Judgment:
J.V. Gupta
1. This appeal is directed against the order of the single judge dated May 9, 1986, passed in Civil Writ Petition No. 258 of 1986 whereby the order of termination of the services of the writ petitioner, J. K. Aggarwal, was set aside. Shri J. K. Aggarwal, writ petitioner, was appointed as company secretary in the Haryana Seeds Development Corporation Limited, Chandigarh (hereinafter referred to as ' the corporation '), on September 4, 1977. The said corporation is a company registered under the Indian Companies Act. It has a board of directors and a managing director also. In the memorandum and articles of association, Article 125A provides that the directors may appoint a secretary of the company for such term, on such remuneration and upon such conditions as they may think fit and any secretary so appointed may be removed by them. A copy of the resolution passed in the board meeting held on September 22, 1977, has been placed on record as annexure P-19 in this appeal by filing Civil Miscellaneous No. 594 of 1988 which was allowed.
2. During the course of his working, certain charges predominantly pertaining to inefficiency, insubordination, non-maintaining of faithful records and non-co-operation with subordinates, all pertaining to the writ petitioner were framed against him. An enquiry officer was appointed for the purpose. However, the writ petitioner was proceeded against ex parte and ultimately his report was against Shri J. K. Aggarwal. Acting on that report, the managing director of the corporation terminated the services of the writ petitioner and it was that order which was the subject-matter of challenge in the writ petition on a variety of grounds. However, the learned single judge, without going into the various contentions of the writ petitioner, found that the termination order was illegal on the short ground that the managing director had no authority to terminate the services of the writ petitioner as, according to the memorandum and articles of association, only the board of directors was competent to terminate the services of a company secretary.
3. Learned counsel for the appellant contended that the appointmentwas made by the managing director of the corporation as underArticle 89(c) the board has conferred powers on the managing director,vide annexure R-7, such of the powers as they may think fit and confersuch powers for such time and to be exercised for such objects andpurposes and upon such terms and conditions and with such restrictionsas they may think expedient and may from time to time revoke, alter orvary all or any such powers. He also referred to the definition of theterm ' officer ', as provided under Section 2(30) of the Companies Act,1956, which reads as under :
''officer' includes any director, managing agent, secretaries and treasurers, manager or secretary, or any person in accordance with whose directions or instructions the board of directors or any one or more of the directors is or are accustomed to act, and also includes--
(a) where the managing agent or the secretaries and treasurers is or are a firm, any partner in the firm ;
(b) where the managing agent or the secretaries and treasurers is or are a body corporate, any director or manager of the body corporate ;
but, save in Sections 477, 478, 539, 543, 545, 621, 625 and 633, does not include an auditor.'
4. According to learned counsel, the said definition of the term 'officer' includes a secretary and, therefore, the managing director was competent to appoint him as such as authorised, vide annexure R-7, and since the appointment was made by the managing director, he was competent to terminate the services as well. He also referred to annexure R-1, the appointment letter in this behalf, which was written on behalf of the managing director to Shri J. K. Aggarwal offering him the post of company secretary at Chandigarh. According to learned counsel, the said definition of the term 'officer' referred to above was not considered by the learned single judge and, therefore, the finding arrived at was wrong and liable to be set aside in appeal.
5. It is not disputed that the company's memorandum and articles of association are the Magna Carta and it is a business document and is to be interpreted strictly. Article 125A,.inter alia, specifically provides that, 'the directors may appoint a secretary of the company for such term, at such remuneration and upon such conditions as they may think fit and any secretary so 'appointed may be removed by them..... '
6. Annexure P-19 which is a copy of the resolution of the board meeting held on September 22, 1977, contains that, 'resolved that the appointment of Shri J. K. Aggarwal as company secretary with effect from September 5, 1977, at the basic pay of Rs. 1,360 in the scale of Rs. 1100-50-1300-60-1600 is approved.' Not only that, Article 110(ii) provides that without prejudice to the general powers conferred by the last preceding article and other powers conferred by these articles, the directors shall have the following powers, ' to appoint and at their discretion remove or suspend secretaries, officers, clerks, agents and servants as they may from time to time think fit, and to determine their powers and duties and fix their salaries or emoluments and require securities in such instances and to such amounts as they may think fit..... ' That being so, the power to appoint the secretaries and other officers are vested in the board of directors and not in the managing director as claimed by him. The delegation of powers to the managing director is provided in Article 89(c) which is to the following effect, ' the board may from time to time entrust to and confer on the managing director or a general manager or managers or FA & CAO for the time being such of the powers as they may think fit and may confer such powers for such time and to be exercised for such objects and purposes and upon such terms and conditions and with such restrictions as they may think expedient and may from time to time revoke, withdraw, alter or vary all or any of such powers.'
7. Thus, any reference to the definition of the term ' officer ' in the Companies Act for the interpretation of annexure R-7 is of no avail to the appellant. Moreover, Section 2 provides that, ' in this Act, unless the context otherwise requires,--', so the said definition of the term ' officer ' is to be read in the context provided and not independently thereof. That being so, the delegation to the managing director, vide annexure R-7, in the meeting of the board of directors on September 18, 1974, authorising him and conferring powers to appoint, suspend and dismiss officers, staff and workmen of the company, etc., was of no consequence as under the memorandum and articles of association, it was only for the board of directors to appoint the company secretary. In any case, the argument of learned counsel for the appellant cannot be accepted because by virtue of annexure R-7, the managing director was authorised to dismiss officers as well which, according to the definition referred to above, includes directors also. It could not be successfully argued that the managing director was competent and was conferred the powers to suspend or dismiss a director of the corporation as well.
8. It was next contended that in any case even if the termination orders were passed by the managing director, and the same were approved later on by the board of directors in its meeting dated March 11, 1986, the termination will, therefore, be deemed to have been made by the board itself. This argument was rightly repelled by the learned single judge with the observation that, 'it seems to me that the managing director nakedly usurped their powers. The board of directors, in cause ing approval to the order of termination, have mutely surrendered their powers to the managing director. This is an impossible situation and cannot be given the seal of approval by the court. On this score alone, the order of termination of services of the petitioner is bad in law.'
9. No other point was argued on behalf of the appellant. However, learned counsel for the respondent wanted to argue the other grounds as well taken in the writ petition challenging his termination, but as the learned single judge did not deal with those contentions, the same were not allowed in this appeal particularly when the order of the learned single judge is being maintained in appeal. Consequently, this appeal fails and is dismissed with costs which are quantified at Rs. 2,000.