General meeting power to expand directors upheld, and interim injunction protected management rights from continuing interference.
Where the articles permit a general meeting to determine the number of directors, an increase in that number does not necessarily amount to an alteration of the articles and need not require a special resolution; on that footing, the directors elected under the revised strength were treated as validly appointed. The board could delegate authority to dismiss servants, so a power of attorney authorised the dismissal of the general manager, while a meeting held without notice to duly elected directors could not validly elect a chairman or pass binding resolutions. A temporary injunction was justified to protect prima facie management rights and prevent continuing interference pending trial.
Issues: (i) Whether the increase in the number of directors under Article 98 required a special resolution and, if not, whether the plaintiffs were validly elected as directors. (ii) Whether the general manager was lawfully dismissed and whether the chairman of the board was validly elected at the meeting of 16 July 1932. (iii) Whether a temporary injunction should be granted restraining interference with the plaintiffs' management rights.
Issue (i): Whether the increase in the number of directors under Article 98 required a special resolution and, if not, whether the plaintiffs were validly elected as directors.
Analysis: The article permitted the number of directors to be otherwise determined by a general meeting. The resolution increasing the number of directors did not amount to an alteration of the articles themselves, and the scheme of the articles and Table A supported alteration of the number by ordinary general meeting action. The plaintiffs elected at the relevant meetings were therefore validly appointed for the purposes of the suit.
Conclusion: The increase in the number of directors did not require a special resolution, and the plaintiffs' election as directors was valid.
Issue (ii): Whether the general manager was lawfully dismissed and whether the chairman of the board was validly elected at the meeting of 16 July 1932.
Analysis: The board could delegate its power to dismiss servants, and the power of attorney executed for that purpose validly authorised dismissal of the general manager. The meeting convened without notice to the duly elected plaintiffs could not validly elect a chairman or pass binding resolutions. The meeting at the registered office was duly called and competent to elect a chairman.
Conclusion: The general manager was lawfully dismissed, the plaintiff chairman was validly elected, and the rival chairman claim failed.
Issue (iii): Whether a temporary injunction should be granted restraining interference with the plaintiffs' management rights.
Analysis: The plaintiffs established a prima facie right to participate in management as directors, and continued interference would cause ongoing injury during the pendency of the suit. Order 39 Rule 2 of the Code of Civil Procedure justified protective interim relief.
Conclusion: A temporary injunction was warranted.
Final Conclusion: The interim order was affirmed, the defendants were restrained from interfering with the plaintiffs' exercise of directors' powers and with the plaintiff chairman's functions, and the appeal failed.
Ratio Decidendi: Where the governing articles permit a general meeting to determine the number of directors, an increase in that number does not necessarily amount to an alteration of the articles requiring a special resolution; and interim injunction may issue to protect established management rights from continuing interference pending trial.
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