# LTD v. BHASKAR KASHINATH THAKOOR &

- **Citation:** [1961] 3 S.C.R. 329
- **Court:** Supreme Court of India
- **Decided:** 1959-02-24
- **Case number:** Civil Appeal No. 10 of 1960
- **Bench:** Jafer Imam, A. K. Sarkar, Raghubar Dayal
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/ltd-v-bhaskar-kashinath-thakoor-1999
- **Pages:** 13

## Headnote

Company-Managing director appointing his successor by will
-Validity -
'Assignment', Meaning of-Companies Act, z956
(I of z956), ss. 3z2, 255.
By s. 3r2 of the Companies Act, 1956, "Any assignment of
his office made after the commencement of this Act by any director of a company shall be void."
••
Sarjoo P1asad
v.
The Stale of
Uttar Pradesh
Shah J.
x960
Dei:ember z6.
330
SUPREME COUR1' REPORTS
[1961)
1960
The managing director of a private company,. empowered
-·
by the terms of the agreement between him and the company
Oriental Metal and the articles thereof to appoint, by deed or by will, any perPressing Works son to be the managing director in his place and stead, died
(P.) ltd.
leaving a will whereby he appointed one of the appellants the
v.
managing director in his place from the date of his death.
The
Bhaskar /(ashi- High Court took the view that the word 'assignment' in the
nath 'Ihakoor section included 'appointment' and as such the appointment in
.s. Another
question was void.
Held, thats. 312 of the Companies Act, 1956, cannot be
interpreted in such a way as to bring it into conflict with s. 255
of the Act since its language does not compel such an interpretation. The word 'assignment' in that >ection does not mean
appointment and the section is intended to render a transfer of
his office by a director void and not an appointment by him of
liis successor.
Section 255 of the Act, which expressly permits directors to
be appointed otherwise than by the company, shows that, subject to the lill)it as to numbers prescribed by it, a director, authorised by the articles of the company, can appoint another to
take his office when rendered vacant by his resignation or death
or on expiry qf his te1 m of office.
The proviso to s. 86B of the old Act cannot lend any support to the argument that the word 'assignment' in s. 312 of the
new Act includes 'appointment'.
The Guardians of the Poor of the West Derby Union v. The
Metropolitan Life Assurance Society, [1879] A. C. 647, referred to.

## Text

· 3 S.C.R. SUPREME COURT REPORTS
329
his father's name and his residence. All the details
given in the extract tallied with the description of the
appellant. In the memorandum of appeal filed to
the Court of Session challenging the conviction recorded by the Magistrate First Class, it was not contended that the person convicted in the earlier case was
some person other than the appellant. ·
But the appellant was merely an employee of
Thakur Din. It is not shown that he made himself
any profit out of the transaction. Thakur Din has
been sentenced to pay a fine of Rs. 200 only. The
offence committed by the appellant is a repetition of
a similar offence committed QY him a few months
earlier, but we think that having regard to all the
circumstances, this is a case in which there are special
and adequate reasons which would justify imposition
of a penalty less than the minimum prescribed by
s. 16(ii) of the Act. We reduce the sentence to imprisonment to three months and we remit the fine. Subject to this modification, the appeal is dismissed.
Appeal dismissed.
ORIENTAL METAL PRESSING WORKS (P.)
LTD.
v.
BHASKAR KASHINATH THAKOOR &
ANOTHER
...,.
(JAFER IMAM, A. K. SARKAR and
RAGHUBAR DAYAL, JJ.)
Company-Managing director appointing his successor by will
-Validity -
'Assignment', Meaning of-Companies Act, z956
(I of z956), ss. 3z2, 255.
By s. 3r2 of the Companies Act, 1956, "Any assignment of
his office made after the commencement of this Act by any director of a company shall be void."
••
Sarjoo P1asad
v.
The Stale of
Uttar Pradesh
Shah J.
x960
Dei:ember z6.
