Case: Oriental Metal Pressing Works (Private) Limited & Others Vs. Bhaskar Kashinath Thakoor & Another

S.T. Desai, J. 1. This appeal raises an important question of construction of S.312 of the new Companies Act which section now imposes total prohibition against any assignment of his office by a Director. The prohibition applies in case of both a public and a private limited company. The facts are not in dispute nor disputable. The first appellant (original first defendant) is a private limited company incorporated on 21-5-1955. Prior to that Dadoba Kashinath Thakoor was the sole proprietor of a business of metal pressing works which he carried on in the firm name of Oriental Metal Pressing Works. The first appellant company acquired that business as a going concern. The agreement dated 7-7-1955 between Dadoba and the Company states that Dadoba was appointed Managing Director of the company and was entitled to hold that office for life. Clause 7 of that agreement is as under : Mr. Thakoor shall be entitled by deed inter vivos or by will or codicil to appoint any person to be a Managing Director in his place and stead and in default of such appointment the legal representatives of Mr. Thakoor shall be entitled to exercise the said power. Any appointee as aforesaid shall whilst holding office also be designated as a Managing Director and shall be entitled to be paid by the Company the same remuneration and to exercise the same powers and authorities as are vested in Mr. Thakoor and the appointee as aforesaid shall have a power of appointing any person to be Managing Director as his successor on the remuneration of not less than Rs. 1,000 (Rupees one thousand) per month and upon some other terms and conditions as are herein contained. Under the agreement Dadoba was to be allotted a certain number of fully paid up shares of the company. Article 109 of the Articles of Association of the company is material and is as under : 109 (a). The said Shri Dadoba Kashinath Thakoor shall be the first Managing Director of the company at a remuneration of Rs. 2,500 per month subject to the said remuneration being increased by the Board of Directors of the Company. He shall be entitled to hold such office for life and will not be subject to clauses 87, 88 and 91 of these Articles. (b) The said Shri Dadoba Kashinath Thakoor may by deed inter vivos or by will or codicil appoint any person to be a Managing Director in his place and stead and in default of such appointment, the legal representatives of the said Shri Dadoba Kashinath Thakoor shall be entitled to exercise the power; (c) Any appointee as aforesaid shall, whilse holding office, also be designated a Managing Director and shall be entitled to the same remuneration and to exercise the same powers and authorities as were vested in the Managing Director in whose place and stead he is appointed; (d) The appointee as aforesaid shall have a power of appointing any person to be a Managing Director as his successor on the remuneration of not less than Rs. 1,000 per month and with the same powers as are vested in Shri Dadoba Kashinath Thakoor. Dadoba died on 14-1-1957. By his will executed on 18-8-1956, he appointed his son, the second appellant (original 2nd defendant) to be the Managing Director of the company from the date of his demise. The 1st Respondent to the appeal (plaintiff to the suit) is the brother of Dadoba. The 2nd Respondent to the appeal (original 4th Defendant) is another son of Dadoba. The first Directors of the Company were (1) Dadoba; (2) Bhaskar, and (3) Govind, one of the sons of Dadoba. The same persons continued to be directors till 14-1-1957 when Dadoba died. At the time of Dadobas death, the shares of the company were held as under : Dadoba...1971 shares. Plaintiff...845 shares. 2nd Defendant...844 shares 4th Defendant...843 shares. We are told that Dadoba died leaving 3 sons and his shares were inherited by his three sons as part of his estate. 2. Dispute arose between the plaintiff and the second Defendant soon after Dadobas death when the latter assumed the Managing Directorship and Chairmanship of the Board of Directors of the company on the basis of the appointment made by the will of Dadoba. Defendant No. 2 began to act as the Managing Director and the Chairman of the Board of Directors of the company and also began to draw a salary of Rs. 3,500 per month. The plaintiff addressed letters to the Second Defendant on 23-3-1957 and 29-3-1957 and contended that the 2nd defendant had no right to act as Managing Director and/or Chairman of the Board of Directors of the Company. He also contended that the second defendant had no authority to call a meeting of the Board of Directors as he had purported to do and that the appointment of Defendant No. 2 as Managing Director of the Company by the Will of Dadoba was not valid and not binding on the plaintiff or the Company. Correspondence ensued in the course of which the second defendant contended that he was the Managing Director and entitled to call meetings and conduct the business of the Company as its Managing Director. The plaintiff contended that the power of Dadoba to appoint a Managing Director by his Will given by the Articles of Association and the Agreement was invalid, illegal and inoperative on the ground that in the meantime the new Indian Companies Act had come into force and the provisions of that enactment rendered any such power invalid and illegal. The plaintiff also contended that defendant No. 2 was acting in his own interest and in a manner detrimental to the interest of the company. He made reference to the Agenda of a meeting dated 13-5-1957 which included an item viz. To consider the provision for bonus to late Shri Dadoba Kashinath Thakoor in his capacity as the Managing Director. The plaintiff also contended that defendant No. 2 claimed to be the beneficiary under the Will of Dadoba and his attempts were to add to the estate of Dadoba to the detriment of the company. In the last week of June, 1957 the plaintiff received a letter dated 28-6-1957 from the second defendant alleging that the plaintiff had ceased to be a Director of the Company under S. 283 (g) of the Companies Act and Art. 85 (f) of the Articles of Association of the Company owing to his absence without leave at three consecutive meetings of the Board of Directors and/or at all such meetings for a continuous period of three months. The plaintiff brought a suit for a declaration that he was and continued to be a Director of the first Defendant Company and was entitled to act as such. He also sought a declaration that the appointment of the second defendant as a Managing Director and/or Chairman of the Board of Directors of the first defendant Company was void, invalid and inoperative. He also sought a declaration that the appointment of the third defendant as a Director was invalid, illegal and inoperative. It seems that some time before the suit was filed, the second defendant in the purported exercise of his powers had co-opted the third defendant as a Director of the Company. The plaintiff also sought relief by way of certain injunctions in that suit. He asked for an injunction restraining defendant No. 2 from acting as Managing Director of the Company and for an injunction against defendant No. 3 restraining him from acting as a Director of the Company. He also sought a further injunction restraining the defendants from holding an annual general meeting of the company which was proposed to be held on 28-11-1957. In the suit, he impleaded the company as Defendant No. 1. Defendant No. 3 to the suit (appellant No. 3) as I have already mentioned, was co-opted by defendant No. 2 as a Director of the Company. Various issues were raised by the learned Judge, City Civil Court, who tried the suit. It is not necessary for the purpose of the present narrative to state them and it will suffice to observe that the main question which had to be determined by the learned Judge was whether the appointment of Defendant No. 2 as the Managing Director of the Company by the Will of Dadoba was invalid and ineffective in law by operation of S. 312 of the new Companies Act. That section, as I shall have occasion to point out little later appears under the heading Miscellaneous provisions and is as under : Prohibition of assignment of office by a director. - Any assignment of his office made after the commencement of this Act by any director of a company shall be void. It will be convenient here to set out S. 9 of the new Companies Act which is as under : Act to override memorandum, articles, etc. Save as otherwise expressly provided in the Act - (a) the provisions of this Act shall have effect notwithstanding anything to the contrary contained in the memorandum or articles of a company, or in any agreement executed by it, or in any resolution passed by the company in general meeting or by its Board of Directors, whether the same be registered, executed or passed, as the case may be, before or after the commencement of this Act; and (b) any provision contained in the memorandum articles, agreement or resolution aforesaid shall, to the extent to which it is repugnant to the provisions of this Act, become or be void, as the case may be. The expressions director and managing director are defined in the Act. I shall refer to those definitions a little later when examining one of the arguments urged on behalf of the appellants. It will be noticed that the marginal note to S. 312 suggests that the section lays down a prohibition of assignment of office by a Director and the section is in terms of such prohibition. The learned Judge took the view that the object of the Legislature in imposing the prohibition laid down in S. 312 was that a Director should not be clothed with the power to transfer his office to any person whether by an act inter vivos or by a testamentary instrument. He reached the conclusion that the expression assignment in the section should not be given a restricted meaning but must be read in a broad sense as applicable also to an appointment of any person as Managing Director of the Company made by his Will by a Managing Director to come into effect on his demise. He upheld the contentions of the plaintiff and gave the declarations and the injunctions sought by him. The Company and defendants Nos. 2 and 3 have now come to this Court in this appeal. 