1967 (7) TMI 84

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....promissory note had been executed not for any cash consideration but to secure a liability of the second defendant to indemnify the bank against the loss caused to it by reason of the dishonour of a cheque which the second defendant discounted while he was the agent of the bank at its Pazhayannur branch. The defendants further averred that several payments had been made by the second defendant in respect of this liability and that till 10th March, 1958, an amount of Rs. 6,690 had been remitted by him to the bank. According to the defendants, in consideration of these payments and of the faithful and meritorious service rendered by the second defendant to the bank, the general body of the shareholders of the bank had passed a resolution on 1....

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....f the trial court was set aside and the suit was dismissed. The plaintiff-bank has preferred this second appeal challenging the aforesaid decision of the lower appellate court. Exhibit D-1 is the articles of association of the plaintiff-bank. It will be seen from article 14 of exhibit D-l that the business of the company is to be managed by the directors, who may exercise all such powers as are not required to be exercised by the company in general meeting. There is no provision in any of the articles enabling the general body of shareholders to interfere in the day-to-day management of the business of the bank and the conduct of such business is left by the articles entirely to the board of directors. Exhibit D-7 is a copy of the rules ....

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....mpany the power. Where, under the articles, the business of the company is to be managed by the directors and the articles confer on them the full powers of the company subject to such regulations, not inconsistent with the articles, as may be prescribed by the company in general meeting, the shareholders are not enabled by resolution passed at a general meeting without altering the articles, to give effective directions to the directors how the company's affairs are to be managed, nor to overrule any decision come to by the directors in the conduct of its business. An agreement made by the company which is inconsistent with the powers of management of the directors under the articles, as, for example, an agreement purporting to confer auth....