N. SRINIVASAN Vs. K.S. NARAYANAN AND ORS.

JUDGEMENT

(1.) The Plaintiff is the Appellant. He filed the suit Original Suit No. 6886 of 1978, on the file of the City Civil Court, Madras for a declaration that he is entitled to hold office as Joint Managing Director till 31st December, 1979 as per the service contract entered into with the twelfth Defendant company on 27th April, 1977 pursuant to the appointment made at the General body meeting of the company in 1975 and for a consequential injunction restraining Defendants 1 to 11 from dissociating him from the office of Joint Managing Director. He also prayed for a declaration that the decision of Defendants 1 to 11, as per resolutions of the Board of Directors, dated 27th February, 1978, 8th May, 1978 and 25th May, 1978 followed by a show cause notice on 27th May, 1978 are null and void and are of no legal effect and for a consequential injunction as mentioned above. Along with the plaint, the Plaintiff filed Interlocutory Application No. 14648 of 1978 under Order XXXIX, Rules 1 and 2 read with Ss. 94 and 151 Code of Civil Procedure for a temporary injunction restraining Defendants 1 to 11 from dissociating him from the management of the twelfth Defendant company as Joint Managing Director, pending disposal of the suit, or from implementing any decision, if they have taken in this direction pending disposal of the suit.

(2.) It may be necessary to state a few facts to appreciate the nature of the interim relief asked for in the interlocutory application. The twelfth Defendant -company, after amending Article 265 of its Articles of Association, appointed the Plaintiff, who is the Appellant herein, as its Joint Managing Director for a period of five years and again the term was renewed for a further period of five years, which period expires on 31st December, 1979. The Appellant is also one of the directors of the company and. he is to hold office as director until removed by the General Body for cause shown. The first Defendant is the Managing Director of the company. The Plaintiff alleges various misdeeds as having been committed by the first Defendant is relation to the affairs of the company. Suffice it to say that there was ill -feeling between the first Defendant and the Plaintiff, launched upon a plan to oust the Plaintiff from the Joint Managing Directorship. It has been alleged in the plaint that with this end in view the first Defendant started enlisting the support of the co -directors of the company and has been waiting for an opportunity to wreak vengeance on the Plaintiff. As early as 7th February, 1977, due to intervention of persons interested in the welfare of both the Plaintiff and the first Defendant, a memorandum styled as memorandum of understanding was drawn up. This has been marked as exhibit A -4 in this case. Apart from other things, this memorandum states that both the Plaintiff and the first Defendant shall co -operate with each other and that at the end of the term of office of the Plaintiff as Joint Managing Director, expiring on 31st December, 1979, the Plaintiff would be helped to become the Managing Director of the twelfth Defendant -company and the first Defendant would extend his whole -hearted co -operation in this regard subject to re -approval of the Board and the General Body. As per this solemn agreement, it is the case of the Plaintiff, he transferred his shares in Messrs Chemical and Plastics India Ltd. in favour of the first Defendant. But the first Defendant, in spite of such agreement, continued to have hostile attitude towards the Plaintiff and carried on vilifying propaganda against the Plaintiff. It has been further alleged in the plaint that in July, 1977, the first Defendant, under the guise of bringing organisational reforms in the company wanted to reduce the powers of the Appellant and make him only a mere figure head. At the Board's meeting of the twelfth Defendant -company on 10th July, 1977. under a resolution, passed as item 3, the powers of the Plaintiff to operate bank accounts singly were withdrawn and the cheque -signing powers were in effect restricted. In spite of the request of the Plaintiff to en large his powers, the Board, according to the Plaintiff, acted against him under the instructions of the first Defendant. Even though the Plaintiff absented himself at the Board's meeting, the same was discussed and duly ratified