9911796707
TMI Blog1952 (10) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... ant to look after the duties of secretary and treasurer temporarily. Plaintiff filed a petition under section 144 of the Criminal Procedure Code in the Stationary Sub-Magistrate's Court and obtained an order in his favour, which was vacated by the High Court on the 24th of August, 1950. Exhibit A-5 is a letter written by the second defendant as chairman of the board and as secretary and treasurer to the plaintiff forwarding to him copy of the board's resolution, which found him guilty of certain charges, suspended him from acting as secretary and treasurer, with a recommendation for his outright dismissal to an extraordinary general body meeting to be convened for the purpose along with the annual general body meeting to be held during the year. This course, however, was not adopted and on 25th July, 1950, the board removed the plaintiff from the post of secretary. This suit was filed on 1st October, 1950. The scope of the suit is very limited and confined to the articles of association of the company. Plaintiff has not sued for damages for wrongful removal or dismissal, but for a declaration that he still continues to be the secretary and treasurer on the ground that the board h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that by this combination of circumstances the appointment of the plaintiff as sole secretary and treasurer was in fact from 1938 under Article 111 of the company. It is common ground that plaintiff is himself a substantial shareholder and that the company did not itself run the jute mills from 1940 since when it has been annually leased out to the East India Commercial Company, Calcutta. There was, therefore, apparently not much day-to-day business for the sole secretary to do. The short point for consideration is the legal effect of the memorandum and articles of association. Under section 21 of the Indian Companies Act, "The memorandum and articles shall, when registered, bind the company and the members thereof to the same extent as if they respeletively had been signed by each member and contained a covenant on the part of each member, his heirs and legal representatives, to observe all the provisions of the memorandum and of the articles subject to the provisions of this Act." There is a long catena of English decisions, which have unhesitatingly laid down that not only a third party, but even a shareholder cannot sue the company on anything contained in the articles, tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specified sum per annum. The company reduced this by a special resolution, whereupon the plaintiff resigned and sued the company for three months' remuneration for services prior to the date of his resignation. The court held that he was entitled to recover on the footing of an implied contract in the terms of the clause. "The articles", said LORD ESHER, "do not themselves form a contract but from them you get the terms upon which the director is serving." The articles undoubtedly constitute evidence in a wide field such as the terms of remuneration of managing director, secretaries, treasurers and so on Palmer has observed at page 31 that the question whether an implied contract so entered into was capable of being varied by the company against the will of the other party has not been finally decided and he has cited decisions which appear to take different views. A discussion of those decisions would not be relevant for purposes of the present appeal. We have been referred to no decision either in English or in Indian law in which a shareholder has succeeded, after removal from an office in the company, in obtaining a declaration that such removal was invalid and that despite it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... board of directors at a meeting was competent to remove the plaintiff from the post of secretary and treasurer and whether this can only be validly done by a special resolution at an extraordinary general body meeting. The plaintiff has sued only in his capacity as secretary and treasurer and, as Mr. Thyagarajan has urged, his position as director is derived from his appointment as secretary. We find on the pure question of law, on which this appeal is pressed, that the plaintiff has no cause of action against the company as such on the basis of the articles of association and that his appointment as secretary must be regarded as one de hors the articles and governed by an independent contract as between the plaintiff and the company, as regards which there is no other evidence apart from the articles themselves. In Ramkumar Potdar v. The Sholapur Spinning Weaving Co., Ltd., a Bench of the Bombay High Court held that the court does not interfere with the internal management of the affairs of a company and that, if a majority of shareholders consider that a particular contract of employment should be terminated, the court would not ordinarily consider the matter at the ins ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pendency of those proceedings will not make this suit for mere declaration maintainable. It is urged that there are some decisions in which courts have granted relief by way of mere declaration in case of removal from an office. We have been referred to the Privy Council decision in High Commissioner for India v. I.M. Lall. Mr. Lall, a member of the Indian Civil Service, was dismissed from service on certain charges. He filed a suit, which was tried by a Bench of the Lahore High Court in the first instance in which he asked for a declaration that his removal was ultra vires and invalid under section 240 of the Government of India Act and for consequential relief that he still continued to be a member of the Indian Civil Service and was entitled to all the rights and privileges attaching to the office. The High Court gave him only the declaration he sought and, on appeal, the Federal Court, while confirming the declaration that his removal was wrongful, permitted him to amend his plaint with a consequential relief for damages and remitted it to the trial court for further disposal. Their Lordships of the Privy Council in an appeal against the decision of the Federal Court me ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
