Surprise Ltd. was incorporated under the Companies Act, 2013. The memorandum of association of the company in its objects clause stated that the company was established to make and sell or to carry on the business of mec

In the case of a company whatever is not stated in the memorandum as the objects or powers is prohibited by the doctrine of ultra vires. As a result, an act which is ultra vires is void, and does not bind the company. Neither the company nor the contracting party can sue on it. The company cannot validate such an act even if every member's assent to it. The rule is meant to protect shareholders and the creditors of the company. If the act is ultra vires (beyond the powers of) the directors only but intra vires the Memorandum of Association, the shareholders can ratify it. If it is ultra vires the articles of association, the company can alter its articles in the proper way. The doctrine of ultra vires was first enunciated by the House of Lords in a classic case, Ashbury Railway Carriage and Iron Co. Ltd. v. Riche, (1878). The facts of the case were that the memorandum of the company in the said case defined its objects thus: "The objects for which the company is established are to make and sell, or lend or hire, railway plants............ to carry on the business of mechanical engineers and general contractors...". In this case, The House of Lords held that the contract was ultra vires the company and, therefore, null and void. In the given case, the prominent Ltd. will not succeed, since the contract itself was ultra vires.