TMI Blog1967 (7) TMI 84X X X X Extracts X X X X X X X X Extracts X X X X ..... but to secure a liability of the second defendant to indemnify the bank against the loss caused to it by reason of the dishonour of a cheque which the second defendant discounted while he was the agent of the bank at its Pazhayannur branch. The defendants further averred that several payments had been made by the second defendant in respect of this liability and that till 10th March, 1958, an amount of Rs. 6,690 had been remitted by him to the bank. According to the defendants, in consideration of these payments and of the faithful and meritorious service rendered by the second defendant to the bank, the general body of the shareholders of the bank had passed a resolution on 14th May, 1960, resolving to write off the balance amount due fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aintiff-bank has preferred this second appeal challenging the aforesaid decision of the lower appellate court. Exhibit D-1 is the articles of association of the plaintiff-bank. It will be seen from article 14 of exhibit D-l that the business of the company is to be managed by the directors, who may exercise all such powers as are not required to be exercised by the company in general meeting. There is no provision in any of the articles enabling the general body of shareholders to interfere in the day-to-day management of the business of the bank and the conduct of such business is left by the articles entirely to the board of directors. Exhibit D-7 is a copy of the rules and regulations of the plaintiff-bank, and rule 1 states that, subj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany is to be managed by the directors and the articles confer on them the full powers of the company subject to such regulations, not inconsistent with the articles, as may be prescribed by the company in general meeting, the shareholders are not enabled by resolution passed at a general meeting without altering the articles, to give effective directions to the directors how the company's affairs are to be managed, nor to overrule any decision come to by the directors in the conduct of its business. An agreement made by the company which is inconsistent with the powers of management of the directors under the articles, as, for example, an agreement purporting to confer authority upon the manager of a department to act without interference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irectors and they were not subject to any control in that respect by the company in general meeting. It is true that if the company in general meeting disapproved the management by the directors, they could remove the directors, but the general meeting could not, as the articles stood, directly interfere with the management of the business by the directors. There is no case for the respondents that any special resolution had been passed by the company in general meeting so as to constitute a valid modification of the articles of association. It has, therefore, to be held that the directors had acted fully within their powers in deciding to enforce the liability under the promissory note, notwithstanding the recommendation contained in the r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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