330
SUPREME COUR1' REPORTS
[1961)
1960
The managing director of a private company,. empowered
-·
by the terms of the agreement between him and the company
Oriental Metal and the articles thereof to appoint, by deed or by will, any perPressing Works son to be the managing director in his place and stead, died
(P.) ltd.
leaving a will whereby he appointed one of the appellants the
v.
managing director in his place from the date of his death.
The
Bhaskar /(ashi- High Court took the view that the word 'assignment' in the
nath 'Ihakoor section included 'appointment' and as such the appointment in
.s. Another
question was void.
Held, thats. 312 of the Companies Act, 1956, cannot be
interpreted in such a way as to bring it into conflict with s. 255
of the Act since its language does not compel such an interpretation. The word 'assignment' in that >ection does not mean
appointment and the section is intended to render a transfer of
his office by a director void and not an appointment by him of
liis successor.
Section 255 of the Act, which expressly permits directors to
be appointed otherwise than by the company, shows that, subject to the lill)it as to numbers prescribed by it, a director, authorised by the articles of the company, can appoint another to
take his office when rendered vacant by his resignation or death
or on expiry qf his te1 m of office.
The proviso to s. 86B of the old Act cannot lend any support to the argument that the word 'assignment' in s. 312 of the
new Act includes 'appointment'.
The Guardians of the Poor of the West Derby Union v. The
Metropolitan Life Assurance Society, [1879] A. C. 647, referred to.
CIVIL APPELLATE JURISDICTION:
Civil Appeal No.
10 of 1960.
Appeal·from the judgment and decree dated February 24, 1959, of the Bombay High Court in First
Appeal No. 540 of 1958.
M. C. Setalvad, Attorney-General for India, A. P.
Bhatt, Rameshwar Nath, S. N. Andley, P. L. Vohra
and J. B. Dadachanji, for the appellants.
The respondent did not appear.
1960. December 16.
The Judgment of the Court
was delivered by
Sari,., f.
SARKAR, J.-Dadoba Tukaram Thakoor carried on
a business under the name and style of Oriental Metal
Pressing \Yorks. On ]\fay 26, 1955, a private company
was incorporated under the name of Oriental Metal
Pressing Works Ltd.,' hereafter called the Company,
i-
3 S.C.R. SUPREME. COURT REPORTS
331
. '
'
.
.
to . take o:ver the aforesaid business. On July 7, 1955,
z9fo
Dadoba. transf~rred' his business to the '!ompany.
.~n . Oriental Metal
the same date, an ·agreement was made ·between him Pressing works
and the Company by which he was appointed the
(P.) Lt4.
managing director. of the Company Jor ljfe a.ml was .
v.
given the power "by deed. inter .vivos'. or by will or Bhaskar Kadicodicil to appoint any person to be a managing direcnath Thakoor
tor in his place and stead". Regulation 109 of the
& Another
articles of the Company reproduced these provisions.
Sarkar J.
The shareholders of the Company were Dadoba, his
brother, the respondent Bhaskar, and his two sons,
the appellant Govind and the respondent Harish, of
whom the first three were the directors, Dadoba being
the managing director. This '{)Onstitution of the Company continued till Dadoba's death on January 14,
1957.
Dadoba ha.d died leaving a will whereby he purported to appoint the appellant Govind the managing
director of the Company in his place from the date of
his death. Shortly after Dadoba's death, disputes arose
between the appellant Govind and the respondent
Bhaskar. The appellant Govind was contending that
the respondent Bhaskar had ceased to be a director
on account of his failure to attend the directors' meetings. He also purported to co-opt the appellant Bhalchandra as a director. The respondent Bhaskar contended that he had not ceased to be a director and
challenged the legality of the appointment of the
appellant Bhalchandra as a director. He further
contended that the appointment of the appellant
Govind as the managing director of the Company by
the will of Dadoba, was void. On November 22, 1957,
the respondent Bhaskar filed a suit in the City Civil
Court of Bombay against the Company, the appellants
Govind and Bhalchandra and the respondent Harish
for the following declarations and for reliefs incidental thereto:
(a) the appointment of the appellant Govind as
the managing director was void;
(b) the appointment of the appellant Bhalchandra as director was illegal and inoperative; and
(c) he (the respondent Bhaskar) was and continued to be a director.
