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

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 (1 = appeal accepted, 0 = rejected): 0

Explanation:
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