RAMABEN A THANAWALA Vs. JYOTI LTD

JUDGEMENT

(1.) THIS is a special case submitted to us under section go of the Civil procedure Code and it raises questions of construction of certain sections of the new Companies Act, 1956. Counsel have drawn our attention to the extremely unsatisfactory drafting of this Act and We must confess that many of its provisions do not suffer from lucidity. We have been told that the new Act has raised many problems for those who have anything to do with the management or running of companies, and the problems brought before us are only a few of those which have arisen in practice. It seems to us unfortunate that a law which is intended to help in the development of companies in our country and also to put down abuses- which were noticed in the working of companies and especially in the institution of the managing agency which is peculiar to our country, should not have been couched in clear and more precise language. That, however, is a matter for Parliament. Our concern is to take the law as we find it and do the best that we can.

(2.) THE plaintiff in this case is a shareholder of the first defendant company and the second defendants are the managing agents. They were appointed managing agents by an agreement dated the 10th April 1951. The third defendant is a partner of the second defendant firm, the other partner being one Dinubhai Amin. The third defendant is also a Director of the first defendant company and he was also appointed a Technical Adviser, he being qualified as an Electrical and Mechanical Engineer, on a salary of Rs. 3,000/- on the 1st January 1944. His appointment as Director came subsequently, he being appointed in April 1944, and the questions which call for a construction at our hands relate to the remuneration to be paid to the managing agents and the remuneration also to be paid to the third defendant. Under the agreement the managing agents were to receive 10 per cent of the annual net profits and under certain circumstances also a further one-third share in the balance of net profits after making certain deductions as provided in the managing agency agreement.

(3.) THE first relevant section that we have to consider in this connection is Section 309. That section deals with the remuneration of directors and Sub-section (1) provides: