TMI Blog1966 (7) TMI 49X X X X Extracts X X X X X X X X Extracts X X X X ..... ir agents and servants from holding any election pursuant to the alleged resolution and/or decision and/or agreement and also from counting or allowing to be counted the ballot papers, if any, received by the respondent No. 16 and from declaring the results of the counting of the ballot papers and from declaring and giving any effect to the results of the said election and from giving effect to the results of the counting. The facts relevant for the purpose of this application are as follows: The petitioner No. 1, Mica Export Promotion Council, hereinafter referred to as the Council, was incorporated under the Companies Act, 1956, as a company limited by guarantee and the main objects of the Council are to promote exports of mica and by-products of the mica industry. Under the articles of association the management and administration of the affairs of the Council are entrusted to a committee of administration consisting of 15 members, including the chairman, the vice-chairman and at least 2 Government nominees. The provisions of some of the relevant articles may be noted. "Article 10. Members of the Council shall as soon as possible after the 1st of April in each year ele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Christian Mica Industries Ltd. Member Chattaram Horilram Pvt. Ltd. Member Gunpatray Pvt. Ltd. Member Goenka Mica Co. Member Ratan Mica Produce Co. Member Mica Mfg. Pvt. Ltd. Member Inderchand Rajgharia Sons Pvt. Ltd. Member Mr. N. D. J. Rao Member Sree Baidyanath Mica Works Pvt. Ltd. Member Bengal Ruby Mica Supply Co. Member C. M. Rajgharia (Resigned) Nuram Reddy Raghava Reddy Co. (Regd.) (Reserved seat for Andhra Pradesh) R. B. Nemichand Mulchand Co. Pvt. Ltd. (Ceased to be Member) (Reserved seat for Rajasthan) S. B. Roy (Co-opted). Indian Standards Institution (Co-opted). One-third of the total number of the members constituting the said committee were liable to retire at the general meeting to be held in 1965, but owing to various disputes and litigations, no valid general meeting of the Council could be held in that year. On or about 22nd January, 1966, the secretary of the Council issued a notice to the members that the 9th general meeting of the Council would be held on 25th March 1966. The said notice had further stated the names of the persons on the committee who were liable to retire at the said next general meeting and called upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 66-67, including vice-chairman was carried. It appears that thereafter it was agreed at the meeting that a fresh election should be held in respect of vice-chairman and 5 committee members on the basis of the existing rules of election and it was also further decided that the present members of the committee would continue in office until a fresh election was held and confirmed in an extraordinary general meeting. The unanimous election of Sri G.C.L. Joneja, I.A.S., Jute Commissioner as the chairman of the Council, Sri M. R. Reddy and Sri K. L. Mathur who were selected as members of the committee of administration representing the States of Andhra Pradesh and Rajasthan for 1966-67, were approved at the said meeting. Copies of the proceedings of the said annual general meeting have been annexed to the petition and also to the affidavits filed on behalf of the respondents. It appears that there is some dispute with regard to the correctness of the minutes and of the copy of the proceedings annexed to the affidavit of S. R. Sengupta. I shall deal with this aspect of the case later on. On the 30th March, 1966, the secretary of the Council addressed the following letter to all the membe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dministration and one for vice-chairmanship. You may nominate only 5 persons/firms for membership of the committee and also one for vice-chairmanship (6 seats in all 1 vice-chairman and 5 committee members). A list of members of the Council (other than the associate members) including members nominated by the Government is also enclosed. It is, therefore, requested that special care may kindly be taken to make your nomination on the basis indicated in the new rules of election mentioned above and forward the same to the undersigned within the prescribed time i.e., 13th April, 1966. The list bearing your nomination may kindly be signed, stamped with the official rubber-stamp of your firm/office and dated. Yours faithfully, Encls : As stated above.sd/- R. N. Mukherjee Secretary. Pursuant to the said letter of the secretary, various members including the petitioners Nos. 2 to 5 had filed their nominations. On the 18th April, 1966, the secretary by a further letter informed the members of the names of the persons who have been nominated for vice-chairmanship and also for membership of the committee of administration of Council (5 seats). The petitioners Nos. 2, 3, 4 and 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... election results. According to learned counsel, as soon as results of the election are announced, successful candidates automatically become elected, whether there is any confirmation or not. The learned counsel argues that there is no provision either in the articles of the Council or in the Companies Act, requiring any such confirmation. The learned counsel has next contended that even if it be held that there has been no valid election, the old committee will continue to function under the provisions of the Companies Act and also in accordance with the articles of the Council. In support of this contention reliance is