TMI Blog1969 (9) TMI 64X X X X Extracts X X X X X X X X Extracts X X X X ..... ect the board of directors and other office bearers, and to pass the accounts, balance sheet and budget; and ( c )for appointing a receiver for carrying on the affairs of the Yogam till a board of directors is properly constituted. The petition is opposed by the general secretary and a few other members who support him. He has filed a counter-affidavit denying most of the allegations in the petition. He has also taken a preliminary objection to the maintainability of the petition on the ground that the petitioners have not obtained the written consent of the necessary number of members as required by section 399 of the Companies Act for filing this petition. His learned counsel requested that the preliminary objection may be considered and disposed of first; and, accordingly, I heard arguments on this point. It is necessary to state a few facts in order to deal with the contentions of the parties. The Yogam which was formed with its registered office in Aruvipuram Siva Temple has for its main object the conduct of daily worship and annual festivals in the above temple and other temples attached thereto or under its management. It has for its general object the improvement of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e next annual meeting. The board shall consist of a president, a vice-president, a general secretary, a devaswom secretary and members not exceeding 101 inclusive of the above officers. There shall be a council for the internal management of the Yogam. The council shall consist of not more than 15 members including the abovesaid four officers. The general secretary is the executive officer of the Yogam, and very large powers are vested in him. He is the person empowered to convene meetings of the Yogam, the board of directors and the council. He is also competent to convene meetings of the members of the branches and unions. The president has got the power to convene meetings of the Yogam, the board of directors or the council, if the general secretary fails, or it becomes not possible for him, to convene them. There is no difference between the 1943 articles and 1966 articles in respect of the above matters, except regarding the board of directors and the council. Under the 1948 articles, there is no vice-president, and the number of members constituting the board and the council is limited to 75 and 11 respectively. There is one material difference between the two sets of article ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion established under the Yogam. According to the petitioners, it became evident that the general secretary had no majority; and he, therefore, allowed a large number of persons who were not members of the Yogam to get into the meeting hall for creating trouble and obstruction for the conduct of the meeting. The meeting was dispersed by the president without transacting any business, on accourt of the refusal of these intruders to go out of the hall, and the hubbub and confusion caused by them. The allegation relating to the entry of non-members and the obstruction and confusion said to have been caused by them in conducting the meeting is denied by the general secretary. But there is no dispute that the meeting was dispersed by the president, as a result of disorder which prevailed at the meeting. According to the general secretary, the president's conduct was responsible for creating this situation. Subsequently, the board of directors met, and decided to hold the annual general meeting on January 6, 1968, in continuation of the dipersed meeting. But the general secretary took no action to convene the same. The board again met and required the general secretary to convene the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only. On February 18, 1968, a meeting of the board was convened by the general secretary, which was presided over by the president. According to the petitioners, the general secretary behaved in a rude and violent manner at that meeting; and yet the board transacted business, passing several resolutions. One of them was to frame rules for the administration of the schools under the Yogam, and the rales provided for the appointment of a general manager for that purpose. These allegations are denied by the general secretary. Both the president and the general secretary have recorded the minutes of the proceedings of the meeting, and naturally they differ. On March 23, 1968, the general secretary convened a meeting of the council, without giving notice to one Shri Mukundan, who was nominated to the council by the board of directors at their meeting on February 3, 1968. The general secretary docs not recognise the said meeting and the nomination of Shri Mukundan as valid. Therefore, Shri Mukundan filed O.S. No. 187 of 1968 in the Munsiff's Court, Ernakulam, and obtained an interim order of injunction restraining the general secretary from holding any meeting of the council without no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a few persons said to be constituting a committee appointed at the above meeting met him and discussed about the affairs of the Yogam, to whom he explained the obstacles caused in convening meetings of the general body or of the directors on account of the various orders of injunction issued from court. He does not admit that there was any meeting on October 6, 1968. The present petition for reliefs under sections 397 and 398 of the Companies Act had been filed under the aforesaid circumstances. There are many more serious allegations against the general secretary. He has denied all of them, and