P L D 1970 Dacca 155 (PLP)

A. H. KHAN, J.‑‑These two appeals are directed against the judgment and decrees passed by Mr. Santiranjan Karmakar, in Title Suits Nos. 2 and 12 of 1965. The two appeals were heard analogously and are being disposed of by this judgment. Appeal No. 9 of 1966 is directed against the judgment and decree in Title Suit No. 2 of 1965 and Appeal No. 128 of 1966 against those in Title Suit No. 12 of 1965. Title Suit No. 2 of 1965 has been instituted under the provisions of Order I, rule 8 of the Civil Procedure Code by Alhaj Mofizuddin Khan and several others on behalf of the plaintiffs themselves and other members of the Deshbandhu Sugar Mills Ltd., having its registered office at Dacca (hereinafter referred to as the Company). The Eastend Agencies is defendant No. 1 in this suit and Messrs M. M. Ishpahani Limited and Md. Mofazzel Hossain, the 2 partners of Eastend Agencies, are defendants Nos. 2 and 3 respectively. Ali Haider and S. Mobarak Reja are defendants Nos. 4 and 5 respectively they are the Agents of Messrs M. M. Ishpahani Limited under Power‑of‑Attorney authorising them to represent M. M. Ishpahani Limited in the affairs of the Eastend Agencies, the Managing Agents of the Company. Of the other defendants, defendant No. 5 (a) is It. N. Bose, representing a firm of the name of Eastend Consultants Limited. Defendants Nos. 6 to 10(a) are the Directors of the Company and the defendant No. 11 is the Company (the Deshbandhu Sugar Mills Limited). In Suit No. 12 of 1965 the Company is the plaintiff No. 1 and the remaining plaintiffs are Directors of the Company. Some of the defendants in this suit who are also defendants in Title Suit No. 2 are defendant No. 1, Ali Haider, defendant No. 2 Fastend Consultants Limited defendant No. 8, Eastend Agencies, defendant No. 9, M. M. Ishpahani Limited, defendant No. 10, Md. Mofazzel Hossain and defendant No. 11 S. M. Reja. As common questions of law and fact are involved in both the suits, the learned Subordinate Judge heard them analogously and disposed of them by the same judgment. In both the suits certain declarations in respect of the affairs of the Company which is a public Limited Company were prayed for. The company was incorporated under Companies Act of 1913 for the purpose of manufacturing sugar and selling the same in the market. Under the Articles of Association the Company is entrusted to Managing Agents to be appointed by the Company; and the Managing Agents subject to the control of the Directors are to conduct the business of the Company. The facts regarding the Management of the affairs of the Company so far relevant for the purpose of the present appeals are as follows : On 18‑12‑53 the Company in its Annual General Meeting passed a Special Resolution appointing as the Managing Agents, Messrs Eastend Agencies, a partnership firm consisting of Raziuddin Bhuiya, Mofazzel Hossain and Suresh Chandra Pal as partners. The partnership firm was first brought into existence by an oral agreement among the partners and the partnership deed was executed on 22‑12‑54 and a deed of agreement between the Company and the Managing Agent was executed on 30‑12‑

53. This firm continued to act as Managing Agents peacefully till 10.1‑63 on which date one of the partners, Raziuddin Bhuiya died and then on 19‑1‑63 the surviving partners, Suresh Chandra Pal and Mofazzal Hossain executed a Deed of Dissolution of the partnership with effect from 11‑1‑63 and a fresh Deed of ‑Partnership was executed under the old name and style of Eastend Agency on 21‑1‑

63. The Board of Directors in a meeting held on 23‑1‑63 approved of this new partnership as the reconstituted firm of Eastend Agency by its resolution No. 3 of the aforesaid date. This is one of the acts validity of which has been challenged in both the suits on the contention that the partnership firm that was brought into existence on the dissolution of the old partnership firm was a new firm and not merely a reconstituted firm and the appointment or approval of the new firm by the Board of Directors wag illegal and ultra vires the Articles of Association as well as the provisions of Companies Act. The partnership firm with Suresh Chandra Pal and Mofazzel Hossain however had continued working as Agents of the Company till 14‑7‑64 when another partnership was brought into existence. Before that on 18‑11‑63 one of the two partners, Suresh Chandra Pal had entered into an agreement to transfer his interest in the firm in favour of M. M. Ishpahani Limited, and on 13‑4‑64 the said partner had also served a three months' notice on the firm expressing his intention to retire from the firm with effect from 13‑7-64, and on this date (13‑7‑64) Suresh Chandra Pal also executed a Power‑of‑Attorney in favour of M. M. Ishpahani Limited authorising them to represent Suresh Chandra Pal as a partner of the firm. On 14‑7‑64 a deed of partnership was executed by M. M. Ishapahani Limited and Mofazzel Hossain for carrying on the Managing Agency and other business under the name and style of East End Agencies. On the same date a resolution in a meeting of the Board of Directors was also passed appointing as Managing Agents the Eastend Agencies with the two partners, Mofazzel Hossain and M. M. Ishpahani Limited, in place of Suresh Chandra Pal. Subsequently the appointment of the newly‑constituted partner ship as Agents of the Company was approved in a meeting claimed to be the 32nd Annual General Meeting of the Company held on 28‑3‑65 in which new Directors of the Company were also elected. The plaintiffs in both the suits have also challenged the validity of the appointment as Managing Agents of this firm consisting of M. M. Ishpahani Limited and Mofazzel Hossain as partners. In both the suits the plaintiffs have further challenged the validity of the so‑called 32nd Annual General Meeting held on 28‑3‑1964 convened under two notices both dated 10‑3‑65, one issued by Ali Haider representing the Managing Agents and the other issued by Eastend Consultants Limited represented by R. N. Bose, and 5 other members. In Title Suit No. 12 of 1966 there was a further prayer for a decision that defendants Nos. 2 to 7 and 12 to 20 of that suit are not share‑holders of the Company. Ali Haider and S. Mobarak Reja who are common defendants in both the suits contested the suits. They contended inter alia that the firm consisting first of Mofazzel Hossain and Suresh Chandra Pal and then of Mofazzel Hossain and M. M. Ishpahani Limited as partners was in each case a reconstituted firm and not a new firm and it was legally approved by the Board of Directors and as such all acts done by them as partners of the said firm were legal and valid, including convening and holding of the 32nd Annual General Meeting of the Company on 28‑3‑

