Credit Card is one of popular payment method now days. Using credit card, we only bring a card whenever we go without bringing money cash. Few years ago, one had to bring traveler check when they were traveling, but now days, through improvement of Technology Information, live change so much. We can find ATM easily world wide and report to the Bank when our credit Card is stolen by thief.
Credit card is managed by international management so that the credit card can implement around the world no difficulties. Almost banks around the world can publish credit card, as City Bank, HSBC credit card, American Express credit card and others. Now days, people tend to require credit card to pay every day life, shopping in the store, or making transaction on line.
The improvement of Internet Technology, also motivate people join business on line. They can choose master card, visa card or Pay Pal.
Because of many fraud on transaction on line, people chase to create security in order payment on line save.
Although credit card is easy and flexible to use, but it belong to middle class at developing country. Not every one have it , because we must pay card fee, beside not every stores receive credit card.
Does payment with credit card save on transaction on line? The high tech security payment now days, payment use credit card saver and easier than before.
Doctrine of indoor management
Memorandum of Association and articles of association are two most important documents needed for the incorporation of a company. The memorandum of a company is the constitution of that company. It sets out the (a) object clause, (b) name clause, (c) registered office clause, (d) liability clause and (e) capital clause; whereas the articles of association enumerate the internal rules of the company under which it will be governed.
Undoubtedly, both memorandum of association and the articles of association are public documents in the sense that any person under section 610 of Indian company act, 1956 may inspect any document which will include the memorandum and articles of the company kept by the registrar of companies in accordance with the rules made under the destruction of records act, 1917 being documents filed and registered in pursuance of the act. As a consequence, the knowledge about the contents of the memorandum and articles of a company is not necessarily restricted to the members of the company alone. Once these documents are registered with the registrar of companies, these become public documents and are accessible by any members of the public by paying the requisite fees. Therefore, notice about the contents of memorandum and articles is said to be within the knowledge of both members and non-members of the company. Such notice is a deemed notice in case of a members and a constructive notice in case of non-members. Thus every person dealing with the company is deemed to have a constructive notice of the contents of the memorandum and articles of the company. An outsider dealing with the company is presumed to have read the contents of the registered documents of the company. The further presumption is that he has not only read and perused the documents but has also understood them fully in the proper sense. This is known as the rule of constructive notice. So, the doctrine or rule of constructive notice is a presumption operating in favour of the company against the outsider. It prevents the outsider from alleging that he did not know that the constitution of the company rendered a particular act or a particular delegation of authority ultra vires.
The ‘doctrine of constructive notice’ is more or less an unreal doctrine. It does not take notice of the realities of business life. People know a company through its officers and not through its documents. The courts in India do not seem to have taken it seriously though. For example, in Dehra Dun Mussorie Electric Tramway Co. v. Jagmandardas, the Allahabad high court allowed an overdraft incurred by the managing agent of a company when under the articles the directors had no power to delegate their borrowing power.
The doctrine of indoor management is an exception to the rule of constructive notice. It imposes an important limitation on the doctrine of constructive notice. According to this doctrine “persons dealing with the company are entitled to presume that internal requirements prescribed in memorandum and articles have been properly observed”. A transaction has two aspects, namely, substantive and procedural. An outsider dealing with the company can only find out the substantive aspect by reading the memorandum and articles. Even though he may find out the procedural aspect, he cannot find out whether the procedure has been followed or not. For example, a company may have borrowing powers by passing a resolution according to its memorandum and articles. An outsider can only found out the borrowing powers of the company. But he cannot find out whether the resolution has in fact been passed or not. The outsiders dealing with the company are presumed to have read and understood the memorandum and articles and to see that the proposed dealing is not inconsistent therewith, but they are not bound to do more; they need not inquire into the regularity of the internal proceedings as required by the memorandum and articles. They can presume that all is being done regularly.
The doctrine of indoor management is also known as the TURQUAND rule after Royal British Bank v. Turquand. In this case, the directors of a company had issued a bond to Turquand. They had the power under the articles to issue such bond provided they were authorized by a resolution passed by the shareholders at a general meeting of the company. But no such resolution was passed by the company. It was held that Turquand could recover the amount of the bond from the company on the ground that he was entitled to assume that the resolution was passed.
In one of the case the rule was stated thus: “If the directors have the power and authority to bind the company but certain preliminaries are required to be gone through on the part of the company before that power can be duly exercised, and then the person contracting with the directors is not bound to see that all these preliminaries have been observed. He is entitled to presume that the directors are acting lawfully in what they do.”
In another case where the plaintiff sued the defendant company on a loan of Rs.1,50,000, it was held that where the act done by a person, acting on behalf of the company, is within the scope of his apparent or ostensible authority, it binds the company no matter whether the plaintiff has read the document or not. In this case among other things the defendant company raised the plea that the transaction was not binding as no resolution sanctioning the loan was passed by the Board of directors. The court after referring to turquand’s case and other Indian cases, held that the passing of such a resolution is a mere matter of indoor or internal management and its absence under such circumstances, cannot be used to defeat the just claim of a bona fide creditor.
