Mathew, J.:— The 3rd defendant is the appellant. Defendants 3 to 5 were Directors of the 1st defendant company. Item No. 4 in the agenda of the annual general meeting of that company held on 23rd March, 1961 was the election of three Directors in the place of defendants 3 to 5 who were due to retire. Defendants 3 to 5 sought re-election and it was resolved in that meeting that there should be separate elections to the three posts. The first election was to fill up the vacancy to be caused by the retirement of the 5th defendant. The plaintiff was a candidate, and he contested the election, but was defeated, and the 5th defendant was elected. Then two shareholders moved a resolution that the election of the two other Directors may be postponed. The chairman disallowed the motion. Thereafter the plaintiff was proposed as a candidate to fill up the vacancy to be caused by the retirement of the 3rd defendant. But the chairman ruled that he was not qualified to stand as a candidate as he was already defeated in the contest with the 5th defendant. In the election the 3rd defendant was declared elected. The suit was for a declaration that the proceedings of the meeting as regards the election of the Directors were null and void, and for an injunction restraining defendants 3 to 5 from functioning as directors and for directing the 1st defendant company to hold a meeting for electing the three Directors. Several allegations were made in the plaint challenging the validity of the election. The main defence was that the question raised in the suit related to the internal management of the 1st defendant company and that the suit was incompetent.

2. The courts below held that the chairman, acted illegally in disallowing the nomination of the plaintiff to the vacancy caused by the retirement of the 3rd defendant, that the question raised in the suit did not relate to purely internal management of the 1st defendant company and that the suit was competent. They also held that no direction could be given for convening a meeting of the company for electing the Directors. The only point argued before me was that the suit was not maintainable, since the matter related to and was entirely concerned with the internal management of an incorporated company. In order to decide the question whether the ruling of the chairman that the plaintiff has no right to stand as a candidate for election to the post of a Director raised a justiciable issue, one has to look into the nature of the right which the plaintiff was asserting in the case. There are two kinds of rights for a member of the company, one the individual membership right, and the other the corporate membership right. So far as the corporate membership rights are concerned, a shareholder can assert those rights only in conformity with the decision of the majority of the shareholders. An individual membership right is a right to maintain himself in full membership with all the rights and privileges appertaining to that status. This right implies that the individual shareholder can insist on the strict observance of the legal rules, statutory provisions and provisions in the memorandum and articles which cannot be waived by a bare majority of shareholders. The distinction between individual membership rights and corporate membership rights of a shareholder is founded on the following consideration:

“By his contract with the company (and the other members; of Section 20) the shareholder undertakes with respect to some—and, in fact, most—rights which his membership carries, to accept as binding upon him the decisions of the majority of shareholders, if arrived at in accordance with the law and the articles; these membership rights are known as corporate membership rights. Other rights of the shareholder, according to his contract with the company, cannot be taken away from him unless he consents; if such right is in question, a single shareholder can, on principle, defy a majority consisting of all the other shareholders. Rights of this type are known as individual membership rights.” (See Palmer's Company Law, 20th Edn., page 492.)

4. So far as individual membership right is concerned every shareholder has got the right to assert it in his own name, but if the infringement of a corporate membership right is alleged, his remedy is a representative action on behalf of himself and other shareholders or in some instances, an action in the name of the company. Individual membership right should not be confused with the rights available for qualified minorities. The question for decision therefore is whether the particular right asserted in this case is an individual membership right or a corporate membership right. If it is a corporate membership right it is subject to the will of the majority provided that will is expressed in accordance with the law and the articles. With respect to this right the principle of supremacy of the majority will apply and the rule in Foss v. Harbottle (1843 (2) Hare 461) will get itself attracted. In that case, the minority of shares-holders had a claim in damage against some of the Directors by reason of the fraudulent act of those Directors. At the general meeting, the majority resolved that no action should be taken against the delinquent Directors. Two of the minority shareholders took out legal proceedings against the Directors and others to compel them to make good the losses to the company; but the court dismissed the action on the ground that as the acts of the Directors were capable of being ratified by the majority of the members, the court should not interfere. It was left to the majority to decide what was for the benefit of the company and their decision cannot be questioned except under certain well-defined circumstances.

5. In Nagappa v. Madras Race Club (A.I.R 1951 Mad. 831 (2)) it was held that the right of a shareholder to vote or his right to stand as a candidate for election as a Director of the company, is an individual membership right, which he can assert in his own capacity without the sanction of the majority or without impleading the company as a co-plaintiff or defendant.

