The basic principle of non-interference with internal management of company by the court was laid down in a celebrated case of Foss Vs. Harbottle. Discuss the rule with its exceptions.

The Company Law provides for adequate protection for the minority shareholders when their rights are trampled by the majority. However, the protection of the minority is not generally available when the majority does anything in the exercise of their powers for internal administration of a company. The court will not usually intervene at the instance of shareholders in matters of internal administration, and will not interfere with the management of a company by its directors, so long they are acting within the powers conferred on them under the Articles of the company. In other words, the Articles are the protective shield for the majority of shareholders who compose the Board of directors for carrying out their object at the cost of minority shareholders. The basic principle of non-interference with the internal management of company by the court was laid down in a celebrated case of Foss vs. Harbottle that no action can be brought by a member against the directors in respect of a wrong alleged to be committed to a company. The company itself is the proper party of such an action. However, the rule in Foss vs. Harbottle is not absolute but is subject to certain exceptions. In other words, the rule of supremacy of the majority is subject to certain exceptions and thus, minority shareholders are not left helpless, but they are protected by; The common law and The provision of the Companies Act, 2013 The cases in which the majority rule does not prevail are commonly known as exceptions to the rule in Foss vs. Harbottle and are available to the minority. In all these cases an individual member may sue for declaration that the resolution complained of is void, or for an injunction to restrain the company from passing it. The said rule will not apply in the following cases: Ultra Vires Acts: Where the directors representing the majority of shareholders perform an illegal or ultra vires act for the company, an individual shareholder has right to bring an action. The majority of shareholders have no right to confirm an illegal or ultra vires transaction of the company. In such case a shareholder has the right to restrain the company by an order or injunction of the court from carrying out an ultra vires act. Fraud on Minority: Where an act done by the majority amounts to a fraud on the minority; an action can be brought by an individual shareholder. Wrongdoers in Control of the company: If the wrongdoers are in control of the company, the minority shareholders' representative action for fraud on the minority will be entertained by the court. Resolution requiring Special Majority but is passed by a Simple Majority: A shareholder can sue if an act requires a special majority but is passed by a simple majority. Simple or rigid, formalities are to be observed if the majority wants to give validity to an act which purports to impede the interest of minority. Personal Actions: Individual membership rights cannot be invaded by the majority of shareholders. It is to be noted that shareholder is entitled to all the rights and privileges appertaining to his status as a member. Breach of duty: The minority shareholder may bring an action against the company, where although there is no fraud, there is a breach of duty by directors and majority shareholders to the detriment of the company. Prevention of oppression and mismanagement: The minority shareholders are empowered to bring action with a view to preventing the majority from oppression and mismanagement.