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Judgment
Venkataramana Rao, J.—The question for decision in this second appeal is whether the award of the sum of Rs. 1,295 paid as gratuity to
the second defendant by the first defendant Bank in pursuance of a resolution of the General Body dated 23rd November, 1935, is valid. The
learned judge in the Court below answered the question in the affirmative. The question is whether his view is sound.
Mr. Rajah Aiyar canvasses this view on two grounds : (1) The Ex-Secretary was permitted to retire on 17th March, 1935, on production of a
medical certificate which stated that he was suffering from chronic bronchitis and would not be in a position to attend to his duties for a period of
six months. Under the Gratuity rules which govern the payment of gratuity, the Ex-Secretary would not be entitled to claim any money as and by
way of gratuity; because the rules contemplated certain conditions on fulfilment of which alone an ex-servant of the Bank can claim gratuity.
However the Board''of Management seeras to have granted the gratuity but exception was taken by the Deputy Registrar of Co-operative
Societies and the Board of Management was requested to get the sanction of the General Body to the said payment. After the receipt of that letter
from the said Registrar, the Board of Management seems to have amended the by-laws by providing that in cases where the Board comes to the
conclusion that an officer will have to be permanently incapacitated, though not supported by a medical certificate, it might pay gratuity. On the
strength of the amended by-law, the Board of Management wanted to grant the gratuity but however by way of abundant caution, they wanted to
put the matter before the General Body. They accordingly framed a resolution to the following effect:
To sanction a sum of Rs. 1,295 as gratuity to the Ex-Secretary Mr. S.R. Subramania Aiyar as recommended by the Board in their Resolution No.
19, dated 2nd October, 1935.
The intended resolution was circulated to the shareholders and a General Body meeting of the shareholders was held on 7th December, 1935,
wherein they passed a resolution sanctioning the payment of the said gratuity. It is contended by Mr. Rajah Aiyar that the Board of Management
had no power to give retrospective operation to the amended by-law and any payment of gratuity in pursuance of such an amended by-law would
be illegal. Therefore, when the General Body passed a resolution sanctioning the said sum of Rs. 1,295, they were simply sanctioning an illegal
resolution of the Board of Management. It must therefore be held that the payment was ultra vires, lam not inclined to agree with this contention. It
cannot be denied that even though the by-laws did not provide for payment of a gratuity because under the rules, the Board of Management could
not grant it, still, it is always open to the General Body to sanction a gratuity which an officer according to the sense of the meeting of the General
Body deserved. In the particular case, how I construe the resolution of the General Body is this. They intended to pay the gratuity of Rs. 1,295
and treat the resolution communicated to them by the Board of Management as a recommendation to them. It is perfectly competent to them to
grant the gratuity or to decline it. There is a statement in the resolution circulated to the shareholders that it was recommended by the Board in
Resolution No. 19 dated 2nd October, 1935. But that would not invalidate the payment sanctioned by the General Body. At the meeting of the
General Body, the General Body must have been apprised that according to the old by-laws, that is, before they were amended, the payment of
gratuity to the Ex-Secretary was not proper, that objection was taken by the Registrar of Co-operative Societies and that therefore the sanction of
the General Body was sought. Considering all these facts, the General Body chose to pass the resolution which it is perfectly competent to do and
Mr. Rajah Aiyar has not placed before me any authority to show that it was ultra vires of them to do so. The matter only relates to the
administration and management of the affairs of a company and so long as the General Body acts within the ambit of the Articles of Association,
any act done by them in regard to the management of the Bank will be intra vires and not ultra vires. It is next contended by Mr. Rajah Aiyar that
the power to frame by-laws in regard to the payment of gratuity was delegated to the Board of Management and once they passed by-laws, both
the Board of Management and the General Body were bound by them. I am not prepared to agree with this contention. The fact that the Board of
Management is delegated the power to frame by-laws does not take away the power of the General Body to sanction any payment of gratuity in
exceptional cases which have not been provided by the by-laws as framed by the Board of Management. This power is always vested in the
General Body and by the mere fact of delegation, it cannot be taken away. Mr. Rajah Aiyar has again not placed before me any authority in
support of his contention. Only these two contentions were advanced by Mr. Rajah Aiyar and I am clearly of opinion that both the contentions are
unsustainable.
The appeal fails and is dismissed with costs (one set).
Leave to appeal refused.