The rule is based on public convenience and justice and the following obvious reasons:
1. the internal procedure is not a matter of public knowledge. An outsider is presumed to know the constitution of a company, but not what may or may not have taken place within the doors that are closed to him.
2. the lot of creditors of a limited company is not a particularly happy one; it would be unhappier still if the company could escape liability by denying the authority of officials to act on its behalf.
Exceptions to the doctrine of indoor management:
The exceptions to the doctrine of indoor management are as under:
1. Knowledge of irregularity: when a person dealing with a company has actual or constructive notice of the irregularity as regards internal management, he cannot claim benefit under the rule of indoor management. He may in some cases, be himself a part of the internal procedure. The rule is based on common sense and any other rule would encourage ignorance and condone dereliction of duty.
T.R Pratt (Bombay) Ltd. V. E.D. Sassoon & Co. Ltd., Company A lent money to Company B on a mortgage of its assets. The procedure laid down in the articles for such transactions was not complied with. The directors of the two companies were the same. Held, the lender had notice of the irregularity and hence the mortgage was not binding.
In Howard v. Patent Ivory Co, the directors had the authority under the articles to borrow only up to £1000 without the resolution of general meeting. For any amount beyond £1000, they needed the consent of general meeting. But the directors borrowed £3500 from themselves without the consent of general meeting or shareholders and accepted debentures. It was held that they had knowledge of internal irregularity and debentures were good only up to £1000.
2. Negligence: where a person dealing with a company could discover the irregularity if he had made proper inquiries, he cannot claim the benefit of the rule of indoor management. The protection of the rule is also not available where the circumstances surrounding the contract are so suspicious
as to invite inquiry, and the outsider dealing with the company does not make proper inquiry. If, for example, an officer of a company purports to act outside the scope of his apparent authority, suspicion should arise and the outsider should make proper inquiry before entering into a contract with the company.
Anand Bihari Lal v. Dinshaw & Co, the plaintiff, in this case, accepted a transfer of a company’s property from its accountant. Held, the transfer was void as such a transaction was apparently beyond the scope of the accountant’s authority. The plaintiff should have seen the power of attorney executed in favour of the accountant by the company.
3. Forgery: the rule in turquand’s case does not apply where a person relies upon a document that turns out to be forged since nothing can validate forgery. A company can never be held bound for forgeries committed by its officers. The leading case on the point is :
Ruben v. Great Fingall Consolidated Co., the secretary of a company issued a share certificate under the company’s seal with his own signature and the signature of a director forged by him. Held, the share certificate was not binding on the company. The person who advanced money on the strength of this certificate was not entitled to be registered as holder of the shares.
4. Acts outside the scope of apparent authority: if an officer of a company enters into a contract with a third party and if the act of the officer is beyond the scope of his authority, the company is not bound. In such a case, the plaintiff cannot claim the protection of the rule of indoor management simply because under the articles the power to do the act could have been delegated to him. The plaintiff can sue the company only if the power to act has in fact been delegated to the officer with whom he entered into the contract.
Kreditbank Cassel v. Schenkers Ltd,a branch manager of a company drew and endorsed bills of exchange on behalf of the company in favour of a payee to whom he was personally indebted. He had no authority from the company to do so. Held, the company was not bound. But if an officer of a company acts fraudulently under his ostensible authority on behalf of the company, the company is liable for his fraudulent act.
Conclusion: Thus the doctrine of indoor management seeks to protect the interest of the shareholders who are in minority or who remains in dark about whether the working of the internal affairs of the company are being carried out in accordance with the memorandum and articles. It lays down that persons dealing with a company having satisfied themselves that the proposed transaction is not in its nature inconsistent with the memorandum and articles, are not bound to inquire the regularity of any internal proceeding.
Israel Glitters with Its Diamonds
The Israeli Diamond industry has designated India as a strategic target for 2008. Diamonds account for about 70 per cent of the bilateral trade between Israel and India and the volume has been growing rapidly in the recent past.
The Israel Diamond Exchange is the official name of the organisation in Tel Aviv that organises, conducts and manages the industry to the benefit of its members. The building looms large in the Ramat Gan area of the city, and appears disproportionately large in the tourist maps of the city.
But I was hard pressed to explain my destination to my taxi driver. After trying to say the name with different accents, I pulled out the map and pointed it to him. ‘Ah, Borsa,’ he exclaimed. Everybody knows the borsa, or the bourse, where diamonds are traded.
Interesting anomaly.
But diamonds in Israel is itself an interesting anomaly. Early economic theories stressed the need for natural resources on which to base a country’s economic development till countries such as Singapore proved that what you needed was a vision, and hard work to make development happen. Israel is like that. Without diamond mines and without a major market to consume the product, Israel is still a major player in the global diamond industry.
Israel is said to account for roughly half of the rough and polished diamonds traded in the world, and has built this position based on its creativity and technological competence in polishing and designing equipment that is used in the industry.
The Diamond Exchange is a comprehensive centre; a complex of four interconnected buildings with what is reportedly the world’s largest trading floor, offices for the traders, banks, post office, restaurants, a synagogue, and day care facilities for children. You do not need to leave the place! Such a centre, in any place, needs to have high security, and in Israel, which is not at peace with all its neighbours and faces violent attacks, the need for security has the place tightly sewed up. I had to provide my passport particulars a day ahead in order to be cleared to enter the building.
