People’s Bank v. Yashodha Holdings (Pvt.) Ltd. – SC CHC APPEAL NO. 21/2006-2009

In the case between People’s Bank and Yashodha Holdings (Pvt.) Ltd., the court addressed whether a short-term loan extended by the bank was ultra vires due to being outside the company’s stated objects, and whether such a transaction could nonetheless be validated under Section 35(1) of the English Companies Act of 1989, as applied in Sri Lanka by the Civil Law Ordinance. The findings established that the operation of Section 35(1) protected the transaction from the ultra vires challenge and that doctrines such as unjust enrichment and estoppel further precluded the respondent from repudiating its obligations after benefiting from the loan. The decision reaffirmed the principle that benefits derived by a company from a transaction preclude invocation of the ultra vires doctrine to avoid li