Business Law

Case Study
Analysis

By-

Team 01:

Name:

Banner
Id:

Divansu Dinesh
Bansal
Shashank Tambre

@0316571
1
@0316483
4
@0316482
1
@0317484
9
@0316481
3

Kunal Lal
Syed Abdul Ahad
Bharath Kalkur

CASE STUDY 1:
Case:
Sri Ganeshan was the director of a company. He was also
one of the managing agents. The articles of the company
authorized the directors to borrow money and further it
provided a clause that the board of directors can
delegate any one director or more also. Mr. Ganeshan
borrowed Rs.10 lakhs from a bank. The bank did not
verify whether any resolution had been passed
authorizing Mr. Ganeshan to borrow money. Actually the
resolution was not made. On this ground the company
refused to be liable for the payment of this loan. Examine
whether the company is bound or not.

A N A LY S I S A N D I N T E R P R E TAT I O N :
S C E N A R I O 1 : T H E C O M PA N Y I S B O U N D T O R E PA Y T H E L O A N .

The company is bound to repay the loan as there is a clause in the articles of
association giving power to the board of directors to borrow money and also delegate
any one director or more. Since the company has mentioned this clause in its AOA
and banker would be unaware of the resolution had actually been passed or not, they
have right to collect the repayment of loan from the company. Moreover, the bank can
prove that Ganesh had been delegated by the BOD members and he had the authority
to take the loan on behalf of the company. Therefore, the organization is liable to pay
to pay to the bank.
The banker of any bank, nationalized or non-nationalized is expected to act and
discharge their duties in accordance with the rules and regulations of the bank. Acting
beyond ones authority is by itself a breach of discipline, trust and misconduct. In the
above case we have already determined that Mr. Ganeshan had the power to take the
loan Rule which forces the bank manager to sanction a loan to him. Since the banker
has successfully performed his duties with utmost good faith and without any
fraudulent intention. Hence, the company is liable to repay the loan taken.

SCENARIO 2:

T H E C O M PA N Y I S N O T B O U N D T O
R E PAY T H E L O A N

The company is not liable pay as any B.O.D member is not authorized to take a personal
loan acting on behalf of the company for his own benefit irrespective of any resolution
passed or not. The banker must always take special care with granting a loan with respective
to the beneficiary of the amount. The banker has a duty to properly check with the company
rules and policies before issuing any loan as well. Since we can clearly identify that the
banker has failed to do so, he can be supremely held responsible and negligent of his duty.
Hence it is the banks duty to verify the order or demand as the bank failed to do the same
the company cannot be held responsible and with sufficient proof that no resolution was
made the bank has no right to demand payment.
Thus, the banker is liable and company has no liability related it the repayment of the loan.

ANOTHER ASPECT TO THE CASE

W OULD BE AS FOLLOW S:
The company is not bound to repay the loan taken by Ganesh although there is a clause
in the company that states that board of directors can take a loan. If Ganesh had
submitted the documents for the loan in the name of the company and the company
approved the loan, only then is the company liable to pay the loan. If it is the banks fault
to have sanctioned the loan even though it was not sanctioned by the company then the
company cannot be held responsible. As it is not clear as to what were the documents
submitted by Mr. Ganeshan to the bank, it is difficult to come to a conclusion as to who
is liable to pay the loan back. But most of the circumstances favors towards the
company

CONCLUSION:
In the above scenario the company is bound to pay the liability of the
loan to the bank. The justified act of the bank to grant loan to Mr.
Ganeshan is right in all sense and authority, due to this the liability does
not rest on the shoulders of the bank but on that of the company. In the
court of law proving such an act will not be that big of a problem as Mr.
Ganeshan would have signed off on behalf of the company making them
unaware of the amendments and authorizing the loan towards the lateral.
The basic law states that in the due course of the business any sort of
changes or amendments have to be duly informed to the bank
authorities. This further makes the company liable towards such an act.

CASE STUDY 2:
Case:
Mr. Ram was in a hurry to go the airport to catch a
flight and he hired a taxi run by capital Taxi Company
well known in that locality. Ram asked the driver to
drive fast. In the city there was a speed limit of 60
Kilometers per hour and driver rather reluctantly
drove quite fast at times 90 kilometers per hour to
reach the airport in time. As a result the driver lost
control and hit an obstacle and Ram was badly
injured. Ram filed a suit against the Taxi Company.

