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20. On July 16, 1969, the plaintiffs filed Suit No. 681 of 1969. In this suit they have challenged the validity of the said notices convening the meetings, the conduct of the said meetings, the manner in which the result of the poll taken at the meeting of the 28th April was arrived at and the result of such poll. In the said suit the plaintiffs have prayed for a declaration that the said meeting held on the 28th April and the declaration of the result of the poll taken thereat were illegal and void and that the said meeting was not properly held as required by law. In the alternative they have prayed that the court should give directions for scrutinising the votes, proxies and letters of revocations in respect of the said two extraordinary general meetings and should appoint a fit and proper person to scrutinise them and to determine and decide the result of the said meetings and should remove Tulsidas and Defendants Nos. 3 and 4 as the chairman and scrutineers respectively of the said meeting of the 29th April. In the said Suit No. 681 of 1969 the plaintiffs took out a notice of motion on July 17, 1969. In the said motion they have prayed for an interim order and injunction restraining Tulsidas and the scrutineers from exercising any power as chairman or scrutineers of the said general meeting of the 29th April in connection with the scrutiny of proxies, letters of revocations or votes cast thereat, as also for restraining the company, Tulsidas and the private company from in any manner implementing or acting upon the footing that the resolution proposed at the said meeting of the 28th April was passed, and restraining the company from making any payment to the private company and the private company from receiving from the company any payment, whether by way of commission or otherwise, under the said resolution of the board of directors passed on November 14, 1968, or under the said agreement of February 18, 1969, read together with the said letter dated February 18, 1969, and restraining the company, Tulsidas, the private company and the scrutineers from disposing of or otherwise dealing with the papers and documents in connection with the polls taken at the said two extraordinary general meetings including certain documents specified in exhibit "z-9" to the plaint, and for an order permitting the plaintiffs to inspect the said papers and documents. Before issuing the said notice of motion the plaintiffs, after giving notice to the defendants in the said suit, made an application to me on July 16, 1969, for ad interim reliefs, and after hearing counsel on behalf of the parties, I issued an ad interim injunction restraining the defendants to the said suit, namely, the company, Tulsidas, the scrutineers and the private company, and each of them and their servants and agents from disposing of or in any manner dealing with the papers and documents in connection with the polls taken at the said two extraordinary general meetings including those mentioned in exhibit "Z-9" to the plaint or from opening the packets in which the papers may have been kept.

21. Though a large number of grounds have been taken in both these suits at the hearing of these notices of motion Mr. Nariman, learned counsel for the plaintiffs, has confined himself to arguing certain points only. This he has done only for the purposes of these motions and without in any manner giving up the right to argue the said points at the hearing of the suits; for instance, though in the said Suit No. 522 of 1969 the validity of the initial appointment of the private company as sole selling agents of the company made in September, 1963, has been challenged, Mr. Nariman for the purposes of these notices of motion did not argue this point at the hearing of these motions. I may also mention that all parties before me are agreed and further applied to me that it would be in the interest of the parties if the hearing of both these suits were expedited, a view which I too am inclined to take. It was also not disputed by any of the defendants that an interim injunction may be granted restraining Tulsidas and the scrutineers in terms of prayer (a) of the said notice of motion in Suit No. 681 of 1969, namely, restraining Tulasidas and the scrutineers from proceeding further with exercising any power as chairman or scrutineers at the said extraordinary general meeting of the company held on April 29, 1969, in connection with the scrutiny or examination of the proxies, revocations of votes cast thereat in connection with the declaration of the result or the result of the poll taken thereat. The reason for this is obvious. Either the company had validly approved the further appointment of the private company at the meeting held on April 28, 1969, and the resolution moved thereat was duly passed, assuming an ordinary resolution only was required, or it had not. In either event, the passing or rejecting of the resolution moved at the requisitioned meeting held on April 29, 1969, would be immaterial. If the further appointment was approved at the meeting of the 28th April its disapproval at the meeting of the 29th April would not have any effect. If the said further appointment was not approved at the meeting of the 28th April, its express disapproval at the meeting of the 29th April would be redundant. The parties are also agreed that the papers and documents in connection with the polls taken at the said two meetings should be kept in safe custody and that the parties should be permitted forthwith to take inspection thereof under proper safeguards without waiting for formal discovery, so that the hearing of the suits and particularly of Suit No. 681 of 1969 may be expedited. Though at one stage the parties agreed as to the person who should have the custody of these papers and documents and give inspection thereof, as the parties could not agree upon the form of the consent order in that behalf, no order by consent can, however, be passed with respect thereto.

52. The next point for consideration is whether a special resolution was necessary for the appointment for a further term of the private company as sole selling agents of the company either under the provisions of section 314 of the Companies Act, 1956, or article 183 of the articles of association of the company. When the private company was appointed the sole selling agents in 1963, the resolution appointing it was passed as a special resolution. This was done as it was then considered that by reason of the fact that Tulsidas and Ramdas were directors and members of the private company, section 314 applied to the appointment of the private company as sole selling agents under section 189(2) of the Companies Act, 1956, a resolution is a special resolution when, inter alia, the intention to propose the resolution as a special resolution has been duly specified in the notice calling the general meeting or other intimation given to the members of the resolution and the votes cast in favour of the resolution (whether on a show of hands, or on a poll, as the case may be) by members who, being entitled so to do, vote in person, or where proxies are allowed, by proxy, are not less than three times the number of the votes, if any, cast against the resolution by members so entitled to vote. The notice convening the extraordinary general meeting of April 28, 1969, however, specifies the intention to propose the resolution in question as an ordinary resolution nor are the votes cast in favour of the requisite majority required by section 189(2), the votes in favour of the resolution as declared by Tulsidas being a little over 52 per cent. of the votes cast both in person and by proxy. Since the plaintiffs who opposed the appointment for a further term of the private company hold more than 25 per cent. of the shares in the company it is obvious that if a special resolution were required, it could never be passed.

61. The object underlying section 314 is the same as stated by North J. It is to prevent a director, or his partner or relative, or any firm in which a director or his relative is a partner, or a private company of which such a director or member, and director, managing agent, secretaries and treasurers, or manager of private company in which such a director is a director or member, from holding any office or place of profit carrying a total monthly remuneration of five hundred rupees or more under the company and thereby put in his pocket, directly or indirectly, additional profit above the remuneration to which he is entitled as such director, unless three-fourths of the members of the company, voting either in person or by proxies, agree to this being done at a meeting called to pass such a resolution. To hold that a sole selling agency is not an office or even a place of profit and that the appointment as sole selling agent of persons mentioned in section 314 can be made by an ordinary resolution requiring only a bare majority for it to be passed, while in respect of the holding by such persons of other offices and places of profit a special resolution is required, would be to exclude from the restrictive effect of section 314 a highly lucrative place or office of profit while bringing within its fold other offices and places of profit not so lucrative. Section 294A also expressly refers to a sole selling agency as an office. I am, therefore, of the opinion that the private company was appointed to an office or place of profit under the company and that since two of the directors of the company, namely, Tulsidas and Ramdas, were both directors and members of the private company, it would be an office or place of profit under the company within the meaning of section 314.