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of <h1>Company resolution requiring fixed deposit upheld, directors' discretion emphasized. Applicability to past directors deemed unnecessary.</h1> The High Court upheld a company resolution requiring directors to maintain a fixed deposit, dismissing a suit challenging its validity. The court ruled ... Share capital - Notice of increase of and Disqualification of directors Issues:1. Validity of a resolution imposing a qualification of having a fixed deposit for directors.2. Interpretation of the Companies Act regarding director qualifications.3. Compliance with the Memorandum of Association in relation to the resolution.4. Applicability of the new requirement to past directors.5. Justification of the resolution regarding the removal of past directors for non-compliance.The judgment addressed the validity of a resolution passed by a company requiring directors to maintain a fixed deposit, challenged in a suit by two directors. The trial court upheld the resolution, stating it was in the company's interest and not oppressive. The trial court found no prohibition in the Indian Companies Act for additional director qualifications beyond shareholding requirements. The court held the resolution valid and dismissed the suit. On appeal, the Subordinate Judge declared the resolution illegal, citing it as ultra vires and conflicting with the Companies Act and the Memorandum of Association. However, the High Court disagreed, stating the resolution was within the company's powers. The High Court highlighted that the Companies Act does not restrict additional director qualifications beyond shareholding. The court emphasized the shareholders' discretion in setting qualifications, even beyond shareholding. It also noted examples of other non-share qualifications in director appointments. The High Court found the resolution valid and not conflicting with the Memorandum of Association or the Companies Act. The court also dismissed the argument that the resolution amounted to a capital increase. The High Court allowed the appeal, restoring the trial court's decree and emphasizing that the resolution was legal and within the company's powers.Regarding the applicability of the new requirement to past directors, the lower appellate court did not address this issue due to its ruling on the main resolution's legality. The trial court found the agenda comprehensive enough to introduce this aspect of the resolution. The High Court agreed with the trial court's view but deemed it unnecessary to base its decision on this point as the terms of the directors had expired. The court concluded that it was not necessary to address the issue of past directors vacating their positions due to non-compliance as it had become academic.In conclusion, the High Court allowed the second appeal, restoring the trial court's decree and emphasizing the legality of the resolution. The court dismissed the arguments against the resolution's applicability to past directors and the provision for removal in case of non-compliance, as these issues had become irrelevant with time.
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