INCORPORATION OF COMPANY AND MATTERS INCIDENTAL THERETO
Provisions of the Companies Act, 2013:
Section 10: Effect of Memorandum and Articles.
[Section 10 is not yet brought to force]
Corresponding provisions of the Companies Act, 1956:
Corresponding provisions of the English Companies Act, 2006
This provision is applicable to all companies.
This section provides that the provisions contained in the memorandum and articles of association of a company shall be binding on the company and each of the members thereof. It is to be treated in the same manner as if a contract signed by the company and each of its members.
Thus, contents of articles of association shall be observed by members and the company, as if an agreement signed by and between them.
Articles of association does not constitute an agreement between the company and outsiders or third parties.
However, while dealing with or entering into contract with a company, outsiders or third parties shall consider provisions of memorandum and articles of association of the company, as there may be provisions in it relating to the subject matter for which it deals with the company. For example, Articles may provide that where a dispute arises between the company and contractee party, such dispute shall be referred to arbitration. [Ganges Sugar Works Ltd. v. Nuri Miah 28 Ind Cas 384 All; AIR 1915 All 234].Â In Kotla Venkataswamy Mukherjee v. Rammurthy,
It further provides that all moneys payable by members to the company shall be debt due from him to the company.