65. They also asserted that defendants Nos. 2 to 7 and 12 to 20 of Title Suit No. 12 of 1965 were duly accepted as share‑holders by virtue of their purchase of some forfeited shares of the Company, and as such they were members of the Company. During the course of hearing of the suits the following three issues were agreed upon as the issues to be determined in the suits: (1) Whether the firm of Eastend Agencies consisting of M. M. Ishpahani Limited and Mofazzel Hossain was validly appointed Managing Agents of the Company? (2) Whether the 32nd Annual General Meeting of the Company was legally convened and held on 28‑3‑65? (3) Whether the defendants Nos. 2(a) to 7 and 12 to 20 of Title Suit No. 12 of 1965 were share‑holders by virtue of the alleged purchase of some forfeited shares? On a careful consideration of the evidence and facts and circumstances of the case in an elaborate and well‑reasoned judgment the learned Subordinate Judge found issue No. 3 in favour of the defendants and the remaining two issues in favour of the plaintiffs and accordingly declared (i) that the firm, Eastend Agencies consisting of M. M. Ishpahani Ltd. and Mofazzel Hossain as partners was not validly appointed Managing Agents of the Company and further that the 32nd Annual General Meeting of the Company held on 28‑3‑6j was not legally called nor legally held. The first question that arises for determination in these appeals is whether the firm of Eastend Agencies as constituted or reconstituted with M, M. Ishpahani Limited and Mofazzel Hossain as partners under the partnership deed of 14‑7‑64 was duly appointed Managing Agent of the Company. Now, though no specific issue was raised regarding the validity of the appoint ment of the firm consisting of Mofazzel Hossain and Suresh Chandra Pal as Managing Agents by the Board of Directors and though no decision was necessary on this point, for a decision of the points at issue in the suits, the learned Subordinate Judge dealt with that question at length. As this was also argued before us, we shall discuss this question as this will serve to clarify the legal position of the Eastend Agencies that was subsequently formed with M. M. Ishpahani Limited and Mofazzel Hossain as partners. Mr. D. C. Bhattacharjee, learned Advocate for the appellants, has contended that the learned Subordinate Judge erred in holding that the deed of partnership, dated 21‑1‑63 (Exh. 3 (a)), created a new partnership on dissolution of the old partnership consisting of Raziuddin Bhuiya, Md. Mofazzel Hossain and Suresh Chandra Pal under the deed of dissolution of partnership, Exh. 4 dated 19‑1‑63 (vide page 41 of Paper Book 11), Mr. D. C. Bhattacharjee has argued that both the document namely, the deed of dissolution of partner ship, Exh. 4, and the new deed of partnership between Suresh Chandra Pal and Mofazzel Hossain dated 21‑1‑63, Exh. 3 (a), read together clearly show that the intention of the parties was reconstitution of the partnership on the death of third partner, Raziuddin Bhuiya, The learned Advocate has contended that the alleged dissolution cannot be held to be dissolution as it was in effect a reconstitution of the old partnership and as such, approval or appointment by the Board of Directors was enough and there was no necessity for re‑appointment of the firm as Managing Agents in a General Meeting of the members of the Company under the provisions of section 87‑B (f ) of the Companies Act. Now, it is true that in clause No. 21 of the old partnership deed including Raziuddin Bhuiya as a partner, it is provided that on the death of one of the partners his legal heirs etc. shall step rote his shoes but in case they express their unwillingness to work with the other partners, the accounts of the deceased partner shall b;, adjusted and paid in full to the legal heirs etc, with such compensatory allowances as may be decided by the partners within three months from the date of death of the deceased partner. The said old partnership deed, Exh.3, also provided in clause No. 17 that if from any cause "any two members of the partnership ceased to be so, the partnership would be dissolved". In view of above provisions it was, no doubt, open to the surviving partners to continue the partnership as a reconstituted firm. The first question that arises is whether in the eye of law the two documents namely, the deed of dissolution. Exh. 4, dated 19‑1‑63 and new deed of partnership, Exh. 3 (a), dated 21‑1‑63 had the effect of a simple reconstitution of the firm, or whether they brought into existence a new partnership firm, dissolving the old one. Section 40 of the Partnership Act provides that "a firm may be dissolved with the consent of all partners or in accordance with the contract between the partners," while section 43 (1) provides for dissolution of a partnership‑at‑will by any partner on giving notice in writing to all other partners of his intention to dissolve the firm. To our mind, section 43 has no applications in the present case inasmuch as the old partnership including Raziuddin Bhuiya was not a partnership‑at‑will as defined in. section 7 of the Partnership Act, as there is a contract under A the old deed of partnership" for the determination of the partnership though there was no contract regarding duration of the same. We are of the view that section 40 which provides for dissolution of a partnership with the consent of all the partners, is applicable to the present case. In Exh. 4, dated 19‑1‑63 the deed of dissolution of partnership, it is stated, inter alia, that "as one of the partners of the aforesaid firm Mr. Raziuddin Bhuiya died on the 10th pf January 1963 and there is no unanimity amongst the heirs to continue the said firm and the remaining referred to as the first and second parties after due notice has mutually dissolved, the partnership and a new partnership firm will be formed soon, after which they shall carry on the business of the Managing Agency." In the said deed of dissolution it is also stated that "the existing firm of Eastend Agency has no liabilities on books of account and its commission and other earnings", and further that the partners have signed notices addressed to the Registrar of Firms notifying the dissolution of the Firm, which shall be recorded with the Registrar as soon as possible, and it is further stated that the parties have agreed to notify the Deshbandhu Sugar Mills Limited that "the existing partnership firm has been dissolved and a new partnership firm will be formed soon, after which they shall carry on the business of the Agency". In the new partnership deed, Exh. 3 (a), dated 21‑1‑63 it is also stated, inter alia, that the two partners have dissolved the old partnership and constituted a new partnership for the same and other purposes as they deem fit and proper. It is further stated, that the capital of the partnership firm shall be Rs. 4,000 whereas under the old partnership the capital was Rs. 5,

000. Now, in view of the unequivocal expressions in the documents regarding the dissolution of the old partnership and creation of a new partnership, we find no reason why the two documents should be construed as documents merely reconstituting the old firm. It also appears that there were good reasons for bringing into existence a new partnership firm in order that there might be complete severance from the old partnership, as otherwise the legal heirs of Raziuddin Bhuiya might bring forward claims in respect of the future profits and gains of the firm. It may be mentioned here that under certain circumstances, under the provisions of section 37 of the Partnership Act, in the absence of a contract to the contrary, the legal representatives of a deceased partner are entitled, at their option, to such shares of the profits after the death of the partner as may be attributable to the use of the share of the party of the firm, or to interest at the rate of 6 % per annum on the amount in the share of his property in the firm In view of the above facts and circumstances, we have no hesitation to hold that the learned Subordinate Judge's finding that there was in fact a dissolution of the old partnership and creation of a new partnership consisting of Mofazzel Hossain and Suresh Chandra Pal, and that it was not a reconstitution of the old firm as contended