3. The first and the principal contention of the appellants pressed before us by Mr. Manekshaw, learned counsel for the appellants, is that the appointment of the second defendant as a Managing Director made by Dadoba by his Will is not an assignment of an office within the meaning of that expression in S. 312. It is said that what Art. 109 conferred on Dadoba is not any power of assignment but merely a power of appointment. It is also said that the word assignment means actual transfer. A transfer of office by a Director, it is stressed can only be by an act inter vivos and in no circumstances by a testamentary instrument. The greatest emphasis has been laid on the factor that on his death Dadoba naturally ceased to be a Managing Director. The argument has been stressed in the form of an interrogation : By Will a person can bequeath any property; he can by an act inter vivos transfer any property. But how can a person transfer something which is non-existent - something he ceased to hold immediately on his demise It will be noticed that the argument is founded in the context of property and not of an office of a director which is purely personal and is not property. It is impossible to contend, says Mr. Manekshaw, that there could be any assignment when Dadobas appointment as Managing Director was only for his life and nothing was left for him to give at the point of time of his death. It is said that this is the most crucial question.4. At first blush the argument, under the latter head, that a person cannot transfer what he has not got may perhaps seem somewhat attractive from a sheer legal point of view, however repugnant it may be to the object of the Legislature in laying down the absolute bar against the transfer of an office of a Director. But on closer examination I think it defective even from the legal standpoint in paying too little attention to a number of relevant and material considerations, which, in my judgment, must weigh with the Court on this question of interpretation of the rule which aims to prevent use and abuse of a power. The argument, if I may so describe it, asks us to apply to the situation before us the maxim Nemo dat cuod non habet - you cannot give what you do not have; you cannot give what you do not have the right to give. The equivalent maxim is assignatus utitur jure auctoris - An assignee is clothed only with the right of his principal. Now, these maxims pithily express one of the leading rules as to titles and tersely state the well-known general rule that no man can transfer a greater right or interest in property than he himself possesses and if he has none he can give no title whatever to the property which is the subject matter of the transaction. 5. The principle of these maxims is indubitably sound and it has bearing firstly on the quantity and secondly on the quality or nature of interest in property which can be assigned by the owner to another party. Now, what Mr. Manekshaw contends for is the same principle but the contention assumes as a major premise an equivalent between the nature of a right or interest in properly and the office of a Director which by no stretch of argument can be termed as property or any interest or right in property. Such an equation, to my mind, is impermissible. We have nothing to do with any right or interest in property nor are we concerned with any question of title or transmission of a title which could or could not vest in Dadoba. The question before us is not whether a person can or cannot give what he has not got. The question is whether a Director in a public or private company who is empowered by the Articles of Association of a company to appoint another person in his place and stead by an act inter vivos or by his will can be said to assign that office to the latter when he does so by an act inter vivos or by his will. It has not been possible for Mr. Manekshaw to dispute that if this was done during the life-time of the Director by an act inter vivos it would be an assignment and hit by S. 312, though at one stage of the argument that position was not accepted. But that line had to be abandoned in view of the language of certain sections in the Act and particularly S. 86B of the repealed Act of 1913 and the proviso to the same to which I shall refer a little later. This present argument of learned counsel for the appellants is founded on certain observations of the learned editors of Gore-Brownes work on Companies law and it will be necessary for me to quote the same and examine them when I refer to S. 86B of our repealed Act of 1913. It will suffice here to state that those observations are made in the context of a private company and not a Director of a public company and even in the context of a Director of a private company the opinion of editors of standard treatise on Companies law in England, as I shall point out, is to treat that point as one in dubio. Besides the point has little cogency since there is no section in the English law analogous to S. 312 of our Act of 1956. 6. We are concerned primarily and principally with the connotation of the expression assignment of his office........by a Director and the legal inhibition contained in the section which is applicable in case of a Director both in a public and a private company and the question is can he, if the Articles of Association permit it, appoint a person to be the Director of the company in his place and stead by making such appointment by his will or is he prohibited by S. 312 from doing so notwithstanding such Articles since S. 9 renders void any such Articles which are repugnant to any provisions of the Act. (Section 312 applies equally to a Director in a public and a private company and I have stressed that aspect because considerable emphasis was laid on behalf of the appellants on the fact that there are cases where an owner of a business transfers it to a private limited company and he is appointed a Managing Director of the company with powers to appoint any person in his place and stead by a deed or will as for instance in the case before us. I am not concerned with the object of giving such powers but with the validity of such powers and the considerations relating to the object of conferring such powers in case of a private company would mostly be irrelevant in the case of a Director of a public company. The prohibition in S. 312 i3 imposed for an object which I shall point out little later can be gathered from the enactment itself. I prefer in the first place to examine the language of the section itself and shall turn to an enquiry as to its object only in so far as it is permissible and required by the well-known canon of construction that the meaning of the words of a statute is to be found not so much in strictly grammatical or in etymological propriety of language, nor even in its popular use, as in the subject, or in the occasion on which they are used and the object to be attained. Of this more hereafter. 7. The crucial consideration, therefore, is not that a person cannot transfer something which he has not got. But it must be as to what is the connotation of the expression assignment in the context of an office of a Director which, indisputably, is not property or any right or interest in property. The Legislature has said that a Director cannot assign his office, meaning thereby that he cannot transfer it to any other person. It is not questioned and could not be questioned that transfer of the office of a Director in any shape or form is expressly prohibited by the Statute. The crux of the matter, therefore, is what is it that is prohibited when it is enacted that you cannot assign the office of a Director of a company. Now, one thing is clear that in a case of a prohibition or restriction of this nature which is absolute and unqualified, the intention and object of the law-giver is to restrain and prevent a Director from putting some one in his place and stead by any act on his part or doing any act which would have the same effect. The question of course must be : Has the intended object been carried out in a appropriate language capable of bringing out that result I put to myself the question : Is this word assignment to be read in the narrow sense - in a sense wanting in breadth in which it is used in conveyancing language and by conveyancing men in the context of rights m property where it may mean only a transfer by an act inter vivos or is to be understood in the broad comprehensive sense that the holder of the office is not to give it by any act of his in presenti and also not to give it to another by any testamentary disposition or direction or appointment. I have perhaps dwelt little longer than I need have done on the argument of learned counsel for the appellants that Dadoba could not transfer what he did not have at the point of time of his death because his office came to an end that very time and therefore, the appointment by him of the second defendant cannot be called an assignment of the office of a Director. The argument would have cogency if there was any dispute about the quantity or quality or the nature of any interest or right in property when such consideration would certainly have had bearing on the enquiry. But in the context of an assignment of an office of the nature before us. it has little import. 8. The argument suffers from a patent weakness and it is this. It is indubitable that a right can be transferred by assignment of the nature of transfer inter vivos or by operation of law provided the transfer of that right is not prohibited by law and it is made in accordance with the requirements of law as to form such as writing, registration etc. In respect of a right not ordinarily transferable, for instance one which involves personal element and which ceases on death or disablement, the law lays down that the right cannot be transferred unless other parties interested in the matter gave their consent to the transference of the right or imposes conditions subject to which alone the right may be transferred, as for instance in a case of a company if it is accepted in a meeting of the shareholders. In all such cases there is in the first instance no right of transfer either by an act inter vivos or by a testamentary instrument. But when the right is given and the condition necessary for the exercise of the power of transference is fulfilled as required by law, it is extremely difficult to see how it can be said that there cannot be a transfer of the right by testamentary disposition. To my mind, there is here no justification for any over-refined distinction between appointment and assignment. In the first place, we are not dealing with property. We are dealing with an office which can only be the subject matter of an appointment. Whether you call it an assignment or transfer or alienation or appointment, it has the same meaning and the effect is the same. I fail to see how in such a case it can be said that what is done is not a transfer because the right to transfer was not there. Of course it was not there at the inception but it was there when the power to transfer the right was conferred. This, to my mind, is the weakness underlying the argument of learned counsel so strongly pressed for our acceptance. 