by the Board of Directors in the Board's meeting on 27th June, 1977. The Appellant has further alleged in the plaint that at the instance of the first Defendant, the then Chairman of the Board Sri Ramjeedas Iyer addressed a letter on 24th September, 1977 once again re -opening the question of absence and certain other matters and calling for the Plaintiff's explanation. The second Defendant, who had by then become the chairman of the company, issued a letter, dated 10th October, 1977, stating that the Board viewed seriously the absence of the Plaintiff in the company. The Plaintiff sent two replies on 17th December, 1977 stating that his absence was due to his pre -occupations in settling his affairs of the business at Singapore and on the ground that he was undergoing treatment for his illness and pleading that apart from the leave entitlement, lie would also be entitled for leave on medical grounds and, he expressly stated that he did not have any objection not to claim any remuneration or perquisites for the excess period of his absence from the twelfth Defendant -company. In the meanwhile, the Plaintiff had issued a notice on 27th December, 1977 calling upon the first Defendant to re -transfer the shares in Messrs. Chemicals and Plastics India Ltd. in view of the fact that the memorandum of agreement reached between the first Defendant and the Plaintiff had become a dead letter consequent on the first Defendant committing breach of the terms thereof. The first Defendant sent a reply thereto on 30th December, 1977, which was received by the Plaintiff on 31st December, 1977. The Plaintiff gave detailed explanation and the Plaintiff alleged that the same (sic) be seen from the copy of the reply notice, dated 17th December, 1977 and that on a consideration of the merits he had an excellent case on which he should have been fully exonerated. It is the further allegation in the plaint that the Board in its meeting held on 3rd January, 1978 held that the absence of the Plaintiff, which was the main charge that was raised in the letters, dated 27th September, 1977 and 10th October, 1977, was absolutely justified and the absence was ratified and it was expressly held by the Board that the Plaintiff's absence was not detrimental to the interests of the company. The Board decided that the Plaintiff shall refund certain amounts by way of perquisites drawn by the Plaintiff on the basis that, he had exceeded his leave quota, and that, in respect of certain advances, he should take some personal responsibility of paying the same, though in law he was not liable, as the advances had been made only in the normal course of business. What was expected of the Plaintiff thereafter, that is, after 3rd January 1978, was that, he should work in co -operation with the Managing Director and obey instructions issued by the Board. The Plaintiff, keeping in mind the interests of the twelfth Defendant -company, accepted with all grace, the decision of the Board on the premise that a curtain was drawn completely on whatever that had happened and on whomsoever there was a mistake and that the parties should work in the spirit of absolute co -operation and co -ordination. According to the Plaintiff, a perusal of the minutes of the meeting, dated 3rd January, 1978 would also show that the decision taken at that meeting was not arrived at subject to any condition that the Plaintiff should give up his personal claim against the first Defendant in regard to matters unconnected with the twelfth Defendant -company. No such, assurance was given by the Plaintiff to any Director. The parties by action, also treated all the happenings prior to 3rd January, 1978 as a closed chapter and proceeded on that footing. Even when the Board considered various matters on 3rd January, 1978, they were aware of the existence of controversies between the Plaintiffs on the one hand and the first Defendant on the other, and the Board members were aware of the exchange of notice, dated 24th December, 1977 and the reply, dated 30th December, 1977. The Plaintiff, in acceptance of the decision and acting in furtherance thereof, had paid back the monies and did not choose to question the legality of the position in regard to fixing up of personal responsibility on him for the re -payment of the advance, but, in fact, saw to it, that these advances were completely re -paid to the company.