by Mr. Bhattacharjee. In view of the dissolution as found above, and having regard to the provisions of section 87‑B (f) of the Companies Act which lays down that the Managing Agent shall be appointed by the members of the Company, it appears to be clear that the appointment of the partnership firm of Mofazzel Hossain and Suresh Chandra Pal treating it as a reconstituted firm as Managing Agents by the resolution of the board of Directors dated 21‑1‑63 (vide Exh. 6(e) page 67 of the Paper Book 11) was invalid, the appointment having been in contravention of the provisions of section $7‑13(f) of the Companies Act. Mr. Bhattacharjee, however, has contended that in view of the provisions of Article 86‑A (c) of the Articles of Association of the Company (vide page 126 of the Paper Book il), the learned Subordinate Judge should have held that the appointment by Board of Directors of the Eastend Agency consisting of the partners, Suresh Chandra Pal and Mofazzel Hossain, even, if, considered to be a new firm, was valid in the eye of law. Article 86‑A(c) of the Articles of Association, Exh. D (page 129 of the Paper Book II) is as follows :‑ "In the event of dissolution of the partnership all the members of the Eastend Agency now constituting the Managing Agency of the Company, owing to death, resignation, withdrawal or any other cause or causes, the Board of Directors shall be at liberty to retain or withhold the operation of any or all articles mentioned in this Chapter (XVII) for, or from, the successor or successors of this Managing Agency of the Company or, if necessary, and expedient, to appoint one or two members of the Board as Managing Director for the Management of the affairs of the Company." On the basis of the above provision Mr. Bhattacharjee has argued that the clause empowers the Board of Directors to retain the service of the surviving partners as Manag ing Agents even on the dissolution of the partnership firm. We are in complete agreement with the learned Subordinate Judge that this provision was made merely for the purpose of an ad hoc arrangement, till a new Managing Agent was appointed by the members of the Company under the provisions of section 87‑B (f) of the Companies Act. It appears from the judgment of the trial Court that it was argued before that Court that the appointment of the partnership firm consisting of Messrs Suresh Chandra Pal and Mofazzal Hossain by the Board of Directors was ratified in 31st Annual General Meeting of the members of the Company. But from the proceedings of the 31st Annual General Meeting held on 21‑6‑64 (vide Exh. 5 (a), page 50 of the Paper Book II), it appears that there was no such resolution ratifying the appointment. Mr. Bhattacharjee has also not argued before this Court that there was any such ratification in respect of the appointment of the firm of Suresh Chandra Pal and Mofazzal Hossain as Managing Agents in the 31st Annual General Meeting of the Company held on 21‑6‑

64. We now come to the main issue. As already stated, the learned Subordinate Judge has found that there was dissolution of the firm consisting of Suresh Chandra Pal and Mofazzel Hossain as partners on the retirement of the former with effect from 13‑7‑64 by virtue of the notice issued by Suresh Chandra Pal on 13‑4‑64, expressing his intention to retire with effect from that date and he has, therefore, held that the partnership that was formed on 14‑7‑64 with M. M. Ishpahani Limited and Suresh Chandra Pal as partners was a new firm and not a reconstituted firm. He has also found that though there was an agreement between Suresh Chandra Pal and M. M. Ishpahani Limited under the deed of agreement, Exh. M. dated 18‑11‑63 (page 154 of the Paper Book 11) there was in law no transfer in favour of M. M. Ishpahani Limited inasmuch as such a transfer could be effected only by a written document and no such document of transfer was executed. In the opinion of the learned Subordinate Judge, the interest of Suresh Chandra Pal was of the nature of an actionable claim for a valid transfer of which a written document was required. The learned Subordinate Judge also found as already stated, that the deed of partnership, Exh. 3 (b), dated 14‑7‑64 between M. M. Ishpahani Limited and Mofazzel Hossain brought into existence a new firm and, therefore, the appointment of this firm as Managing Agents was beyond the authority of the Board of Directors inasmuch as Managing Agents can be appointed only by the members of the Company under the provisions of section 87‑B (f) of the Companies Act. Mr. Bhattacharjee has contended that the notice regarding retirement issued by Suresh Chandra Pal as also the agreement in favour of M. M. Ishpahani Limited to transfer Suresh Chandra Pal's share in the firm and the Power‑of‑Attorney, dated 13‑7‑

64. Exhibit 4 were all designed to effect a transfer of Suresh Chandra Pal's interest in favour of M. M. Ishpahani Limited and that in fact there was a transfer by delivery of possession, as is evident from the deed of agreement, Exh. M. between M. M. Ishpahani Limited and Suresh Chandra Pal dated 18‑11‑63 and the deed of partnership, Exh. 3 (b), dated 14‑7‑6J (page 30 of the Paper Book II) between two parties. In paragraph 2 of the aforesaid document it is stated that Suresh Chandra Pal has transferred in favour of M. M. Ishpahani Limited "all rights, title and interest in the goodwill, assets (movable and immovable) and other incomes and benefits to the extent of his (Suresh Chandra Pal's) 50% share in the said (partnership) business" carried under the name and style of Eastend Agency. In the agreement (Exh. M. page 154 of the Paper Book 11) there is also a term that M. M. Ishpahani Limited would be put in possession of the properties proposed to be transferred; and Schedule B of the document includes 50% share owned by Suresh Chandra Pal in the partnership firm of Eastend Agency, the Managing Agents of Deshbandhu Sugar Mills Limited. Now, assuming for the present that there was a valid transfer of the share of Suresh Chandra Pal to M. M. Ishpahani Limited, this is of no avail to the appellant in view of the following provisions in clause 17 of the original deed of partnership, Exh. 3 among Raziuddin Bhuiya, Moffazzel Hossain and Suresh Chandra Pal as members "That if from any reason whatsoever any two members of the partnership cease to be so, the partnership will be dis solved." Further, in the deed of partnership between Mofazzel Hossain and Suresh Chandra Pal, Exh. 3 (a) dated 21‑1963 there is also n clause, namely, clause 15, saying; If from any cause whatsoever any member of the partnership retires or becomes insolvent the partnership will be dissolved. Thus according to both the original deed of partnership and the subsequent deed of partnership between Suresh Chandra Pal and Mofazzel Hossain, Exh. 3 (a) the partnership came to be dissolved when Suresh Chandra Pal ceased to be a partner of the firm, whether by retirement or by the transfer of his interest in the partnership business. Mr. Bhattacharjee has strongly relied on the provision of section 87‑B (c) of the Companies Act which reads as follows "Notwithstanding anything to the contrary contained in the articles of the Company or in any agreement with the Company; (c) a transfer of his office by a Managing Agent shall be void unless approved by the Company in a General meeting Provided that in the case of managing agent's firm a change in the partners thereof shall not be deemed to operate as a transfer of the office of managing agent, so long as one of