9. To turn to the former head of the argument of Mr. Manekshaw relating to the connotation of assignment of an office within the meaning of that expression as used in S. 312. Now, it is well understood that the expressions assign and transfer are often used in our statutes to convey the same meaning and the same sense and that the primary meaning of the word assign is to legally transfer or to legally make over any property or any right. It is equally well understood that the expression transfer is one of wide import and embraces both a transfer by an act inter vivos as well as a transfer by operation of law, that is by sale in execution, forfeiture, insolvency, intestate succession or testamentary disposition. In view of this connotation of the word transfer the argument on behalf of the appellants was that a distinction must be drawn between an assignment of the office of a Director and appointment of another person as a Director by a person holding the office of Director. Learned counsel, however, had to agree that if a Director in a private company appointed for life and clothed with the power to appoint any other person in his place and stead were to exercise that power by an act inter vivos that would be an assignment of an office and hit by S. 312 even though it might be called an appointment. But it was said that appointment by a will in such a case would be wholly a different matter. It would not be within the ambit of the section because that would not be an assignment. The argument of necessity had to rest on the principle one cannot give what one has not got. 1 have already examined that argument. 10. It has been argued by Mr. Khambatta, learned counsel for the respondents that there is no justification for giving a limited and narrow construction to the expression assignment of office which can mean passing of any right from one person to another. Counsel has referred to Law Lexicons and to Murrays English Dictionary. In Whartons Law Lexicon, 14th Edition, as to the verb assign it is stated that the verb is variously applied and the meaning given, in that Lexicon to the word assign is generally to transfer property, especially personal estate, or set over a right to another, or appoint a deputy. It is common knowledge that the draftsmen of our Indian Statutes do not prefer to use the expression assign in the context of property and have for a long time since the enactment of the Transfer of Property Act chosen to use the expression transfer. Wharton defines assignee as a person appointed by another to do an act or perform any business. The expression assignment is defined as transfer of an estate or interest in property. Mr. Khambatta has strongly relied on the meaning of the verb assign given in Murrays Dictionary and one of the meanings is to appoint. He has also relied on the meaning of that verb given in that Dictionary as to transfer or formally make over to another. He has also relied on the meaning given there as to appoint authoritatively as also another meaning which is to appoint, designate, ordain, depute. Counsel has also referred to certain provisions of the Transfer of Property Act. But I do not think it necessary to refer to those provisions because it has not been disputed and could not be disputed by Mr. Manekshaw that the meaning of the expression transfer includes a transfer by an act inter vivos as well as by a testamentary disposition or direction. Great reliance has been placed by Mr. Khambatta on the meaning of the verb assign as to appoint or to designate. Mr. Khambatta has also argued that the contention on behalf of the appellants in asking the Court to give a restricted meaning to the expression assignment ignores the existence of a third party viz. the company. It is said that this is not a case of an ordinary assignment between an assignor and an assignee whereby some property is transferred by the assignor to the assignee. Here, what was being done, though called an assignment, was really an appointment to the post of the office of a Director and which had the effect of imposing the will of one person on a third party and the third party was affected. This aspect of the matter, to my mind, cannot be ignored. It is not a bilateral act pure and simple with which we are concerned in this case. We are concerned with the office of a Director in a company and one person is clothed with the power to appoint another person and the appointee is the third party. Therefore, the ordinary sense in which the expression assignment may be used in the context of transfer of property by an act inter vivos is a concept which need not be introduced in reading the expression assignment in S. 312. Learned counsel has also drawn our attention to the scheme of the Act. He has referred to S. 253 which lays down that only an individual can be a Director of a public or a private company and not any body corporate or association or firm of partners : and he has also drawn our attention to S. 254 which requires that subscribers to the Memorandum of any company can only be individuals and in default of and subject to any regulations in the articles of a company, subscribers of the memorandum who are individuals shall be deemed to be the Directors of the company until the Directors are duly appointed under S. 255. He has also drawn our attention to S. 255(2). These sections have been referred to for the purpose of showing that the Act does not contemplate any continuity in the matter as must accur if the Director could be a body corporate or an association or a firm of partners. It is urged that it is clear from various provisions of the Act that the intention of the Legislature was to prevent the mischief of any Director introducing into the company any other person as a Director at his own volition even though he might have been authorised by an agreement between him and the company to do so and even though the Articles of Association of a company may expressly permit that to be done. Numerous prohibitions have been laid down by the new Companies Act in case of Managing Agents, Managing Directors, Managers and Directors of the Company and other officers of a company. It is not necessary for me to examine the scheme of the Act in any detail since it is now well-understood that the new Companies Act aims at eradicating many serious mischiefs which the principle of perpetual management of companies had caused in the past. The argument of counsel is : Why permit that mischief to continue by reading S. 312 in a narrow sense by attributing any undue restricted meaning to the words assignment of his office It is stressed that the real meaning of this expression and one to be gathered from the section itself is that a person cannot introduce another person as a Director in that company even though authorised to do so by the Articles of Association of the Company. This it is urged is the effect of reading S. 9 with S. 312. Then it is said that if the argument urged on behalf of the appellants were to be accepted, an inconsistent and incongruous position is bound to arise. 11. In my opinion, Mr. Khambatta is right when he says that an inconsistent and incongruous position must arise if the argument urged on behalf of the appellants is to be accepted by us. Of course the Court will not attach any undue importance to this consideration but any inconsistent or incongruous position that might arise has to be borne in mind even in interpreting a statute the language of which is plain and unambiguous. Moreover it is not possible to say that the expression assignment is capable of only one meaning and one meaning alone nor has any such attempt been seriously made before to suggest that the word assignment is capable of only one meaning. The inconsistent and incongruous position that can arise if the argument for the appellants is accepted is that while a Director cannot during his life time appoint another person as a Director in his place and stead, though authorised by an agreement between him and the company and the Articles of Association to do so, he can do so by an appointment which is to be effective immediately on his demise. Of course where the language of the section is plain, unambiguous and is not capable of more than one meaning, then ordinarily that meaning would have to be given by the Court. But in such a case, question of interpretation can hardly be said to arise. There will be no need of interpretation. The language itself being clear and manifest best declares the intention of the Legislature - Absoluta sententia expositore non indiget . But it is not possible to say that the expression assignment which is usually used in the context of property law and which has been pitchforked in a provision relating to the Companies Act in the context of a personal office which is neither an interest nor a right in any property and obviously is not an office of profit can be said to have a plain and simple meaning and which, as Wharton has said, is variously applied even in England. 12. Learned counsel for the Respondents has also drawn our attention to S. 317 of the Companies Act. That section rules that a Managing Director of a company cannot be appointed for more than 5 years at a time. The argument has been that a Managing Director of a public company if clothed by any agreement between him and the company and the Articles of Association to appoint a successor would have power to make a Will and appoint a successor and in such a case on his demise within the period of the allotted span of five years mentioned in S. 317 the appointee would step in as a Managing Director. The suggestion is that in case of a public company such a position would be inconceivable and intolerable. It is not necessary for me however, to examine in any detail what would happen in case of a Managing Director clothed with any power as in the illustration suggested by learned counsel. But it does seem that such a strange and impermissible situation can arise and it does seem that the present argument lends support to the contention pressed on behalf of the respondents. 13. The next argument of Mr. Khambatta turns on the meaning and effect of Art. 10 9. It is said that clause (b) of that Article authorised Dadoba to appoint any person to be a Managing Director in his place and stead and in default of such appointment the legal representatives of Dadoba were entitled to exercise the power. It is said that the appointment by Dadoba by an act inter vivos of any person as Managing Director in his place and stead would be within the mischief of S. 312 and if he appointed any person to be a Managing Director in his place and stead by a Will or Codicil, the appointment would be valid if the contention of the other side were to be accepted. The argument here is that there is no warrant for splitting Art. 109 under two heads of appointment by Deed and an appointment by Will or Codicil. It is said that if one part of Art. 109 is bad, then the whole of Art. 109 is bad. It is also said that not merely Dadoba but the legal representatives of Dadoba have also been given the power to appoint a Managing Director. The contention is that for this reason the whole of Art. 109 (b) must be treated as bad because it is not divisible. Now, this argument can have force only in case of matters which are not severable. I do not think that an appointment by a Deed inter vivos and an appointment by a Will or Codicil are matters which are not severable. Therefore, there is little scope for the present argument urged before us by Mr. Khambatta. There is, however, considerable force in the argument of learned counsel that a restricted meaning should not be given to the expression assignment in the context of the personal office of a Director of Company under our Company law. Evidently, the construction pressed for our acceptance by learned counsel for the appellants relies - to put it in his own words on the rule of literal construction. It has been strenuously urged that S. 312 must be literally construed and so construed the expression assignment must be given the meaning pressed for our acceptance on behalf of the appellants. Not only that, but the argument asks us to put a restricted meaning on an expression ordinarily used in the context of property and rights and interest in property, whereas in the section which we have to interpret, it is not used with reference to property but a personal right involving confidence as a main element as well as the character, credit and substance of the person who is a Director and who is sought to be appointed as a Director in his place and stead. It also involves a third party viz. the company. 