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TMI Blog1955 (11) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... 2,000 preference shares of the face value of Rs. 100 each. The first four directors were the plaintiff, the first defendant the second defendant and Chandulal B. Nanavati whose widow is the third defendant. In the first allotment of shares which was on 8th March, 1938, 250 ordinary shares were allotted to the first defendant. In the second allotment which was on 8th June, 1938,85 ordinary shares were alloted to the first defendant. In the third allotment which was on 28th April, 1941, 500 ordinary and 500 preference shares were allotted to the first defendant. On 6th August, 1953, the first defendant transferred out of the ordinary shares first allotted to him 50 to his grandson Mahesh, 50 to another grandson Madhukar and 50 to his third ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the group indicated in article 88, the group consisting of Jivanlal, his wife, children, or child, and as 150 shares had been transferred to his grandchildren they do not constitute members of the group and therefore the first defendant no longer holds the first 250 ordinary shares allotted to him. Then the rest of article 88 makes similar provisions with regard to other directors, with which we are not concerned. The last paragraph of article 88 provides that the above-named Mr. Jivanlal C. Chinai shall be deemed to have been appointed by the said Mr. Jivanlal C. Chinai, which means that article 88 having given the power to Jivanlal to nominate either himself or anyone else as a nominated director, the article itself provides that Jiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contingencies mentioned in that section take place. That is a statutory provision and the articles of association, cannot detract from the provisions contained in this section. But sub-section (2) provides that nothing contained in this section shall be deemed to preclude a company from providing by its articles that the office of director shall be vacated on grounds additional to those specified in this section. Therefore, it is open to the articles of association to provide for cases other than those mentioned in section 86(1) which would render the office of a director vacant. But just as the grounds on which the office of a director is vacated are specified in section 86(1), the additional grounds must equally be specified in the artic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry to give to the transaction such business efficacy as the parties must have intended. This does not mean that the court can embark on a reconstruction of the agreement on equitable principles, or on a view of what the parties should, in the opinion of the court, reasonably have contemplated. The implication must arise inevitably to give effect to the intention of the parties." Applying this test, can it be said on reading these articles that it goes without saying that a director appointed by the group mentioned in article 88 vacates office as soon as the appointing authority ceases to hold the shares referred to in article 88? Or, to apply the second test, can it be said that this implication must arise inevitably to give effect to the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rector vacating office. It mentions death and it mentions "otherwise". Obviously "otherwise" refers to the grounds mentioned in article 94 and also the grounds mentioned in section 86(1). Mr. Rege wants us to give a wide meaning to the expression "otherwise" and to hold that this particular contingency which was to take place would be included in the expression "otherwise". "Otherwise" can only mean that the director vacates office according to law or according to the articles of association; "otherwise" cannot incorporate a fresh ground of disqualification which is neither to be found in the articles or in section 86(1) of the Companies Act. Therefore, in our opinion, the learned Judge was right in the view that he took that the mere fac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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