New RBI Grade B 2025 Notification will come Soon! Enroll Here

    Question

    From which famous case law the rule of “Majority shall

    prevail” was inferred?
    A Reylands v Fletcher Correct Answer Incorrect Answer
    B Mohinibibis v Dharmodas Ghose Correct Answer Incorrect Answer
    C Shanti Prasad Jain v. Kalinga tubes Correct Answer Incorrect Answer
    D Foss v Horbottle Correct Answer Incorrect Answer

    Solution

    The principle of the ‘Majority Rule’ was recognized in the landmark case of Foss v Harbottle (1843).  As a general principle laid down in Foss v Harbottle, where it is alleged that a wrong has been done to the company then proper claimant in such an action is the company itself; as the company is a legal entity having its own separate identity apart from its members. Where the company is competent to settle the alleged wrong itself or, the company is competent to ratify or condone an irregularity by its own internal procedure, then no individual member may bring action Shareholders individually do not have the right to institute a suit against the wrongdoer of the company .

    Practice Next

    Relevant for Exams: