TMI Blog1950 (3) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... President of the said Nidhi. The suit was for a declaration that a certain resolution passed by the general body on 30th April, 1944, was invalid. The suit is a representative suit. Article 5 of the memorandum of association of the company is as follows: "The share capital of the company is Rs. 20,000 divided into 2,000 shares of Rs. 10 each." The object of the company was to carry on the business of banking. The articles of association of the company provided for the management of the company. Article 21 was as follows: "The members of the Managing Committee shall each take not less than 25 shares in the company." Article 20 ran as follows: "The Managing Committee shall consist of not less than five persons and not more than ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... restraining them from removing either the plaintiffs or such other directors who do not comply with the above resolution. There was a prayer for costs and for such other relief as the Court may think fit. The contention in the plaint was that this resolution imposing an additional qualification for directors was opposed to the Indian Companies Act and also to the provisions of the memorandum of association. There was a subordinate contention that the resolution making it applicable to past directors was not properly included in the subject-matter of the agenda as set out in the notice convening the meeting. The trial court held that there was nothing in the Indian Companies Act which prohibited a company from laying down in its articles a q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al and void irrespective of the fact whether it was in the general interests of the shareholders or not. The defendants have now come on appeal against this decree of the Subordinate Judge and contend that the special resolution was perfectly in order and there was nothing in the Companies Act to prohibit the same. On behalf of the respondents it was urged that the only qualification which could be imposed on directors was a share qualification, i.e., a requirement necessitating the holding of a certain number of shares by the director. Reference was made to various sections of the Companies Act wherein share qualification of directors is referred to, particularly Sections 84, 93, 103 and Regulation 70 of Table A and Regulation 77. It i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the organisers or promoters or shareholders. Indeed, in some cases, it may even be necessary in the interests of security of the State to prohibit a non-national from being in the directorate of a concern of national importance, for instance, one for the manufacture of atom bombs or hydrogen bombs. The presence of an "alien" in the directorate of such a company promoted by a State would obviously be very undesirable. I can find nothing in the Indian Companies Act to preclude a provision for that. In truth the matter is left entirely to the discretion and judgment of the shareholders. I am therefore of opinion, differing from the view of the Subordinate Judge and agreeing with the view of the District Munsif, that this special resolution p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned counsel himself had to concede that this resolution can be justified as coming within the share qualification clause which, according to him, was not only permitted but was the only clause in respect of qualification of directors. There is no substance, therefore, in this contention either. In the result it follows, in my opinion, that the declaration granted by the lower appellate court that the resolution is invalid and the amendment of the article is inoperative should be vacated. It was next argued that the portion of the resolution relating to the applicability of the new requirement to past directors was not justified. The lower appellate court dose not deal with this matter, because, in the view it had taken, the main reso ..... X X X X Extracts X X X X X X X X Extracts X X X X
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