| Citation(s) |
|---|
| 2012 SLG 1258 2012 SLD 1258 2012 CLD 1588 |
Sindh High Court
Suit Nos. 222 and 293 of 2012, decision dated: 13-08-2012
MUHAMMAD SHAFI SIDDIQUI, JUSTICE
Khalid Javed Khan for Plaintiffs (in Suit No. 293 of 2012).Salman Talib-ud-Din for Plaintiffs (in Suit No. 222 of 2012).Salman Talib-ud-Din for Defendant No. 1 (in Suit No. 293 of 2012).Taha Ali Zia for Defendants (in Suit No. 222 of 2012).
Suit Nos. 222 and 293 of 2012, decision dated: 13-08-2012
MUHAMMAD SHAFI SIDDIQUI, JUSTICE
Khalid Javed Khan for Plaintiffs (in Suit No. 293 of 2012).Salman Talib-ud-Din for Plaintiffs (in Suit No. 222 of 2012).Salman Talib-ud-Din for Defendant No. 1 (in Suit No. 293 of 2012).Taha Ali Zia for Defendants (in Suit No. 222 of 2012).
NADIR AKMAL KHAN LEGHARI AND OTHERSVS ASIM ARSHID AND OTHERS
Law: Companies Ordinance, 1984
Section: 214
Companies Ordinance (XLVII of 1984)--Ss. 214, 215, 216 & 217----Trusts Act (II of 1882), S.88-Contract/arrangement/ negotiations to be made by company with a third person---Directors(s) having personal conflicting interest in such contract etc.---Duties/loyalty of such Directors(s) towards company stated. Section 214 of the Companies Ordinance, 1984 deals with the obligation of the director, who has interest in any contract or arrangement entered into by the company to disclose his interest to other directors and imposition of penalties for not disclosing his interest. From the bare reading of this section, it appears that the object of this section to compel a director to disclose his personal interest when there is possibility of such interest conflicting with their duties to the company as its director, and thus to avoid there being such a conflict which would remain unknown. Section 214 further stretches down to the effect that the disclosure of interest must be made at a meeting of the directors. A director is in fiduciary relationship with the company, and it is a general rule of equity that no one who has such duties to discharge shall be allowed to enter into engagement or negotiations in which he is or can have a personal interest conflicting or which may conflict with the interest of those whom he is bound to protect. The company is entitled for the services of its directors in terms of the Companies Ordinance, 1984. The company is a separate and distinct legal entity and the directors perform duties under the law. Subsection (6) of section 214 deals with the penalty, which makes the operation of this section as of a mandatory in nature. Under section 217, the directors can be declared to be lacking fiduciary behaviour, if they contravene the provisions of section 214 or subsection (1) of section 215 or section 216 of the Companies Ordinance, 1984. Section 217 makes other sections such as 214, 215 and 216 as mandatory in nature as it provides a penalty for contravening the aforesaid sections. As long as the company exists, the relationship of its directors with the company exists. If this legal entity i.e. the company is to survive and live with all…
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