14. We have to construe an expression which is capable of a sufficiently flexible meaning as well as a restricted and narrow meaning. The elementary rule of literal construction, as has so often been said, is confined to cases where the language is precise and capable of but one construction or where neither the history nor the cause of the enactment, nor the context, nor the consequences to which the literal interpretation would lead, show that that interpretation does not embrace the real intention. It has also been repeatedly said that language is so often capable of being used in more than one sense and to adhere rigidly to its literal and primary meaning in all cases would be to miss its real meaning in many words if sufficiently flexible must be construed in the sense which, if less correct grammatically, is more in harmony with the intention of the law-maker. These are well settled principles of interpretation of a Statute. 15. To turn to examine the object of the enactment. The expression director includes any person occupying the position of Director by whatever name called and Managing Director means a Director who is entrusted with any powers of management which would not otherwise be exercisable by him, and includes a Director occupying the position of a Managing Director by whatever name called. Only an individual can be a Managing Director of a company. It is plain from Art. 109 that the right to appoint a Director was given to Dadoba and the right could be exercised from generation to generation. A company is a perpetual body and the effect of accepting the construction pressed on behalf of the appellants would be that in this private limited company which is a perpetual body the Managing Director was given a right to appoint the future managing director and if the right was not exercised by him, then his legal representatives could exercise that right so that the same process of appointment could continue from generation to generation. That, to my mind, is wholly foreign to the object and scheme of the new Companies law. I entertain no doubt that the object of the mandatory prohibition in sec. 312 was to prevent any such appointment being operative in the lifetime of the director as well as after his death and the only doubt that must naturally arise is from the fact that my brother K. T. Desai holds a view different from mine. This type of perpetual management whether in the form of a director, manager, managing agent or managing director was an evil which had to be eradicated and the precise object of the whole Act read in the context of sec. 9 was to eradicate that evil. I do not propose to burden this judgment by referring to the numerous sections of the Act which leave no doubt that such was the intent and object of the law-giver. I shall have occasion to refer a little later to sec. 86B of the repealed Act of 1913 the language of which when compared with sec. 312 does throw considerable light on this point. According to the argrument of learned Counsel for the appellant, the Legislature, although it has dealt with the matter of appointment of the nature before us made by a director in his life time, has not dealt at all with the matter of such appointment if it is to operate after death. It is said that if there is any lacuna in the Act, it is for the Legislature to remedy the defect. Of course the court cannot reach a casus omissus and no canon of construction permits the court to cure a lacuna in a statute. That is simple. But it is equally true that omissions are not to be readily inferred. The court, it is firmly established, will not wrest the language of a Statute and will not lightly create or infer a lacuna. It will at the same time see that the true meaning of any passage is to be found not merely in the words of the passage, but in ascertaining also among other things what was the circumstance with reference to which the words are used, in what context they are used and what was the object which the Legislature had in view. 16. There is another aspect of the same question. We are not dealing with a codifying enactment but with an Act to consolidate and amend the law relating to Companies and certain other Associations. It is well-settled that in an enactment of this nature, it is legitimate to refer to the previous state of the law for the purpose of ascertaining the intention of the Legislature. Many provisions of the Indian Companies Act of 1913 were adopted from analogous provisions in the English Companies Acts. A number of provisions in our Companies Act of 1956 have been adopted from the English Act of 194 8. It is also true that there are numerous sections in which the language of the English enactment has only partially been adopted. There is no section in the analogous English enactment similar to sec. 312 of our Act which, as I have already said, enforces prohibition of assignment of office of a director and that prohibition is absolute and unqualified. Under our repealed Companies Act. there was some analogous provision in sec. 86B, the relevant part of which was as under :- If in the case of any company provision is made by the articles or by any agreement entered into between any person and the company for empowering a director or manager of the company to assign his office as such to another person, any assignment of office made in pursuance of the said provision shall notwithstanding anything to the contrary contained in the said provision, be of no effect unless and until it is approved by a special resolution of the company : Provided that the exercise by a director of a power to appoint an alternate or substitute director to act for him during an absence of not less than three months from the district in which meetings of the directors are ordinarily held, if done with the approval of the board of directors, shall not be deemed to be an assignment of office within the meaning of this section : XX XX XX. That section was one of a group of secs. 86A to 861 which were inserted in 1936 in the Companies Act of 1913. The corresponding provision in the English enactment was sec. 151 of the Act of 19 2 9. Section 204 of the English Act of 1948 was in part materia with sec. 151 of the earlier English enactment. Section 151 of the English enactment was as under :- If in the case of any company provision is made by the articles or by any agreement entered into between any person and the company for empowering a director or manager of the company to assign his office as such to another person, any assignment of office made in pursuance of the said provision shall, notwithstanding anything to the contrary contained in the said provision, be of no effect unless and until it is approved by a special resolution of the company. It is noticeable and it is of some importance to observe that the first proviso to our sec. 86B which I have quoted above did not find place in sec. 151 of the English Act of 1929 nor did it find place in the later English enactment of 194 8. Section 86B laid down certain restrictions on the powers of a director or a manager of a company to assign his office as such to another person. The restriction was that even though the Articles of the Company might have permitted it, no such power could be exercised unless and until the assignment was approved by a special resolution of the company. The proviso engrafted a material rule on the section. The effect of the proviso was that the power to make a temporary appointment of an alternate or substituted director to act for him which could be exercised by a director in favour of another person during his absence from the district could be exercised without any special resolution of the company and it was sufficient if the Board of Directors gave its approval to the same. Such a case, the proviso expressly stated, would not be deemed to be an assignment of office. It is clear from the language of the proviso that the Legislature took the view that there was ample scope for the suggestion that even such a temporary appointment of alternate and substituted director for a short period may be regarded as an assignment of office by a director. Therefore, one thing is clear from the language of that proviso read with the section that it was thought possible that a temporary appointment for a short period of a substituted director to act for him during his temporary absence made by a director could fall within the meaning of the expression assignment of office. It is implicit in the proviso that even though the Articles of Association may permit it, a director or a manager of a company had no right to put in his place and stead another person as a director even during his temporary absence. I have referred to that section to show what the intention of the Legislature was even under the provisions contained in sec 86B. Although Articles of Company do in some cases empower a director to appoint an alternate or a substituted director, the Legislature did not approve of any such right being created in favour of a director by an agreement between the director and the company or by recognising that right in the Articles of Association and laid down conditions which were restrictive of that right. It is a well-established principle of construction that when one finds a proviso to a section, the presumption is that but for the proviso the enacting part of the section would have included the subject matter of the proviso. Of course, that presumption need not arise where it is clear that the proviso was inserted only ex abundanti cautela. A comparison of sec. 86B and the first proviso to the same with the language of section 312 with which we are here concerned seems very instructive. In section 312 the Legislature not being content with the restrictions imposed under the old section, decided to lay down an absolute and unqualified prohibition against the assignment of the office of a director in any circumstance and the only qualification that it has made is contained in sec. 313, the relevant part of which is as under : 313. Appointment and term of office of alternate directors. - (1). The Board of Directors of a company may, if so authorised by its articles