1938 (1) TMI 18 - HC - Companies Law

Summary

Issues Involved:
1. Validity and scope of the power of attorney.
2. David Ezekiel's status and presence in India.
3. Authority of the Directors to reject the nominee.
4. Existence and terms of the contract between the plaintiff and the defendant company.

Issue-wise Detailed Analysis:

1. Validity and Scope of the Power of Attorney:
The plaintiff argued that Solomon Ezekiel acted under a valid power of attorney executed by David Ezekiel on 18th April 1929. The defendants challenged the validity of this power, suggesting it might have been revoked by David's return to India or his death. The court held that there was no obligation on the plaintiff to prove David was alive in October 1936, as Section 107 of the Evidence Act places the burden of proving death on the person affirming it. The court found no evidence that David had died or that the power had been revoked. However, the court concluded that the power did not authorize Solomon to renounce shares and nominate the plaintiff, as this was not within the scope of the power's general terms.

2. David Ezekiel's Status and Presence in India:
The court considered whether David Ezekiel was in India on 6th October 1936. The evidence suggested that David had been absconding since the institution of criminal proceedings against him. The court found that David was likely not in India during this period, supporting the validity of Solomon's actions under the power of attorney, provided they were within its scope.

3. Authority of the Directors to Reject the Nominee:
The defendants argued that the Directors had the right to reject any nominee, as stated in the letter of 15th September 1936. The court noted that the resolution passed on 9th September 1936 did not authorize such a qualification. However, the court held that the offer made to the plaintiff included this reservation, and thus, the plaintiff's acceptance was subject to the Directors' discretion. The court found that the Directors legitimately exercised their right to reject the plaintiff as the nominee.

4. Existence and Terms of the Contract Between the Plaintiff and the Defendant Company:
The plaintiff claimed there was a contract for the allotment of 4,200 new shares based on the renunciation and nomination forms submitted. The court determined that the forms of renunciation and acceptance were unauthorized under the power of attorney. Additionally, the court held that the offer to the plaintiff included a term allowing the Directors to reject any nominee, which they did. Consequently, the court found no enforceable contract between the parties.

Conclusion:
The court dismissed the suit with costs on two primary grounds:
1. The renunciation and nomination by Solomon were beyond the scope of his authority under the power of attorney.
2. The contract terms allowed the Directors to reject the plaintiff as David's nominee, which they validly exercised.