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Issues Involved:
1. Validity of the co-option of K.N. Narayana Iyer as a director. 2. Validity of the co-option of K.C. Chandy as a director. Detailed Analysis: Issue 1: Validity of the Co-option of K.N. Narayana Iyer The primary question was whether the co-option of K.N. Narayana Iyer as a director on 9th October, 1950, was valid. The appellant contended that the co-option was invalid because there was only one director entitled to act on that date, and the power to co-opt could not be exercised without a competent board of directors under Article 75. Additionally, it was argued that such power could not be exercised after an annual meeting had been called and that the resolution did not comply with Article 99 of the company's articles. The court rejected the argument that the power to co-opt directors ends once an annual meeting is convened, finding no support in the Companies Act or the articles of the company. The court also dismissed the objection based on Article 99, as no contention was raised that the co-option could be upheld under Article 99. The court examined whether the co-option was made in the interests of the shareholders, considering the fiduciary duty of directors. The facts showed that the company was in financial distress, and Narayana Iyer, managing director of Messrs. Parkins (India) Ltd., was approached by shareholders to join and provide necessary funds. His co-option was deemed beneficial due to his experience and financial capability. The court concluded that the co-option of Narayana Iyer was a proper exercise of power under Article 81, as it was made in the best interests of the shareholders. Therefore, O.S.A. 120 of 1951 was dismissed with costs. Issue 2: Validity of the Co-option of K.C. Chandy The second issue was whether the co-option of K.C. Chandy on 11th October, 1950, was valid. Unlike Narayana Iyer, no particular reason was shown for Chandy's co-option, and it was not linked to any arrangement to advance funds for the company. Chandy, an Advocate, lacked the experience and financial backing that Narayana Iyer possessed. The court noted that V.R. Veeramani, one of the directors, resigned his position as an elected director and was nominated as a director on the same day, which facilitated Chandy's co-option. This maneuver was seen as an attempt by the managing agents to strengthen their position rather than acting in the shareholders' interests. The court agreed with Krishnaswami Naidu, J., that Chandy's co-option was mala fide and could not be upheld. Consequently, O.S.A. 15 of 1952 was dismissed with costs. Conclusion: The court upheld the co-option of K.N. Narayana Iyer as valid and beneficial for the company, while rejecting the co-option of K.C. Chandy as improper and mala fide. Both appeals were dismissed with costs.
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