or by a resolution passed by the company in general meeting, appoint an alternate director to act for a director (hereinafter in this section called the original director) during his absence for a period of not less than three months from the State in which the meetings of the Board are ordinarily held. Now, I have already pointed out that sec. 86B followed the language of sec. 151 of the English Act of 1929 and sec. 204 of the English Act of 1949 is in pari materia with sec. 151, and neither that section nor the earlier section 151 contained any proviso of the nature engrafted on sec. 86B of our Act of 1913. I have referred to the sections of the English enactment for the purpose of showing that the language of sec. 86B without the proviso had been borrowed from the English Act of 19 2 9. I may observe that sec. 204 of the English Act of 1949 does not impose any rigid bar on the assignment of his office by a director but the condition it imposes is that there should be a special resolution of the company. A curious and somewhat interesting position emerges if one turns to the standard text books on the English Companies Act. The note of the editors of Palmers Company Precedents under sec. 204 of the Act of 1949 is as under: The precise connotation of a power to assign office as mentioned in the section is not clear. It is not thought that it would refer to a provision for the appointment of a successor; see. for example, paragraph (4) of Form 255 ante. Now, Form 255 is in respect of a peculiar type of Managing Directorship and the person who holds that directorship is referred to in England as a Governing Director. It is not necessary for me to examine the Form 255 which is given in Palmers Company Precedents. No clear opinion seems to have been expressed by the editors but they say that it is not thought that sec. 204 would refer to a provision for the appointment of a successor by a governing director. They also say that the precise connotation of a power to assign office is not clear. Therefore, one thing is certain that the Editors of that Book were not inclined to state any definite opinion about the meaning of the expression to assign office in sec. 204 and left the matter as one in dubio. Since the greatest reliance has been placed by Mr. Manekshaw, learned Counsel for the appellants, on certain observations made by the editors of the forty-first edition of Gore-Brownes Text Book of Companies law I shall set out those observations in extenso: Where in the case of a private company, the vendor of a business to the company is appointed a director by the Articles, he is frequently styled a governing director, and has conferred upon him all the powers of a Board of Directors, with a right from time to time to appoint a successor during his life or by his will, or for his legal personal representatives to make such appointment after his death. In connection with such powers to appoint a successor the question whether its exercise constitutes an assignment of the office within sec. 204 may arise. That section renders the assignment of the office of director as such to another person of no effect unless and until it is approved by a special resolution of the company. It is difficult to see how a deceased person or his legal personal representatives could assign an office, and possibly in no case would the exercise of a power to appoint a successor under such an Article constitute an assignment of the office, unless the appointment is made by the governing director during his life. The point is, however, a doubtful one and it would be advisable for any person appointed as successor under such a power to obtain the support of a special resolution. I do not think these observations are helpful in interpreting section 312 of our Act of 1956. The, argument on behalf of the appellants leans heavily on the very insecure foundation of these observations of the learned editors made in the context of a section (204) which does not contain any proviso similar to that under the repealed sec. 86B of our Act of 1913. What is more important is that sec. 204 is not in pari materia with sec. 312 with which we are really concerned and which lays down a stricter prohibition on the powers of a director. It is also noticeable that in England this point is not one of particular importance because there is no provision in the English Act similar to our sec. 312 which imposes an absolute prohibition on the assignment of the office of a director. All that is required there is a special resolution of the company. None of the two statements of the learned editors of Palmers Company Precedents or Gore-Brownes work claim the high authority of the illustrious authors of the works and the editors also have left the matter in doubt. It is well-known that Buckley who was later Lord Wrenbury was conservative in the matter of expressing his opinion and the editors of that work have been conservative in the matter of expression, of opinions and that is one reason why Buckleys work has been very often referred to by courts both in England and India. Now, the editors of the present edition of Buckleys work on Company law have made a significant note under sec. 204 and the note is this : Quere, what is meant by the expression assignment of office used in this section which reproduces sec. 151 of the 1929 Act. Mr. Manekshaw says that the expression quere only means that a question is put by the editors. To my mind, it is more than that. It is a question of the nature of objection. It is used at times to question accuracy of what has been said or written by another. In any case one thing is plain that the opinions of these editors expressed in the context of a rule which is different from the rule laid down in sec. 312 would be slender support for the construction urged on behalf of the appellants. 17. We have here an express and unqualified rule in sec. 312 which is manifestly intended to set at nought the mischief which must result if a director of a Company public or private were to be permitted to exercise the power of introducing another person of his own choice as a director in his place and stead by assigning his office in favour of such person. The expression assignment so dear to the heart of English conveyancing lawyers is not used here in any context of conveyancing or transfer of any property or any right or interest in property but in the context of making over of an office of director by one person to another. The expression is capable of being variously applied and I see no reason and no principle why its connotation should be confined to transference of any right by an act inter vivos. It is an expression of larger import than that. In reference to something which is not property or right or interest in property it can certainly mean making over or setting over of any right by one person to another or appointment to an office by one person of another when the person holding the office makes it over to another by appointing him to hold that office. The argument pressed for our acceptance, as I have already mentioned, could not go to the length of suggesting that a director can during his life time make over his office to another person by calling it an appointment and not an assignment. It makes no difference to my mind whether he does it in his life time by an act inter vivos or by a will so that it operates from the date of his death. In either case it is an appointment to the office of director. In the course of the arguments I put it to learned counsel for the appellants if he could suggest any reason why the Legislature should deem it necessary to prohibit a director of a company from appointing another person as a director in his place and stead by an act inter vivos, that is, during his lifetime and should not deem it necessary to prevent him from doing so by a will. No answer was given save that it would be entering the region of speculation. It would be strange indeed to attribute to the Legislature the intention to create the anomalous position that must arise if it were to be accepted that sec. 312 prohibits appointment by a director to his office of another person in his place and stead by an act inter vivos and yet permits such appointment to be made by him by his will. Moreover this incongruous position can arise not only in case of a director in a private company but also in case of a director in a public company if the construction urged on behalf of the appellants is to be accepted. To take the simple illustration of a case where by Articles of Association of a public company the promoters or managing agents are given the power to appoint one or more ex-officio directors for life. Such a power would be valid under sec. 255 of the Companies Act so long as the number of such directors does not exceed one-third of the total number of directors of the company. Section 255 is as under : 255. Appointment of directors and proportion of those who are to retire by rotation - (1) Not less than two-thirds of the total number of directors of a public company, or of a private company which as a subsidiary of a public company, shall - (a) be persons whose period of office is liable to determination by retirement of directors by rotation; and (b) save as otherwise expressly provided in this Act, be appointed by the company in general meeting (2) The remaining directors in the case of any such company, and the directors generally in the case of a private company which is not a subsidiary of a public company, shall, in default of and subject to any regulations in the articles of the company. also be appointed by the company in general meeting. So if the regulations in the Articles of the company empower the promoters or managing agents to appoint a director or directors within the number permissible under sub-sec . (2) for the life-time of such director or directors the appointment would be valid. Now in such a case if the Articles were to provide that a director or directors so appointed will have the power to appoint another person to his or their office of director by an act inter vivos or by will the position would be that the appointment by an act inter vivos would be void while the appointment, by will would be valid if the construction which we are asked to put on the expression assignment were to be accepted. It is inconceivable to my mind that such is the object or effect of sec. 312 of the Act of 1956. It seems indubitable to me that any such appointment of a director in a public company by will is within the prohibition imposed by the section. Cadit question it is within the ambit of the prohibition in case of appointment of a director in a private company. The only answer to this suggested by learned Counsel for the appellants was that section 317 prevents appointment of a managing director of a public company for a term exceeding five years at a time. But that section has no bearing whatever on the present discussion about assignment of his office by a director. It is extremely difficult for me to see why an intention should be attributed to the law-giver of laying down a rule the