the original partners shall continue to be partner of the managing agent's firm. For the purposes of this proviso Original partners' shall mean, in the case of managing agents appointed before the commencement of the Indian Companies (Amendment) Act, 1936, partners who were partners at the date of the commence ment of the said Act, and in the case of managing agents appointed after the commencement of the said Act, partners who were partners at the date of the appointment." It appears to us that the above proviso simply means that when the agency happens to be a firm transfer of the interest of the original partners to new comers shall not be considered as a transfer of the office of the Managing agent so long as at least one of the original partners continue to be a partner of the Agency firm and no approval of the members of the Company will be required in such a case for continuance of the Managing agency by the managing agents' firm. Though under the Partnership Act, a firm of partners is not given the same status as a Company registered under this Com panies Act, it has undoubtedly a distinct personality as observed by their Lordships of the Privy Council in the case of Bhogwanji Gocul Das v. Alembic Chemical Company Limited (52 C W N 681) It is true that the Indian Partnership Act goes further than the English Partnership Act, 1890 in recognising that a firm may possess a personality distinct from the persons constituting it. But the fact that a firm possessed a distinct personality does not involve that the personality continues unchanged so long as the business of the firm continues. The Indian Act, like the English Act, avoids making a firm a corporate body enjoying the right of perpetual succession. The agreement of the 7th December 1907, was made between the Company and four named individuals and when all of these four individuals had ceased to be members of the firm, there was no privity of contract between the Company and the firm as it then existed It should be mentioned here that the agreement in above case was between the respondent‑Company and four individuals by name who constituted a firm and though the appellant, Bhagabanji Gocul Das by virtue of his purchase of the share of the last of the four original partners before the amendment of the Indian Companies Act in the year 1936 became in the eye of law one of the original partners in terms of the proviso to clause (c) of section 87‑B of the Companies Act, it was held that as there was no privity of contract between the Company and the firm as it existed at the time of the suit, and the appeal before their Lordships was accordingly dismissed. The Company in that case had asserted that on the assignment of the share of the last one of the original partners of the firm, the firm with which the Company had entered into the agreement had come to an end and, therefore, the firm was no longer Agent of the Company under the terms of the agreement between the parties. This contention was upheld by their Lordships of the Privy Council for the reasons indicated above. It is true that unless there is any thing to the contrary in the terms of the partnership deed and unless the partnership is dis solved by the happening of any event which results in the dissolu tion of the partnership, a partnership firm may be reconstituted when one of the partners dies, resigns, retires or otherwise ceases to be a partner, and the other partners may continue the business of the firm as a reconstituted firm on the same terms as before so far as may be under the changed circumstances. Vide section 17(a) of the Partnership Act. Section 58 of the Partnership Act provides for registration of firms while section 63 provides that when a change occurs in the constitution of a registered firm or when there is dissolution of a firm, the change or dissolution is to be intimated to the Registrar of Firms and such fact is to be entered in the Register of Firms. In the present case there was a dissolution of the firm as found by us and creation of a new l, partnership and therefore it could be appointed managing agents only by members of the Company under section 87‑B (f) of the Companies Act. Mr. Bhattacharjee, has further argued in respect of second dissolution also, that assuming that it was a dissolution in the eye of law, the Board of Directors under clause (c) of Article 86‑A were at liberty to withhold the operation of the dissolution of the partnership by reason of retirement or transfer of share of Suresh Chandra Pal and in fact they did so by appointing the partnership firm constituted by M. M. Isphahani Limited and Mofazzel Hossain as Managing Agents. But having regard to the provisions of section 87 (f) of the Companies Act, it must be held that the Board of Directors had authority to appoint the new firm of partners to continue the work of the Managing Agency only by way of a temporary arrangement until the members of the Company appointed the Managing Agents under the powers vested in them by section 87‑B (f) of the Companies Act. Section 87‑B(f )the Act provides as follows "Notwithstanding anything to the contrary contained in the Articles of Company or in any agreement with the Company. The appointment of Managing Agent, the removal of a Managing Agent and any Management made after the commencement of the Indian Companies Act (Amendment) Act, 1936 shall not be valid unless approved by the Company by a resolution at a General Meeting of the Company notwithstanding anything to the contrary in section 86‑E." Accordingly, we find, that the appointment of partnership firm of M. M. Ishpahani Limited and Md. Mofazzel Hossain as Managing Agents by the Board of Directors was invalid being contrary to the provisions of law. The next question is whether the 32nd Annual General Meeting of the Company was legally convened and held on 28‑3‑64 on the basis of the two notices, one issued by Ali Haider on behalf of the Managing Agents and the other by six members of the Company. For a proper discussion of the question certain facts should be stated here. The 31st Annual General Meeting was held on 21‑6‑

64. On 26‑11‑64 the Board of Directors passed a resolution for holding of the 32nd Annual General Meeting of the Company during the second week of June 1965. On the 26th November 1964 there was a meeting of the Board of Directors in which a resolution was passed against the wishes of Mr. Ali Haider one of the Directors representing the Managing Agents for holding the Annual General Meeting in June 1965. Thereafter on 22‑2‑65 another meeting of the Board of Directors was held for reconsideration of the question of the date of holding of the Annual General meeting in view of interpretation of section 131 of the Companies Act given by the Registrar of Joint Stock Companies. But on that date the matter could not be considered and it was postponed. Then on the 3rd March 1965, before the Board of Directors could meet again to take a decision regarding the date of holding of the Annual General Meeting, Ali Haider, one of the Agents representing M. M. Ishpahani Limited in the partnership firm, on behalf of the Managing Agents issued a letter, Exh. 7 (g) (vide page 91 of the Paper Book II) to each Director stating therein, inter alia that it was the duty of the Managing Agents to hold the Annual General Meeting with the approval of the Directors and that the Managing Agents proposed to hold the 32nd Annual General Meeting on 28‑3‑65 at 10 a.m. and each Director was requested to give his approval for holding of the meeting on that