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TMI Blog1978 (5) TMI 131X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Specific Relief Act. The judgment on this application was delivered by Mr. M. S. Rohilla, Sub Judge 1st Glass, Delhi, on 15th March, 1978, who held that the contract of service of Managing Director or Joint Managing Director being a contract of personal service could not be the subject-matter of an injunction which would have the effect of specifically performing that contract. It was observed that the only remedy available in such a case was to get compensation for damages. Another point which weighed with the learned Subordinate Judge was that the Managing Director had in any case to relinquish the office on 30th September, 1979, as per terms of the agreement and the grant of the injunction would virtually amount to decreeing the suit. It was also held that the terms of office of the second plaintiff had to expire on 28th February, 1978, and hence, no relief could be granted in her case. (2) An appeal was taken by the plaintiffs to the Senior Subordinate Judge who admitted the appeal and granted an interim injunction restraining the holding of a meeting by the Board of Directors of M/s. Sylvania Laxman Limited for the purpose of removing Mr. L. S. Aggarwal from the of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat an appeal which was filed before the Senior Subordinate Judge seems to have come for decision before that Company Judge in the High Court. [In para 5 argument about departure from rule, that no injunction in personal service matters, is noticed: 1971 3 All E. R. 1345 (5) The suit as well as the present application are concerned with a proposed meeting of the Board of Directors of M/s. Sylvania and Laxman Limited to be called for the express purpose of removing the third plaintiff from office of Managing Director and the second plaintiff from the office of Joint Managing Director. No doubt, the second plaintiff has already relinquished her office because of the termination of which the Central Government granted permission under the provisions of the Companies Act. Still, if the Central Government extends this permission, she may again be able to hold the office. Therefore, I will deal with this case as if the second and third plaintiffs continue even today to hold the offices of Managing Director and Joint Managing Director respectively. (6) The purpose of the impugned meeting which is sought to be restrained is to remove these two persons from the offices they hold by pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was in force i.e. five years in the case of the Managing Director and this would create a liability for damages. On the other hand, it might be argued that the resolution is void being ultra virus of the powers of the Board of Directors. Such a point would involve the construction of Article 130 which reads : Subject to the provisions of Section 197-A, 269, 316 and 317 of the Act, the Board may from time to time appoint one or more Directors to be the Managing Director of the Company and may from time to time (subject to the provisions of any contract between him/ her/them and the Company) remove or dismiss him/her/them from office and appoint another or others in his/her/their place or places. The Court could then decide whether the action taken is ultra virus or not. (8) There are two well-known cases cited before me concerning these possible results. In Southern Foundries v. Shirlaw (1940) 2 All. E.R. 445, the Managing Director of a company had challenged in a suit on the ground that the action had been taken under amended Articles of the Company. The Managing Director in this case was appointed for a period of ten years on 21st December, 1933 and the Articles at that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ultra vires. The effect of that judgment was to give a declaration that the removal of such directors was ineffective. It also appears in that case that two injunctions were granted by the High Court at Calcutta, but one of these injunctions was discharged by the Privy Council. This is a clear indication that the Court has power to grant an injunction after giving a declaration that a particular resolution is invalid. One of the points urged in this appeal before the Privy Council was that the continuation of the Managing Director's appointment amounted to enforcement of a contract of personal service and was Therefore contrary to Section 27(b) of the Specific Relief Act, 1877. Their Lordships held- The effect of the decree appealed against is not, however, of that nature. It merely prevents dismissal of the managing agents or termination of their appointment at the instance of a majority in violation of articles of association of the company which the minority are entitled to have observed. As between the company and the managing agents it certainly has not the effect of enforcing a contract of personal service. Thus, assuming that the termination of services of Mr. L ..... X X X X Extracts X X X X X X X X Extracts X X X X
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