8 Corporate Law Case Brief - RC Cooper v. Union of India - Notes For Free PDF

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19/06/2020

Corporate Law Case Brief - RC Cooper v. Union of India - Notes For Free

JANUARY 24, 2018 BY ADMIN

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You can grab other case briefs on Corporate law from here. Facts: The government decided to nationalize 14 major commercial banks on 19th July, 1969. All commercial banks with a depositbaseover Rs.50 crores were nationalized Petitioners- shareholders, depositors and a director. Shareholders had to give up their shares at low values due to nationalization of banks. Arguments: Petitioner- 14, 19 and 31. The act lacked legislative competence The act interfered with guarantee of freedom of trade and commerce The act (and thus the acquisitions) was not made in public interest Petitioner’s value of investment reduced, right to receive dividends ceased; suffered nancial loss. ‘deprived of the right as a shareholder to carry on business through the agency of the company’ UOI- petition not maintainable because no fundamental right of the petitioner was directly impaired as he was not the owner of the property of the undertaking taken over. Test:

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19/06/2020

Corporate Law Case Brief - RC Cooper v. Union of India - Notes For Free

Whether shareholder’s rights impaired?-Not formal but qualitative test- if the State action impairs the right of the shareholders as well as of the company, the court will not, concentrating merely upon technical operation of the action, deny to itself jurisdiction to grant relief. Under the Constitution the extent of protection against impairment of a fundamental right is determined not by the object of the legislature nor by the form of the action, but by its direct operation upon the individual’s tights. Holding A company registered under the Indian Companies Act is a legal person, separate and distinct from its individual members. Hence a shareholder, a depositor or a director is not entitled to move a petition for infringement of the rights of the company unless by the action impugned his rights are also infringed. Challenging infringement of his own rights and not of the banks. Rights under article 19- an individual right of a shareholder as a citizen because his/her rights are equally and necessarily affected when the rights of the company are affected. The Act was held to be valid. However there were a few disproportionalities with regards to the fair sum of compensation, it was not considered to be a valid ground for repealing the act. The court orders the government to grant ‘just equivalent’ or ‘fair indemnication’ to the aggrieved parties. The nationalization was allowed. You can grab other case briefs on Corporate law from here. 

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C O R P O R AT E L AW , L AW S C H O O L N O T E S

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