date. It was also stated in the letter "if no reply is received from you by Saturday, the 6th instant, it will be presumed that we have your approval." On 5‑3‑65, it is alleged, one of the Directors, Mr. F. A. Mannan, sent a letter to Mr. Ali Haider, representing the Managing Agents, protesting against the proposed holding of the meeting, on the date proposed by Ali Haider. Then on 8‑3‑65 there was yet another meeting of the Board of Directors in which Md. Mofazzel Hossain, one of the two agents, of partnership firm of M. M. Ishpahani Limited was also present, and a resolution was passed to the effect that in view of the various practical difficulties in the way of holding the meeting the Registrar of Joint Stock Companies and Firms be requested to extend the time and to permit the holding of the meeting in June next, and the Managing Agents were also directed to apply to the Registrar of Joint Stock Companies and Firms for extension of time. 1n spite of this resolution of the Board of Directors, Ali Haider as representing the Managing Agency issued on 13‑3‑65 notices (vide Exh. 7 (d), page 87 of the Paper Book II) of the 32nd Annual General Meeting of the members of the Company fixing the date as the 28th March 1965 and time at 10 a.m. There were a number of items in the agenda of this notice but no item for approval of the appointment by the Board of Directors of Messrs Eastend Agencies as the Managing Agent of the Company. On the same date another notice was issued by six members of the Company including Eastern Consultant Limited repre sented by one R. N. Bose. In this notice also the date was fixed as 28‑3‑65 but the hour was fixed as 9 a.m. approval of the appointment of Messrs Eastend Agency as Managing Agent of the Company formed one of the items of the agenda. It appears that when issuance of the notice by Ali Haider came to the notice of the Directors there was a meeting of Directors on 23‑3‑65 in which a resolution was passed authorising the two Directors in charge to take appropriate steps against Ali Haider as he had illegally called the Annual General Meeting without the approval of the Directors and without the other partners of Managing Agents firm, namely, Mofazzel Hossain, having been a party to the calling of the Annual General Meeting. Thereafter both these suits were filed and in each an ex parte order of injunction was obtained by the plaintiffs restraining Ali Haider and other defendants from holding the Annual General Meeting on 28‑3‑65, but the orders were thereafter vacated. Then on 28‑3‑65 a meeting was held or rather commenced, at the Company's registered office at 58 Patuatully, Dacca. Then as the office was locked up and there was a lack of sitting arrange ments, after the election of Ali Haider as Chairman, the meeting was adjourned and later on held at Belal Manzil, Magbazar, Dacca and various items of business were transacted in the meeting including appointment of Directors of whom R. N. Bose representing the Eastern Consultant Limited was one. The validity of calling of the meeting by Ali Haider on behalf of the Managing Agents has been challenged, as already mentioned, on the ground that there was no validly appointed Managing Agents at all and further that the approval of the Directors for convening the meting was not taken as required by Article 49 of the Articles of Association of the Company. That article provides as follows : "An Ordinary General Meeting of the Company shall be held once in every year after incorporation of the Company at such time and at such place as may be specified in the notice by the Managing Agents with the approval of the Directors," As already stated, there was no meeting of the Directors for approval of the calling the Annual General Meeting but such approval was sought to be taken by letters sent to the Directors individually and one Director, Mr. F. A. Mannan, according to the finding of the learned Subordinate Judge, protested against the holding of the Annual General Meeting as proposed. It is not necessary to consider whether, Mr. Mannan's letter was actually received by Ali Haider or not. We have already seen that before the notices were issued on the 13th March 1964, for holding of the 32nd Annual General Meeting, the Directors had held a meeting on 8‑3‑64 and passed a resolution for holding of the meeting in June and the Managing Agents were also directed to apply to the Registrar of the Joint Stock Companies and Firms for extension of time. Thus there was not only no approval of the date of meeting held on the 28th of March 1965, accorded by the Directors, but there was positive disapproval, in view of the resolution of the Directors in the meeting held on 8‑3‑65 (vide page 71 of the Paper Book II) in which 5 Directors including, Md. Mofazzel Hossain, one of the partners of the Managing Agency firm, was also present. In the circumstances, it cannot be held that the meeting called by Ali Haider on behalf of the Managing Agents was validly convened and held. Further it is evident from the various provisions of the Articles of Association that the decision of Directors in any matter which should to our mind, include approval of the date of holding of Annual General Meeting in terms of Article 49, must be taken in a meeting of the Directors, Article 80 enjoins that the Directors shall meet together at least once in three months for despatch of business etc. Article 83 provides a quorum for meeting of Directors and Article 84 provides that every question at the meeting of the Directors or of a committee shall be determined by the majority of the Directors present, every Director having one vote. It is thus clear that according to the terms of the Articles of Association the Directors can act only in a meeting. It is, however, true that an informal transaction of business by the Directors may be ratified subsequently in a properly held meeting. In the case of Darcy v. The Tamar, Kit Hill and Callington Railway Company ((1886‑87) 2 L R C 158) it was held that the Directors exercising the power conferred by the Companies Clauses Consolidation Act, 1845, must act together and as a Board. In that case the prescribed quorum of Directors of a company was three and the Secretary of the Board of Directors affixed the seal of the Company to a bond, after having obtained consent of two of the Directors at a private interview and in another private interview the promise of a third to sign the authorities. The Company being sued up on the bond it was held that the seal of the Company was affixed without lawful authority and the Company was therefore, not liable on the bond. It should be mentioned here that the Companies Clauses Consolidation Act, 1845 which was incorporated in the defendants Special act had similar provisions regarding transaction of business by the Directors. At the time of hearing of the present appeal it was pointed out that it is stated in Article 49 that the approval of the "Directors" (and not Board of Directors) should be obtained. Now the expression Board of Directors is rarely used in the Articles of Association of the Company and even while speaking of the powers of the Directors only "Directors" are mentioned. In view of the above, the declaration made by the learned Subordinate Judge that the meeting called by Ali Haider on behalf of the Managing Agents was not validly convened and held, must be upheld. As regards the validity of the notice of meeting issued by the six members including R. N. Bose representing Eastern Consultant Limited as one of the members