made counter-allegations against the president and others opposed to him. According to the general secretary, he is carrying on the affairs of the Yogam in the most ideal manner ; and under his administration, the Yogam has achieved great prosperity. It is unnecessary for me to express any opinion about the allegation made against the general secretary or about his alleged meritorious services to the Yogam. The admitted facts and circumstances, to which I have adverted above, show that the management of the affairs of the Yogam has been brought to a calamitous situation ; and it is not ve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... than one-tenth of the issued share capital of the company, provided that the applicant or applicants have paid all calls and other sums due on their shares; ( b )in the case of a company not having a share capital, not less than one-fifth of the total number of its members. (2) For the purposes of sub-section (1), where any share or shares are held by two or more persons jointly, they shall be counted only as one member. (3) Where any members of a company are entitled to make an appli cation in virtue of sub-section (1), any one or more of them having obtained the consent in writing of the rest, may make the application on behalf and for the benefit of all of them. (4) The Central Government may, if in its opinion circumstances exist which make it just and equitable so to do, authorise any member or mem bers of the company to apply to the court under section 397 or 398, notwith standing that the requirements of clause ( a ) or clause ( b ), as the case may be, of sub-section (1) arc not fulfilled. (5) The Central Government may, before authorising any member or members as aforesaid, require such member or members to give security for such amount as the Central Government ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 per share on each of the above 5,000 shares". Palmer's Company Law, twentieth edition, contains the following statements at page 265 : "The word 'capital' is used in company law in various senses and it is necessary to distinguish between ( a )the nominal (likewise called authorised) capital; ( b )the issued capital ; ( c )the paid-up capital". "Every company limited by shares or limited by guarantee and having a share capital is required to hare a nominal capital with which it is registered, and this is one of the essential features of the company's constitution and must be stated in the memorandum of association. It is divided into shares of fixed amount". "The nominal capital in its original or altered form sets the limit of capital available for issue, and accordingly the issued capital of a company can never exceed its nominal capital. The nominal capital is, strictly speaking, not 'capital' at all ; it represents only an authority by the shareholders to the directors to create new capital by the issue of shares (hence the term 'authorised capital') ; the issued capital, on the other hand, has actually been taken up by shareholders who have agreed to give ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f a fixed amount; ( b )no subscriber of the memorandum shall take less than one share ; and ( c )each subscriber of the memorandum shall write opposite to his name the number of shares he takes". This provision shows that "a company having a share capital" may fall into one of the three classes mentioned in section 12 ; and clause ( a ) of section 13(4) deals only with such a company which is not "an unlimited company". In other words, it deals with a company having a share capital, and which is either limited by shares or limited by guarantee; and it provides that in the case of such a company, the memorandum shall state the amount of share capital with which the company is registered, namely, the nominal or authorised share capital of the company, and the division thereof into shares of a fixed amount. I shall also read sections 69(1), 70(1) and 86, in which the expression "share capital" or "company having a share capital" appears : "69. (1) No allotment shall be made of any share capital of a company offered to the public for subscription, unless the amount stated in the prospectus as the minimum amount which, in the opinion of the Board of Directors, must be raised b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot mention any authorised capital; and, therefore, there is no scope for dividing any share capital into shares of a fixed amount. It follows, therefore, that the Yogam is not a company having a share capital. The learned counsel for the petitioners invited my attention to articles 4, 6 and 7 of the 1966 articles, which provide that the value of one share shall be Rs. 5, that for becoming a member a person must take at least one share, and that a member can take more than one share. Articles 8 to 12, which deal with payment of the share value and the rights of the members, were also referred to by the learned counsel. The 1948 articles contain the same or similar provisions. Article 13 is the same in both the 1948 and 1966 articles; and it states that the share of a member is not, under any circumstances, transferable, and that his right in the Yogam ends with his death. In other words, the share is neither transferable nor inheritable".Share", as defined in the Companies Act and as understood in company law, means share in the capital of a company. It is a tangible property. But according to article 13 above referred to, "share" in the Yogam is not share in its capital; and it is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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