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of <h1>High Court grants Secretary's remuneration claim, rules by-laws dictate entitlement.</h1> <h3>R. Ganesa Aiyar Versus Lakshmi Building Co-Operative Society</h3> The High Court ruled in favor of the petitioner, the Secretary of a cooperative building society, determining that he was entitled to recover a specific ... Remuneration of directors Issues:Entitlement to recover remuneration as Secretary of a cooperative building society for services rendered, interpretation of society's by-laws regarding payment of honorarium, authority of general body to withhold payment, applicability of principles regarding remuneration for directors in a company.Analysis:The judgment addressed the issue of whether the petitioner, serving as Secretary of a cooperative building society, was entitled to recover a specific sum as remuneration for his services. The lower court had denied the claim based on the general body's refusal to sanction the payment. The High Court examined the society's by-laws, emphasizing that the executive management vested in a Board of Directors, with services to be gratuitous as per by-law 28. By-law 60 outlined the distribution of profits, including a provision for an honorarium to the Secretary and Treasurer. The Court noted that while by-law 29 allowed the general body to amend or repeal by-laws, until such changes were made, the Secretary was entitled to the honorarium specified in by-law 60.The judgment delved into the legal principles governing remuneration for directors, citing precedents that inferred an agreement between the director and the company based on the articles of association. The Court highlighted that the word 'honorarium' in the by-law did not necessarily denote a gratuitous payment but could signify a fee for services rendered. Drawing on case law, the Court emphasized that the substance of the agreement, rather than the specific terminology used, determined the entitlement to remuneration.Furthermore, the judgment clarified that the Secretary's right to the honorarium was contingent on profits, as specified in the by-law, and not subject to the general body's discretion. The Court held that the general body could not withhold payment unless the relevant by-law was altered. Consequently, the Secretary was deemed entitled to the specified honorarium for the period he served, based on the profits earned during that time. However, the Court determined that the honorarium was an annual lump sum contingent on continuous service, thus limiting the Secretary's entitlement for a broken period.In conclusion, the Court reversed the lower court's decision and granted a decree in favor of the petitioner for the sum entitled under the by-law for the relevant period, with interest and costs awarded accordingly. The judgment provided a detailed analysis of the by-laws, legal principles, and precedents to establish the petitioner's entitlement to remuneration as Secretary of the cooperative building society.
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