9911796707
TMI Blog1978 (6) TMI 152X X X X Extracts X X X X X X X X Extracts X X X X ..... was the manager of the Bombay branch. By an agreement in writing dated 16th of February, 1974, executed between the American company and the defendants Nos. 1, 2 and 3, the American company agreed to sell and transfer to the defendants Nos. 1, 2 and 3, the entire business of the American company as a going concern with effect from the 1st of December, 1973, together with all benefits, assets, properties, losses, book debts, liabilities, for the total price of rupees equivalent to 2,00,000 dollars. The salient terms and conditions of the said agreement were first of all that the said transfer would be completed on or before the 1st of June, 1974, after obtaining the consent and approval of the Reserve Bank of India under the provisions of the Foreign Exchange Regulation Act, secondly, the vendee shall take over and retain in its employment all the staff, employees, workmen and other personnel employed by the American company at various places in India, on the same terms and conditions of their services as they were with the American company, thirdly, the Indian company will allow the employees to participate in the share capital of the company to the extent of 15 per cent. On t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p basis and on equal terms with that of the defendants Nos. 1, 2 and 3 in the said company. It is his further case that as a result of various assurances, discussions and negotiations it was agreed that the petitioner, Mr. Malkani, would be appointed as a director and he would have equal rights along with the other three defendants in respect of the shareholding, rights and responsibilities in terms of the articles of association of the company. In this respect many correspondence passed by and between the parties wherefrom it would appear that the defendants Nos. 1, 2 and 3 agreed to take the plaintiff as a working director of the defendant No. 4 at the next general meeting which was due to be held in November, 1976. In the meantime, they agreed to take him as an additional director for which the petitioner was required to give a letter of consent and a draft consent prepared by M/s. Orr Dignam Company was sent by the defendant No. 1 to the petitioner. At a meeting of the board of directors held on 16th of February, 1976, the petitioner was appointed as a working director of the defendant No. 4 and by a letter dated 23rd of December, 1976, the defendant No. 1 communicated the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erfering with his services as a branch manager of the company. Various orders have been passed in this suit. The first of such orders was passed by his Lordship Mr. Justice S.C. Deb on 25th of January, 1978, whereby his Lordship injuncted the defendants as the directors of the defendant No. 4 from allotting any share, except to the employees of the defendant No. 4 for 10 days and also injuncted the defendants and the directors of the company from interfering with the functions of the plaintiff as a director of the defendant No. 4 and/or terminating as a manager of the Bombay branch of the defendant No. 4 or National Cash Register Co. Thereafter, the suit and the application were released by his Lordship Mr. Justice S. C. Deb and by way of special assignment they appeared before me. On 10th of February, 1978, I modified the order passed by his Lordship Mr. S.C. Deb to the extent that till the hearing of the application the plaintiff will not act or hold himself as the director of the defendant No. 4. Thereafter, another application was taken out on behalf of the petitioner seeking for various directions in respect of various details of management, control and administration of the B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s should be granted in favour of the petitioner. He further submitted that cases involving personal relations and of personal nature should be distinguished from professional management of impersonal nature and in such cases there is no reason why specific performance should not be granted of any contract of employment which does not involve relationship of personal character. He further referred to cases reported in AIR 1914 Cal. 362 and [1906] ILR 33 Cal. 351, AIR 1925 Cal. 233 (Ram Sadan Biswas v. Mathura Mohan Hazra) and [1932] 36 CWN 291 and AIR 1932 Cal. 353 (Nand Lal Mukherji, In re ) and submitted that the court's power to grant an interim injunction is not limited in such a case to the provisions of the Specific Relief Act but the court in special circumstances may grant an order of injunction under O. 39 of the CPC. His second submission was that the plaintiff's position as a director should not be disturbed by the defendants till the hearing of this suit. He drew my attention to the fact that although Mr. Malkani was required to take the qualification share within two months from the 1st of August, 1976, before the said period of the two months expired, the arti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted that he has taken this point in the affidavits in reply and the court is entitled to pass an order taking into consideration all the facts as pleaded in the affidavit-in-reply. Mr. Sankar Das Banerjee, Mr. Ashoke Sen, Mr. Samiran Sen, Mr. Sankar Ghosh, Mr. Sudipta Sircar and R.C. Nag appeared on behalf of the defendants. The first point taken by them is, the petitioner is not entitled to get any order of injunction restraining the company from interfering with or dispensing with his services as a branch manager of the company at Bombay as the court will not specifically perform a contract of personal service by giving an order of injunction ; secondly, Mr. Ghosh submitted that Mr. Malkani by not taking the qualification share within two months' time has disqualified himself to remain or act as a director; thirdly, Mr. Malkani by not disclosing his position or office of profit in the company has disqualified to remain as a director ; fourthly, the board of directors under the articles of association of the company cannot appoint any new directors, and as such any appointment by the directors is ultra vires the articles and is not binding on the company. Mr. Ghosh's further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n clear and unambiguous language. In a case reported in AIR 1976 SC 888 (Executive Committee of Vaish Degree College v. Lakshmi Narain), it has been held that, "a contract of personal service cannot ordinarily be specifically enforced and a court normally would not give a declaration that the contract subsists and the employee, even after having been removed from service, can be deemed to be in service against the will and consent of the employer. This rule, however, is subject to three well recognised exceptions ( i ) where a public servant is sought to be removed from service in contravention of