Implied contract from company articles upheld, but permanent injunction to retain a managing director was refused.

Acceptance of office under a company's articles, together with long-standing performance of the role, receipt of remuneration and compliance with the shareholding requirement, can give rise to an implied contract on those terms. The Lahore HC sustained the declaration that such an implied contractual right existed. It also held that a managing director's office, being a personal agency involving continuous duties and dependent on the company's volition, is not specifically enforceable by injunction. A principal cannot be compelled to retain an unwilling agent, and any breach is remediable in damages rather than by equitable restraint. The request for permanent injunction was therefore refused.

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Issues: (i) whether a contract between the company and the managing director could be implied from the articles of association and the parties' conduct; (ii) whether a permanent injunction could be granted to restrain the company from removing him from the office of managing director.

Issue (i): whether a contract between the company and the managing director could be implied from the articles of association and the parties' conduct.

Analysis: The articles fixed the plaintiff's position, remuneration, and shareholding qualification, and he applied for and held the requisite shares, acted as managing director for many years, and was remunerated in accordance with the article. Even if the articles did not of themselves constitute a binding contract in the strict sense, the long course of dealing between the parties, taken with acceptance of office and payment under the article, established an implied contract on those terms.

Conclusion: The implied contract was proved, and the declaration in the plaintiff's favour was justified.

Issue (ii): whether a permanent injunction could be granted to restrain the company from removing him from the office of managing director.

Analysis: The office was treated as one of agency rather than master and servant, but the Court held that an unwilling principal cannot be compelled to continue such an agency by injunction. The contract depended on personal qualifications and volition, involved continuous duties over a long period, and was capable of breach remediable in damages. A contract of that character is not specifically enforceable, and therefore equitable relief by injunction was inappropriate.

Conclusion: The injunction was rightly refused, and the plaintiff was not entitled to specific equitable relief.

Final Conclusion: The declaration regarding the existence of an implied contractual right was sustained, but the request for injunctive relief failed, and both appeals were dismissed.

Ratio Decidendi: Where a person accepts and acts upon the office and remuneration structure set out in a company's articles, an implied contract may arise from the parties' conduct; however, a contract of personal agency involving continuous duties and dependent on volition is not specifically enforceable by injunction.

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