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Case Number

Original Suit No. 2235 of 1939.

Attorney(S)

P.C Ghose, Sudhish Roy and J.C Moitra for the plaintiff.
S. Chaudhuri and K.K Basu for the defendants.

Judges

Ameer Ali, J.

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Smart Summary

Judgment Summary — Ameer Ali, J.

Factual and Procedural Background

This opinion arises from an internal dispute within a modest insurance company which, as of late 1939, split into at least three competing factions described in the judgment as (1) amalgamationists, (2) isolationists, and (3) re-insurers. After proposed amalgamation with another insurance company (Aryasthan Insurance Company) was discussed and co-options made on October 1, 1939, two rival boards of directors developed and thereafter operated in parallel: one labelled the “B” board (composed largely of six co-opted directors and certain existing directors) and the other ultimately labelled the “C” board (formed later by resignations and fresh co-options).

Key events recorded in the opinion:

Notice for an ordinary general meeting issued on September 29, 1939 for a meeting on October 16, 1939.
On October 1, 1939 six persons were co-opted as additional directors and a manager from Aryasthan was appointed; resolutions to resign some existing directors were taken to keep the board within a prescribed limit.
On October 16, 1939 an ordinary general meeting was held where only two of the retiring directors were re-elected; nothing explicit was recorded there about the six co-opted directors.
An extraordinary general meeting fixed for October 31 produced two rival shareholder meetings held concurrently under different chairmen, one adopting amalgamation and the other rejecting it.
From late October, parallel minute books, records and claims of registration with the Registrar of Insurance Companies existed for both the “B” and “C” boards; the Government later cancelled the company’s registration certificate for non-payment of a required deposit under a new insurance Act.

Procedurally, the present suit was brought by a member of what the judgment calls the “C” board seeking declarations and injunctive relief that would oust the “B” board and recognise the plaintiff’s directorship. The court treated the pleadings and evidence and limited the contest, for present purposes, to whether the plaintiff is a director and to the applicability of Article 148 of the Articles of Association to co-opted directors. The court allowed limited further evidence on a counter-attack (alleged default in payment of calls) but ultimately did not rely on that additional evidence because of the main decision reached.

Legal Issues Presented

Whether the suit, as framed by the plaintiff, was competent to obtain the declarations sought to invalidate the resolutions of one rival meeting and validate the other.
Whether the plaintiff is a director of the company (i.e., whether he was validly appointed and not disqualified).
Whether the “B” board members are validly directors, specifically whether Article 148 of the Articles of Association applies to validate co-opted directors (and whether Article 148 is directory or mandatory).
Whether default in payment of calls prior to appointment and continuing thereafter disqualifies a person from directorship (as raised in the counter-attack against the plaintiff).

Arguments of the Parties

Plaintiff's Counsel (Mr. Roy)

Advanced a principal contention distinguishing two categories of retiring directors — “shareholders' directors” and “additional (co-opted) directors” — arguing that co-opted directors create a vacancy before the company meeting and are therefore in a different position from shareholders' directors.
Relied upon certain authorities (the opinion indicates he constructed his point on decided cases) to support the proposition that co-opted directors and shareholders' directors are of different legal quality for purposes of re-election and vacancies.
Presented the argument described in the judgment as the “share-holders' directors and additional directors' point,” though the judge noted some uncertainty as to its precise philosophical basis in the course of argument.

Defendants' Counsel / Respondents (as represented in argument by Mr. Ghose and the defendants generally)

Relied primarily on the language of the Articles of Association and on the authority In re Great Northern Salt and Chemical Works, Ex parte Kennedy to argue that Article 148 is directory and operates by creating a notional adjourned meeting (and therefore validates co-opted directors by a remedial construction).
Mr. Ghose advanced a set of specific points, summarised in the judgment as:

(a) Article 151 should be read so that “re-election” means re-election by directors (i.e., a directors' function).
(b) There was no notice for the October 16 meeting specifically setting out re-election of additional directors.
(c) Alternatively, the company had in fact determined not to re-elect additional directors on October 16.
(d) Article 148 is mandatory (not directory), relying on differences of language from older English schedule articles.
(e) The final words of Article 151 must be construed so that a proposal to appoint additional directors had to have been before the meeting as a condition precedent to any re-election of additional directors.

