructuring, Insolvency, Liquidation & Winding-up · PYQS · June 2021
Could you explain with certain citations indicating exceptions to the Majority Rule Held in Foss Vs Harbottle (1843) 2 Hare 461 (Ch.)?

Answer & Explanation:

No need to take the views of majority if there is allegation of ultra vires acts by the Management held in Dhaneswari Cotton Mills Ltd. v. Nilkamal Chakravarthy [1937] 7 Comp. Cas. 417 (Cal) . Similarly, the allegation of fraud is an exception as was held in Cook v. Deeks (1916)1AC 554 (PC) . Where majority is wrongdoer and pocket property of company, an individual shareholder has right to file a suit. Menier v. Hooper's Telegraph Works (1874)9 Ch. App. 350 (CA) . A minority of shareholder in saddle of power cannot be allowed to pursue a policy of venturing into a litigation to which the majority of the shareholders were opposed. Life Insurance Corp of India v. Escorts Ltd (1986) 59 Comp Cas. 548 (SC) . Nevertheless, the principle of Majority Rule prevails normally as held in Foss Vs. Harbottle [1843] 2 Hare 461 (Ch.) until and unless proved beyond doubt the exceptions.

Topics: Company Law

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