9911796707
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Issues:
Interpretation of resolution passed by general body shareholders, Authority of board of directors in managing company affairs, Validity of resolution to write off debt, Power of general body shareholders to interfere in management. Analysis: The appellant bank filed a suit to recover amounts due under a promissory note jointly executed by the defendants and their deceased father. The defendants claimed the note was to secure a liability of the second defendant and that a resolution by shareholders wrote off the debt. The trial court decreed in favor of the bank, but the lower appellate court dismissed the suit based on a resolution by the general body shareholders. The bank appealed this decision. The articles of association of the bank vested management powers in the board of directors, not the general body shareholders. The court cited legal principles stating that unless the articles or Companies Act require, the directors cannot be compelled to follow general body directions. The court held that the directors acted within their powers in enforcing the liability under the promissory note, despite the shareholder resolution to write off the debt. The lower appellate court's decision was deemed incorrect. In conclusion, the appellate court's decree was set aside, and the trial court's decision was restored with costs. The court emphasized that the directors had the authority to enforce the liability under the promissory note, and the general body shareholders could not directly interfere with the management of the business by the directors without a valid modification of the articles of association.
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