MOTHEY KRISHNA RAO Vs. GRANDHI ANJANEYULU
HIGH COURT OF MADRAS
Mothey Krishna Rao
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(1.) APPELLANT , Mothey Krishna Rao, is the plaintiff, whose suit for a declaration that 'he is the Secretary and Treasurer of Sri Krishna Jute Mills Ltd. Eluru' has been dismissed with costs by the learned Additional Subordinate Judge of Eluru. Defendants 1 to 4 were Directors of this company when on 1 -7 -1950 a meeting of the Board ended in disorder and confusion which necessitated police intervention to restore order. According to the plaint, after the regular business on the agenda had been done, defendants 1 to 4 wanted other matters brought up, which led to this fiasco. After the plaintiff left the room, defendants 1 to 4 passed a resolution co -opting defendant 5 as director, suspending the plaintiff from the post of Secretary and Treasurer and appointing defendant 2 to look after the duties of Secretary and Treasurer temporarily. Plaintiff filed a petition under Section 144, Cri. P. C. in the Stationary Sub -Magistrate's Court and obtained an order in his favour, which was vacated by the High Court on 24 -8 -1950. Ex. A -5 is a letter written by defendant 2 as Chairman of the Board and Secretary and Treasurer to the plaintiff forwarding to him copy of the Board's resolution, which found him guilty of certain charges, suspended him from acting as Secretary and Treasurer, with a recommendation for his outright dismissal to an extraordinary general body meeting to be convened for the purpose along with the annual general body meeting to be held during the year. This course, however, was not adopted and on 25 -7 -1950 the Board removed the plaintiff from the post of Secretary. This suit was filed on 1 -10 -1950.
(2.) THE scope of the suit is very limited and confined to the Articles of Association of the Company. Plaintiff has not sued for damages for wrongful removal or dismissal, but for a declaration that he still continues to be the Secretary and Treasurer on the ground that the Board had no power to remove him under the Articles of Association. There has been no argument before us at all on the merits of the removal of the plaintiff or as regards any alleged misconduct by him, which justified his removal. Mr. Thiruvenkatachari for the appellant took his stand on this pure question of law that under the Articles of Association the Board of Directors was not competent to remove the plaintiff, and that the only competent authority, which could remove him was the general body of shareholders by a special resolution at an extraordinary general meeting.
To appreciate this contention, it is necessary to consider the relevant articles and the genesis of the plaintiff's appointment as Secretary and Treasurer. This company was formed in 1904 and under Article 111, plaintiff's uncle Mothey Ganga -razu and Venkata Subbarao were the first Joint Secretaries and Treasurers of the company. The article contained an important proviso, that it shall be lawful for the company to remove them and appoint others in their place by resolution passed at an extraordinary general meeting by a majority of not less than three -fourths of the shareholders of the company. Article 114 regulated the remuneration of the Joint Secretaries, Trea -surers and Manager. In 1935 at an extraordinary general meeting, a new Article 114 was substituted fixing the remuneration for Secretaries and Treasurers at 9 per cent. on the net profits or Rs. 4000 a year, whichever is higher. Under Article 114 -A, the plaintiff Mothey Krishna Rao was appointed working Secretary and Treasurer entitled to draw the whole of this remuneration. Article 111 was hot itself amended till 12 -3 -1938 also by a resolution at an extraordinary general meeting. In its place was substituted the following: 'Mr, Mothey Krishna Rao, Zamindar, Eluru shall be the sole Secretary and Treasurer.' At that same meeting, there was an amendment to Article 114 entitling him to remuneration of only a commission of 9 per cent on the net profits of the company. It is noteworthy that the proviso to Article 111 that the original Joint Secretaries and Treasurers could not be removed, except by a re -dolution at an extraordinary general meeting was specifically deleted when the plaintiff was appointed sole Secretary and Treasurer.
(3.) THE plaint case is based entirely on the legal position sought to be made out of the fact that by this combination of circumstances the appointment of the plaintiff as sole Secretary and Treasurer was in fact from 1938, Article 111. It is common ground that plaintiff is himself a substantial shareholder and that the company did not itself run the Jute Mills from 1940 since when it had been annually leased out to the East India Commercial Company, Calcutta. There was, therefore, apparently not much day -to -day business for the sole Secretary to do.;
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