(3.) It has been further alleged in the plaint that after the meeting, dated 3rd January, 1978 the Plaintiff was attending to the work as before, and there have been meetings of the Board. He was also taken into confidence by the Board in regard to other committees on which he was appointed as a member. There are no specific duties attached to the post of Joint Managing Director, but he was to function and perform the duties delegated to him by the Managing Director. The first Defendant Managing Director did not allocate any particular work to the Plaintiff at any point of time after 3rd January, 1978. After the Board meeting held on 13th February, 1978, the Plaintiff obtained the permission of the Chairman to go to Singapore for a period of ten days and, he left India. In the meanwhile, on 14th February, 1978, he was advised by his counsel that certain questions of fact erroneously stated by the first Defendant in his reply, dated 31st December, 1977 as an answer to the Plaintiff's notice, dated 24th December, 1977 called for a detailed rebuttal, lest the Plaintiff would be subjected to a comment that, he has not repudiated the statements, false to the knowledge of the first Defendant, and they would be construed as an admission on the Plaintiff's part. Therefore, the Plaintiff issued a re -joinder on 15th February, 1978 to the first Defendant. Enraged at this, it is the case of the Plaintiff, the first Defendant maneuvered to bring about certain resolutions at the Board meeting held on 27th February, 1978. According to the Plaintiff, between the previous Board's meeting, dated 13th February, 1978 and the next Board's meeting on 27th February, 1978, the Plaintiff had been abroad with the permission of the Chairman and before that there was no complaint of any non -co -operation. The re -joinder issued by the Plaintiff, according to him, had provoked the first Defendant to maneuvered and make the Board pass the resolution, dated 27th February, 1978 to dissociate the Plaintiff from the management of the twelfth Defendant -company. The Board by its resolution dated 23rd May. 1978 called upon the Plaintiff to show cause as to why he should not be dissociated from the management of the company. According to the Plaintiff the members of the Board have not taken proper action on the confidential circular sent to them by the Plaintiff regarding the first Defendant. He would allege that the main spirit behind the entire show as also the resolutions referred to above, was the first Defendant, who got the resolution passed to his dictation enlisting the support of a few of the other directors. The Board had already taken the view, according to the Plaintiff, by way of pre -judgment, that the Plaintiff must be dissociated from the company, and in effect they have come to the conclusion to exclude the Plaintiff, as could be seen from the wordings of the resolution. The main object of the resolution was to somehow or other get rid of the Plaintiff from the Board, having been conceived and put through by at the instance of the first Defendant. The calling for of an explanation from the Plaintiff is only an empty formality since the resolution, dated 23rd May, 1978 was a mala fide one, having been motivated and brought about by the first Defendant. The Plaintiff has specifically alleged that the hand of the first Defendant in acting with the intention of some how or other getting rid of the Plaintiff is seen in the entire proceedings, dated 27th February, 1978, and 23rd May, 1978 and at every stars anterior and subsequent to the said dates. After the meeting held on 23rd May, 1978, the Chairman of the Board issued a notice to the Plaintiff on 27th May, 1978. The Plaintiff submitted his explanation on 5th August, 1978, setting out as to how the whole matter which had been closed as early as 3rd January, 1978, has been again brought in for a discussion. The Plaintiff has further alleged that the resolutions dated 27th February, 1978 and 23rd May, 1978 are mala fide and prompted by absolute personal vendatta on the part of the first Defendant in collusion with Defendants 2 to 11, that the action intended to be taken is beyond the authority and powers of Defendants 1 to 11 and is ultra vires arbitrary and opposed to principles of natural justice, that the action of Defendants 1 to 11 is without authority and highly discriminatory, that Defendants 2 to 11 had acted in a one -sided manner only listening to and acting upon the representation made by the first Defendant and ignoring all the representations made by the Plaintiff against the first Defendant, that the action of Defendants 1 to 11 is unjust and dishonest that the Plaintiff has not suffered any disqualification coming within the categories enumerated in Article 299 of the Articles of Association and that the matter once closed as early as 3rd January, 1978 has been unnecessarily re -opened in order to get rid of the plaintiff from the Joint Managing Directorship of the twelfth Defendant -company. The Plaintiff has also specifically alleged that there is conspiracy to oust him and install R. Jagannathan in his place and as sack the resolution passed by the Board should not be discussed or put before the General Body. With the abovesaid allegations, the Plaintiff, who is the Appellant herein, prayed for the reliefs mentioned in the paragraphs supra.