DR. A. LAKSHMANASWAMI MUDALIARAND OTHERS vs LIFE INSURANCE CORPORATION

The Supreme Court held that the donation of Rs. 2 lakhs from the Shareholders’ Dividend Account by the United India Life Assurance Company was ultra vires, as the shareholders did not possess a proprietary interest in the account. The Court ruled that the right to dividends depended on the Directors' recommendation, and the resolution passed at the meeting did not constitute a binding contract due to lack of consideration. Furthermore, the Court clarified that the company's objects did not authorize such donations, as they were not expressly provided for in the Memorandum of Association, thus upholding the Tribunal's order for restoration of the amount to the Corporation under Section 15(1)(a) of the Life Insurance Corporation Act, 1956.