1950 (5) TMI 15 - SUPREME COURT

Whether the issue of further shares by the directors was in contravention of section 105-C of the Indian Companies Act?

Held that:- As noticed before, the object of the section is to prevent discrimination amongst shareholders and prevent the directors from offering shares to outsiders before they are offered to the shareholders. So long as these two requirements are complied with, the action of the directors in selecting the time when they will issue the shares as also the proportion in which they should be issue a is a matter left to their discretion and it is not the province of the Court to interfere with the exercise of that discretion. This is or course subject to the general exception that the directors are not to act against the interest of the company or mala fide. No such question arises in this case and therefore it is unnecessary to discuss that aspect of the situation. In my opinion therefore on this third ground this contention of the appellants should be rejected. Appeal dismissed.