of the Company, and the validity of the meeting held with R. N. Bose as a member in the meeting, the notice and the meeting have been held by the learned Subordinate Judge, as already stated, as bad in law because of participation of R. N. Bose at the time he represented was not a member of the Company at that time. It is established from the evidence on record that by the time the notice by the six individuals was issued there had been already allotment of a number of shares in the name of Eastern Consultant Limited and an intimation of share allotment had also been issued. The question is whether by virtue of this R. N. Bose's firm can claim to be a member of the Company without its name having been registered in the Register of members as a member. Now, "member" has been defined in section 30 of the Companies Act as follows : "30 (1). The subscribers of a Memorandum of Company shall be deemed to have agreed to become members of the Company and on its registration shall be entered as members in its Register of members. (2) Every other person who agrees to become a member of the Company, and whose name is entered in the Register of members shall be a member of the Company." Section 31 of the Companies Act provides for maintenance of a Register of members. It is as follows :‑ "31 (1). Every Company shall keep in one or more books a register of its members, and enter therein the following particulars (i) The names and addresses, and the occupations, if any, of the members and, in the case of a Company having a share capital, a statement of the share, held by each member, distin guishing each share by its number, and of the amount paid or agreed to be considered as paid on the shares of each member; (ii) The date at which each person was entered in the register as a member ; (iii) The date at which any person ceased to be a member." From the above, it is clear that in order that the name of a person may be entered in the register of members, shard must have been already issued to him so that the individual numbers of the shares may also be recorded in the register of l members. In Halsbury's Law of England, 3rd Edn., Vol. 6, we find the following statement at page 211 :‑ "435, how far entry (in register of members) is necessary. In order to constitute membership‑entry on the register is necessary, except in the case of signatories or persons deemed to be signatories to the memorandum of association." Section 524 of the same volume of Halsbury's Law of England, page 250, is as follows "

524. Bearer of share warrant as member.‑The bearer of a share warrant may, if the articles of association so provide, be deemed to be a member of the Company, either to the full extent or for any purposes defined in the articles." To the same effect under the provisions of section 46 of the Companies Act. There is no such provision in the Articles of Association of the present Company under which the bearer of a share warrant is to be deemed to be a member of the Company although his name may not be entered in the register of Companies. In view of the provisions in sections 30 and 31 of the Companies Act quoted above, it is clear that a person is not a member unless his name is registered in the register of the Company under section 31 (1). In view of the above, we find that R. N. Bose's firm was not a member of the Company either on date of issuing of the notice for holding of the meeting or on the date the meeting was held (28‑3‑65). Mr. Asrarul Hossain the learned counsel who has appeared for the. respondents has relied upon the case of Lane v. Norman (66 L T R 83) in support of his contention that the meeting held on 28‑3‑65 was invalid because of participation in it by R. N. Bose without his firm being a member of the Company. In this case a Charch's sidesman, who was not properly a member of the Committee of Churchwardens by which a resolution was passed terminating the engagement of all the existing staff of the Church School in order to make new arrangements which was necessary in consequence of the Free Education Act. The master brought an action to restrain the committee from dismissing him on the grounds that the committee was improperly constituted, and he ought to have been heard in his own defence, and that the absence of notice to one Churchwarden and the presence of a sides man at the Committee rendered the meeting invalid. It appears that a practice had grown up for a `sides man' of St. Marks to attend the meetings of the School Committee for the purpose of giving information and advice as to the Management of the school. North, J. in holding that the presence of the sidesman was a fatal objection observed inter alias as follows : But when persons who do not belong to the committees are summoned to attend the committee, to take part in the discussions which ensue, and to use their influence as to what the committee should do and to vote upon the point, then ill my opinion the body which is acting is not a committee duly appointed, but a committee with an unauthorised addition or additions made to it. In the present case as found above R. N. Bose firm not being one of the members not only called the meeting along with others but himself took part in the General Meeting and was, also elected as a Director. There can be little doubt in the circumstances that he exercised a lot of influence in the matter, of calling of the meeting and in the deliberations and decisions taken therein. We are of opinion that because of his participation) in the meeting the meeting would not be a valid meeting even though it had been otherwise in accordance with law. It is also to be noted in this connection that though under the law of Partnership every partner may act on behalf of the firm so as to bind the firm unless otherwise provided in the partnership deed, in the present case Ali Haider representing one of the partners; viz. M. M. Ishpahani Limited issued the notice for holding of the Annual General Meeting on 13‑3‑65, under the circumstances from which it is clear that the other partner Md. Mofazzel Hossain was not a consenting party to the same for, it is found from the proceedings of the meeting of the Board of Directors held on 8‑3‑65 (vide Exh. 6 (h), page 71 of the Paper Book II) that of the five Directors present at the meeting as already stated, one was Md. Mofazzel Hossain, the other partner of the Eastend Agencies, and in that meeting of the Board a resolution was passed for requesting the Registrar of the Joint Stock Companies extension of time for holding of the meeting in June and directing the Managing Agents to apply for extension of time to the Registrar of Firms. If Mofazzel Hossain did not agree to the passing of the above resolution he could have easily prevented the holding of the meeting or passing of the resolution by simply remaining absent or withdrawing from the meeting when the above resolution was about to be passed. That he did not want the holding of the Annual General Meeting on the 28‑3‑65 and was one of the party who wanted the holding of the meeting in June 1965, is also clear from the proceedings of the meeting of the Board of Directors held on 17‑3‑65 (Exh. 6(m), page 78 of the Paper Book II) in which Md. Mofazzel Hossain was appointed General Manager of the Company temporarily at a monthly salary of Rs. 500 together with car allowance and "free driver" at the Company's expense. We now turn to the question whether the share of Mr. Suresh Chandra Pal in the partnership firm could be transferred without any document, this has been