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TMI Blog1952 (9) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... m entering into any contract for the sale, purchase or supply of goods and materials with the company. The disqualification is not absolute, because the section provides that with the consent of the directors, a director can enter into contracts which are prohibited under this section. It is clear that in enacting this provision, which is a novel provision and finds no place in the English Companies Act, the Legislature wanted to suppress a particular mischief and had a particular object in mind. A director of a company occupies a responsible position and the Legislature wanted that while occupying that position he should not be placed in a situation where there would be a conflict between his interest and his duty. His duty would be to his company of which he is a director. His interest would be to enter into a profitable contract with the company. It is also clear that a director holding the position that he does can obtain undue benefit by entering into profitable contracts with the company, and in order to suppress that mischief and to achieve the object which the Legislature had in mind, section 86F was enacted. It is a well settled canon of construction that when we are consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out considering the particular material in respect of which the contract was to be entered into, in anticipation and generally can agree to a director or directors entering into contracts with the company. In other words, power is given according to Mr. Mody under section 86F to remove the personal disability which the Legislature has imposed upon the directors by section 86F. In our opinion, the Legislature having imposed a personal disability upon the directors under section 86F, the only power that is given to the board of directors is not to remove that personal disability generally, but to remove the personal disability with regard to a particular contract or contracts with regard to which the board of directors has applied its mind. The facts in this particular case are extremely striking and significant. The respondent wrote to the company on April 30, 1941, giving a list of the companies of which he was a director and also a list of the firms of which he was a partner for the purpose of giving particulars under section 87(1). Further, he gave a general notification under section 91A that he should be considered interested in any subsequent transactions with the companies a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acts entered into prior to the Companies (Amendment) Act, 1936. Then Mr. Mody says that if we were to place this construction on section 86F, it would lead to conflict with section 91A. Section 91A deals with entirely a different subject-matter. The subject-matter of section 91A is disclosure of interest by directors, and it provides that every director who is directly or indirectly concerned interested in any contract or arrangement entered into by or on behalf of the company shall disclose the nature of his interest at the meeting of the directors at which the contract or arrangement is determined on, if his interest then exists, or in any other case at the first meeting of the directors after the acquisition of his interest or the making of the contract or arrangement, and the consequence of contravention is that the director is liable to a fine. The consequence of a contravention of section 86F is much more drastic because under section 86-1 (h) the office of the director becomes vacant if he acts in contravention of section 86F. What Mr. Mody says is that if a contract is not determined on at the meeting of the directors, but is subsequently entered into, then the director ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... could have made the disclosure with regard to his interest at a subsequent meeting under section 91A. Therefore there is no such conflict between sections 86F and 91A which would require at our hands a construction of section 86F which will reconcile it with section 91A. Then Mr. Mody has drawn our attention to certain difficulties and anomalous consequences that would result by reason of the construction we are placing upon section 86F. Mr. Mody says that there are many petty contracts which a director may have to enter into with his company and with regard to which it would be impossible for him to take specific consent from time to time, and yet if the construction of section 86F be what we are proposing to put upon it, it would either make it impossible for the director to enter into these petty contracts or, if he did enter into them, would result in his vacating his office. It is never a safe guide for a construction of a section merely to look at certain anomalies that may result from a particular interpretation being put upon the section. It is true that a court must, if it can possibly do so, give an interpretation to a section which would not result in difficulties in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 86F is a general consent unrelated to the contract to be entered into by the director or the consent is with reference to a specific contract or contracts, and in the absence of any clear indication by the Legislature, we must try and give a construction more in accordance with the object intended by framing section 86F rather than a construction which would defeat that object. Mr. Mody has relied on an English case reported in Tyler v. Ferris. The English Appeal Court was called upon to construe section 14 of the Weights and Measures Act and that section provided: "An inspector of weights and measures may, with the consent, of the local authority, prosecute before a court of summary jurisdiction . or justices any information, complaint or proceeding arising under the Weights and Measures Act or in the discharge of his duties as such Inspector;" and the question that arose was whether a separate consent had to be given in each case or whether the Inspector could be authorised by the local authority to conduct all prosecutions, and the English Court of Appeal held that the section did not provide that a separate consent was to be given in each case and if that was the intent ..... X X X X Extracts X X X X X X X X Extracts X X X X
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