placed on section 256 of Companies Act, the relevant provisions of which may be set out: Section 256 (4)( a ) " If the place of the retiring director is not so filled up and the meeting has not expressly resolved not to fill the vacancy, the meeting shall stand adjourned till the same day in the next week, at the same time and place, or if that day is a public holiday, till the next succeeding day which is not a public holiday, at the same time and place. ( b ) If at the adjourned meeting also the place of the retiring director is not filled up and that m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l the time for deciding them should arrive." Mr. A. K. Sen, learned counsel has mainly argued the case on behalf of the respondents opposing this application. Mr. Sen has argued that the election of the office bearers of the Council is to be held under the articles of the Council and also under the provisions of the Companies Act, only at the annual general meeting at which the office bearers retire ; and such election has to be by show of hands, or by ballot if poll is demanded. To facilitate the holding of the election, the committee of the Council has framed certain rules, but the said rules cannot override the provisions of the articles or the Companies Act and as a safeguard against any such lacuna, the confirmation of such election is required at the annual general meeting; and according to Mr. Sen this confirmation at the annual general meeting is the real and proper election of the office bearers at the said meeting in accordance with the law and the provisions of the articles. Mr. Sen contends that so long as there has been no confirmation at the annual general meeting there can be no valid election and nobody can claim to have been elected unless his election has been c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o state in what respect the said minutes are incorrect. Mr. Sen submits that the said agreement recorded in the minutes really amounts to a decision taken by the members present at the said meeting and to a resolution unanimously adopted by the members present at the said meeting. Mr. Sen has contended that the said decision or resolution has in fact been implemented and the petitioners Nos. 2 to 5 have themselves accepted the said decision and have acted upon the same by submitting their own nomination papers. Mr. Sen has contended that after having participated in the election the petitioners Nos. 2 to 5 moved this court at the last stage when the results of the said election were going to be announced and confirmed, realising that the said petitioners Nos. 2 to 5 have no possible chance of being elected to the committee. In suport of this contention that the provisions of section 256 of the Companies Act can have no application in the facts of this case, Mr. Sen has referred to the decision in the case of Spencer v. Kennedy [1926] Ch. 125, and also to the decision in the case of Grundt v. Great Boulder Proprietary Mines Ltd . [1948] Ch. 145. Mr. Sen has finally cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In the petition itself the petitioners nowhere make the case that such confirmation is not necessary and any member may be validly elected without such confirmation at the annual general meeting. To my mind the case made by the petitioners in paragraph 16 that the election of the new members of the committee had been confirmed is "palpably false, as the minutes of the meeting clearly indicate that the members present had expressly refused to confirm by an overwhelming majority. It may be noted that the correctness of the minutes on this point is not challenged. The case made by the petitioners in the alternative that the old committee should be deemed to continue, is, in my view, not prima facie acceptable in the facts and circumstances of this case. As the minutes of the meeting clearly indicate, the members at the said meeting had unanimously decided to fill in the vacancy in respect of the office of the vice-chairman and 5 members of the committee by holding a fresh and further election. I am unable to accept the contention of the learned counsel of the petitioners that there was no such agreement at the meeting and the minutes do not correctly represent the said fact. On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... articipated in the election and have submitted their ballot papers. I accept the contention of Mr. Sen that in the facts of this case section 256(4) of the Companies Act, and article 15 of the articles of the Council have no application. In my view, there is a good deal of force in the contention of Mr. Sen that there is no proper pleading either in the plaint or in the petition to build up a case on the basis of the provisions of section 256(4) of the Companies Act or of article 15 of the articles of the Council, but it is not necessary for me to pronounce any opinion finally at this stage. It is, however, to be noted that it is nobody's case that the said meeting had stood adjourned to the same day in the next week at the same time and place and that on that date any such meeting had been held. I am inclined to accept the contention of Mr. Sen that the deeming clause contained in section 256(4) of the Companies Act and in article 15 of the articles of the Council can have any application only in the case of complete silence and inaction on the part of the company or its members and I do not consider it necessary to discuss the cases cited by Mr. Sen. In my view, Mr. B. N. Sen, le ..... X X X X Extracts X X X X X X X X Extracts X X X X
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