332
SUPREME COURT REPORTS
[1961)
i96o
The learned Judge of the City Civil Court a.ccepted
Oriental Metal all the contentions_ of th~ respondent Bhaskar and
Pressing Works made the declarat10ns claimed.
(P.) Ltd.
The Company and the appellantsGovind and Bhalv.
chandra appealed from this decision to the High Court
Bhaskar Kashi- at Bombay. The appeal came up for hearing before
•a: A Th~koor a bench of two learned Judges of that Court. These
not "
learned Judges having taken different views, the
Sarkar J.
matter was referred to another learned Judge of the
same High Court. In the eventual result according to
the opinion of the majority of the learned Judges, the
appeal was dismissed and the decree of the City Civil
Court was confirmed. The High Court however granted a certificate under Art. 133(1)(c) of the Constitution
and the present appeal has been filed by the Company,
Govind and Balchandra pursuant thereto. The respondents to this appeal are Bhaskar and Harish.
It appears that while the appeal was pending in
this Court, the respondent Bhaskar sold his holding
in the Company to the appellant Govind and has now
no interest in the Company or tho appeal. No one has
consequently appeared to contest the appeal in this
Court, the respondent Harish apparently not being
interested in doing so. In these circumstances, the
questions whether the respondent Bhaskar continues
to be a director and whether the appellant Bhalchandra
was legally co-opted as a director are no longer live
issues and have not been canvassed in this appeal. On
those questions therefore we express no opinion.
Another result, rather unfortunate, has been that we
have not had the advantage of arguments against the
·appeal.
. ..
.
The Courts below .held that the appointment of the
appellant Govind as managing director by the will of
Dadoba was void in view of the provisions of s. 312
of the Companies Act, 1956. That section reads thus:
S. 312. "Any assig11ment of his office made after
the commencement of this Act by any director of a
company shall be void."
The Act came into force on April 1, 1956 and Dadoba
had both made his will and died, after that date. The
appointment of the appellant Govind as managing
' I
3 S.C.R. SUPREME COURT REPORTS
333
director was, therefore, made after· the commencement
of the Act.
Now, s. 312 makes the assignment of his office by a
director void. It does not on the face of it, say that
a.u appointment by a director of another person n,s the
director in his place, would be void. The High Court,
however, took the view that the word "assignment"
in the section included "appointment", and so, such
an app0intment would also be void under the section.
\Vhat we have to decide is whether the High Court
was right in this view.
Before we proceed to examine. this question, we
have to point out one thing. It appears that the
High Court thought that the appellants had conceded
that· nn appointment by a director of 1\nothcr in his
place ·by act inter vivos would be an assignment of
the office of a director within s. 312, and had onlv
contended that such an appointment by will, which is
what had been. done by Dadoba, would not be an
assignment and would not therefore be rendered
void by·· the section, The learned Attorney-General,
appearing for the appellants, said that in this the
High Court \l[as in error and no such concession had
bcPn made.
He further expressly withdr<ew t.hat con.
cession. This he was dearly entitled to do. It, therefore, becomes unnecessary for us to deal wit.h the rcasoningR of the High C~urt in support of the view
accepted by it., which were based on th1> concession.
vVe have given the views of the High Court a most
respectful and anxious co!1sideration but we do not find
ourselves able to agree with them. \Ve will presently
. state our reasons for this conclusion, but now we wish
to point out that in the view that we have taken of
the matt.er it will not be neceRsary for us to deal with
the argument advanced in the ·High Court that the
section only forbade a director from appointing his
successor, assuming assignment included appointment,
but it <lid not prevent a managing. director from assign.
ing his office, or appointing his successor which was
what Dadoba had done. If t!ie section did not prevent a director from appointing his successor, which
we do not think it did, then, clearly, there is nothing
OriPnlnl A1elal
Pressing 1-VoTks
IP.) Ltd.
v.
