TMI Blog1933 (12) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... uted in pursuance thereof. After the institution of the suit the plaintiffs took out a notice of motion for an interim injunction restraining the 7th defendant company from acting upon the said agreement, and in my interlocutory judgment on the motion I have set out the facts and contentions of the parties. I then directed that a meeting of the shareholders of the 6th defendant company should be held in order to find out whether the company was willing to maintain the suit and to proceed with it. I gave full directions as to notices and advertisement and as to the execution of proxies and other incidental matters, and further directed 1hat the meeting should be presided over by the Commissioner of this Court and the resolution passed should be communicated to this Court. This course was adopted by me on the authority of several English cases, to which it is not necessary to refer here. Accordingly, a meeting of the shareholders of the company was held on September 10, 1933. The Commissioner's report shows that the resolution which was put to the meeting was in these terms : Whether the 6th defendant company, the Indian Cooperative Navigation Trading Co., Ltd., is willing to mai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... meeting was irregularly and improperly convened and that there was in law no valid extraordinary general meeting held on February 27, 1933. For the same reason the plaintiffs submit that the confirmatory meeting on March 15, 1933, was also invalid and improper. It may be stated that the extraordinary resolutions with regard to the execution of the proposed agreement between the 6th defendant company and the 7th defendant company for employing the latter as managing agents was passed at the extraordinary general meeting of February 27, 1933, and confirmed in the confirmatory meeting of March 15, 1933. On behalf of the defendants the following issue was raised as a preliminary issue, namely, whether the suit is maintainable. The issue is in the nature of a demurrer to the bill. It is clear from the facts set out that the subject-matter of the resolutions challenged and the questions raised by the plaintiffs are all relating to the internal management of the company acting within its powers. The contention is that these resolutions are illegal and void because of certain irregularities. The question, then, is, whether the Court has jurisdiction to interfere with the internal manag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and were attempting to remedy it by way of an amendment of the plaint. Their summons, which it may be incidentally stated sought inter alia to bring in the second resolution passed unanimously on February 18 for calling the extraordinary general meeting and the confirmatory meeting, was however, dismissed, and the only cause of action now is that the resolutions are invalid because of certain irregularities. Secondly, there is no allegation in the plaint that the plaintiffs personally have suffered any wrong. The whole case on behalf of the plaintiffs is that there was a wrong caused to the company. The report of the Commissioner, however, to which I have referred, shows clearly that the majority of the shareholders have decided not to proceed with the suit, and the position is that they have in effect approved of the resolutions complained of with full knowledge of all the material facts about the alleged irregularities in the passing of the resolutions and in the holding of the meetings complained of. Under these circumstances it is difficult to see how a few shareholders who represent a minority are entitled to maintain the suit and ask the Court to interfere on the question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this ease went on its own facts which were of a specially exceptional character. There were two companies concerned in that case, one being the principal company and the other subsidiary company. The directors to the principal company were practically the masters of the situation and could dominate the subsidiary company. On the facts it was held that the notice calling the extraordinary general meeting, the validity of which was challenged, was tricky. Lord Cozens Hardy, M. R. observed (p. 515): "I feel no difficulty in saying that special resolutions obtained by means of a notice which did not substantially put the shareholders in the position to know what they were voting about cannot be supported, and in so far as the special resolutions were passed on the faith and footing of such a notice the defendants cannot act upon them." Kennedy, L. J., delivered no separate judgment. Swinfen eady, L. J., seemed to hold that in certain cases members may sue on behalf of the corporation and such an action may be permitted in the interests of justice. This case is understood by Palmer as a case of a resolution being carried out by a trick. Even so, as Palmer points out, it is the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omplained that his views placed before the directors were not given effect to in the meeting of 27th February. He asked the shareholders to vote against the resolution moved and reject it. One of the shareholders put before the meeting what he had discovered as the result of his inspection of the file of the 7th defendant company from the office of the Registrar of Companies and inter alia disclosed the interests of defendants Nos. 1 and 3 in the company. Another shareholder urged that the agreement would be vitiated as some of the directors of the 6th defendant company were interested in the 7th defendant company and that defendant Shinkar was particularly interested in the 7th defendant company. Then, after the various objections were considered, the resolution was voted upon and declared carried by a large majority. Upon these admitted facts it is clear that the objection to the validity of the meeting, if any, was waived. The irregularities, if any, in the resolution calling this meeting were condoned and the resolution of February 18 was ratified. Having regard to the minutes of the meetings, the notice itself, the advertisement of the notice and the resolution, it is diffic ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
