- (1.) The Lothian Jute Mills Company Limited is a joint stock company incorporated under the Indian Companies Act. Its share capital is Rs. 20 lacs divided into one thousand ordinary shares of Rs. 100 each and one thousand preference shares of the like value. The ordinary shareholders only are entitled to vote at the meetings of the company. Messrs. Andrew Yule & Company are the managing agents since October, 1929. On the 23rd March, 1944, the articles of association were amended at a special meeting of the shareholders. Article 109 provides that the number of directors shall not be less than three and not more than four in number. Of those one is to be appointed by the managing agents and the others to be elected by the shareholders at the annual general meeting. The director appointed by the managing agents is to be the Chairman of the Board of Directors. There is another article, namely 126, which provides that the company in general meeting may from time to time increase or reduce the number of directors subject to the provisions of Sections 83A and 833(2) of the Indian Companies Act, but this article is not material in the appeal. As admitted by the parties we must in this appeal proceed on the basis that the number of directors can be four and not more. Articles 121 to 123 provide that one-third of the directors or the number nearest to one-third for the time being, except the director appointed by the managing agents shall retire at the first ordinary meeting of the company of every year but the retiring director would be eligible for re-election. Article 116 (k) provides that the office of a director (other than ex officio director) shall ipso facto be vacated if he is requested in Writing by all his co-directors to resign and article 128 provides that casual vacancies occurring among directors may be filled up by the directors.
(2.) In 1944, some persons called the Dalmia-Jain Group acquired more than half the number of ordinary shares. In that year the Board of Directors consisted of Cumber batch, who was the nominee of the managing agents. Dr. Satya Charan Law, Sir David Ezra and Champalal Jatia. At the first ordinary meeting of the company of the year 1945 held on the 9th March, 1945, Sir David Ezra retired in accordance with the provisions of the articles and offered himself for re-election. The Dalmia-Jain Group of shareholders set up a rival candidate, Rameshwara Prosad Bajoria, and the latter was elected as a director in the place of Sir David Ezra. We do not think it necessary to state what other resolutions were passed at that meeting or the course of events that followed. They have a bearing on the merits of the suit but have no bearing on the questions which arise in this appeal.
(3.) Bajoria continued to act as director till December, 1945.;