On the counter-attack point about default in payment of calls, counsel relied upon Dawson v. African Consolidated Land and Trading Company as authority to question whether continuing default prior to and after appointment is a disqualification; the court said it would not accept that proposition without further consideration.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
In re Great Northern Salt and Chemical Works, Ex parte Kennedy	That the Article in question (comparable to Art. 148) was directory only and could be remedially applied by treating a notional adjourned meeting and notional re-appointment.	The court treated this decision as directly relevant and followed its remedial approach: the judge held that Art. 148 applied (and, being directory, validated the position of the B board under the facts of the case).
Bluett v. Stutchbury's (Limited)	Appears to be cited for the proposition that a director not re-elected is not a director.	The court noted the reference but observed that the case, as recalled, did not establish more than the simple proposition “director not re-elected — not a director.” It did not play a decisive role.
Blair Open Hearth Furnace Company, Limited v. Reigart	Used by counsel to suggest that directors appointed by directors are of different quality to shareholders' directors.	The court concluded the case does not establish that retiring directors of different classes produce different legal consequences at a general meeting; it is confined to an issue about appointment power where the articles fixed a maximum number of directors.
Spencer v. Kennedy	Relates to the operation of an article comparable to Art. 148 (directory/remedial operation).	The court treated it as relevant to the interpretation of Art. 148 and indicated it might be referred to again, but used it principally to support discussion of Art. 148's operation.
Eyre v. Milton Proprietary, Limited	Relied upon by plaintiff's counsel to argue that additional directors are in a different position before a meeting than shareholders' directors.	The court observed that the decision in that case turned on a special article providing shareholders' directors would act throughout the meeting; on the court's reading, it did not support the notion of two legal species of vacancy on retirement at the general meeting.
Dawson v. African Consolidated Land and Trading Company	Cited in relation to whether default in payment of calls prior to and continuing after appointment disqualifies a person from directorship and whether equitable relief should be granted to such a director.	The court declined to adopt a definitive view on that authority without further consideration and indicated it would not be prepared without more to hold that continuing default could not be a disqualification or that equitable relief would necessarily be granted.

Court's Reasoning and Analysis

The court's analysis proceeded in a sequence of focused determinations constrained by the pleadings and evidence:

Suit framing and scope — The judge first limited the effective scope of the suit. Although the plaintiff sought declarations invalidating one shareholder meeting and validating the other, those reliefs were not pressed and, in any event, could not be obtained on the way the suit was framed. The judge therefore confined the contest to the narrow question whether the plaintiff is a director (and incidentally whether the B group are directors).
Factual matrix — The court summarised the sequence of meetings, co-options, and rival boards (A, B and C), and emphasised the existence of parallel minute-books, rival registrations with the Registrar of Insurance Companies, and possession of records and funds by the B board. The judge relied on the oral evidence of Professor Kumud Ray Chaudhuri and the plaintiff, and noted the absence of proven minutes for certain contested meetings (notably a purported October 23 minute marked “not admitted” and therefore unproved).
Central legal pivot — The critical legal question was the applicability and effect of Article 148 to the position of co-opted (additional) directors. The B board's principal legal reliance was upon Article 148 and the remedial construction under In re Great Northern. If Art. 148 applied as directory and remedial, it could validate the B board's appointments.
Consideration of parties' arguments — The judge reviewed counsel's submissions in detail:
- He analysed Mr. Roy's contention that co-opted directors create a vacancy before the company meeting and that shareholders' directors create a vacancy only at the meeting, concluding that, as a matter of law and on the Articles, both types of retiring directors are in substance in the same legal position at the meeting and are eligible for re-election.
- He examined Mr. Ghose's multiple points (including the contention that Art. 148 is mandatory), and rejected the strict mandatory reading. The court rejected the reading of Article 151 urged by Mr. Ghose that would deprive the meeting of an opportunity to re-elect additional directors unless a specific proposal had appeared on the notice.
- The court considered supporting case-law (Bluett, Blair Open Hearth, Spencer v. Kennedy, Eyre v. Milton) and concluded that none compelled a conclusion that co-opted directors must be treated differently in the way Mr. Roy or Mr. Ghose suggested; the decisive authority on remedial application was In re Great Northern.
Synthesis and decision on Art. 148 — The judge formulated the essential question as “What ought to have taken place at the company meeting?” He reasoned that even if an omission to place the re-election of additional directors on the agenda was due to an earlier omission by the directors, there remained something which ought to have been done at the meeting. Reading Article 148 and the relevant authorities, the judge concluded that Art. 148 does apply and is not mandatory in the sense urged by opponents. Applying that remedial/directory construction, the position of the B board was established under the facts.
Counter-attack on plaintiff's status — The court found that evidence challenging the plaintiff's status (default in payment of calls) was not conclusive. The judge allowed the plaintiff an opportunity to give additional evidence on that point but, because of the principal decision on Art. 148, did not rely upon that additional evidence to decide the case. On the legal point raised by counsel about disqualification for non-payment of calls, the court declined to finally adopt the proposition that continuing default prior to and after appointment cannot be a disqualification without further consideration.
Relief and procedural consequence — Given the court's view that the suit as confined was good only to the limited extent of determining whether the plaintiff is a director, and given its conclusion about Art. 148 and the established position of the B board, the court determined that the interlocutory injunction restraining the B directors could be dissolved (noting that a similar injunction existed in a related suit which would be called on). Ultimately, the suit was dismissed with costs.