Bhaskar r:ashinath
Thakoor
& AnoJher
Sarkar J.
334
SUPREME COURT REPORTS
[1961)
r960
in it. which can justify the view that a managing
director cannot appoint. his successor.
O>iental -~letal
P•essing w.,k,
The section says that a director shall not be able
(P.) Ltd.
to assign his office. It may be, as the High Court
v.
pointed out, that a.part from "transfer" another mean.
Bhaskar Kashi· ing of the word "assignment" is, "appointment". But
nath Thakoo• on a plain reading· of the language used in the section,
&·Another
.
.
it does not seem to us possible to hold that the word
Sa•kar J.
"assignment" in it, can mean "appointment".
First, the section talks of "assignment of his office"
by a director. The word "his" would indicate that
the office contemplated was one held by the director
at the time of assignment. An appointment to an
· office can be made only if the office is yl\.l)ant. It is
legitimate, therefore, to infer that by using the word
"his" the Legislature indicated that an ·appointment
by a director to the office which he previously held
but did not hold at the date of the appointment, was
not to be included within the word "assignment".
Again, there can be no doubt that the section was
intended to render void a transfer of his office by a
director for, if the section had intended only to avoid
an appointment by a director of his successor, it
would r.ave clearly said so and would not have used
the word "assignment". Therefore, even if it is possible for the word "assignment" to have the meaning
of "appointment", then it would have to be given
·both the meanings of "transfer". and "appointment"
in the section. This is what the High Court did.
That would produce a curious result.
Transfer and
l
appohtment are clearly entirely different things.
Even apart from considerations arising from the law
of conveyance, which the High Court was unable to
entertain in connection with the transfer of an office,
a transfer from its very nature inevitably imports .the
passing of a thing from one to another; a transfer
without the passing of the thing transferred, even
when t:hat thing is an office, cannot be conceived.· An
''appoilltmene', on the other hand, has not~ing to do
with ·anything passingfrom one to another; it connotes the putting in of somebne in a vacancy .. The acts
constituting a transfer . and an appointment a.re
3 S.C.R. SUPREME COURT REPORTS
335
therefore wholly dissimilar. It would be an unusual
statute which by the use of a single word intended to
prohibit at the same time, two wholly different acts.
We do not think that a construction leading to such a
result is permissible.
Secondly, s. 255 of the Act permits one-third of the
total number of directors of a public company and all
the directors of a private company to be appointed
otherwise than by the company at a general meeting, if the articles make provision in this regard.
The Act therefore expressly permits directors to be
appointed otherwise than by the company. It follows
that within the limit as to the number prescribed by
the section, a power of appointment ·of directors can
be legitimately conferred by the articles on any person
including one who holds the office of a director. The
Act expressly permits such power being conferred. In
. order, however, that a director may exercise this
power of appointment, there must be a vacant office
of a director.
He may himself bring about that
vacancy by resignation of his office. The vacancy
would agairi be caused by his death or by the expiry
of the term of his office. It would follow that the Act
contemplates an appointment by a director of another
person as director to take his office, when made
vacant by his resignation or death or the expiry of
the term of his office. There will be nothing illegal,
if the power is exercised in the case of the death of
the director, by an appointment made by his will. It
will not be right so to interpret s. 312, when its language does not compel it, as to bring in conflict with the
provisions of s. 255. This would happen, if the word
"assignment" in s. 312 was interpreted as including
"appointment" and thereby ma.king it prevent a
director from appointing his successor ·when s .. 255
permits him to do that. Therefore a.gain we think
that in s. 312 the word ''assignment" does not mean
"appointment".
