Public financial institution created by special Act

The present problem is based on the facts of T.R. Pratt (Born.) Ltd. v. £.D. Sasoon & Co. Ltd. (1936) 6 Compo Cas. 90. In this case, it was held that the money having been borrowed and used for the benefit of the principal Le., the company either in paying its debts, or for its legitimate business, the company cannot repudiate its liability on the ground that the directors had no authority from the company to borrow.
Your company’s articles of association do not contain any provision for nomination of director by a financial institution. The company has borrowed long-term funds from the lOBI and ICICI Ltd. ‘A’ and ‘B’ are nominated by the said lenders respectively on the Board of your company. Advise whether the company can accept
the nominations.
In case of some financial institutions, the relevant Act by which they have been constituted, provides for right of nomination by them to all assisted companies. This provision supersedes the provisions in the Companies Act, 1956 and the Articles of Association of the assisted companies in regard to the appointment, retirement of directors,. holding of qualification shares, determination of directors liable to retire by rotation, etc. lOBI is a public financial institution created by special Act of the Parliament and that Act has overriding provision in this regard.,Therefore, its nominee’ A’ can be appointed on the Board of the conwany even if the articles of the company do not contain any provision in this regard. .
However, ICICI Ltd. is a company’registered under the Companies Act, 1956. Therefore, in case of appointment of nominee of ICICI Ltd. the provisions of the Companies Act, 1956 have to be complied with. In such case nominee director can be appointed only if there is provision in the Articles of Association of the company and if such nomination is in conformity with the provisions of Section 255 and 256 and other related provisions of the Companies Act, 1956. Therefore, for the appointment of B who is nominee of ICICI Ltd., the company will have to amend its Articles of Association to incorporate a provision for nomination of director by Financial Institution before he is appointed on the Board. This nomination should be within overall
maximum number of directors fixed by Articles. .
X Ltd. is being managed by Mr. Clever as the Managing Director. Serious allegations have been made by some shareholders and creditors of the company that the Managing Director has misused his position and caused enormous loss to the company. The said shareholders and creditors of the company make a complaint to the Central Govemment to intervene and provide relief to them. Their main prayer is that the Managing Director should be removed from the post. Explain the powers ofthe Central Government in this regard.