Holding and Implications

Holding: The court concluded that Article 148 of the Articles of Association applied (construed as directory/remedial rather than mandatory) and, on that basis, validated the position of the “B” board. Accordingly, the suit by the plaintiff (a member of the “C” board) seeking to oust the “B” board was dismissed with costs.

Implications:

Direct effect on the parties: The plaintiff's claim to have declarations and injunctions ousting the B board failed; the injunction restraining the B directors may be dissolved (subject to related proceedings), and the court dismissed the suit with costs in favour of the defendants.
The court did not purport to establish a broader mandatory rule overriding the remedial construction of Art. 148; it followed the remedial approach exemplified in In re Great Northern and applied it on the facts. The judgment does not assert or announce a new wide-ranging precedent beyond its interpretation and application of Art. 148 as directory in this factual context.

Outcome reported in the judgment: "Suit dismissed." Attorneys of record: for plaintiff J.M. Chaudhuri; for defendant P.C. Chatterjee.

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Sati Nath Mukherji v. Suresh Chandra Ray

The Judgment of the Court was delivered by

Ameer Ali, J.:— I would have taken time to consider the typed note handed up to me by Mr. Roy on the question of law, but for two reasons: one is that the real point is one of those which must be largely a question of opinion on the construction and language of the Articles of Association, and upon that I have come to a conclusion; the other is that I am anxious that the next suit should be called on and that this matter should go back to the company, if that course is possible.

The real trouble with this unfortunate matter is that in this company there are at least three groups of opinion. There are, first, the amalgamationists; there are second, the isolationists; and there are third, the re-insurers, who are amalgamationists in another form. The question is, which of these groups is the genuine Genuine Insurance Company. That in the essence of the matter. As a result, there have been since the latter part of October last two separate organisations, two rival boards of directors.

This suit is in substance one by a member of what I shall call the “C” board for declarations which will oust the “B” board. The meaning of these two symbols will appear from the facts which in a simplified form I will now set out.

The company is an insurance company on a modest scale. Recent legislation has imposed certain, presumably necessary, burdens or conditions upon such insurance companies in the interests of policyholders. The directors, whom I will call the “A” board, who were functioning prior to October 1, 1939, were as follows,—I number them, because although I am at this stage now more familiar with their names, the names are at first very confusing:—

(1) Kumud Chandra Ray Chaudhuri,

(2) Kshettra Mohan Chatterji, and

(3) Sailendra Nath Basu,

[these three had been elected by the share-holders]; and

(4) Subodh Mitra, elected by the policy-holders,

(5) Sailen Sarkar, and

(6) Hira Lal Ghosh,

the last two being appointed by the managing agents, and therefore, under the Articles, permanent.

On September 29, 1939, was issued a notice of the Ordinary General Meeting to be held on October 16, with the usual business, including the election of directors in place of the retiring directors.

On October 1, there were two directors' meetings, at which a proposal to amalgamate with the Aryasthan Insurance Company was discussed and in substance adopted, a course due to the pressure of the new Act. The proposal to amalgamate involved the bringing in of the directors of the latter insurance company, and the six persons, whose names I am about to give, were on October 1, co-opted as additional directors:—

(1) Sir Manmatha Nath Mukerji,

(2) The Raja of Nasipur,

(3) Khan Bahadur M.A Momin,

(4) Rai Bahadur A.C Banerji,

(5) Mr. Santosh Kumar Basu, and

(6) Miss Jyotirmoyee Ganguli.

