Board of A Ltd exercised the power to sell its whole undertaking in Ab Ltd its subsidiary through nb...........

Companies Act-Phase (I & II) Board-powersandMeetings

Board of A Ltd exercised the power to sell its whole undertaking in Ab Ltd its subsidiary through a consent of the Company vide an ordinary resolution. Later it was discovered in 4 months that the situation warranted a special resolution. Owing to the same, the title of the purchaser of the undertaking was brought into question. Is the treatment correct.

Yes, the title of the purchaser is invalid if the Company fails to provide a special resolution where needed under Companies Act

No, as the title of the purchaser is free from any defect in procedure of approval provided the purchaser has made purchase in good faith

Yes, as the decision taken relates to sale of undertaking hence the same is void ab initio and doctrine of indoor management doesn’t protect outsiders

No, as any suit for this sale transaction is time barred as per the Statute of Limitations applicable to such case

Cannot be determined

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Explanation:

Restriction on powers of Board According to Sec 180 (3) Nothing contained in clause (a) of sub-section (1) shall affect—

(a) the title of a buyer or other person who buys or takes on lease any property, investment or undertaking as is referred to in that clause, in good faith; or

(b) the sale or lease of any property of the company where the ordinary business of the company consists of, or comprises, such selling or leasing.