TMI Blog1941 (7) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... trial Court decreed both the declaration and the injunction prayed for. On appeal the learned Senior Subordinate Judge dismissed the suit, On second appeal to the High Court Mr. Justice Bhide allowed the appeal as regards the declaration but dismissed it with regard to the injunction. Both parties have, therefore, filed appeals: the plaintiff against the decision disallowing him an injunction and the defendants against the decision granting the plaintiff a declaration. The plaintiff was the promoter of the Company. Article 101 of the Articles of Association provided as follows: "The remuneration of the Managing Director may be by way of salary, commission, participation in profits or by any or all of these modes at the discretion of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the Company intended to amend Article 101. At the meeting Article 101 was amended. This resolution amending Article 101 was duly confirmed at a subsequent meeting. This amendment has been held because of the lack of notice, to be invalid. On the 6th of July 1932, a suit was brought by those opposed to Sardar Gulab Singh for a declaration that he had ceased to be Managing Director on the ground of the amendment of the articles. If this suit had proceeded the decision would have settled the point now in dispute between the parties. In the month of October 1932, Sardar Gulab Singh was forcibleejected from the bank and at the annual meeting of the Company in November of that year Sardar Gulab Singh was compulsorily retired. In the month of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stitute a contract between the Company and Sardar Gulab Singh and in support of his argument he drew our attention to several English authorities based on a provision similar to section 21 of the Indian Companies Act in the English Companies Act. section 21 enacts as follows: "The memorandum and articles shall, when registered, bind the company and the members thereof to the same extent as if they respectively had been signed by each member and contained a covenant on the part of each member, his heirs, and legal representatives, to observe all the provisions of the memorandum and of the articles, subject to the provisions of this Act". If the matter had been res integra it is possible that we might have held that the terms of sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lied for and obtained Rs. 20,000 worth of shares, which were allotted by the Board. He was the Managing Director and acted as Managing Director for 11 years and he was remunerated in accordance with the terms set out in Article 101. As we have already pointed it was never contended until the appellate stage that Sardar Gulab Singh had not acted and been remunerated as Managing Director. In the suit itself no issue was struck on this point, the only issue was whether Sardar Gulab Singh had been improperly removed from the office of Managing Director. It seems to us, therefore, that an implied contract on the terms of Article 101 has been clearly proved. There is ample authority for the proposition that under the circumstances, such as in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hough the provisions in the articles were only part of the contract between the shareholders inter se, the provisions in the articles were, on the directors being employed and accepting office on the footing of them, embodied in the contract between the company and the Directors and on the winding up of the company the directors were, therefore, entitled to rank as ordinary creditors in respect of the remuneration due to them at the commencement of the winding up. In In re R. Bolton and Company [1894] 3 Ch. D. 356 , Isaacs' case [1892] 2 Ch. D. 158 was followed by the Court of Appeal and the decision of Wright, J., in the lower Court that by accepting office and acting as directors, the directors had agreed to take the qualification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne form or another ever since his dismissal. On other grounds, however, we do not consider that in this case it would be proper to issue an injunction. The learned Judge held that the position of the company and that of Sardar Gulab Singh as Managing Director was that of master and servant. With great respect we do not think that this is correct. A director or a Managing Director is in no way a servant of the company: he is the agent of the company for carrying on its business. But we agree that the same principles which have been held to apply to the issue of an injunction at the instance of a dismissed servant ought also to apply in the case of a dismissed agent. It would be contrary to public policy to impose upon an unwilling principa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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