Mr. S.C Ray, manager of the Aryasthan Insurance Company, was appointed manager. It was also decided that three members of the “A” board should resign as from that date in order that the total number should not exceed the limit of nine.

Oil October 7, a further board meeting was held, at which it was decided to convene an extraordinary general meeting to obtain the final approval of the share-holders to the amalgamation. That notice was sent out on October 11, for the 31st.

On October 16, the ordinary general meeting was held, twenty-three members being present. Resolution 2 provided that only two out of the retiring directors were to be re-elected, Professor Kumud Ray Chaudhuri and Hira Lal Ghosh, although, if I remember rightly, Hira Lal Ghosh was permanent, as the managing agents appointee. At this meeting nothing was said about the six co-opted directors, and no election in their place was either mooted or effected. There is no evidence before me indicating whether the company was or was not made aware of their co-option. I do not, however, draw the inference suggested by counsel for the plaintiff that the company decided to reduce the number of directors to two only. Indeed, if an inference is to be drawn, I should infer that the re-election was confined to two, for the reason that the election of others was contemplated. Nor has there been any evidence that on October 16 there was any group of parties on the question of amalgamation, which of course on that date had not been put before the company.

I should have mentioned that between October 1 and October 16, the board which continued to function and which may now be designated the “B” board, consisted of the six co-opted directors and three of the “A” board, Nos. (2), (3) and (5). After October 16, the “B” board purported, at any rate, to function and consisted of the six co-opted members, with Kumud Chandra Ray Chaudhuri and Hira Lal Ghosh. Subodh Mitra continued as the policyholders director.

Owing to the disputes, which subsequently arose challenging the status of the “B” board after October 16 (it is not disputed between October 1 and October 16) parallel sets of minute books, both for the company and the directors' meetings were kept. In the “B” board's minute book is a minute which has not been put in evidence, but which I shall allow to remain on the record, of October 30, 1939. I use it for no other purpose than to explain the history of the matter.

At this meeting, as appears from the documents put in, certain disputes arose, as the result of which the “B” board co-opted the Chief Presidency Magistrate and sought the assistance of the police, one of the factors which has such an effect in promoting business in Bengal.

The next day was that fixed for the Extraordinary General Meeting, an according to the records there were two meetings at the same time and at the same place, one under the chairmanship of Mr. Bhubaneswar Nag, and one under the chairmanship of Khan Bahadur Abdul Momin. It is not alleged that they occupied the same chair, but otherwise, so far as the records are concerned, the meetings coincide. The question is which was the genuine meeting. The Bhubaneswar Nag meeting resolved against the amalgamation; the Khan Bahadur Abdul Momin meeting unanimously adopted the amalgamation.

Police assistance, so essential on all these business occasions, having been obtained, the “B” board remained in possession of the field and, I understand, of one set of records, and I also understand, of the funds of the company, Mr. S.C Ray continuing as manager, supported by an order under s. 144, Criminal Procedure Code.

From this date, as I have already said, the two boards functioned independently and on parallel lines. I gather that Kumud Chandra Ray Chaudhuri and Hira Lal Ghosh ceased to function as a part of the “B” board and constituted themselves a limited board of their own. On November 8, they proceeded to create what I called throughout the case the “C” board, by the resignation of Hira Lal Ghosh, the co-option first of Ramendra Nath Mukherji, and subsequently at a meeting of the same date at which Ramendra Nath Mukherji presided the co-option of another six persons, of whom the plaintiff is one.

Professor Ray Chaudhuri and Subodh Mitra subsequently resigned on November 21, 1939, and the “C” board, therefore, after that date, was composed of person exclusive of the nine included in the “B” board.

Now, the “C” board in the normal course, if anything is normal in this matter, notified the Registrar of Insurance Companies that its members were the proper board, of directors of the company. The “B” board, of course, also notified the Registrar of Insurance Companies to the same effect with regard to its members, and we have, therefore, parallel registrations. The “C” board, also I see from the records, attempted to obtain the assistance of the police but was less successful.

The “C” board finding themselves in the same difficulty as the “A” board, according to them, as will appear from their resolutions, by reason of the misconduct of the “B” board, were compelled to enter into a similar or analogous proposal, which is called “re-insurance” with another company called the Arya Insurance Company. The relevant resolutions are in December, 1939.

It was at this stage, I presume that the third group of opinion, to which I have referred, the isolationists, who like neither the “B” board's amalgamation nor the “C” board's amalgamation, came into existence.

