TMI Blog1961 (1) TMI 92X X X X Extracts X X X X X X X X Extracts X X X X ..... d therefore the Legislature intervened and recast the entire Companies Act, providing for a large number of checks which prevented managing agents getting control of the Board of Directors and thereby enabling themselves to cover their own deeds and misdeeds. The objects of the provisions must be kept in view when interpreting the sections of the Act. (6) Section 261(1) of the Companies Act, so far as is relevant may be reproduced as follows:- (1) If a public company . . . . . .has a managing agent . . . . . . none of the following persons shall be appointed as a director of the Company. . . .. . .except by a special resolution passed by the company:- (a) any person who is an officer or employee of, or who holds any office or place of profit under, the company or any subsidiary thereof: Provided that nothing in this clause shall apply to the director of such company or subsidiary, or to the holder of any office or place of profit under such company or subsidiary which may be held by a director of the company by virtue of section 314: (b) where any office or place of profit which would disqualify a person under clause (a) read with the proviso thereto, is held by any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertain election cases decided by this Court and by the Supreme Court. The first case on which reliance is placed is the case of Dattatraya Motiram v. Bombay State, AIR1953Bom311 . The question arose with reference to Articles 16(1)(2)(3) of the Constitution of India wherein the following words occur employment or appointment to any office under the State . It was held The expression 'under the State' makes it clear that the person holdings office to which article 16(1) applies is a person who stands to the State as a subordinate would to a higher officer, or, in other words, there must be a relationship of employer and employee between the person holding office and the State , or at least there must be an element of subordination to the State in the office contemplated by article 16(1). The second case relied upon is Abdul Shakur v. Rikhab Chand, [1958]1SCR387 , where Articles 102(1)(a) and 58(1) of the Constitution were construed. The words are office of profit under the Government of India . In that case the election of a person in the service of a Committee of Madarsa Durga Khawaja Sahib Akbari was being challenged. It was held by the Supreme Court that such a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed and the mischief to be prevented. It is difficult to appreciate the argument that though B. M. And Co., may be an officer in view of the definition, still it cannot be said to hold an office or place of profit under the company. I may refer to Corpus Juris Secundum, Vol. 67 at p. 97 wherein the word officer has been dealt with. It is said: In general an officer is one who holds, or is an incumbent of, an office, or who performs the duties of an office, or is lawfully invested with an office. 'Officer' is inseparably connected with 'office'; there can be no officer without an office . Even if therefore the test ordinarily applied were not satisfied, I would have come to the conclusion that B. M. And Co., held an office or place of profit under the Company, it being an officer . (13) Coming then to the next question of the applicability of clause (d) of Section 261(1) of the Companies Act, the question is whether defendant No. 2 is an officer or employee of B. M. And Co. At this stage the terms of the power of attorney may be advantageously considered. At the outset it must be mentioned that he is the power of attorney holder not of the directors but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the existence of an office. (B) In a wider sense, any position or place in the employment of the Government, esp. One of trust or authority; also, that of an employee of a corporation invested with a part of the executive authority;.. . . . . . . In Corpus Juris Secundum, Vol 67 at p. 96 where several definitions have been given it is said: The term 'office' has various meanings and has been defined as a duty or charge a place of trust, or a right to exercise a public or private employment and to take the fees and emoluments thereof. An office may exist although there is no incumbent thereof or emoluments attaching thereto. The term 'office' is one which is employed to conferee various meanings, and no one definition thereof can be relied on for all purposes and occasions. When used in any proper sense, the term implies a duty or duties to be performed, and that it is generally agreed that a position is an office when the elements of trust, honour and compensation combine with definite duties and responsibilities. and at p. 97 in connection with officer it is said: Although many definitions of officer have been attempted, the meaning ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in order that a person be called an officer of the company, there must be a designated place and there must be a method of appointment. He has also referred to sections regarding remuneration like sections 199(1), 200 and 204. It is true that these sections speak of appointment of officers and their remuneration. In support of his argument Mr. Amin has invited my attention to the case o f In re, Great Western Forest of Dean Coal Consumers Co. (Ltd) Carter's Case, (1886) 31 Ch. D 496, where it was held that a solicitor who acted as such in the ordinary course of his duties as a solicitor as he would have done for other clients could not be regarded an officer of the company. On the other hand in the case of In re, Liberator Permanent Benefit Building Society, (1894) 71 Law Times 406; 2 Manson's Ban. W.-up Cases 100 a solicitor who was in the regular employment of the company was held to be an officer of the company. I do not think these cases support Mr. Amin. (17) Strongest reliance, however, is placed on In re. Western Countries Steam Bakeries and Milling Co. (1897) 1 Ch 617. In that case Lord Justice Lindley observed at p. 627 as follows: But to be an officer t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lled upon to give evidence fort plaintiff. It has been often pointed out that it is the duty of parties to place the best evidence before the Court. The practice of refusing to enter the witness-box when called upon to do so and requiring the plaintiff to call the defendant as his own witness has also been deprecated. It is clear, therefore, that he was shy of giving evidence in Court. Under these circumstances I would be justified in drawing an inference against him and hold that he derived some remuneration. (19) It is clear that the election of defendant No. 2 is hit by clause (d) read with Section 261(1)(a). (20) The alternative argument of Mr. Gupte is based on the law of partnership. A partnership firm as such has no legal entity but is merely a compendious name for all partners together. He therefore says that each partner must be regarded the Managing Agent of the Mills. Added to this he relies on the fact that each one of the partners was a signatory to the agreement. It may however be assumed for the purpose of this case that the agreement was by the firm of Agarwals. He relies on the case of Ramaben Thanawala v. Jyoti Ltd. MANU/MH/0063/1958MANU/MH/0063/1958 : AIR19 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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