1969 (12) TMI 74 - HC - Companies Law

Form of contracts, Meetings and Proceedings Quorum for meeting, Contents and manner of service of notice and persons on whom it is to be served

Summary

Issues Involved:
1. Validity of the resolution appointing Motilal on February 8, 1942.
2. Applicability of Section 69 of the Indian Partnership Act, 1932.
3. Existence of an implied agreement between the plaintiffs and the defendant-company.
4. Entitlement of plaintiffs and defendants Nos. 3 to 6 to the moiety of commission for the years 1940 and 1941.

Issue-wise Detailed Analysis:

1. Validity of the Resolution Appointing Motilal on February 8, 1942:
The plaintiffs contended that the general meeting on February 8, 1942, appointing Motilal was invalid as it continued post-dissolution by Seth Sobhag Mal. The court examined the agreement dated July 6, 1906, and the subsequent incorporation of the Edward Mills Co. Ltd. The court noted that the shareholders had the right to elect the chairman in the absence of a permanent chairman or managing director. Seth Sobhag Mal's dissolution of the meeting was unauthorized as he was not the permanent chairman. The court cited precedents establishing that a chairman cannot arbitrarily dissolve a meeting without the majority's consent. The court concluded that the remaining shareholders were within their rights to continue the meeting and appoint Motilal, making the resolution valid.

2. Applicability of Section 69 of the Indian Partnership Act, 1932:
The plaintiffs argued that the agreement of 1906 was between two individuals, not joint family firms, and thus Section 69 did not apply. The court found that the suit was filed on behalf of the firm, Kamal Nayan Hamir Singh, which, after the partition suit in Calcutta High Court, became a partnership subject to the Indian Partnership Act. The court held that Section 69 barred the suit as the firm was not registered. The court referenced multiple precedents affirming that a suit by an unregistered firm is incompetent and must be dismissed.

3. Existence of an Implied Agreement Between the Plaintiffs and the Defendant-Company:
The plaintiffs claimed an implied agreement based on the company's actions post-incorporation. The court held that a company cannot ratify a pre-incorporation contract but can enter into a new contract on the same terms. The court found no evidence of a new contract between the company and the plaintiffs. The court cited legal principles and precedents, including Kelner v. Baxter and In re Northumberland Avenue Hotel Company, to support its conclusion that the company was not bound by the pre-incorporation agreement.

4. Entitlement to the Moiety of Commission for the Years 1940 and 1941:
The plaintiffs sought Rs. 23,061 as their share of the commission for 1940 and 1941. The court noted that the trial court found the claim uncontested by the defendants but did not pass a decree. The court referenced Order 12, Rule 6 of the Civil Procedure Code, which allows for judgment on admissions. The court concluded that the trial court should have passed a decree for the uncontested amount based on the defendants' admission during arguments.

Conclusion:
The appeal was partly accepted, and the court passed a decree for Rs. 23,061 in favor of the plaintiffs and defendants Nos. 3 and 4 against defendant No. 1, the company, for the commission of 1940-41. The appeal was dismissed in other respects, and the parties were left to bear their own costs.