dealt with by the learned trial Court as follows "It appears that on 18.1.1‑63 Mr. Suresh Chandra Pal entered into an agreement, Exh. M to exchange his 8 annas interest in favour of Messrs M. M. Ishpahani Limited but no document of transfer could yet be executed. Transfer of the interest of Mr. Suresh Chandra Pal in the firm is certainly a goodwill. Lindley on Partnership at page 403 has said :‑ The goodwill of a partnership in so far as it has a pecuniary value is partnership property, unless the contrary can be shown. At page 521 the author has stated. It is only so far as the goodwill has a saleable value that it can be regarded as an asset of any partnership. Exh. M. is crystal clear that has a pecuniary saleable value. Again under section 3 of the Transfer of Property Act a share in a partnership is an actionable claim, vide 8 Ch. D 218 and as such may be a subject of transfer under section 130 of the Transfer of Property Act. That being the legal position in so far as Exh. M is concerned, I might state that mere agreement could not create an interest in favour of M. M. Ishpahani Limited." Mr. D. C. Bhattacharjee has contended that in the 8 Ch. D case mentioned above a mortgage was involved but in the present there is no such mortgage. Now actionable claim has been defined in section 3 of the Transfer of Property Act as follows :‑ Actionable claim means a claim to any debt other than a debt secured by mortgage of an immovable property or by hypothecation or pledge of movable property, or to any beneficial interest in movable property not in the possession either actual or constructive, of the claimant which the Civil Courts recognize as affording grounds for relief, accruing conditional or contingent." Section 130 of the Transfer of Property Act requires that a transfer of an "actionable claim" shall be effected only by an instrument in writing signed by the transferee or by his duly authorised agent. Now, from paragraph 2 of the Partnership deed, dated 14‑7‑66, Exh. B it is clear that the transfer by Suresh Chandra Pal was in respect of his share in the partnerships firm including goodwill and all assets movable and immovable. The said paragraph 2 reads as follows :‑ "The aforesaid Sri Suresh Chandra Pal has transferred in favour of the first partner, all his rights, title and interest in the goodwill, assets (movable and immovable) and all other incomes and benefits to the extent of his 50 Y. share in the said business." In the case of Abdul Hakim v. Abdul Majid (P L D 1957 Kar. 379) at page 385 it has been held by Lari, J. "The interest of a partner in a partnership concern is property and can only be assigned under section 130 of the Transfer of Property Act as an actionable claim whether with or without considerations only by the execution of an instrument in writing signed by the transferor or his duly authorised agent and shall be complete and effectual upon the execution of such instrument." In support of his view the learned Judge has relied on the case of Dharam Chand Boid and another v. Mouji Shaha and others (16 I C 440). In this case the plaintiff Dharam Chand sought to recover some money due to the defendant, Mouji Shahu, by a partnership firm of which two partners, Champalal and Hulas Chand were members and Champalal executed a deed of release whereby he gave up his claim to the business and declared that thenceforward the partnership would be conducted by Hazarilal Mal and Dharam Chand, the uncle and father respectively of Hulas Chand and on the strength of the deed of release Dharam Chanda and Hazarimal as plaintiffs, sought to recover the money owned to the firm by defendant, Mouji Shahu. Asutosh Mukherjee, J. held as follows :‑ "In our opinion, the claim cannot be sustained. There was no assignment of the interest of Champalal in favour of the plaintiffs. The parties in fact tried to effect by a release what could be legally attained only by an assign ment properly executed. It is well settled that title cannot pass by admission or relinquishment where the statute requires a deed of transfer, Jadu Nath v. Ruplal 10 C W N

650. We are, therefore, of the opinion that no title has vested in the plaintiffs under section 130 of the Transfer of Property Act and they are not entitled to maintain this suit." Thus according to the learned Judge interest of a partner in a partnership firm is an actionable claim and requires an instrument for its transfer. In the case of Mulchan Tagiore v. Shamdas (A I R 1941 Sind 73) it was held that the share of a partner in a partnership firm is property and the right to recover it is a chose in action assignable under Transfer of Property Act. In the case of K. Roy & Brothers v. Ramdas (A I R 1945 Cal. 37) in spite of the provision of section 17 (2) of the Registration Act, it was held by Derbyshire Chief Justice, Calcutta High Court, that a debenture creating charge floating or fixed over immovable property of a Company must be registered under section 17 (1)(b) of the Registration Act in addition to its registration under section 109 of the Companies Act. Section 17 (2) (ii) of the Registration Act dispenses with the requirement of registration of any instrument relating to shares in a Joint Stock Company notwithstanding that assets of such Company consist in whole or in part of immovable property. No such provision is made in respect of transfer of a share of a partnership firm. In the present case, as it appears from the paragraph 2 of the partnership deed between M. M. Ishpahani Limited and Mofazzel Hossain, the property of the partnership consisted of not only of goodwill but also of movable and immovable properties. There is no provision of law as already stated exempting the requirements of writing and registration in case of transfer of a share of a partnership firm whose assets include immovable properties also. Therefore, in case of such a transfer a registered instrument would be necessary. This view is supported by the decision reported in the case of Jaharrnal v. Tejram Jagrup (I L R 17 Bom. 235). In that case three letters were produced to establish a mortgage. It was held by Justice Telang "Although a partner's share does not include any specific part of any specific items of the partnership property, still where the partnership is entitled to immovable property such share does include an interest in immovable property, and, therefore, every instrument operating to create or transfer a right to such share requires to be registered under our Registration Act. Section 29 of the Partnership Act reads as follows :‑ "(1) A transfer by a partner of his interest in the firm, either absolute or by mortgage, or by the creation by him of a charge on such interest does not entitle the tranferee, during the continuance of the firm, to interfere in the conduct of the business or to require accounts, or to inspect the books of the firm, but entitles the transferee only to receive the share of profits of the transferring partner, and the transferee shall accept the account of profits agreed to by the partners. (2) If the firm is dissolved or if the transferring partner ceases to be a partner, the transferee is entitled as against the remaining partners to receive the share of the assets of the firm to which the transferring partner is entitled and, for the purpose of ascertaining that share, to an account as from the date of the dissolution." It will thus appear that the transfer of interest of a partner in a partnership firm does not entitle the transferee to interfere with, the conduct of the