1. This small case presents an interesting question of law.
2. The respondent to this appeal was the plaintiff in the Court of first instance. He sued for recovery, inter alia, of a sum of Rs. 551. He was one of the directors of the defendant company who are now appealing in this Court. In paragraph 2 of the plaint the respondent says:
The defendant company was constituted promoter and managing agent of the National Transport Service Company, Ltd. In this capacity, the defendant company entrusted this work to the plaintiff that he should select other directors for the said company and perform all the work in connection with the registration and promotion of the said company. As regards remuneration for this work, it was settled that the defendant company would pay Rs. 551 to the plaintiff besides travelling allowance.
3. It is for recovery of this sum of Rs. 551 and for recovery of some other sums with which we are no longer concerned that the suit was brought.
4. Numerous grounds of defence were set out and among these, one was to the effect that the plaintiff himself being a director of the defendant company it was his duty to perform the work of the company and he could not therefore get any remuneration beyond what was sanctioned by the Articles of Association.
5. The learned Judge in hearing the appeal did not frame express issues as to whether the work for doing which the plaintiff claimed remuneration over and above the remuneration fixed by the Articles of Association was or was not within the scope of the business of the Company. But he remarked that the plaintiff was asked to do a work which was not within the scope of his general duties and he did it.
6. We do not feel bound by this so called finding of the learned Judge. We have already mentioned that the plaintiff himself admitted that the company took it upon themselves to promote another company and it was to perform the duties in connection with the promotion of this new company that the remunerations are claimed.
7. The proposition of law that, a director of a company is not entitled to any remuneration beyond what has been sanctioned by the Articles of Association for doing an act which would be his duty as a director to do, has not yet been questioned by the learned Counsel for the respondent. This is a clear proposition of law. The directors are agents of the company, viz., all the share-holders who constitute the company, and therefore, stand in the same position as an agent to the principal. Further they stand in special fiduciary relations to the share-holders. The case might be slightly different if there were one agent and one principal. The share-holders leave all the business of the company in the hands of the directors and it is therefore highly incumbent on the directors that they should act without raising the slightest suspicion of dishonesty.
8. On the facts, it is clear that, the plaintiff is claiming remuneration for doing something which it was the duty of the directors to do. We find in the evidence of Jagannath Prasad Dikshit that one of the purposes for which the company was formed was the promotion of other companies. The plaintiff cannot, in our opinion, claim anything over and above what has been fixed as the remuneration by the Articles of Association and the claim was therefore not maintainable. Other points raised do not require decision.
9. We allow the appeal, modify the decrees of the Courts below and dismiss the claim as regards the sum of Rs. 551 with proportionate costs. The costs in this Court will include counsel's fees on the higher scale.