·
· The High Court was of the view that unless
"assignment" included "appointment"; the object of
the Act would be defeated. It was said that the intention and the object of the section was to restrain and
Oriental Metal
Pressfng Works
(P.) Ltd.
v.
Bhaskar I<ashi·
t1alh T hakoor
6- Another
Sarkar J.
Orient11l Metal
Pressing ivorhs
(P.) Lid.
v.
Bhaskar K nshi~
nath Tllakoor
& Another
Sarkar J,
336
SUPREME COURT REPORTS
. [1961]
prevent a director from putting some one in his place ·
and stead by any act on his part. This point was
further expressed more clearly in the following words:
"It is now well understood that the new Companies
Act, aims at eradicating many serious mischiefa which
the principle of perpetual management of companies
had caused in the past" ... The High Court felt that it
would be defeating that aim by reading s. 312 as if
the words "assignment of his office" only meant a
"transfer of office" and did not include the appoint.
ment of his successor by a director.
Apparently the
High Court thought that by making it possible for a
director to choose his successor, the management of the
company would be permitted to remain all along in
one hand and this the Act wanted to prevent. It
does not seem to us that the Act wanted to prevent
this. The act by enacting s. 255 shows that it does -
not disapprove of a person having power to appoint
a succession of directors and in the case of a private
company, a succession even of all the directors. Such
a person would have what has been described as "perpetual management". It would follow that the Act
did not consider this as an evil which required prevention. If perpetual management by an outsider is
not an evil, nor would such management by one who
is a director of the company· be so. This aspect is
very clearly illustrated .by the case in hand.
Dadoba
had this "perpetual management". But the whole of
the Company's undertaking was really a largess from
him. In fact he held nearly 43% of the shares of the
Company. It is inconceivable that perpetual management by him would havEf·worked to the detriment of
the Company.
We are therefore unable to agree
that it was the object ofthe Act or of s. 312 to prevent a director from appointing his. successor.
In view of the clear provisions of s. 255 we do not
think tr.at it can be said, as was done in the High
Court, that ss. 254 and 317 of the Act, impliedly indicate that there should be no perpetual management.
Section 254 says that a corporation or an association
of persons shall not be eligible as a director. But this
is not because, otherwise, there would be perpetual
I
- -
'• -•.
. .·
.
.
. 3 S.C.R. SUPREME COURT REPORTS
337
management. The persons comprising the corporation or the .association must change from time to time
and so, even if they were appointed directors, _there
would be no perpetual management. We rather think
that the idea behind s. 254 is that as the office of a
director is to some extent an office of trust, there
should be somebody readily available who can be
held responsible for the failure to carry out the trust
and it might be difficult to fix that responsibility if .
the director was a corporation or an association of
persons. Turning to s. 317, we find that it provides
that a managing director cannot be appointed for a
term exceeding five years at a time. Section 315 however malies s. 317 inapplicable to a private company.
Therefore, s. 317 is not available to support an argument that the Act does not want a private com;
pany-· and we are concerned with that type of a company-to be under perpetual management. But indeed s. 317 does not support that argument in the
case of a public company either. It forbids an
appointment of a managing director for more than
five years "at a time". It permits the managing director to be reappointed after a term is over.
If he is
so re-appointed, then there would be "perpetual ·
management" by him. The Act does not, therefore,
intend by s. 317, to prevent that. Lastly, s. 317 is
not concerned with the directors, whicl;. s. 312 is.
Another argument that has to be dealt with is that
if s. 312 does not prohibit an app')intment by a
director of his successor,· that section can easily be
rendered infructuous by a director adopting the
simple device of appointing a person as his successor
in office instead of transferring the office to him. It
seems to us that the question does not really arise. A
director can legally and effectively appoint his
successor only to the extent the articles permit this
subject, of course, to the limit prescribed in s. 255 in
the case of a public comp:iny. An appointment so
legally made.does not r-esult in an evasion of s. 312
for; as we have e.arlier said; the section could not have
intended to prevent what another section in the same
43
Oriental .'VJ eJal
Pressing IVorks
(P.) Ltd.
v.