business or to require accounts or to inspect the books of the firm but only to receive the share of the; profits of the firm and after the firm is dissolved only then the tranferee is entitled to receive the share of the assets to which he is entitled, after above, it appears to be quite clear that transfer of the interest of a partner in a partnership firm can be effected only by an instrument in writing, the share in a. partnership being of the nature of a beneficial interest in. movable property, and it has also to be registered according to the provisions of section 17 (1) (b) of the Registration Act when the firm is possessed of immovable property as the transfer operates to create an interest in immovable property. The next question which calls for a discussion is, what is the nature of the meeting which members are themselves entitled to call under section 79 (2) (a) of the Companies Act. These provisions are as follows "(2) The following provisions shall have effect in so far as articles of the Company do not make other provisions in that behalf. (a) Two or more members holding not less than 1/10th of the total share capital paid up or if the company has not a share capital, not less than five per cent. in number of the members of the company may call a meeting." Now, as there is no provision in the Articles of Association for holding of a meeting by members of the Company, seCtion79(2)(a) of the Companies Act enables the requisite number of members to call a meeting of the Company in this case. Learned Advocate for the appellant has contended on the basis of the ruling reported in A I R 1959 Cal. 715 that the members may call even the Annual General Meeting under section 79(2)(a) of the Companies Act. The ruling relied upon by Mr. Bhattacharjee is easily distinguishable, in view of the fact that in that case the meeting was held long after the expiry of the period mentioned in section 76 of the Act. Section 76 provides for holding of the Annual General Meeting of a Company within 18 months from the date of its incorporation and thereafter once in every calendar year and not more than 15 months after the holding of the last preceding General meeting. Clause (3) of the said section provides that if default is made in calling the meeting any two members of the Company may ask the Directors to call or themselves may call the Annual General Meeting of the Company. Section 77 of the Act provides for calling an extraordinary general meeting on requisition by members and enables the requisitions themselves to call a meeting in case the Directors fail to call the meeting requisi tioned for. Section 78 provides for calling the Statutory meeting after incorporation of the Company with which we are not concerned. Section 79 (1) lays down that certain provisions enumerated therein as to meetings, votes etc. shall be applicable notwithstanding any provision to the contrary in the articles of the Company in that behalf. Section 79 (2) (a) with which we are concerned has been already quoted above. Before considering this provision it is also necessary to mention certain provisions of the Articles of the Company. Article 49 of the Articles of Association provides :‑ "An ordinary general meeting of the Company shall be held once in every year after incorporation of the Company." Article 50 provides that the Directors may hold any extra ordinary general meeting and that such a meeting may also be called under requisition as provided for by section 77 of the Act, 1913. Now, the meeting that was proposed to be held on the 28th of March 1964, is the Annual General Meeting as required to be held under section 76 of the Companies Act and provision is made for calling of such a meeting by subsection (3) of that section in case default is made in holding the meeting. I have also already mentioned that section 77 also provides for calling of an extraordinary general meeting on the requisition by members. In the instant case it is difficult to see why the members should be held to have had the authority to call the Annual General Meeting of the Company, specially when no default was made. In the present case the 31st Annual General Meeting having been held in June 1964 the 32nd Annual General Meeting under section 76 of the Act could be held at any time within fifteen months from that date, and the Managing Agents with the approval of the Board of Directors were also required to call the meeting within one year from such date under Article 49 of the Company. There is no reasonable cause why the provisions of section 79 (2)(a) should have to be resorted to by members to call a general meeting under section 79 (2) of the Act at a time when no default had already been ‑ made in holding the annual meeting as laid down in section

76. To assert that a certain percentage of members may call the annual general meeting under section 76 at any time even when there is no default under section 76 is to argue contrary the provisions of that section and to interpret section 79 (2)(a) as authorising a few members to interfere with the duties and rights and privileges of the Board of Directors and the managing agents. Obviously this is not contemplated under the Companies Act. Accordingly, we are of the view that section 79(2)(a) does not authorise members to call the Annual General Meeting except in case of default as contemplated in section 76 (1) of the Act. It appears that the Managing Agents or rather Ali Haider representing M. M. Ispahani Limited was anxious to hold the Annual Meeting within March 1965, in view of a wrong interpretation of the section 131 of the Companies Act which is that the Annual General Meeting of the Company is to be held not later than nine months from the date of the preparation of the accounts of the year concerned (vide Exh. 1). All that section .131 lays down is that at the annual general meeting the accounts of the Company are to be submitted and such accounts must be made up to a date not more than nine months previous to the date of the meeting, that is to say, whenever the meeting is held within the time specified in section 76, that is, within 18 months from the date of first incorporation or within 15 months from the date of the previous Annual General Meeting, the accounts must be made up as near a date of the meeting as practicable and the account in any case must cover a period up to a date not earlier than the date of the meeting by more than nine months from the date of the meeting. The meeting called by the six individual could be validly called on in case of default in calling the meeting within the specified period under section

76. There having been no default in the eye of law, the meeting called by some of the members on the face of it was invalid. Thus the meeting whether considered as called by the Managing Agents or by some of the members was invalid is not having been called in accordance with law. In view of the discussions above, we agree with the learned Subordinate Judge that the partnership firm styled as Eastend Agencies With M. M. Ishpahani Limited and Md. Mofazzel Hossain as partners was not a validly appointed Managing Agent inasmuch as this new firm of partners could be validly appointed only by the Company under section 79‑B (f) of the Act and not by the Directors and we also agree with the findings of the learned Subordinate Judge that the 32nd Annual General Meeting was pot validly called and held. In the result both the appeals fail and they are dismissed with costs. A. S. CHAWDHURY, J.

‑I agree. Appal dismissed.