RAJENDRA NATH DUTTA Vs. SHIBENDRA NATH MUKHERJEE

JUDGEMENT

(1.) In the second appeal the defendant is the appellant. The plaintiffs along with the pro forma defendant No. 3 are the directors of M/s. Ahmedpur Rice Mills (Private) Ltd., which is a registered company being governed by the rules and regulations embodied in the memorandum and articles of association and the provisions of the Companies Act, 1956. In order to face the financial crisis of the company it was decided in a meeting of the board of directors on 19th October, 1974, to lease out the mill for a few years which was followed by a resolution passed by the shareholders on October 28, 1974, authorising plaintiff No. 2, the managing director, to finalise the negotiation of the lease with the principal defendants and that the said plaintiff No. 2 and another director of the company would sign and execute the deed consisting of 22 terms with an affixation of the common seal of the company. It is alleged that as per the said terms, the lease would remain in force for two years with an option of renewal for another two years. It appears, however, according to the plaintiffs, that due to mistakes on the part of the plaintiffs, plaintiff No. 2 for the first time came to know that the new term, being item No. 23, had been fraudulently and surreptitiously included by the defendants, and in collusion with the scribe during a temporary absence of plaintiff No. 2 from the Sub-Registry Office ; in the said term, it had been provided that the lease would be extended for another 20 years if the lessee makes improvement by modernising the mill, the other conditions remaining the same. It is alleged that no such modernisation of the mill was made by the defendant. Hence the suit filed by the directors to avoid the lease.

(2.) Defendants Nos. 1 and 2 filed written statements denying the material allegations. It is further contended that the defendants represented about the poor financial condition of the company due to the urgent financial necessity and an extraordinary general meeting of the shareholders was held on October 28, 1974, and it was resolved in the said meeting that the managing director would sign and execute the deed of lease containing 23 clauses on behalf of the company and an attested copy of the said resolution was made over to the defendants when there was no whisper of the alleged meeting of October 19, 1974. The court of first instance dismissed the suit. On an appeal, however, the suit was decreed. Hence the second appeal by the defendants.

(3.) Before I deal with the points raised by the parties in the second appeal it is convenient for me to state that the alleged mistake or misrepresentation or fraudulent insertion of term No. 23 into the deed has not been believed by both the courts and, therefore, the finding regarding Clause 23 cannot be challenged in the second appeal.