Analyze the following case and answer the following questions.
Shaky Engineering Ltd., an Indian company, which is into cement manufacturing, gave a loan of Rs 20 crs, to J.S. Construction, for helping them to buy two cement mixers for the construction work. J S Constructions failed to pay the interest and repayment instalments in time. Hence, Shaky Engineering filed a suit against J S Constructions. However at that time, Shaky Engineering Ltd, realized that the loan that was given was a transaction outside the scope of their Memorandum. To cover this up, the management of Shaky Engineering, called a meeting of the shareholders and passed a unanimous resolution to alter the memorandum of association and enter a new clause allowing the company to carry on the financing business. However, J S Constructions claimed “that the loan contract, when entered, was not within the scope of company’s object clause of the MoA and hence it was ultra vires the MOA. Further that a subsequent alteration in memorandum does not validate the ultra vires transaction.”
1.Decide whether a subsequent alteration in the Memorandum validates an utra vires transaction in the light of the decided cases.
2.Decide also whether J S Constructions can escape from its duty to pay the interest and principle.
3.Like Shaky Engineering, was there some lapse on side of J S Constructions too?