Madras High Court
F.P.S. Albuquerque vs The Catholic Bank, Ltd., Mangalore By ... on 29 June, 1942
Equivalent citations: (1942)2MLJ307, AIR 1942 MADRAS 737(1)
JUDGMENT Byers, J.
1. The only questions which arise in this second appeal are whether the resolution of the directors of the defendant bank removing the appellant from the board of directors was ultra, vires and, if so, the damages to which he is entitled.
2. The respondents rely on article 78 (g) of the articles of association, which declares that the office of a director shall ipso facto be vacated:
if he resigns, or fox any other reason becomes incapable of acting as a director.
The ground on which the defendants relied to declare that the appellant had vacated his office was that he had defaulted in repaying a loan taken by him some years previously. The directors had earlier passed a rule that any director defaulting in repayment of a loan taken by him as principal borrower would cease to be a director. This rule, the respondents' learned advocate informs me, was passed under the powers conveyed by article 67 of the articles. This is clearly procedural only and gives no power to the directors to frame fresh articles of association. The removal of a director was already provided for in article 62 of the articles and this required an extraordinary resolution of the Bank. This rule was, therefore, ultra vires and cannot be relied on in support of the removal.
3. Article 78(g) of the articles contemplates resignation or some incapacity such as illness, long absence, imprisonment, insanity or any other incapacity. It cannot be said that indebtedness would incapacitate him and the learned advocate for the respondents has been unable to cite any authority to show that indebtedness to the bank is incapacity. The exclusion of the new Section 86-D (1) from banking companies under Clause (3) of the same section makes it clear that loans to directors of a bank are contemplated as part of its business. I agree with the lower Courts that the removal of the appellant was ultra vires. It follows that he is entitled to damages accordingly and on this point appellants' learned Counsel says he will be satisfied with the nominal damages assessed by the lower Court, provided he be given costs.
4. In the result the suit is decreed for the damages already awarded by the trial Court with costs throughout. The Memorandum of cross-objections is ordered to be dismissed with costs.
5. Leave is refused.