3. If Article 109 bad stood alone there can be no doubt that this view would have been correct. To avoid the necessity for a special resolution a form has sometimes been used in which an article of this type is prefaced by words such as " until " otherwise determined by the company in general meeting." These words enable the stated maximum and minimum limits to be altered by an ordinary resolution. No such words are used in the present case. But that does not by any means conclude the matter. To interpret Article 109 there are other articles which require consideration. Their Lordships think that the learned judges in India did not attach sufficient importance to this aspect of the question.

4. The first of these to be considered is Article 126 itself. Two points in it fall to be noticed: (a) the power is expressed to be subject to Section 83 A (1) of the Indian Companies Act, which provides that "every company shall have at least three "directors"; and (b) the power extends to altering the qualification and making a change in the order of rotation of the increased or reduced number. Now if, as the High Court has held, Article 126 only allows an ordinary resolution to operate between the limits of four and three prescribed by Article 109, the following consequences would result: (a) The reference to Section 83 A (1) would, as the articles stand, be unnecessary. The reason of this is that if, according to the argument, the minimum of three laid down by Article 109 can only be altered by a special resolution it could not in any event be altered by an ordinary resolution which is the kind of resolution with which Article 126 is dealing. (b) The power to alter qualification, and change the order of rotation, if, as Article 126 provides, it is to be exercised by ordinary resolution, must involve a departure from the provisions of Articles 112, 121 and 122. Those articles are not expressed to be "subject to " Article 126," nor are these powers in Article 126 expressed to be given notwithstanding anything in Articles 112, 121 "and 122". Some such words must therefore be implied in one place or the other in order to remove the inconsistency. The omission to make such cross-references as may be required to reconcile two textually inconsistent provisions is a common defect of draftsmanship. There is thus no insuperable difficulty in reconciling Article 109 with Article 126 either by implying in the former some such opening words as " subject to " Article 126" or implying in the latter some such opening word as "notwithstanding anything contained in Article 109."

5. If, as the courts in India have held, the only scope for the operation of Section 126 lies in the area between the maximum of four and the minimum of three the question arises, what is the use of Article 126 If at a time when there are only three directors the company wished to appoint a fourth it could do so by ordinary resolution at a general meeting without the necessity of having a special article in that behalf. For the purpose, there fore, of an increase in the actual number of directors to four there is no need for the article. If, however, the company wished otherwise than by dismissal (as to which provision is made by Article 127) to reduce the number to three it could do so under the very terms of Section 109 itself and that notwithstanding Article 126. Article 109 in effect gives an option to the company to have no more than three directors. It therefore appears to their Lordships that to give effective content to the opening words of Article 126 it is necessary to make an appropriate implication as suggested above, either in Article 109 or in Article 126. It is moreover to be observed that the draftsman of the articles where he wished to show that the maximum number as fixed is not to be exceeded in exercising a power to appoint additional directors, says so in terms. Under Article 111 the directors have power to appoint additional directors " but so that the total number of directors " shall not at any time exceed the maximum number fixed." A limit therefore which is set to the power of the board is not repeated in the case of a general meeting.

6. Lastly, the power to " increase or reduce the number of " directors " in their Lordships view, according to the natural meaning of the words, means, or at least includes, a power to increase a maximum without necessarily making specific appointments, or (subject to Section 83 A (1)) to reduce a minimum. Such a power carries with it the implication that, e.g., the vacancy created by an increase in the maximum may at the same time, or subsequently, be filled up by appointing an individual to fill it: (Salmon v. Quin and Axteris, Ld. [1909] 1 Ch. 311: [1909] A.C. 442).. On this footing there is a direct textual conflict between Articles 109 and 126 which must be remedied.

7. For these reasons their Lordships are of opinion that resolution No. 1 was valid.

8. Resolution No. 2 stands in a different position. Articles 131, 132 and 135, so far as relevant, provide as follows:



Managing Agents.

131. The general management of the affairs of the " company shall be entrusted to managing agents to be " appointed by the company and the managing agents shall, " subject to the control of the directors, conduct the business " of the company.

132. At the date of the adoption of these articles " Andrew Yule & Co., Ld., are the managing agents of the " company, and they .... shall continue and be the " managing agents of the company (unless otherwise mutually arranged .... or unless they shall voluntarily resign that " office) for the period of 15 years certain from the 30th day " of October, 1929, and thereafter until they shall be " removed therefrom by an extraordinary resolution of " the company, passed at an extraordinary general meeting " specially convened for that purpose, and of which not " less than six calendar months notice shall be given, and at which persons holding or representing by proxy or " power-of-attorney, not less than three-fourths of the " issued ordinary capital of the company for the time " being, shall be present.

