Company articles and common seal requirements controlled execution; directors could not sue personally to void the lease.

Where a company's articles require execution of a binding instrument by two directors with the common seal, execution without the seal and outside that authority structure is unauthorised and does not validly bind the company. A shareholder resolution cannot override the articles or retrospectively validate the defect. The text further states that a suit to challenge such a lease must ordinarily be brought by the company as the separate legal person, not by directors in their own names, absent a recognised exception; no fraud or exception was shown, so the suit was not maintainable.

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Issues: (i) Whether the lease deed could bind the company despite the absence of the common seal and the execution not being in conformity with the articles of association; (ii) Whether a suit to avoid the lease was maintainable at the instance of two directors instead of the company itself.

Issue (i): Whether the lease deed could bind the company despite the absence of the common seal and the execution not being in conformity with the articles of association.

Analysis: The articles of association required execution of a binding document by two directors with the common seal. A resolution of the shareholders could not override the articles or displace the authority structure established by them. Where the seal was required by the articles, execution without it was treated as unauthorised and beyond the authority of the directors. Such an act was not capable of being validated by a subsequent resolution.

Conclusion: The deed, as executed, did not validly bind the company.

Issue (ii): Whether a suit to avoid the lease was maintainable at the instance of two directors instead of the company itself.

Analysis: A company is a separate juristic person and a wrong done to it must ordinarily be redressed in its own name. Directors cannot sue in their individual capacity for relief that properly belongs to the company, unless a recognised exception applies. On the facts found, no fraud was established and no exception to the general rule was available.

Conclusion: The suit as framed was not maintainable because it was not brought by the company.

Final Conclusion: The appeal succeeded and the suit was dismissed, as the challenge to the lease could not be maintained by the directors in their own names.

Ratio Decidendi: Where the articles of association prescribe the mode of execution of a company's binding instrument, non-compliance renders the act unauthorised, and a challenge to such a transaction must be brought by the company as the proper plaintiff.

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