The security also seems appropriate for a business that has, at higher levels, been shrouded in secrecy, and is an industry that seems to deviate from all the accepted theories of business and management. The official face of DeBeers, the private company that controls the industry, is just innocuously called the Central Selling Organisation (CSO), not wanting to attract attention. Hmm. An organisation that does not want publicity!
Crafted by CSO
The diamond industry is carefully managed by the CSO, which has about 50 per cent of the world’s share of the market. Much like the central planners of the former Soviet Union, it sets the prices at which it will sell its rough diamonds to ‘sight holders’ who are its approved buyers. You take it or decline; there is no negotiation. Even Russia, now a major diamond producer, prefers to let DeBeers take the lead in setting prices, for the company has mastered the art of managing both demand and supply to keep price high. Interestingly enough, in the case of luxury goods such as diamonds, nobody is interested in the prices crashing! It is obvious that the supplier wants high prices, but so does the buyer, for it represents her/his status and luxury.
That same spirit of secrecy and security pervades other aspects of the operations of the diamond exchange. In any other exchange, you will see listings of opening and closing prices and volume of trades in a day. Not here. The Exchange does not keep records of the volume of business conducted on the trading floor. You are not going to see flashing signs listing the going price.
You will see two individuals seated across a small desk, negotiating a price for a small piece of stone wrapped in paper. A trader, who has just made a few millions in profit, will probably shuffle across the floor claiming to his friends that business is bad, so as not to attract attention! A person transporting diamonds is not likely to advertise that fact too for obvious reasons.
SBI in fray
The Israeli Diamond industry has designated India as a strategic target for 2008, signalling that there is going to be increased cooperation between the two countries. The trend has been building for a while. Diamonds account for about 70 per cent of the bilateral trade between Israel and India and the volume has been growing rapidly in the recent past.
If the diamond business is growing, the banks cannot be far behind. And that is where the State Bank of India (SBI) has entered the fray. The bank has been in the diamond business for about 30 years and already operates in other diamond centres such as Antwerp, Hong Kong, Johannesburg, New York and Mumbai.
Ms V. Sasikala, my gracious host during my visit to the Diamond Exchange, is the CEO of SBI’s operations in Tel Aviv and was sent there to get the operations started. She has successfully managed to find a strategic perch for the bank by locating it physically in the bourse in such a manner that the bank can be accessed from the rear by its diamond clients and thus have all the security protection they need At the same time, the bank can be accessed from the front by ‘market’ (or non-diamond) customers without being hassled by the need for security clearances.
‘Cutting-edge’ technology
There are about 35 Indians in the diamond business in the bourse and they have been operating there long before diplomatic relations were established between the two countries in 1992. One of them, Nimish Modi, who has been operating in Israel for about 30 years, briefed me on the changes he has seen in the business.
One has been the inroads that machines and technology have made, gradually taking over skills that were previously in the domain of human expertise. Israel’s traditional role in the diamond business came from its diamond cutting expertise which, for cost reasons, has now largely shifted to other countries, such as India.
Mr Modi explained that the two fields in which Israel has competence now is in its network of trading and marketing, and in its technological competence in developing many of the machines that have an important role in the industry.
One of the machines in the bourse’s technical centre demonstrated how much of the skill had now been transferred to the machine.
With the rough diamond placed in a compartment, a laser scans it, analyses the data, and provides a report that gives the colour, carat and other characteristics. It then displays what could be the most efficient cut and is also prepared to mark it on the stone as a guide for the cutter. While the standard mass merchandising diamonds go to China, the more creative cuts are done in India.
Ms Sasikala took about nine months since landing in Tel Aviv to start the branch, which began operations in 2007 and was also the first foreign bank in the bourse. Often one thinks of starting operations in a new country as challenging due to the need to understand the environment, which includes the regulations, the local business culture, finding the office space and people, and so on.
But there is another side to it, namely, the need to effectively convey to one’s head office how some of the standard operating procedures and rules will not work in the new environment and secure the necessary permissions to design a new structure and culture. So, a pioneering manager has to manage both ends of the operation while at the same time, setting the right precedents.
Opening up opportunities
The diamonds sector makes up about 90 per cent of SBI’s business there now, but Ms Sasikala sees enough opportunities in other sectors of Israel’s economy that do business with India such as telecommunications, plastics, chemicals, and pharmaceuticals, to drop the diamonds’ share of her business to about 50 per cent in
the near future. Not a small achievement.
Here is an interesting example of the kinds of opportunities that have shown up on her door. Since religious strictures prevent orthodox Jews from receiving interest from other Jews, they shun Jewish banks and are looking at SBI with great interest!
Israel is thriving and it will be wonderful if it can share some of that prosperity with its poorer cousins, the Palestinians. SBI can even play a role here with India having good relations with both sides of the disputed territories. SBI’s expertise in lending to small businesses, weaker sections, and priority sectors is applicable in the West Bank. Maybe we will see an office there too very soon.