1998 (4) TMI 433 - HC - Companies Law

Summary

Issues Involved:
1. Amendment of the plaint.
2. Validity of the Annual General Meeting (AGM) and subsequent actions.
3. Appointment and actions of scrutineers.
4. Rejection of votes and proxies.
5. Allegations of manipulation and misconduct by defendants.
6. Cause of action and its continuity.
7. Avoidance of multiplicity of suits.
8. Prejudice to defendants due to amendment.

Detailed Analysis:

1. Amendment of the plaint:
The plaintiffs sought to amend para 53 of the plaint by inserting additional sub-paragraphs (A) to (I) and to substitute para 54 with a new paragraph. The amendments aimed to include subsequent events that occurred after the original filing, which were claimed to be part of the continuing cause of action. The court allowed the amendment, emphasizing that it was necessary to avoid multiplicity of suits and to do complete justice between the parties. The court noted that the amendments did not constitute a new cause of action but were related to the original facts of the case.

2. Validity of the Annual General Meeting (AGM) and subsequent actions:
The plaintiffs challenged the validity of the AGM held on December 5, 1997, and the subsequent adjournments and actions. They argued that the AGM and the poll conducted on December 8, 1997, violated the provisions of the Companies Act, specifically section 180(2), which mandates that a poll demanded should be taken within 48 hours. The court acknowledged the plaintiffs' concerns about the procedural irregularities and allowed the amendment to include these subsequent events.

3. Appointment and actions of scrutineers:
The plaintiffs contended that the appointment of scrutineers by defendant No. 6 was biased and against the provisions of the Companies Act. They argued that the scrutineers were not independent and had represented the defendants in various proceedings, thus compromising their impartiality. The court considered these allegations significant and allowed the amendment to include details about the appointment and actions of the scrutineers.

4. Rejection of votes and proxies:
The plaintiffs alleged that their votes and proxies, along with those of other financial institutions, were unjustly rejected by the defendants. They claimed that the rejection was done on frivolous grounds to manipulate the poll results. The court found these allegations relevant to the original cause of action and allowed the amendment to include details about the rejected votes and proxies.

5. Allegations of manipulation and misconduct by defendants:
The plaintiffs accused the defendants of manipulating the poll results and engaging in misconduct. They provided specific instances where the number of rejected ballots was altered, and valid votes were invalidated. The court recognized the importance of these allegations and permitted the amendment to include them, as they were part of the continuing cause of action.

6. Cause of action and its continuity:
The court emphasized that the cause of action was continuous, starting from the meetings held on August 14, 1997, and August 29, 1997, and extending to the subsequent AGM, poll, and related actions. The court held that the subsequent events were interwoven with the original cause of action and allowed the amendment to reflect this continuity.

7. Avoidance of multiplicity of suits:
The court highlighted the principle of avoiding multiplicity of litigation. By allowing the amendment, the court aimed to address all related issues within the same suit, thereby preventing the need for separate suits for each subsequent event. This approach was deemed necessary to ensure comprehensive justice between the parties.

8. Prejudice to defendants due to amendment:
The defendants argued that the amendment introduced new causes of action and would prejudice their defense. However, the court found that the amendments were related to the original cause of action and did not constitute a new case. The court also noted that the suit was at an early stage, and no prejudice would be caused to the defendants by allowing the amendment.

Conclusion:
The court allowed the amendment application, emphasizing that it was necessary to address the subsequent events and to avoid multiplicity of suits. The court directed the plaintiffs to file the amended plaint within one week, and the defendants to file their amended written statement within two weeks thereafter. The matter was listed for further hearing on May 14, 1998.