effect of which would be to rule that a director in a public or private company, authorised by the Articles of the Company, cannot make any such appointment five minutes before his death - that would be by an act inter vivos - and yet he can do it by inserting a clause to that effect in his will. It was, however, said that sec. 255(2) has the effect of permitting appointment of a director in a public or private company A. I. R. being made by a third person who may be a total outsider and not a director of the company and the argument was that an appointment made by such third person cannot be called an assignment of the office of director. The argument ran that there was no difference between any such appointment made by a third party and an appointment made by a person who happens to be a director. The argument to my mind is not sound. The section speaks of assignment of his office by a director and the prohibition is evidently imposed on a person who is a director. It is the office held by a person as a director that is not permitted to be assigned by any act on his part. Therefore, there is a difference between an appointment made by a third party and one made by a director. In the former case it cannot be said that there is an assignment of his office by the person exercising the power. On a consideration of the whole matter it seems to me that having regard to the nature of the office of a director it cannot make any difference whether the act is called an assignment of his office by a director or transfer of his office by a director or appointment by such director of another person to that office in his place and stead either by a deed or will. I fail to see any reason why we should recognise the over-refined distinction sought to be made in case of an appointment by will by attributing any restricted and technical conveyancing meaning to the expression assignment of the nature suggested on behalf of the appellants. This is not a matter of doctrinaire technicalities but a matter to be considered on broad principles and rules of interpretation. 1 8. I have not yet made any reference to another argument urged before us by learned Counsel for the appellants. It has been argued that sec. 312 speaks only of a director and the prohibition imposed is against the assignment of office of a director and not against the assignment of office of a managing director. Section 312 is one of a group of three sections headed miscellaneous provisions. Chapter II of the Companies Act deals with Directors. Learned Counsel for the appellants has drawn our attention to certain sections where the Legislature has referred to a director and certain sections where reference is made to a managing director. The suggestion is that in respect of every provision of law affecting a managing director, the framers of the Act have taken care to lay down separate rules affecting them and where they have only referred to a director, the rule is only applicable to a director, though a managing director being a director the rule may also apply to him. But that, it is said, would be in a distinguishable capacity as a director and not as a managing director. An examination of the relevant provisions of the Companies Act would show that such is not the position. There are sections which apply to a director and are equally applicable to a managing director. Moreover in section which speaks of a director the Legislature has taken special care to state necessary qualifications to the rule there stated if the section is not to apply to the case of a managing director. Before I examine one or two of such sections I should refer to the definitions of director and managing director which are as under : Section 2(13) director includes any person occupying the position of director, by whatever name called. Section 2(26) managing director means a director who, by virtue of an agreement with the company or of a resolution passed by the company in general meeting or by its Board of Directors or by virtue of its memorandum or articles of association, is entrusted with any powers of management which would not otherwise be exercisable by him, and includes a director occupying the position of a managing director, by whatever name called. The definition of managing director makes it abundantly clear that a managing director is necessarily a director entrusted with powers of management and that the expression managing director includes a director occupying the position of a managing director by whatever name called. In certain sections the Legislature has drawn a distinction between a director and a managing director by express words of qualification and it is impossible to say that the expression director wherever it is used in the Act excludes a managing director. The definition of director is rather comprehensive than restrictive. Now these expressions which are defined by the Legislature are always to be read in their context and as is usual in modern legislative practice sec. 2 which gives definitions begins with the words Unless the context otherwise requires. The expression director is not to be read in sec. 312 or any other section as if it could apply only to a person who is a director and not to one who is also a managing director or to put it slightly differently as if it excluded per se a director who is also a managing director. When question arises whether the expression director in any section is to be understood in a comprehensive or exclusive sense it would be necessary to examine the scope and ambit of the particular section and the nature and object of the rule and the context in which it is used. Now as I have already pointed out sec. 312 is one of the sections under the heading of Miscellaneous Provisions. That itself to my mind is some indication that the expression director is used in the sections under that head in a comprehensive and not an exclusive sense. What is more important is that there is ample support to be derived for the view that the expression director in these miscellaneous provisions is used in a general sense. Section 313 must evidently apply to a managing director although only the expression director is used there. Then if sec. 314 is scrutinised it is clear that the Legislature having used the expression director has expressly mode reference to a managing director. Now one thing is quite clear that secs. 312 and 313 are to be read as dealing with a matter of the same nature and that the expression director in those sections must have the same meaning. Section 307 also lends support to the same view and it is not possible to rule out consideration of that section by saying that a managing director is also a director, and that it must be read as applicable to a managing director only in his capacity of a director and not of a managing director. The point is whether the expression is always used in the exclusive sense contended for on behalf of the appellants. I may permit myself to refer to sec. 86B of the repealed Act for the purpose of examining the present argument. That section applied both to a director and a managing director. Section 2(24) of the Act of 1956 defines manager to mean :- an individual (not being the managing agent) who, subject to the superintendence, control and direction of the Board of Directors, has the manage ment of the whole, or substantially the whole of the affairs of a company and includes a director or any other person occupying the position of a manager, by whatever name called and whether under a contract of service or not. Section 86B to which I have already made reference placed certain restriction on the powers of a director as well as a manager of a company. Section 383 of the Act of 1956 rules that the provisions of section 312 shall apply in relation to a manager of the company as they apply to a director thereof. If we accept the argument urged on behalf of the appellants, the effect of the rule read with sec. 312 would be that the manager of a company who is a paid employee or servant of a company can by his will ap-point another person to occupy the post of manager after his death if the Articles of Association of the company authorise him to do so. It is extremely difficult for me to see that such could be the intention or object of the law-maker. The prohibition in sec. 312 applies equally to a director as to a manager and not only in a private company but also in a public company. No reason whatever could be suggested why the Legislature should have wanted to exclude a managing director and that too of a public as well as a private company from the salutary prohibition laid down in sec. 312. Here also it was said on behalf of the appellants that sec. 317 lays down that a managing director of a public company cannot be appointed for more than five years at a time and that it does not apply to a private company. I do not think that advances the contention urged on behalf of the appellants. I need not pursue the examination, of some other sections which, to my mind, support the view that the expression director when used without any qualifying words is to be read in a comprehensive sense as inclusive of a managing director and not in the exclusive sense in which we are asked to read it. These considerations, in my judgment, lead to the result that the expression director in sec. 312 includes a managing director of a public or a private company. 1 9. Another phase of the argument on behalf of the appellants on the question of construction of the expression assignment in sec. 312 was that Article 109 only amounts to delegation of power by the directors to one of them viz. Dadoba. I have read the relevant Articles 105 to 109 of the Articles of Association of the company more than once and I see no support whatever in them for the present argument. There is nothing in those articles which even faintly suggests anything like delegation nor any exercise by Dadoba of any delegated power. The present argument must therefore fail. 20. For all these reasons, the conclusion seems to me inescapable that the expression assignment of his office cannot be read in the narrow restricted sense in which we have been asked to read it on behalf of the appellants and sec. 312 must be read as applicable to a director including a managing director and in the comprehensive sense in which it would include appointment by any testamentary disposition or direction. In my judgment the learned Judge was right in the conclusion reached by him. 21. I now turn to examine another contention urged before us by Mr. Manekshaw. It has been argued that in any event the plaintiff ceased to be a director of the company because he failed to attend certain meetings of the directors and became disqualified from acting as a director by operation of Art. 85(f) and sec. 283(g). A few dates and facts are necessary to dispose of this contention. There was a meeting of the Board of Directors soon after the death of Dadoba which was in the nature of a condolence meeting and it was attended by the plaintiff. That was on 13-2-1957. On 14-2-1957 the second defendant sent out a notice calling