H.K.Bose, C.J. - (1.) This is an appeal from an order of A. N. Ray J. refusing an application for an interlocutory injunction restraining the passing of certain resolutions of a company known as National Co. Ltd. at the proposed annual general meeting of the company. The appellant is a shareholder of the National Co. Ltd, The case of the appellant is that in the middle of 1961, the National Co. Ltd. purported to appoint in Calcutta one B.M.T. Commodity Corporation of New York State in the United States of America as its sole selling agent. After the said appointment the first general meeting of the National Co. Ltd. was held on July 17, 1961. On January 27, 1962. the board of directors of the said company by an agreement in writing appointed the said B.M.T. Commodity Corporation as its sole selling agent for the sale of jute backing cloth and ordinary burlap over the width of hundred inches manufactured by the said company for the territories of the United States of America, its possessions, Canada and Mexico with effect from February 1, 1962, inter alia, on the following terms and conditions : "(1) that National hereby appoint B.M.T. as its exclusive distributors in and for the United States of America, its possessions, Canada and Mexico only for the sale of (a) jute backing cloth, and (b) ordinary burlap over a width of hundred inches manufactured by National; (2) that B.M.T. hereby undertakes that it will represent National exclusively in the territories aforesaid for sale and distribution of the said two commodities and will not import, sell, handle or deal in any manner directly or indirectly in the said goods or any other similar substitute product manufactured by any one else in India or elsewhere ; (3) that B.M.T. shall make their best efforts to promote and secure maximum sales and/or distribution of National's said goods and shall in all matters act loyally and faithfully to National and take all possible steps to protect and safeguard the rights and interests of National; (4) that B.M.T. assures National that they have the capacity and the resources for sale or distribution of the goods of National; (5) that B.M.T. shall place their orders with National regularly from month to month, approximately one month in advance for manufacture in the succeeding calendar months and shall accept these ordered goods on shipment from National; (6) that B.M.T. shall effect sales of National's manufactured goods to B.M.T.'s customers at prices mutually agreed upon between National and B.M.T.; (7) that B.M.T. shall regularly submit to National copies of all their sales contracts within a month from the date of the respective contract; (8) that B.M.T. shall pay National for all purchases of aforesaid goods at cost and freight port of destination basis at the following prices : (a) For jute backing cloth and burlap over hundred inches width ; Price as agreed upon less 12 per cent, thereon. (b) For jute backing cloth hundred inches and below in width : Price as agreed upon, less 91/2% thereon. The said 12 per cent, or 91/2% is subject to revision in case of change of rate or rates in customs duty, clearance charges, handling charges, etc.; (9) that National undertakes to indemnify B.M.T. against all just claims made by B.M.T.'s customers for defective quality, shortage of material, wrong specifications, late shipment or non-shipment of goods by National, but National shall not be liable for any indirect or consequential claims, losses or damages or in case of force majeure ; (10) that National undertakes to protect B.M.T. against any decline in sales, prices, in case B.M.T. is unable to have its customers take delivery of goods because of decline in market prices and B.M.T. undertakes to use all its efforts to have its customers take delivery of goods contracted for and shall also take due action to recover such losses on price decline and possible damages for non-fulfilment of contract by such customers unless National and B.M.T. think it inadvisable to do so ; (11) that B.M.T. shall make payment for its purchases by establishing irrevocable letters of credit on terms mentioned in the agreement; (12) that B.M.T. will furnish National monthly stock inventory reports and copies of all their invoices immediately when shipments to their customers are effected by B.M.T.; (13) that the business between National and B.M.T. will be as principal to principal basis notwithstanding any provisions or stipulations relating to variation in prices, claims or otherwise and National will have no responsibility in respect of B.M.T's customers and B.M.T. themselves will be responsible for all risks in respect of deliveries effected by them except for certain claims as mentioned in the agreement; (14) that National decides to have their own representative in New York or elsewhere in the U.S.A. or Canada and he shall be consulted by B.M.T. on all matters and B.M.T. undertakes to meet any reasonable expenses of such a representative not exceeding U.S. three thousand dollars per annum; (15) that National's representative shall be entitled to full access to B.M.T's warehouse, stocks and books and records relating to stocks and sales and in other matters relevant to this agreement and B.M.T. shall be fully bound to provide all information and explanations concerning these as may be required by the National's representative ; (16) that this agreement shall be effective from February 1, 1962, and remain in force till January 31, 1957, and can be terminated by either party giving 90 days notice during November of any of the years, viz., 1964, 1965 and 1966 ; (17) that on the expiration or termination of this agreement National will arrange for goods remaining unsold with B.M.T. to be taken over from B.M.T. against payment of the C. & F. price plus actual importing expenses; alternatively, National will keep B.M.T. covered for fall in prices or against claims or actual further expenses as mentioned in different clauses of the agreement until those goods are sold by B.M.T. and B.M.T. shall sell those goods according to the advice by National; (18) that all steel cores on which National delivered jute backing cloth shall be returned by B.M.T. to National."
(2.) There are also clauses for arbitration in case of disputes arising between the parties.
(3.) The next general meeting of the company was held on May 31, 1962, but the purported appointment of the B.M.T. Commodity Corporation as the sole selling agent was not approved either in the meeting held on July 17, 1961, or on May 31, 1962. It appears however that on August 29, 1962, an annual general meeting of the company was held in which the report of the directors dated April 9, 1962, which contained a reference to the agreement dated January 27, 1962, was passed. On December 3, 1962, the Registrar of Companies, West Bengal, Calcutta, wrote to the National Co. Ltd. intimating that upon an examination of the agreement dated January 27, 1962 (wrongly dated as January 20, 1962), and particularly its Clauses (1), (2), (3), (4), (6), (7), (12) and (18) respectively, the Central Government was of the opinion that the appointment of the B.M.T. Commodity Corporation as exclusive distributors for sale of the products of National Co. Ltd. should be regarded as that of sole selling agents for the territories specified in the agreement and so request was made to obtain the approval of the shareholders of the company at a general meeting in respect of the said appointment in pursuance of the provisions of Section 29A. of the Companies (Amendment) Act, 1960, and a copy of the resolution should be filed with the office of the Registrar of Companies in order to regularise the position and an early compliance was requested. On December 11, 1962, a director of National Co. Ltd. replied to the letter of the Registrar stating that the company had been advised by an eminent lawyer that the arrangement did not constitute B.M.T. Commodity Corporation as agent but nevertheless the arrangement was referred to by the directors in their report to the shareholders and this amounted to approval of the arrangement by the shareholders. But in view of the wishes of the Registrar as expressed in his letter, dated December 3, 1962, the company would be glad to place the matters again before the shareholders in a general meeting. The letter concluded with the following words: " Kindly confirm if the above course has your approval" and it was signed by director, R. N. Goenka. On January 22, 1963, the reply was written by the office of the Registrar of Companies stating that the office had no objection to the course of action proposed to be taken by the company at the ensuing general meeting of the shareholders for proper compliance of the provisions of Section 294 of the Companies Act in respect of the appointment of B.M.T. Commodity Corporation.;