135. The managing agents shall have the general "management of the companys business....

9. The complaint against this resolution is that under Article 132 the managing agents could only be removed by an extraordinary resolution as there mentioned and that to attempt to remove them by an ordinary resolution constituted a violation of the rights of the minority shareholders. In substance, three points were argued by the appellants. First they referred to Section 87b of the Indian Companies Act, the relevant provision of which is as follows:



Section 87b.--Conditions applicable to managing " agents.--Notwithstanding anything to the contrary contained in the articles of the company or in any agreement " with the company--



(f) the appointment of a managing agent, the removal " of a managing agent and any variation of managing " agents contract of management made after the commencement of the Indian Companies (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 86b :...

10. This, it was suggested, empowered the company to remove its managing agents by ordinary resolution. In their Lordships opinion this suggestion misinterprets the provision, which is directed solely to securing that a managing agent shall not be validly appointed, removed or have his contract altered without a resolution of the company. The next point also lacks substance. It was, that to affirm the continuance in force of the managing agents appointment amounted to specific enforcement of a contract of personal service and was a violation of Section 27 (6) of the Specific Relief Act, 1877. The effect of the decree appealed against is not, however, of that nature. It merely prevents dismissal of the managing agents or termination of their appointment at the instance of a majority in violation of the articles of association of the company which the minority are entitled to have observed. As between the company and the managing agents it certainly has not the effect, of enforcing a contract of personal service.

11. The last point was that the matter was one concerning the; internal management of the company in which the court will not on principle interfere. In their Lordships opinion it is much more than that. To treat the resolution as effective would mean that the company could terminate the appointment of the managing agents by ordinary resolution contrary to the article which requires an extraordinary resolution. This requirement was obviously intended as a protection to a minority, who are not to have the appointment, terminated against their will unless a particular majority votes in favour of it. Accordingly, their Lordships are in agreement with the decision of the Indian courts in regard to resolution No. 2.

12. The first injunction granted by the High Court restrained the defendants " from acting as directors of, or dealing with " the funds of, or using the seal of or otherwise interfering " in the management and affairs of the plaintiff company " except when validly appointed." This injunction, which was based on the finding of the invalidity of resolution No. 1, cannot now stand. The second injunction restrained the defendants their agents and servants " from interfering or intermeddling in the management of the plaintiff company " (by its managing agents Andrew Yule and Company, Ld.) " until the valid termination of their contract in conformity " with the articles of the plaintiff company." This injunction was granted in view of the fact that the defendants were acting on the assumption that both resolutions were valid and were taking a number of steps with a view to putting into forcer resolution No. 2. Their Lordships see no necessity for continuing this injunction. There appears to them to be no reason to suppose that the defendants will take any action which would be inconsistent with the declaration as to the invalidity of resolution No. 2. Moreover, this injunction might impede the board, of which the appellants are, in their Lordships opinion, validly elected members, in exercising the control over the managing agents for which Article 131 makes provision.

13. It remains to mention one further point. The company was and could be made a plaintiff only on the basis that the seven appellants were not directors. As in the result they have been held to be directors the use of its name as plaintiff was unauthorized. Accordingly the company should, in their Lordships opinion, be struck out as plaintiff. On the other hand, it is necessary that the company should formally be bound by the order. Normally in a representative action by a minority shareholder the company would be made a defendant, and their Lordships consider that it should be added as a defendant. The appellants, as the majority of the board, formally by their counsel consent to that course.

14. Accordingly, their Lordships, will humbly advise His Majesty that the appeal should succeed as to resolution No. 1 but should fail as regards resolution No. 2: that there should be a declaration of the validity of resolution No. 1, and the declaration as to the original four being the only proper directors should be struck out: that all the injunctions should be discharged: and that the record should be amended by striking out the name of the company as plaintiff and adding it as defendant. The respondents having succeeded in both courts in India on all issues were given their costs throughout. As a result of this appeal they ought to have failed on resolution No. 1 and succeeded only on resolution No. 2. In view of this their Lordships consider that there should be no costs of the proceedings either in the Indian courts or on this appeal.