Bhaskar Kas1u·-
t1ath Thakoor
0- Another
I <)60
Orioztal Afetal
Pressing TVorks
{P.) Ltd.
v.
338
SUPREME COURT REPORTS
[1961)
Act made legal.
An appointment made outside the
powers legally conferred by the articles is wholly
ineffective, and therefore is not an appointment at all
and hence again, does not result in an evasion of
s. 312.
lJhaskar
I>ashiWe have now to consider an argument based on
11ath
Thaf,oor . the first proviso to s. 86B of the Companies Act of
& Another
1913. The main part of H. 86B contained a provision
analogous to that of s. 312 of the new Act. It made an
Stt1lu.1.r J.
assignment of his office by a director to another person, under an agreement with the company, void,
unless such assignment was approved by a special
resolution of the company. Under tho new Act the
assignment has been made altogether void and would
not become valid even if approved by a special resolution of the company.
:~ow, the proviso laid down
that the .exorcise by a director of a power to appoint
an alternate director to a.ct for him during an absence
of not less than three months from the district in
which meetings of the directors are ordinarily held, if
done with the approval of the boa.rel of directors,
would not be deemed to be an assignment of office
within the meaning of this section. · The High Court
took the view that this proviso showed that in certain
circumstances an appcintment by a director of another in his place might be deemed to be an assignment of his office and that since the new Act is a consolidating Act, it must be deemed to have continued
the policy of the earlier Act and, therefore, for the
purpose of s. 312, an "assignment" must include an
"appointment".
The learned Attorney-General pointed out that in
the new Act there is no proviso, and thl)refore the
rule of construction applied by the High Court, which
enables by raising a presumption, something to be
included .in the main part of a section by reason of a.
provision in a proviso to it, has no application to the
new Act for, here the provision in the proviso has
been enacted in the form of an independent section,
namely, s. 313. According to him, this departure from
the old arrangement of the provisions, in. the new Act
shows that it was not intended to continue the policy
I
3 S.C.R. SUPREME COURT REPORTS
339
of the old Act. He also said that the proviso in substance stated that the appointment by a director of an
alternate director might in certain circumst11,nces be
deemed to be an assignment. He point.ed out that by
using the word "deemed" the proviso made it clear
that the appointment of an alternate director was not
a real assignment of office but was only to be fictionally . taken as one. His contention was that such
fiction .could arise in a case coming strictly within the
proviso but cou Id not by extension be made to arise ·
in any other case. These seem to us to be arguments
of weight. Further ins. 313 of the new Act, which
has. taken the place of the first proviso to s. 86B of
the old Act, the power to appoint an alternate director has been given to the board and not to the director who intends to absent himself. No scope for any
deeming provision as in the Act of 1913 remains.
Therefore again an argument based on the proviso to
s. 86B would not be available for the purpose of the
present Act.
It further seems to us that the proviso to s. 86B
does not indicate that it was intended that the word
"assignment" in the ma.in part of the section would
include "appointment". The rule of construction on
which the High Court relied in arriving at the view
that it did, was put in these words: "It is a well established principle of construction that when one finds
a proviso to a section, the presumption is that but for
the proviso the enacting part of the section would
have included the subject matter of the proviso."
This rule would enable the court to hold inregard to
s. 86B at the most that an appointment of an alternate
director by a director intending to absent himself
\vould have been H·n llSsigrimerit of his office but for
the proviso. It would be an unwarranted extension
of this principle to hold that.111! appoi~tment~ of their
su.ccessors by directors would be·. assignments within
the main part of. the section .. In any. 0ase, in our view,
as in s .. 312 of the new Act, so.under the main part of
s. 86B of the old Act, an appointment of a successor
to his. office by a director, ;was not an assignment of
his office by him for, the old Act contained in s. 83B,
Oriental Aletal
Pressing
~Vorks
(P.) Ltd.
v.
