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Issues Involved:
1. Whether the resolution of the Board of Directors passed on October 12, 1932, sanctioning the construction and equipment of a building at a total cost not exceeding 3 lakhs is ultra vires. 2. If the resolution is not ultra vires, whether the action of the majority of the Board of Directors to put up a building at a cost of 3 lakhs but with foundations and steel stanchions as for a building that would ultimately cost Rs. 4,10,000 is illegal and improper. Issue-wise Detailed Analysis: Issue 1: Whether the resolution of the Board of Directors passed on October 12, 1932, sanctioning the construction and equipment of a building at a total cost not exceeding 3 lakhs is ultra vires. The first issue questions the competency of the Board of Directors to invest money from the Policyholders' Trust Fund in constructing a building, as the Articles of Association authorize them to invest money only in the purchase of house property. The resolution passed on October 12, 1932, had the unanimous approval of all directors and would be intra vires if constructing a building amounted to "purchasing house property." However, the distinction between "purchasing house property" and "constructing a building" is significant. The Articles of Association, particularly Article 116-A (1-i), empower the directors to invest in the purchase of house property by a unanimous resolution, but not explicitly in constructing buildings. The language used in other articles, such as Article 105-G, which empowers the directors to acquire or erect houses or buildings, indicates a clear distinction. The framers of the Articles deliberately used "purchase of house property" in Article 116, suggesting a more cautious approach to safeguarding the Policyholders' Trust Fund. Therefore, the resolution to construct a building is ultra vires, as it does not align with the specific authorization to purchase house property. Issue 2: If the resolution is not ultra vires, whether the action of the majority of the Board of Directors to put up a building at a cost of 3 lakhs but with foundations and steel stanchions as for a building that would ultimately cost Rs. 4,10,000 is illegal and improper. The second issue examines whether the modified resolution to construct a building with foundations for a six-storeyed building, costing 4 lakhs and odd, but restricting the immediate expenditure to 3 lakhs, is valid. The original resolution had unanimous approval, but the later resolution did not, as two directors, Messrs. P.N.S. Ayyar and R. Rangachariar, dissented. The unanimity required under Rule 116-A (1-i) for investing in house property is not just about the amount but also about the specific property or building. The modified resolution, which involves a different building plan, lacks the unanimous consent of all directors and thus cannot be enforced. The argument that the duty of deciding the kind of building can be delegated to a committee is invalid under Section 47 of the Trusts Act, which allows delegation of the duty of buying property but not deciding which property to buy. Therefore, the action of the majority of the Board of Directors is illegal and improper, as it does not have the unanimous approval required for such an investment. Conclusion: Both issues were decided against the appellants. The resolution of the Board of Directors passed on October 12, 1932, is ultra vires as it involves constructing a building rather than purchasing house property, which is not authorized under Article 116-A (1-i). Additionally, the modified resolution to construct a building with foundations for a six-storeyed building, without unanimous approval, is illegal and improper. Consequently, the appeal is dismissed with costs.
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