LexTURNER MORRISON AND CO., LTD. versus HUNGERFORD INVESTMENT TRUST LTD.
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
711
TURNER MORRISON AND CO., LTD.
v.
HUNGERFORQ INVESTMENT TRUST LTD.
March 9. 1972
B
. [K. S. HEODE AND K. K. :!VIATH.Ew, 11.]
Estoppti-P!omissory estoppel~cope of-App/lcab/ll:y of doctrlru.
I
Company Law--lncorp,orated CompanieJ-R'esidmu of-Ultra ~
CompfJIJ authorised by resolution ID dixhmge rax /iob/1/(y of JwldJiw
company to which dividends due not distribuud-lf ultra vires tht com-
C
p<Jny's powers.
· Limitation Ac(. 1963--S'ection
1S(S)~Applicability to lnC07pOrtllu
companies--Company-When can be said to be re:ridinll In In.di4 tl1ld
constqurntly noJ "absent" from the country.
The rule of estopple has gained new dimensions ln re~:ent years and
a new c)as5 of estoppel, vir. .• promis:sory estoppel hu come to be recoc-
D ni!l!d by Courts.
Where parties ent.:r into 111 ~greemeot which il in-
tenlk!d to cte<~!e legal relations between them and in punuaooe of ax:h
arrangement om party make; a promise to the other which he kiiOII'S
wiU be acted on and which i5 in fact acted on by the pi'001isce, 1be
Court will treat the promise at finding on the promisor to the extent that
it will not allow him to act inconsi&ttntly with it ~ven allhoug!i m, ~
mise may not be supported by consideration in the strict .~. n21o,
I
723Cl
.
Hungerford Investment Co. owo:d hundred per c.ent shares.~~~
Morrison & Co. During the assessment yean 1939-~~ to v~.
the lat!er did not disrribute dividends and t~ undtstnbuted. dividc:Dds
were utilised by it as working ~apital. Jn all thoec yean tbe
111~
~utboriti~ took proceedings under s. 23-A ~f tho Income Tf ~!'gertord.
and the deemed dividenc4 were assessed 10. the handl 0 Turner Mor·
f
But, yur after yo:ar trom 1939 to 19S4, the Dtnecto!'.l ot 'ubi to JSk
rison PUled a resol~tion to the effect that it would be incqUitsel~ sboU!d
~UD&erford to pay the talt levied and that Tume~ Morruon ' b 'I\II1Ief
d~.~tharge that
liability. The rcaolutions were
U[P~~~r~e ~vidalda
,
MomSOQ by PlYinll aU the. taxes due from Hunger 0
than two and a
~
~n declared Hungerford would have got m~ were not debt~
,,.... tunea the talt paid on ita behalf.
Tho paymcn as debll dUtJ ftcm
0
~ the accoont of Hungerford; nor were they sh~~oer MorriJoD tude
UO.terford in the b~tlanoe 1hects. At no tune •
'd. 1o. 195~ tho
any dt:inand on Hungerford to r~imbune tho rn':J::!e.~r by ·~
~trol of T~I"'ICT· Morrison chang.ed hand•th4u liability' of HUoam_ .. ,1
... oer Morr110n under-toolc to dt.chuge
e
· n died • -
10 the extent of Ri. 46 lakhs. 14 1965 Turner r.~ult wu d!slllt.od·
~r~" Hunpford for recovery of thJ 'd' Pf~ the plea ot ~
It
Clio e 1•PilO:II ro thia Court Hunaeth· Of It ra rcsoiU4ioP• w~!"
of d'l.
pPe • Turner Morrbon ur~ at
1
rcprcJCJ~tat.iOIII
lbeY
~
1~« to do aomcthlng In future; they ~ere not anY C()QiidentlOO. r tb8
nd. at those promise• were nor .upportcd 'jr gerford arsued ·~
•t!or~d no ltaal bula to reslat the c:lalm.
~pOl'~ by eoliSid
~rom,'« malt: under ~~ rc.solut1ons wcro au
.
712
SUPREM'E COURT REPORTS
[1972] 3 S.C.R.
in as mu~~ as Hungelrford, in response to those promises, refrained .. from
enforc!ing the right to hav~ the profits distributed as dividends.
Held, that by acting on the basis of. the representation made by
Turner Morrisott Hungerford placed itself in a disadvantageous position,
and therefore, the pleas of promissory estoppel had to be sustained. [122B-CJ
Union of India v . .Indo Afghan Agencies Ltd., {1968] 2 S.C.R. 366,
Central London Property Trust Ltd. v. High Trees House Ltd., ~19471
1 K.B. 130, Combe v. Combe, [1951] 2 K.B. 215, Tool Metal Manu-
facturing Co. Ltd. v. Electric Co. Ltd., [1955] 2 All B.R. 657 and Robu-
ton v. Minister of Pensions [1949] 1 K.B. 227, referred to.
It was urged on beh:ili of Turner Morrison that the authority given
to it to discharge the tax liabilities of Hungerford were ultra vires its
powers and, therefore, provided no legal basis to resist the plain, claim,
Held, that Turner Morrison had not acted ultra vires its powers. The
nondistribution df the dividents had augmented the working capital of the
company thus affording it facility to earn more profits. Any step tak~n
to augment the working capital of the company was undoubtedly inci-
dental to the business of the company and, further, tm same was not for
the attainment of ~e objects mentioru:d in the memorandum. When
Turner Morrison paid the tax due from Hungerford, in substance, though
not in form, it was distriExcerpt shown. Read the full judgment & AI analysis in Lexace.