APPLICABILITY OF DUOMATIC PRINCIPLE APPLICABLE IN INDIAN CONTEXT

In civil  appeal no. 2776 OF 2022 in the matter of MAHIMA DATLA VERSUS DR. RENUKA DATLA & ORS. Supreme Court of India held that Duomatic Principle is applicable even in the Indian context. Strict adherence to a statutory requirement may be dispensed with if it is demonstrated any act that the members of a company can do by formal resolution in a general meeting is done with the consent of all the members of the Company. Although this Principle is only applicable in those cases wherein bona fide transactions are involved in case of fraud this principal is a clear exception.

The Duomatic Principle can be briefly stated as “anything the members of a company can do by formal resolution in a general meeting, they can also do informally, if all of them assent to it.”

This Principle was derived from the decision In Re: Duomatic Ltd., [1969] 2 Ch. 365, wherein Buckley, J. held as under: “where it can be shown that all shareholders who have a right to attend and vote at a general meeting of the company assent to some matter which a general meeting of the company could carry into effect, that assent is as binding as a resolution in general meeting would be.”

Lord Devey in the matter of Salmon v. Salmon Co. Ltd., [1897] AC held that, wherein it was held that “a company is bound in a matter intra vires by the unanimous agreement of its members”

Supreme court said that the aforesaid Principle emanating from Salmon’ Case (supra) has found its utility across various aspects of company law such as Duomatic Principle, Doctrine of Indoor Management, etc. This Principle having its origin in common law, is applicable even in the Indian context.

While taking note of observation made by in the matter of Bowthorpe Holdings Ltd. v. Hills, [2002] EWHC 2331 (Ch) supreme court held that application of Duomatic Principle is only applicable in those cases wherein bona fide transactions are involved. Fraud is a clear exception to application of these principles, be it Duomatic Principle or Doctrine of Indoor Management.

The thrust of the Duomatic Principle is that strict adherence to a statutory requirement may be dispensed with if it is demonstrated otherwise on facts, if the same is consented by all members.


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