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N.C. Sircar and Sons Vs. the Baraboni Coal Concern Ld. - Court Judgment

LegalCrystal Citation
CourtKolkata
Decided On
Judge
Reported in13Ind.Cas.868
AppellantN.C. Sircar and Sons
RespondentThe Baraboni Coal Concern Ld.
Cases ReferredIsle of Wight Railway Co. v. Tahourdin
Excerpt:
specific relief act (i of 1877), sections 21, 56, 57 - contract of service as managing agent to limited company--enforcement of contract--indirectly obtaining relief--injunction not to dispense with services of managing agents--master and servant--contract of service specific performance. - .....is not competent to the defendant company to dispense with the services of the plaintiff firm as managing agents by any resolution passed at any meeting held under or in pursuance of the notice above referred to and dated the 17th day of november 1911, and (3) for an injunction that the defendant company be restrained by injunction from passing at any meeting to be held under or in pursuance of the said notice of the 17th day of november 1911, any resolution purporting to dispense with the services of the plaintiff firm as managing agents of the defendant company, and from interfering with the conduct of the business of the company by the plaintiff firm as its managing agents, otherwise than in accordance with the provisions contained in the articles of association of the company and.....
Judgment:

Chitty, J.

1. This suit was filed on the 22nd November by the firm of N.C., Sircar & Sons against the Baraboni Coal Concern Ld. for (1) a declaration that the services of the plaintiff firm as Managing Agents of the defendant Company cannot be dispensed with otherwise than by a special resolution passed at an extraordinary general meeting of the Company specially convened for that purpose of which meeting not less than 12 calendar months' notice shall be given and at which persons holding not less than five-sixths of the issued capital for the time being of the Company shall be present personally or by proxy or attorney; (2) for a declaration that it is not competent to the defendant Company to dispense with the services of the plaintiff firm as Managing Agents by any resolution passed at any meeting held under or in pursuance of the notice above referred to and dated the 17th day of November 1911, and (3) for an injunction that the defendant Company be restrained by injunction from passing at any meeting to be held under or in pursuance of the said notice of the 17th day of November 1911, any resolution purporting to dispense with the services of the plaintiff firm as Managing Agents of the defendant Company, and from interfering with the conduct of the business of the Company by the plaintiff firm as its Managing Agents, otherwise than in accordance with the provisions contained in the Articles of Association of the Company and the said agreement of the 29th day of May 1911. On the same day, Counsel for the plaintiffs applied for and obtained a Rule for a temporary injunction in much the same terms. I suggested, when the matter came on for argument, that the Rule might by arrangement stand over till the hearing, and the proposed meeting of the Company be adjourned, the hearing being expedited. This suggestion, however, was not accepted and I must give my decision on the Rule. The matter has been argued at great length on either side, but I propose to deal with it as briefly as possible. I do not wish to enter into the merits of the case itself, but it is impossible to altogether avoid doing so from the close connection of the Rule with the suit and the similarity of the reliefs claimed. The only question now before me is whether the Company should be restrained pending the disposal of the suit from passing a resolution purporting to dispense with the services of the plaintiffs' firm or from interfering with the conduct of the business of the Company by the plaintiffs' firm otherwise than in accordance with the Articles of Association and the agreement of the 29th. May 1907. A large number of authorities were referred to, which deal with the removal of a Director by a Company, where the Articles of Association do not contain any provision for such removal. It was pointed out by the petitioners' Counsel that although in the case of the defendant Company, Article 99 provides for the appointment of Managing Agents, neither it nor any other Article provides for their removal. This is, no doubt, the case, but I must not be taken to accept as correct the proposition put forward at the Bar that the Company could not, therefore, dismiss any Managing Agents whom they had appointed, I am of opinion that the cases cited have little or no bearing on the present case. The position of a Director is very different from that of Managing Agents, who are merely servants of the Company. Further, in this case the plaintiffs' claim is based on the agreement of 29th May 1907, and by that they must stand or fall. It is true that the Company entered into that agreement purporting to act under the authority of Article 99, but so far as the plaintiffs are concerned, their contract is contained in the agreement alone. If the learned Counsel's argument as to the Articles of Association was sound, it would follow that the Company had no power to make the stipulation as to the removal contained in the agreement, or to act upon it. The plaintiffs, however, cannot, of course, plead that. It was conceded that if it were a simple case of wrongful dismissal, the plaintiffs would have no case on their present plaint as framed. Their only remedy would be by an action for damages for wrongful dismissal. It was argued, however, that the threatened resolution would not amount to a dismissal. I am unable to fully appreciate the learned Counsel's argument on this point. At one time he said it would not be a dismissal because it would not be the act of the Company. If that were so, the Company would not be the appropriate defendants in this suit. The plaintiffs Ought to sue the individual or individuals by whose act they would suffer or had suffered damage. The Company clearly can only be sued in respect of an act done or purporting to be done by itself. If the act threatend the passing of the resolution did not operate as a dismissal, the plaintiffs would have no cause of action against the Company for wrongful dismissal. If it caused damage to the plaintiffs in some other way, the correct course would be for them to sue the Company on that cause of action, if any were so created. It was perhaps necessary for Counsel to frame his argument in some such way as this, because if the case be one of a contract for service, the plaintiffs are met by the combined effect of Section 21 and 58 of the Specific Relief Act. They could not enforce the contract of service against the Company, nor could they by injunction indirectly obtain the relief prescribed by Section 21. I cannot accede to the argument of their Counsel that Section 57 would help them. If they could not enforce the positive contract of service, they clearly could not obtain an injunction to restrain the Company from dispensing with their services, except in a given manner, or until after a stated period; for the result of this would be to continue their services, and so in effect to specifically enforce the contract. It would be a very strong measure to restrain the body of share-holders from expressing their opinion at a meeting duly convened. It is the only way they have of interfering in the matters of the Company. On this point, the remarks of the Lords Justices in Isle of Wight Railway Co. v. Tahourdin 25 Ch. D. 320 : 53 L.J. Ch. 853 : 50 L.T. 132 : 32 W.R. 297 are very pertinent, though the question in that cafe was as to the removal of Directors, not the dismissal of servants. It is by no mear.Fi certain that the resolution, of which the plaintiffs are so apprehensive, will be passed. It is not certain what will be its effect. I do not desire to go into the merits of the case. It is conceded on both sides that there is considerable friction with regard to the management of the Company, and in the minds of some of the share-holders, considerable dissatisfaction with the conduct of the plaintiffs as Managing Agents. It is expedient that the matter should be ventilated, and it cannot be better ventilated than at a meeting of the shareholders. If the proposed resolution be not passed, the plaintiffs will have no cause of complaint against the Company. If it be passed, it remains to be seen what will be its effect. If the plaintiffs are thereby dismissed, they will have their remedy. If they are not, but they thereby suffer some other damage, they will also have their remedy. It was said by their Counsel that in this last case the damages would be too remote to support a claim in a suit for damages. If that be so, it is clear that I ought not to restrain by injunction an act which would have such a shadowy result.

2. For these reasons, I am of opinion that the present application must fail. The Bale is accordingly discharged with costs.


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