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The High Court, by its order dated 20-2-61, required the Board to state a case on the Srst and the fourth question only.

7. The learned Government Advocate appearing on behalf of the Agricultural Income-tax Department, has strenuously urged that the resolution passed in the meeting of the Board of Directors of the Company held on 10-4-50 was in violation of section 91B of the Indian Companies Act, 1913, which was the relevant Act in force at the relevant time, and the transactions of sale entersd into and executed in pursuance of such a resolution are null and void; they have not been validly ratified by the meeting of the share-holders held on 19-12-53, and it is open to the Taxing Department to treat such sales as nullities in the eye of law and to assess tax on the agricultural income derived from such lands as income of the Company. Mr. A.C. Mitra, Senior Standing Counsel of the Covernment of West Bengal, who argued the case of the assessee before us, conceded that the impugned. resolution of the Board of Directors of the Company was in violation of the statutory provisions aforesaid; but, he submitted, the effect of such violation was not to make "either the resolution or the transactions of sale null and void, but they were merely voidable at the option of the Company or its share-holders; far from repudiating the transactions, the share-holders of the Company in their meeting held in December, 1993 ratified them; and whether such a ratification was valid is not a question which calls for our determination as the Board has not been asked to state A case in that regard nor were any facts placed before, or found, by, either the Deputy Commissioner or the Member, Board of Revenue, in support of the alleged invalidity of the ratification.

In my judgment, the impugned transactions being ultra vires the Directors but within the powers of the Company, were capable of ratification by an ordinary resolution of the members in the general meeting. Learned Government Advocate did not dispute' this position of law, but he submitted that there was no valid ratification by an ordinary resolution of the members in the general meeting as the ratification to be valid must be made by the members with the express knowledge of the illegality of the transactions entered into by the Directors on behalf of the Company. In the present case, according to his submission, there being nothing to indicate that the share-holders who were not interested in the transactions had notice of the Illegality of the transactions as a matter of fact, most of the share-holders present were interested in the transactions as the Directors and their relations hold 95 per cent of the shares in the Company. In support of his proposition, he placed reliance upon the case of Smt. Premila Devi v. Peoples Bank of Northern India Ltd., AIR 1938 PC 284 wherein Lord Romer has said at page 289 (column 2):

"There can in truth be no ratification without an intention to ratify and there can be no intention to ratify an illegal act without knowledge of the illegality".

I do not feel called upon to decide in this case as to whether the ratification by the share-holders in their meeting of the 19th December, 1953, was valid or not. The Deputy Commissioner, in his appellate orders, as I have said above, remarked that no evidence was led on behalf of the Taxing Department to establish that the meeting in which the ratification was made was invalid or that there was no valid ratification. The Board of Revenue was not required by this Court to state a case on the question of ratification, nor is it necessary, in my opinion, to go into this question, as, the ratification, if valid, would validate the invalid transactions from, their very inceptions as avoidance will make them void from the very beginning. But the point which I want to emphasise is that the transactions which were ultra vires the Directors were capable of being ratified at a meeting of the shareholders and that unmistakably leads to the conclusion that the impugned transactions were such as could be declared to be void from the very beginning, if avoided by the Company or its shareholders, and could be held to be good if ratified by them. But, in absence of either (ignoring the subsequent ratification), the Taxing Department, I have no doubt in my mind, has no right to treat the transactions as mere nullities in law conferring no right upon the transferees and to tax the income from the properties transferred as the income of the Company.