Meanwhile, on dates which I have not for the moment before me, the deposit under the new insurance Act not having been paid, the Government took steps to cancel the registration-certificate of the company.

As a result of this unfortunate imbroglio, we have an imposing set of proceedings: this suit by a director of the “C” board, the next suit by a number of share-holders to obtain a decision as between the “A” board and the “C” board, the “A” opinion and the “C” opinion. There is an application to sanction the amalgamation under the Companies Act. There are I understand proceedings to challenge the decision of the Government. There are also proceedings in which the position of those supporting, the “C” amalgamation is sought to be affirmed or established.

At some stage of the proceedings, as to which I am not quite clear (I would be glad if counsel would inform me), the appointment of a member of the bar to act in place of the Secretary of the company, presumably by way of an interlocutory safeguard, was made by the Court.

Those are the facts. The evidence before me consists of the oral evidence of Professor Kumud Ray Chaudhuri, who was a member of all the boards, “A”, “B” and “C”, a most respectable gentleman, who gave his evidence very fairly and is a Professor of Geography, and the plaintiff, who is said, by himself, to have some knowledge of insurance.

Coming to the present suit, I can deal with technical questions very shortly. Among the prayers are two for declarations that the resolutions of the Bhubaneswar Nag meeting are valid, and those of the Khan Bahadur Abdul Momin meeting are invalid, that of course being what the suit is aimed at. But those reliefs were not pressed, nor, in my opinion, could they have been obtained in a suit framed as this suit is framed.

I am also of opinion that, as a matter of law, Mr. Chaudhuri is right in his contention that, in so far as this is a suit challenging the position of the “B” board and to remove them from the directorate, the suit is wrongly constituted. It is not necessary for me to go into the technicalities of the matter, because I expressed this opinion, to which I adhere, that, in so far as it is a suit for a declaration that the plaintiff is a director and for the protection of his rights qua director, the suit lies. And, in deciding that question on the facts of this case, it may be necessary for me, as a matter of fact and not for the purpose of proceeding to other reliefs or declaration to go into the question of the appointment of the B board, because on the facts of this case the B board and the “B” board, so to speak, are mutually exclusive.

Again, I do not as at present advised consider that a suit by A to establish the rights by declaration and injunction of B, C, D and E lies.

But to the limited extent, I have stated, in my opinion, the suit is good, and so limited the only issue is whether the plaintiff is a director. It involves two subsidiary questions: (1) whether the B group of directors are directors, and (2) whether the plaintiff is a director or disqualified, because counter-attack has been made on his position.

The first question falls within a very small compass and the answer depends upon the applicability and effect of Art. 148 of the Articles of Association, for this reason that the B board for whom Mr. Chaudhuri appears rely upon this Article to validate their position and upon nothing else. Mr. Chaudhuri, in my opinion, exercised very sound discretion in not relying upon what is relied upon in his written statement, namely, accompany meeting of October 23, 1939. As a result, the minutes of this meeting, which appear at p. 29 of the brief, but marked “not admitted” by the plaintiff, have not been proved. Now, Mr. Chaudhuri, while he has deprived us of a description which would have delighted, the heart of Gilbert & Sullivan; has achieved two very desirably objects for his client: first, he avoided a finding on the lines of two popular English sayings: “That a little company law is a dangerous thing”, and second, “The girls rush in where Khan Bahadurs fear to tread.” I do not mean to be flippant but to indicate that Mr. Chaudhuri was very wise. He achieved an even more important object, because he excluded an argument (which as it has not been put before me I will say no more than that it appears highly plausible), namely, that there was an actual meeting on the 23rd, either an adjourned or a distinct meeting and that, having regard to what took place then, the application of Art. 148, in the sense in which it has been construed by the ruling In re Great Northern Salt and Chemical Works. Ex. parte Kennedy , does not apply, the position being on the evidence that matters ended with the company meeting of October 16.

Now this question of the applicability of Art. 148 to co-opted directors is by no means easy, especially to one like myself, who has no knowledge of company matters.

Summarising the arguments, the defendants rely upon the language of the Articles coupled with the decision to which I have already referred, In re Great Northern Suit and Chemical Works (supra), which ruled that this Article or an Article in similar, though possibly distinguishable, terms (this is a matter to which I shall have to refer again) was directory only, in other words, that there is a notional adjourned meeting and a notional re-appointment.

