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Interpretation of article 75 of the articles of association regarding remuneration for managing agents. Analysis: The judgment by the High Court of Rajasthan involved the interpretation of article 75 of the articles of association of a company regarding the remuneration of managing agents. The case revolved around the Mahalakshmi Mills Co. Ltd., a company engaged in manufacturing cotton textiles. The article in question outlined the appointment and remuneration of agents, secretaries, treasurers, chairman, and managing directors of the company. The court highlighted the specific terms of the article, which stated that the managing agents were entitled to a fixed amount per month and a commission on the net profits of the company. The court detailed the events that led to a dispute between the two appointed agents, resulting in the court intervention and the appointment of a receiver and an interim board of management to oversee the company's affairs. The dispute caused a period where the managing agents did not render any services to the company. The directors later proposed a significant amount as remuneration for the managing agents, which was approved by the shareholders and paid to one of the agents. However, the Income-tax Officer disallowed this payment as an admissible expenditure. Upon appeal, the Appellate Assistant Commissioner and the Tribunal held that the company was only liable to pay the managing agents for the period they were actively managing the company, and not for the period of dispute where no services were rendered. The court agreed with this interpretation, emphasizing that the managing agents could only claim remuneration for services rendered as per the terms of the article. Therefore, the court answered the referred question in the negative, affirming that the company was not liable to pay remuneration for the period in question. The judgment concluded with no order as to costs.
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