the provisions of art. 311 of the Constitution of India ; ( ii ) where a worker is sought to be reinstated on being dismissed under the industrial law ; and ( iii ) where a statutory body acts in breach or violation of the mandatory provisions of the statute". The relief of declaration and injunction under the provisions of the Specific Relief Act is purely discretionary and the plaintiff cannot claim it as of right. The relief has to be granted by the court according to the sound legal principles and ex debito justitiae. The court has to administer justice between the parties and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tate Warehousing Corpn. v. Chandra Kiran Tyagi) and AIR 1958 SC 1050 (Dr. S. Dutt v. University of Delhi). Applying the principles as laid down amongst other cases and in the case reported in AIR 1976 SC 888 (Executive Committee of Vaish Degree College, Shamli v. Lakshmi Narain) the plaintiff's case is not a case of any special circumstances, as such it does not fall in any of the three categories of exceptions as laid down by the Supreme Court of India. Generally, when there is an adequate remedy in damages injunction will not be granted. An injunction is granted in aid of the legal right sought to be established. While granting an order of injunction, the court will have first to see that there is a bona fide contention between the parties and then on which side in the event of obtaining a successful result of the suit will be the balance of inconvenience if the injunction is not issued. The petitioner who seeks the aid of the court must be able to show a fair prima facie case in support of his claim although he need not make out a clear legal title but he must satisfy the court that he has a fair question to raise as to the existence of his legal right which he se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... employer. The position of a manager requires a lot of confidence reposed by the employer in him as he is required to perform his duties with utmost confidence and with best competency. As such, the court should not impose the services of such a person on an employer who has lost confidence in him. Moreover, the service of a manager is in the nature of a personal service which cannot be specifically enforced by a court of law. Under section 14 of the Specific Relief Act no injunction should be granted in respect of, ( a ) a contract for the non-performance of which compensation in money is an adequate relief, ( b ) a contract which runs into such minute or numerous details or which is so dependent on the personal qualifications or volition of the parties, or otherwise from its nature is such that the court cannot enforce specific performance of its material terms, ( c ) a contract which is in its nature determinable, ( d ) a contract the performance of which involves the performance of a continuous duty which the court cannot supervise. Applying the said principles, in the present case, I am of the opinion, and I find that the plaintiff has not made out any special case which would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... new director. Moreover, the directors have no right to enter into any agreement where the company is not a party to it to bind the company with such an agreement. Whether there was such a valid agreement or not would be the subject-matter of this suit but at the moment certain factors are important for the purpose of a decision for granting an interim relief pending the disposal of the suit. It is an admitted case that Mr. Malkani, although required to take a qualification share of Rs. 100, failed to do so in terms of the articles of association of the company. Although the articles of association of the company have been amended and/or modified, yet the said amendment has not been given any retrospective effect. Moreover, Mr. Malkani, although he has submitted that his holding of the position of the branch manager is an office of profit with the company was known to the company and in spite of that knowledge the board of directors have decided to appoint him as a director, in my opinion, that does not absolve Mr. Malkani from satisfying the provisions of section 314 of the Companies Act. Under section 314 of the Companies Act, only when the company accords its consent by a special ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Companies Act the company has not by its special resolution accorded or exempted the plaintiff from such disqualification. As such, the plaintiff is not entitled to get any advantage of the minutes of the board meeting as also of the meeting of the shareholders of the company. Mr. Ghosh also submitted that from the minutes of the meeting dated 8th of January, 1978, it would be abundantly clear that the shareholders of the company and the directors do not wish to have Mr. Malkani as a director of the company. As such, the court should not impose an undesirable director on the company. More so, when the company at its next meeting would remove the said director and the court's order would be rendered nugatory by the company at the first available opportunity. As such, the court should not interfere with the internal and/or domestic affairs of the company. The articles of association of the company give power to the company to appoint a director and to nobody else. In this respect, Mr. Ghosh referred to a case reported in [1888] 37 Ch. D 1 (CA) (Browne v. La Trinidad) and the case reported in [1974] 2 All ER 653 ; [1974] 1 WLR 638 (Ch D) (Bentley-Stevens v. Jones), where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icles of association of the company or removable under the articles and there the court held that it was completely outside the power of the directors and competence to enter into any agreement which would entirely deprive the company of its right under the articles of association. In this case also, the company, not being a party to the said agreement, could not be held to be bound by an agreement entered into by and between the directors and Mr. Malkani. The company has not ratified and/or accepted the said agreement entered into by its directors with the plaintiff. As such, I am inclined not to pass any order injuncting the company and/or the respondents from interfering with the plaintiff's position as a director of the company. With regard to the last point of allotment of shares there is neither any averment in the plaint nor in the petition challenging the allotment of the said shares by the company in favour of the defendants Nos. 1, 2 and 3. Mr. Roy's submission that in view of the fact that no return has been filed with the Registrar of Companies in respect of the allotment of the shares and as such the allotment of the said shares are invalid and not binding on the petit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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