A N A LY S I S A N D I N T E R P R E T A T I O N :
S C E N A R I O 1 : T H E C A P I TA L TA X I C O M PA N Y I S L I A B L E T O PAY
RAM.
We think that it is the duty of the taxi driver to drop his client safety to the airport. In any given situation the taxi driver has a few responsibilities.
Such as:
Customer safety
No over charging
Good performance
If the driver fails to comply on any of these responsibilities then he is liable to pay compensation. Irrespective of what the customer has demanded i.e., drive
fast. The driver should follow the traffic rules established by the law and he is bound to obey the law. Since the accident has occurred due to over speeding
the driver should be held responsible. As the driver was negligent in performing his duty he is liable to compensate for the damages caused to the passenger
in the taxi.
Breach of Duty
A defendant is liable for negligence when the defendant breaches the duty that the defendant owes to the plaintiff. A defendant breaches such a duty by
failing to exercise reasonable care in fulfilling the duty. Unlike the question of whether a duty exists, the issue of whether a defendant breached a duty of
care is decided by a jury as a question of fact. Thus, in the example above, a jury would decide whether the defendant exercised reasonable care while
performing the act.

Scenario 2: The Capital Taxi Company is not liable to pay Ram.

In the mist of the case they implied agreement states that the parties that have entered into the contract
have three basis things to take care of:
Offer
Acceptance
Consideration
Performance
Every contract will have some implied rules and regulation, understanding this taxi driver will also be bound
by some bylaws and certain rules would be implied on the passenger as well. The outcomes of some
negligence cases depend on whether the defendant owed a duty to the plaintiff. Such a duty arises when the
law recognizes a relationship between the defendant and the plaintiff, and due to this relationship, the
defendant is obligated to act in a certain manner toward the plaintiff. A judge, rather than a jury, ordinarily
determines whether a defendant owed a duty of care to a plaintiff. Where a reasonable person would find that
a duty exists under a particular set of circumstances, the court will generally find that such a duty exists.

In the case involving the defendant driver of the taxi, and meeting with an accident and

causing injuries to the passenger. The first question that must be resolved is whether the
defendant owed a duty to the passenger. In other words, a court would need to decide
whether the defendant and the passenger had a relationship such that the defendant was
required to exercise reasonable care in handling the car and exercising his duty. If the
driver accepts to safely drop the customer to the airport then he certainly owes a duty but
since the passenger has implied undue influence of increasing the speed of the taxi to
reach the airport fast as he was getting late. Then the court can consider this fact that the
contract is invalid and would be less likely to find that the defendant owed a duty.
Initial ram offered the taxi driver to be able to reach the airport on time. In spite of the

driver knowing he will be unable to perform the task, he accepted the offer for a
consideration. Since the agreement should be a valid agreement and must follow the laws
established i.e. not to break rules and regulations in order to comply with the agreement
.as said in the case, he broke the rule of exceeding the speed limit with the consent of the
passenger hence this contract is an invalid contract. So the taxi driver is not under an
obligation to pay any amount of compensation towards the passenger.

C O N C LU S I O N

After analyzing all the facts in the given case its clear that the
passenger exercised undue influence to perform in manner that is
dangerous i.e., over speeding and impossibility to perform in a way
that would make him reach the airport on time without breaking
any traffic law. The driver should not have accepted the offer and
should have performed in such a way that is safe and responsible.
Nothing is greater than the law itself. Hence, the driver should have
performed his duty diligently without being influenced by Mr.
Ram. However, even Mr. Ram is responsible to some extent. Thus,
the damages claimed by Mr. Ram should be negotiated in such a
way that they both together share it.

REFERENCES:

1.

Findlaw, (2015). Elements of a Negligence Case - FindLaw.

Retrieved 26 January 2015, from
http://images.findlaw.com/optimost/accident-injury-law/elemen

2.
from

ts-of-a-negligence-case-2.html#sthash.1MpGDVTz.dpuf
Reserve Bank of India (2015). Retrieved 26 January 2015,
http://rbidocs.rbi.org.in/rdocs/Publications/PDFs/62574.pdf