Counsel for the plaintiff have advanced a variety of arguments.

Mr. Roy was called upon by the absence of his colleague to make the main address and his full and careful argument was obviously the result of much midnight or early morning research into his extensive library, his point, I think, being constructed upon certain authorities, which in justice to him, I shall have to examine. Mr. Roy's point, for want of a better phrase, I will for the moment designate at the different posts, the share-holders' directors and additional directors' point. Indeed, as I understood him, this was really the only point upon which he desired to rely. I do not for a moment mean to indicate that he or any other counsel makes a binding admission about other points. As to that, I think, he misunderstood me in the course of the argument. But the Court is entitled to know what point is being argued, and what is not being argued.

Mr. Ghose followed and, as I understood his points, I may enumerate them as follows:—

(a) On a proper reading of Art. 151, re-election means re-election by directors;

(b) that there was no notice for the meeting of October 16, setting out as business the re-election of additional directors with certain consequences;

(d) that Art. 148 is not like the old Arts. 62 and 82 of the English Schedules and is in our case mandatory, relying upon differences of language;

(e) and, lastly, that the last words of Art. 151 must be read in the language of the Schedules to the Companies Act, where, after “re-election”, appear “as additional directors”, and that this involves that at the meeting there must be a proposal to appoint additional directors, and that is a condition precedent to any re-election of those who have been additional directors.

I come back to Mr. Roy's point, and although, I think, I have followed the argument, I still and not clear as to the philosophy behind it. It seemed to me, and, so I put it to him in the course of the argument, that his point must depend upon establishing that the vacancy created by the two classes of retiring directors is in some way different, and I have not been able to discover how it is different. I asked him whether the vacancy was one which according to his argument must be filled by directors. This was not his point although it was a point taken by Mr. Ghose, and that would be logical. He did contend on the authority of a certain case, with which I shall deal in a moment, that the difference was this: That, in the case of co-opted directors, the vacancy is created before the meeting. His actual words, if I remember rightly, were that “he as a co-opted director is civilly dead before the meeting,” whereas the shareholders' directors, to use Mr. Roy's expression, “only the at the meeting”; and if this was so, certain consequences would, follow. But I still think that his argument boils down to the question whether there are two species or varieties of vacating directors leaving two species or varieties of vacancies, and I cannot see it.

My point of view, again without any desire to be flippant and only a desire to be clear, I expressed to Mr. Roy as follows: We have Professor Ray Chaudhuri a shareholders' director, we have Khan Bahadur Mahomed Momin additional director. That the void left by the former might be actually or physically different from the void left by the latter may well be, but the void left by them in law is, to my mind, precisely the same when they retire at or for the purposes of that meeting. They both lose their status, they are re-eligible purely as individuals.

In the absence of a special Article or in the absence of anything to be gathered from the Articles, in my view, they are both eligible for re-election, and such re-election should take place at a company's meeting.

I quite follow that from this coupled with Art. 148 and the ruling In re Great Northern Salt and Chemical Works (supra) certain anomalies may follow, the company may find itself with a large number of additional directors appointed for another year which it had no intention of appointing. It may be that in certain cases the appointment of additional directors might be concealed from the company, but I have dealt with this case on the basis that no fraud of that kind has been alleged or established.

I do not again mean that my view on Mr. Roy's point necessarily decides the matter. I do not think it does and I shall proceed to state in a moment, after dealing with Mr. Ghose's points, what I consider to be the crux of the matter, after having referred to the law or authorities upon which Mr. Roy has constructed his argument.

Taking the cases in order of time, Bluett v. Stutchbury's (Limited) , I have not the case before me, but my note is merely “director not re-elected— not a director”. Nor, if I remember rightly, does this case establish anything further.

Blair Open Hearth Furnace Company. Limited v. Reigart . Mr. Roy used this for the proposition that directors' directors-were of a different quality to share-holders' directors. That they were a mutually exclusive body. Now, to some extent, while they are functioning, that is so, but as I read that case, the decision amounts to no more than this that, where under a company's Articles the maximum number of directors is fixed at seven but the company under another Article has power to increase that number, the company could not in a General Meeting appoint additional directors, that being a function delegated to the Board, especially in view of the fact that it had not under the appropriate Article expanded the number. I do not think that this case is an authority on the status of directors retiring at the General Meeting, or establishes that, in respect of the retirement of each class, different consequences ensue.