6. In Pender v. Lushington ((1877) 6 Ch. D. 70) it was observed that the right to exercise his vote by a shareholder in a company is an individual right, and that an infringement of that right will give rise to a justiciable issue. In that case, a resolution of the general meeting would have been carried, had the Chairman not disallowed the nominee holding on behalf of the plaintiff. The plaintiff sued on behalf of himself and other members who had voted with him naming the company as co-plaintiff. He asked for an injunction to restrain the Directors from acting on the basis that the nominee votes were inadmissible. Jessel, M.R granted injunction and ordered that the company's name should remain on record until a general meeting was convened and had decided whether the company wish to sue and act as plaintiff. In the course of his judgment the learned Judge said:

“But there is another ground on which the action may be maintained. This is an action by Mr. Pender for himself. He is a member of the company, and whether he votes with the majority or the minority he is entitled to have his vote recorded—an individual right in respect of which he has a right to sue. That has nothing to do with the question like that raised in Foss v. Harbottle and that line of cases. He has a right to say, ‘whether I vote in the majority or minority, you shall record my vote, as that is a right of property belonging to my interest in this company, and if you refuse to record my vote I will institute legal proceedings against you to compel you.’ What is the answer to such an action? It seems to me it can be maintained as a matter of substance, and that there is no technical difficulty in maintaining it.”

7. In Edwards v. Halliwell, (1950) 2 All E.R 1064 at p. 1067) Jenkins L.J, observed:

“The personal and individual rights of membership of each of them have been invaded by a purported, but invalid alteration……In those circumstances it seems to me the rule in Foss v. Harbottle has no application at all, for the individual members who are suing, sue not in the right of the member but in their own right to protect from invasion their own individual rights as members.” (See also Halsbury's Laws of England, Third Edition, Vol. VI, page 419, Article 811).

8. In Star Tile Works v. N. Govindan (1959 K.L.J 309 : A.I.R 1959 Ker. 254) a Division Bench of this Court had occasion to consider a more or less similar question and the learned Judges came to the conclusion that if the individual membership right is infringed, an action to vindicate it is permissible.

9. In Nagappa v. Madras Race Club (A.I.R 1951 Madras 831 (2)) already referred to, it is observed:

“The rule in Foss v. Harbottle…. is that a Court will not interfere with the ordinary management of a Company acting within its powers, and has no jurisdiction to do so at the instance of the shareholders. A shareholder is entitled to institute a suit to enforce his individual rights against the Company, such as his right to vote, or his right to stand as a director of a Company, at an election. If the shareholder however intends to obtain redress in respect of a wrong done to the company, or to recover monies as damages alleged to be due to the Company, the action should ordinarily be brought by the Company, itself.”

10. The rule in Foss v. Harbottle (1843 (2) Hare 461) is subject to a number of exceptions. But it is not necessary to pursue that question on the facts and circumstances of this case.

11. It was argued for the appellant, relying on Ram Narain v. Ram Kishen (10 I.C 515 at p. 523) that all questions relating to the regularity of the meeting of the company and votings therein are matters relating to the internal management of the company. The question there was whether a shareholder was entitled to recover damages from the chairman who illegally refused to record the plaintiff's vote in that case. It was held that a shareholder who had been wrongfully refused the right to vote for election of a director cannot maintain an action for damages against the chairman of the company without alleging and proving that the latter was actuated by malice and that the mere deprivation of the right of the plaintiff to vote would not entitle him to damages. Here no question of damages arises. The ruling is no authority for the point in controversy in this case. I do not think that the observations of Mallish, L.J, quoted in that Judgment are controlling. The quotation is as follows:

“……If a thing complained of is a thing which in substance the majority of the company are entitled to do or if something has been done irregularly which the majority of the company are entitled to do regularly, or if something has been done illegally which the majority of the company are entitled to do legally, there can be no use in having a litigation about it, the ultimate end of which is only that a meeting has to be called and then ultimately the majority gets its wishes……”

12. In this case, the wrong done to the plaintiff is not a wrong which the majority can ratify as it would be against the provisions of the Articles of Association, and it is settled by authorities that a shareholder can insist on the strict observance of the legal rules, statutory provisions and provisions in the memorandum and articles which cannot be waived by a bare majority of shareholders. In these circumstances, I am of the view that the contention that the plaintiff had no right to move the Civil Court must be overruled. I therefore hold that the suit was maintainable. The only other point argued by counsel for the appellant was that as the plaintiff prayed for holding a meeting for carrying on the election and as that was rejected by both the courts below, the plaintiff was not entitled to have the declaration of the invalidity of the 3rd defendant's election as director. It cannot be said from this circumstance that the plaintiff's suit was not maintainable. The plaintiff's spit was maintainable because there was the prayer for the consequential relief to hold a meeting from the stage at which the chairman declared the plaintiff to be incompetent to stand for election. I can see no point in the argument of counsel that since the consequential relief was not granted by the courts below, the prayer for declaration of the validity of the election cannot stand.

14. In the circumstances, the appeal has to be dismissed, and I do so with costs.