Bhaskar f{ashinuth
Thakoor
0· Another
Sarkar ].
Oriental ilf etal
Pressing Works
(P.) Ltd.
v.
Bhaskar
J(ashi~
nath Thalloor
& Another
Sarkar J.
340
SUPREME COURT REPORTS
[1961]
provisions substitntially similar to those contained in
s. 255 of the new Act, and the reasons which have
inclined us to t.he view that in s. 312 tho word
"assignment" does uot include "appointment" would
equally lead to the sitme conclusion in regard to s. 86B.
If the enacting part did 1,1ot prohibit the appointment
of his successor by a director, such prohibition cam1Qt
be rca.d int.o it, in reliance upon a proviso.
We may
read here the observations of Lord Watson in 'l'he
Guardians of the Poor of the West Derby Union v. 'l'he
Metropolitan Life Assnrance Society (')
"I am perfrctly clear that if the language of the
enacting part of the statute does not contain the
provisio1rn which are said to occur in it, you cannot
derive these provisions by implication from a
proviso."
It may be that the proviso mis enacted ex abundanti
cautela or it mity be again, to prevent a possible n,rgument that by the appointment of alternate directorn
n,n evasion of th<" main part of s. 86B was being
attempted. In view of the fac:t that the power to
appoint alternate directors was not given by the old
Act, but had to he given by the articles, such an argument might not have been unlikely. Therefore, it
seems to us that the proviso to s. 86B of the old Act.
does not assist the argument that in s. Bl:l of the new
Act, the word. "assignment" would include "appointment''.
We think we ought to say something about what
strikes us to be the poliey behind s. 312 of the IH'W
Act.
\Ye have earlier said that 1111der s. 255 of tlmt
Act a certain number of directors in r. pnhlic company
has to be a.ppointcd hy the cornpa.ny in 11 g0neral
meeting.
Jn the case of a private compn.uy likcwi>iP,
the clirectorn have to be a.ppointed Hirniiarly cxcPpi. tu
the extent the articles otherwise provirli>.
!t would
therefore appear to be the policy of the Ad tlmt ton,
certain extent the appointments of the clirndors lnwc
to be made by the s!rnreholclcrn.
1 t is intended that a
certain number of directors would be the chosen representatives of the shareholders. l fa director appointed
(r) (1897] A.C. 647, 652.
I
I
I
3 S.C.R. SUPREME COURT REPORTS
341
by the company was permitted to assign his office,
then the new incumbent would not be the chosen
representative of the shareholders, and the intention
of the Act would be defeated. It seems to ns that it
is to prevent this result that the Act forbids a director
by s. 312 from assigning his office.
Where however a
director has been appointed otherwise than by the
company in a general mcetfr1g, the shareholders have
nothing to do with his appointment. Such a director
is not the chosen representative of the shareholders
and the shareholders cannot claim to have a say in
the appointment of his successor.
We can discern no
policy in the Act which can be said to be liable to be
defeated by the appointment of the successor of such
a director by him. Therefore s. 312 was not concerned with such an appointment.
In the present case Dadoba had power under the
articles to appoint a person to be the managing director in succession to him, and in exercise of that power
he had appointed the appellant Govind as the managing director to hold the office after his death. Such
power was cle11rly recognised by, and legal under,
s. 255 of the new Act.
For
the re11sons earlier
stated, the exerc:ise of such power does not offend
s .. 312. It follows that the·appellant Govind had been
lawfully and validly appointed the managing director of the Company.
We, therefore, declare that the appellant Govind
had been validly appointed the managing director of
the Company, and Ret aside the dc0iHions of the Courts
below that he lrnd not been so appointed. We have
not been asked to interfere with the rest of the judgment under appeal and we do not do so.
We also
make no order for costs as no costs have been asked.
A p7ieal allowed.
Orientnl Metal
Ptessing Works
(P.) Lid:
v.
Bhas/tor Kashinalh ThaJtoor
& Another
Stirkar J.