a meeting of the Board of Directors of the company for 14-2-1957. He sent that notice as Chairman of the company. The next notice sent out by the second defendant was signed by him as a director and was on 19-3-1957. By his letter dated 23-3-1957 the plaintiff protested against the notice of 19-3-1957 which had been sent out by the second defendant. A notice dated 27-3-1957 convening a meeting of the Board of Directors was sent by the second defendant as a managing director of the company. A notice dated 4-5-1957 was also sent by the second defendant describing himself as a managing director. A notice dated 21-5-1957 was also sent by the second defendant as a managing director of the company. So also a notice dated 23-5-1957 was sent by the second defendant as the Managing Director of the company. It will be seen that all but one of the notices relating to the convening of the meeting of Board of Directors were sent by the second defendant as Chairman or managing director and at all relevant period the plaintiff protested against the right of the second defendant to convene any meeting in his capacity as Managing Director or Chairman of the Board of Directors of the company. Since I have taken the view that the appointment of the second defendant as the Managing Director was invalid and bad in law, it must follow as a necessary corollary to that conclusion that the second defendant had in law no power to convene any meeting as a managing director of the company and if he did so, those meetings were not duly and legally convened meetings and if they were not duly and legally convened meetings, it cannot be said that the plaintiff absented himself from any properly convened meeting of the Board of Directors of the company. I must point out that it was also argued by Mr. Manekshaw that in any event the second defendant had continued all along to be a director of the company and even if it be held by the Court that he had no right to convene the meetings as a managing director of the company, he had the right to convene those meetings as a director and on that ground the plaintiff should be disqualified because he had failed to attend the meetings as required by the Articles of Association and by the provisions of law. I do not think this argument is tenable. In express terms, the meetings were called by the second defendant in his alleged capacity as a managing director and there is nothing on the record to show that he called those meetings simply as a director of the company. It is not, therefore, necessary to examine this argument at any length. The meetings being called by him in the exercise of a capacity which he did not have, were bad and it is not open to him now to fall back on his position as a director of the company. I may also refer to Article 94 of the Articles of Association of the company which deals with the question as to when a director may summon a meeting. That article lays down that the managing director may at any time and shall upon request of any Director convene a meeting of the directors. The power to call a meeting of the directors is primarily with the managing director and the second defendant in terms called those meetings as managing director. Mr, Manekshaw has also drawn out attention to Form No. 184 from Palmers Company Precedents and relied on the following observation : In the absence of any article otherwise providing or a contrary practice established by the directors it would seem that any director may summon a meeting. There is nothing before us to show that any contrary practice has been established and Art. 94 is the relevant article which must be taken into consideration in this matter. There is no other article in the Articles of Association of the company which can be said to deal with the matter. The present contention fails and must be negatived. 22. There remains to consider one more contention urged before us by Mr. Manekshaw. It is said that the appointment of the third defendant has been erroneously declared by the trial court to be bad in law. It is not necessary to refer to what I have already said in my judgment about the appointment of the second defendant as a managing director being invalid and bad in law. If his appointment was invalid and bad in law, he had no power to appoint the third defendant as a director by co-option.. That contention also must be rejected.

Decision:
0[ds]4. At first blush the argument, under the latter head, that a person cannot transfer what he has not got may perhaps seem somewhat attractive from a sheer legal point of view, however repugnant it may be to the object of the Legislature in laying down the absolute bar against the transfer of an office of a Director. But on closer examination I think it defective even from the legal standpoint in paying too little attention to a number of relevant and material considerations, which, in my judgment, must weigh with the Court on this question of interpretation of the rule which aims to prevent use and abuse of a powerNow, what Mr. Manekshaw contends for is the same principle but the contention assumes as a major premise an equivalent between the nature of a right or interest in properly and the office of a Director which by no stretch of argument can be termed as property or any interest or right inSuch an equation, to my mind, is impermissible. We have nothing to do with any right or interest in property nor are we concerned with any question of title or transmission of a title which could or could not vest in DadobaIt has not been possible for Mr. Manekshaw to dispute that if this was done during theDirector by an act inter vivos it would be an assignment and hit by S. 312, though at one stage of the argument that position was not accepted. But that line had to be abandoned in view of the language of certain sections in the Act and particularly S. 86B of the repealed Act of 1913 and the proviso to the same to which I shall refer a little laterTo my mind, there is here no justification for anyd distinction between appointment and assignment. In the first place, we are not dealing with property. We are dealing with an office which can only be the subject matter of an appointment. Whether you call it an assignment or transfer or alienation or appointment, it has the same meaning and the effect is the same. I fail to see how in such a case it can be said that what is done is not a transfer because the right to transfer was not there. Of course it was not there at the inception but it was there when the power to transfer the right was conferred. This, to my mind, is the weakness underlying the argument of learned counsel so strongly pressed for our acceptance9. To turn to the former head of the argument of Mr. Manekshaw relating to the connotation of assignment of an office within the meaning of that expression as used in S. 312. Now, it is well understood that the expressions assign and transfer are often used in our statutes to convey the same meaning and the same sense and that the primary meaning of the word assign is to legally transfer or to legally make over any property or any right. It is equally well understood that the expression transfer is one of wide import and embraces both a transfer by an act inter vivos as well as a transfer by operation of law, that is by sale in execution, forfeiture, insolvency, intestate succession or testamentary disposition. In view of this connotation of the word transfer the argument on behalf of the appellants was that a distinction must be drawn between an assignment of the office of a Director and appointment of another person as a Director by a person holding the office of Director. Learned counsel, however, had to agree that if a Director in a private company appointed for life and clothed with the power to appoint any other person in his place and stead were to exercise that power by an act inter vivos that would be an assignment of an office and hit by S. 312 even though it might be called an appointment. But it was said that appointment by a will in such a case would be wholly a different matter. It would not be within the ambit of the section because that would not be an assignment. The argument of necessity had to rest on the principle one cannot give what one has not got. 1 have already examined that argumentHere, what was being done, though called an assignment, was really an appointment to the post of the office of a Director and which had the effect of imposing the will of one person on a third party and the third party was affected. This aspect of the matter, to my mind, cannot be ignored. It is not a bilateral act pure and simple with which we are concerned in this case. We are concerned with the office of a Director in a company and one person is clothed with the power to appoint another person and the appointee is the third party. Therefore, the ordinary sense in which the expression assignment may be used in the context of transfer of property by an act inter vivos is a concept which need not be introduced in reading the expression assignment in S. 31211. In my opinion, Mr. Khambatta is right when he says that an inconsistent and incongruous position must arise if the argument urged on behalf of the appellants is to be accepted by us. Of course the Court will not attach any undue importance to this consideration but any inconsistent or incongruous position that might arise has to be borne in mind even in interpreting a statute the language of which is plain and unambiguous. Moreover it is not possible to say that the expression assignment is capable of only one meaning and one meaning alone nor has any such attempt been seriously made before to suggest that the word assignment is capable of only one meaning. The inconsistent and incongruous position that can arise if the argument for the appellants is accepted is that while a Director cannot during his life time appoint another person as a Director in his place and stead, though authorised by an agreement between him and the company and the Articles of Association to do so, he can do so by an appointment which is to be effective immediately on his demiseIt is not necessary for me however, to examine in any detail what would happen in case of a Managing Director clothed with any power as in the illustration suggested by learned counsel. But it does seem that such a strange and impermissible situation can arise and it does seem that the present argument lends support to the contention pressed on behalf of the respondentsNow, this argument can have force only in case of matters which are not severable. I do not think that an appointment by a Deed inter vivos and an appointment by a Will or Codicil are matters which are not severable. Therefore, there is little scope for the present argument urged before us by Mr. Khambatta. There is, however, considerable force in the argument of learned counsel that a restricted meaning should not be given to the expression assignment in the context of the personal office of a Director of Company under our Company law. Evidently, the construction pressed for our acceptance by learned counsel for the