1933 (1) TMI 21 - HC - Companies Law

General provisions with respect to memorandum and articles - Effect of memorandum and articles

Issues Involved:
1. Validity of the appointment of plaintiffs 1 to 7 as directors.
2. Legality of the dismissal of defendant 8 as general manager.
3. Validity of the resolutions passed at different meetings.
4. Authority to increase the number of directors.
5. Validity of the election of certain directors and the chairman of the board.

Issue-wise Detailed Analysis:

1. Validity of the appointment of plaintiffs 1 to 7 as directors:
The plaintiffs claimed that they were lawfully appointed directors of the company, while the defendants denied this. The court found that plaintiffs 1 to 7 were indeed directors based on facts either admitted or proved by unimpeachable evidence. The court held that the plaintiffs were being excluded from the management, constituting a continuing invasion of their rights, making it a fit case for a temporary injunction under Order 39, Rule 2 of the Code of Civil Procedure.

2. Legality of the dismissal of defendant 8 as general manager:
The plaintiffs argued that defendant 8, the general manager, was lawfully dismissed by R.B. Vikramajit Singh, plaintiff 8, who was authorized by a power of attorney executed by two directors. The court held that the board of directors had the power to terminate the services of any company servant and could delegate this power. The dismissal order by R.B. Vikramajit Singh was deemed valid, and defendant 8 was considered to have ceased to be the general manager from the date of that order.

3. Validity of the resolutions passed at different meetings:
The court examined the resolutions passed at two meetings held on July 16, 1932. One meeting was held at the registered office of the company, and another at the residence of defendant 1. The court found that the meeting at the registered office was duly called and valid, while the meeting at the residence of defendant 1 was invalid due to improper notice and exclusion of duly elected directors. Consequently, resolutions passed at the latter meeting, including the election of defendant 1 as chairman, were invalid.

4. Authority to increase the number of directors:
The court addressed whether the resolution passed at the general meeting on February 14, 1932, which increased the number of directors from 9 to 16, constituted an alteration of Article 98 of the Articles of Association. The court concluded that the increase did not alter Article 98, as the article itself allowed for the number of directors to be determined by a general meeting. Therefore, the resolution was valid without requiring a special resolution.

5. Validity of the election of certain directors and the chairman of the board:
The court found that plaintiffs 1 to 6 and 8, and defendants 2 and 7, could be accepted as directors for the purposes of the proceedings. Defendants 3 and 4 were not validly elected directors. The court also held that R.B. Vikramajit Singh, plaintiff 8, was duly elected as the chairman of the board at the validly convened meeting on July 16, 1932, while the election of defendant 1 as chairman at the invalid meeting was not recognized.

Conclusion:
The court granted an injunction directing the defendants to refrain from interfering with the discharge of duties by plaintiffs 1 to 6 and 8 as directors and with R.B. Vikramajit Singh performing the functions of the chairman. Defendant 8 was directed to refrain from acting as the general manager, and defendant 1 was directed to refrain from acting as chairman of the board. The appeal was dismissed with costs.

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