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TMI Blog1989 (3) TMI 330X X X X Extracts X X X X X X X X Extracts X X X X ..... business. The plaintiff, Mr. D. Ross Porter, is the Assistant General Counsel to the said company and is one of its directors. Pioneer Seed Co. Ltd. (PSCL), the defendant, is a company incorporated under the provisions of the Companies Act, 1956, having its registered office at A-311, Ansal Chamber, I-3, Bhikaji Cama Place, New Delhi. It was incorporated on February 28, 1977, with the object of developing, growing, raising, processing, buying and selling, export, import and dealing in all kinds of seeds. PSCL is stated to have been set up and financed by PHI. The authorised capital of PSCL is Rs. 30 lakhs. Its subscribed and paid-up capital is Rs. 5 lakhs. PHI holds 2,000 shares of the face value of Rs. 100 each. Dr. Surinder M. Sehgal and Mrs. S. Kapoor hold 1,000 and 1,996 shares of Rs. 100 each, respectively. Remaining four shares are held by others. Dr. Sehgal transferred his entire shareholding in PSCL to Asian Investment Inc., a company wholly owned by Dr. Surinder M. Sehgal. Till March, 1988, Dr. Sehgal was the vice-president of PHI and being a trusted employee of PHI, he and his sister, Mrs. Kapoor, were allotted the shares mentioned above. Till April 22, 1988, PHI, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ligations and was guilty of misfeasance and breach of trust inasmuch as he became a director in Regency Megnatics Pvt. Ltd. along with Mr. Brij Anand, Mr. K. N. Mishra and Mr. P. D. Ranjan of which PHI was funding the entire operation. The purpose of floating this company was to have an alternative to PSCL and to set up competition in India and that there was conflict of duty and interest and the plaintiff had violated laws of India in a conspiracy to defraud the defendant-company and its majority shareholders. In the suit, the plaintiff had filed an application (I. A. No. 7194 of 1988) for granting temporary injunction restraining the defendant from implementing the resolutions passed in its meeting held on October 24, 1988, and directing the defendant to ensure that the plaintiff was duly represented in the board meeting through Mr. Brij Anand. This application was vehemently opposed. The main defence was that the plaintiff had set up two companies which had competitive interest with the defendants. After examining the facts and circumstances of the case, P. K. Bahri J. by order dated January 18, 1989 ( D . Ross Porter v. Pioneer Seed Co. Ltd. [ 1989] 66 Comp. Cas. 363 (D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gent who may not himself contract with his principal and that it further is similar to that of a trustee who, however fair a proposal may be, is not allowed to let the position arise where his interest and that of the trust may conflict." A Division Bench of the Bombay High Court in Life Insurance Corporation of India v. Hari Das Mundhra [1966] 36 Comp. Cas. 371, 411, observed: "A director is in the position of an agent of the company; charged with the obligation of carrying on its business. The nature of his duties is determined partly by statute and partly by the law of agency. As agent, he owes two duties to the company the duty of loyalty and the duty of care. Breach of these duties, speaking generally, amounts to breach of trust and misfeasance." To me, it is clear that sub-section (4) of section 209 of the Companies Act confers on the director a statutory right of inspection of the books of account and other books and papers of a company. At the same time, there is a fiduciary relationship between the director and the company. His position is similar to the position of an agent and a trustee. Is the court bound to grant a mandatory temporary injunction to enforce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o arise from granting it. In Cuff v. London and County Land and Building Company Ltd. [1912] 1 Ch. D. 440, Farwell L.J., at page 449, observed as under: "It is one thing to say that a man has a statutory right and it is quite another thing to say that the court, in the exercise of its judicial discretion, is bound to grant a mandatory injunction in order to give effect to such right." In support of this contention that the discretionary relief of temporary mandatory injunction should not be granted, Mr. Kapil Sibbal, counsel for the defendant, has relied on the deposition of Mr. Kamendra N. Mishra, made before the Iowa District Court for POLK Country. On behalf of the plaintiff, an objection was raised that this deposition was governed by a protective order. This fact was denied on behalf of the defendant. In any case, no law was shown to me that this court could not read this deposition in evidence. If the defendant has violated any law of the USA, by producing it in this court, it would face the consequences. A perusal of this deposition reveals that Regency Magnetics (RM), an Indian company, was set up and funded by Pioneer. It was carrying on seed business in India. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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