appellants reliesto put it in his own words on the rule of literal constructionNow, Form 255 is in respect of a peculiar type of Managing Directorship and the person who holds that directorship is referred to in England as a Governing Director. It is not necessary for me to examine the Form 255 which is given in Palmers Company Precedents. No clear opinion seems to have been expressed by the editors but they say that it is not thought that sec. 204 would refer to a provision for the appointment of a successor by a governing director. They also say that the precise connotation of a power to assign office is not clear. Therefore, one thing is certain that the Editors of that Book were not inclined to state any definite opinion about the meaning of the expression to assign office in sec. 204 and left the matter as one in dubioThe, argument on behalf of the appellants leans heavily on the very insecure foundation of these observations of the learned editors made in the context of a section (204) which does not contain any proviso similar to that under the repealed sec. 86B of our Act ofWhat is more important is that sec. 204 is not in pari materia with sec. 312 with which we are really concerned and which lays down a stricter prohibition on the powers of a director. It is also noticeable that in England this point is not one of particular importance because there is no provision in the English Act similar to our sec. 312 which imposes an absolute prohibition on the assignment of the office of a director. All that is required there is a special resolution of the company. None of the two statements of the learned editors of Palmers Company Precedents ors work claim the high authority of the illustrious authors of the works and the editors also have left the matter in doubtMr. Manekshaw says that the expression quere only means that a question is put by the. To my mind, it is more than that. It is a question of the nature of objection. It is used at times to question accuracy of what has been said or written by another. In any case one thing is plain that the opinions of these editors expressed in the context of a rule which is different from the rule laid down in sec. 312 would be slender support for the construction urged on behalf of the appellantsIn the course of the arguments I put it to learned counsel for the appellants if he could suggest any reason why the Legislature should deem it necessary to prohibit a director of a company from appointing another person as a director in his place and stead by an act inter vivos, that is, during his lifetime and should not deem it necessary to prevent him from doing so by a will. No answer was given save that it would be entering the region of speculation. It would be strange indeed to attribute to the Legislature the intention to create the anomalous position that must arise if it were to be accepted that sec. 312 prohibits appointment by a director to his office of another person in his place and stead by an act inter vivos and yet permits such appointment to be made by him by his will. Moreover this incongruous position can arise not only in case of a director in a private company but also in case of a director in a public company if the construction urged on behalf of the appellants is to be accepted. It seems indubitable to me that any such appointment of a director in a public company by will is within the prohibition imposed by the section. Cadit question it is within the ambit of the prohibition in case of appointment of a director in a private company. The only answer to this suggested by learned Counsel for the appellants was that section 317 prevents appointment of a managing director of a public company for a term exceeding five years at a time. But that section has no bearing whatever on the present discussion about assignment of his office by a director. It is extremely difficult for me to see why an intention should be attributed to ther of laying down a rule the effect of which would be to rule that a director in a public or private company, authorised by the Articles of the Company, cannot make any such appointment five minutes before his deaththat would be by an act inter vivosand yet he can do it by inserting a clause to that effect in his will.It was, however, said that sec. 255(2) has the effect of permitting appointment of a director in a public or private company A. I. R. being made by a third person who may be a total outsider and not a director of the company and the argument was that an appointment made by such third person cannot be called an assignment of the office of director. The argument ran that there was no difference between any such appointment made by a third party and an appointment made by a person who happens to be ato my mind is not sound. The section speaks of assignment of his office by a director and the prohibition is evidently imposed on a person who is a director. It is the office held by a person as a director that is not permitted to be assigned by any act on his part. Therefore, there is a difference between an appointment made by a third party and one made by a director. In the former case it cannot be said that there is an assignment of his office by the person exercising the power. On a consideration of the whole matter it seems to me that having regard to the nature of the office of a director it cannot make any difference whether the act is called an assignment of his office by a director or transfer of his office by a director or appointment by such director of another person to that office in his place and stead either by a deed or will. I fail to see any reason why we should recognise thed distinction sought to be made in case of an appointment by will by attributing any restricted and technical conveyancing meaning to the expression assignment of the nature suggested on behalf of the appellants. This is not a matter of doctrinaire technicalities but a matter to be considered on broad principles and rules of interpretationI do not think that advances the contention urged on behalf of the appellants. I need not pursue the examination, of some other sections which, to my mind, support the view that the expression director when used without any qualifying words is to be read in a comprehensive sense as inclusive of a managing director and not in the exclusive sense in which we are asked to read it. These considerations, in my judgment, lead to the result that the expression director in sec. 312 includes a managing director of a public or a private companyI have read the relevant Articles 105 to 109 of the Articles of Association of the company more than once and I see no support whatever in them for the present argument. There is nothing in those articles which even faintly suggests anything like delegation nor any exercise by Dadoba of any delegated power. The present argument must therefore fail20. For all these reasons, the conclusion seems to me inescapable that the expression assignment of his office cannot be read in the narrow restricted sense in which we have been asked to read it on behalf of the appellants and sec. 312 must be read as applicable to a director including a managing director and in the comprehensive sense in which it would include appointment by any testamentary disposition or direction. In my judgment the learned Judge was right in the conclusion reached by himA few dates and facts are necessary to dispose of this contention. There was a meeting of the Board of Directors soon after the death of Dadoba which was in the nature of a condolence meeting and it was attended by the plaintiff. That was on7 the second defendant sent out a notice calling a meeting of the Board of Directors of the company for. He sent that notice as Chairman of the company. The next notice sent out by the second defendant was signed by him as a director and was on. By his letter dated7 the plaintiff protested against the notice of7 which had been sent out by the second defendant. A notice dated7 convening a meeting of the Board of Directors was sent by the second defendant as a managing director of the company. A notice dated7 was also sent by the second defendant describing himself as a managing director. A notice dated7 was also sent by the second defendant as a managing director of the company. So also a notice dated7 was sent by the second defendant as the Managing Director of the company. It will be seen that all but one of the notices relating to the convening of the meeting of Board of Directors were sent by the second defendant as Chairman or managing director and at all relevant period the plaintiff protested against the right of the second defendant to convene any meeting in his capacity as Managing Director or Chairman of the Board of Directors of the company. Since I have taken the view that the appointment of the second defendant as the Managing Director was invalid and bad in law, it must follow as a necessary corollary to that conclusion that the second defendant had in law no power to convene any meeting as a managing director of the company and if he did so, those meetings were not duly and legally convened meetings and if they were not duly and legally convened meetings, it cannot be said that the plaintiff absented himself from any properly convened meeting of the Board of Directors of the companyI do not think this argument is tenable. In express terms, the meetings were called by the second defendant in his alleged capacity as a managing director and there is nothing on the record to show that he called those meetings simply as a director of the company. It is not, therefore, necessary to examine this argument at any length. The meetings being called by him in the exercise of a capacity which he did not have, were bad and it is not open to him now to fall back on his position as a director of the company. I may also refer to Article 94 of the Articles of Association of the company which deals with the question as to when a director may summon a meeting. That article lays down that the managing director may at any time and shall upon request of any Director convene a meeting of the directors. The power to call a meeting of the directors is primarily with the managing director and the second defendant in terms called those meetings as managing directorThere is nothing before us to show that any contrary practice has been established and Art. 94 is the relevant article which must be taken into consideration in this matter. There is no other article in the Articles of Association of the company which can be said to deal with the matter. The present contention fails and must be negatived22. There remains to consider one more contention urged before us by Mr. Manekshaw. It is said that the appointment of the third defendant has been erroneously declared by the trial court to be bad in law. It is not necessary to refer to what I have already said in my judgment about the appointment of the second defendant as a managing director being invalid and bad in law. If his appointment was invalid and bad in law, he had no power to appoint the third defendant as a director by