The next case is Spencer v. Kennedy . This really relates to the operation of Art. 148 or its corresponding Article in the schedule and I may refer to it again when dealing with Mr. Ghose's point on the effect of the operation of the Article in question.

Eyre v. Milton Proprietary, Limited . On this case again, Mr. Roy relied for the proposition that there were two distinct species or varieties of directors not only prior to the General Meeting but also during the General Meeting and that they were to be differently treated. He relied upon it specifically for the proposition that the additional directors the before the meeting and the others the during the meeting. But again, to my mind, the inference from the decision is to the contrary, because, in this case, the Court relied upon a special Article by which, in the case of the shareholders' directors, it was specifically provided that they should act as directors throughout the meeting, in my view, therefore, so far as the law is concerned, there is no different kind of vacancy created on retirement at the General Meeting.

Turning to Mr. Ghose's points, I am against him on the first. I do not read Art. 151 in any other sense than “eligible for re-election in the company meeting.” I do not think this point is strongly pressed.

I deal next with his point to the effect that Art. 148 is mandatory. Again I am against him. In my view, no stress is to be laid upon a difference in language in this Article (Art. 82), the old Art. 62 or 64.

His remaining points, which depending upon the circumstances of the case, come nearer to what, in my mind, is the crux of the question; and indeed it may be that, with a difference in language, the point contended for by Mr. Ghose is the one which I am no going to formulate.

To my mind, the question reduces itself to one which may be simply formulated, but not easy to decide, and that question is, “What ought to have taken place at the company meeting?” The language used is the language of ordinary life which in this connexion does not make it simpler. “What ought to have taken place?”. On the one view, if the re-election of the additional directors could have taken place, it ought to have taken place. On the language it is difficult to avoid the conclusion that if it could and should, it ought. As against this, and this has been my main difficulty, can it be said that a directory, and remedial provision should apply only where there has been a clear accidental omission. Can it be said that there was no such omission on October 16, 1939, because the matter was never before the meeting? That, in the facts of this case, it could not be before the meeting, or that the omission, if any, was on the part of the directors in not bringing it before the meeting, not an omission at the meeting? That, in other words, the company had no opportunity of making the omission and it is therefore not a meeting at which an election “ought to have taken place within the meaning of Art. 148.” That is the opposite contention, to which it strikes me there can be the following rejoinder on the language of the Articles, namely, that, at best, it ought to have been put before the meeting, and, if it ought to have been put before the meeting, it ought to have taken place at the meeting. There still remains an omission to do something which should have been done at the meeting notwithstanding that omission was due to an earlier omission. This I think is the essential point, although I may not have expressed it with sufficient accuracy. It is a point upon which, reading the sections, there may be two opinions; but my opinion, for what it is worth, is,—whatever view you take,—there still remains something which ought to have been done at the meeting. For that reason. I am of opinion that Art. 148 does apply and, not being mandatory, the position of the B Board is established.

With regard to the counter-attack upon the status of the plaintiff, although the plaintiff's position, appeared by no means unassailable, the evidence was not conclusive. I was asked for an opportunity to give additional evidence on the point of default in the payment of calls, and, subject to the objection of Mr. Ghose, I allowed it. In view of my decision on the main point I do not propose to rely upon the evidence subsequently tendered.

With regard to Mr. Ghose's point of law in answer to the counter-attack on the, plaintiff's position, and the authority cited by him, Dawson v. African Consolidated Land and Trading Company , I am by no means prepared, without further consideration, to hold that default in payment of call prior to appointment and continuing after appointment is not a disqualification, or even if the appointment be valid the director, who is bound to vacate, would be granted by this Court equitable relief. Nor that I would be bound to take into account the fact that the director seeking such relief hae subsequently complied with the payment of the call.

I have thought it right to decide upon the main point in the case. The injunction in this suit restraining the B, directors from acting may be dissolved as there is a similar injunction in the next suit which will now be called on.

The suit is dismissed with costs.

Suit dismissed.

Attorney for plaintiff: J.M Chaudhuri.

Attorney for defendant. P.C Chatterjee.

G.K.D

Sati Nath Mukherji v. Suresh Chandra Ray

Judgment Summary — Ameer Ali, J.

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Plaintiff's Counsel (Mr. Roy)

Defendants' Counsel / Respondents (as represented in argument by Mr. Ghose and the defendants generally)

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Sati Nath Mukherji v. Suresh Chandra Ray

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