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TMI Blog1973 (5) TMI 56X X X X Extracts X X X X X X X X Extracts X X X X ..... o motion pictures in this area has to become a member of this company. The accounts of the company are closed at the end of December of every year. The last annual general meeting of the company was held on May 3, 1969. Subsequently no such meeting was held. In the result no election of office bearers could be held. A member of the company (G. S. Maya Wala) had filed a suit (No. 476 of 1970) against the company in which there was also an application for restraining the company from holding its annual general meeting till the decision of the suit. The company appeared voluntarily in that suit and undertook not to hold any annual general meeting till the dispute was decided. Ultimately, there was a compromise. Subsequent to the compromise, on July 29, 1972, a requisition had been left at the office of the company signed by 134 members demanding the holding of an extraordinary general meeting of the company for consideration and adoption of certain resolutions incorporated in the said requisition. But the executive committee of the company allegedly found that 43 signatures out of 134 were invalid, that 38 had been withdrawn by means of separate letters addressed to the association ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lved upon at the meeting to be held on October 7, 1972, under the chairmanship of Shri Daljit Singh. For the meeting to be held on October 21, 1972, Shri P. A. Behl, advocate, was appointed as chairman to conduct the said meeting and also supervise the election of the directors, which was to take place at that meeting. Since only 11 directors of the company were said to be functioning at the date of the said order five more persons (to make up the number 16) were also appointed to constitute an interim board of management with effect from October 7, 1972 (after the meeting which was fixed to take place on that date). Shri Daljit Singh filed a report, dated October 18, 1972, in this court stating that, instead of the resolution as proposed by this court pertaining to article 23, an amended resolution, fixing the members of the executive committee as 18, had been passed. I shall revert to this again later. Shri P.A. Behl, the chairman of the meeting directed to take place on October 21, 1972, submitted his report, dated October 24, 1972, stating that he held and conducted the meeting at which 18 members of the executive committee were elected. The present application (C.A. No. 565 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... list of all the members of the association and if it is not, who are the other members ? (2) That it may be clarified as to who among those mentioned in the said cyclostyled list are members or representatives ? Daring the hearing of the application certain subsequent events were brought to this court's notice by means of an application (C.A. No. 675 of 1972). 17 out of 18 persons said to be elected as members of the executive committee on October 21, 1972, issued notices, on November 22, 1972, convening what was called the "26th annual general meeting" of the company for 16th of December, 1972, stating that the above meeting was being convened only for the purpose of adopting the income and expenditure account and the balance-sheet for the year ending December 31, 1969. But two days before the said meeting was about to be held, the concerned persons appear to have realised that, if an annual general meeting was held according to the article provision as well as section 166 of the Act, all the members would automatically retire and not having offered themselves for re-election would not also be re-elected. The said meeting was, however, cancelled. This cancellation, two days pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Only a meeting other than an annual general meeting could be called by the court in exercise of this power. The power to call an annual general meeting has, under the Act of 1956, been vested in the Central Government under section 167. The Act of 1913 had (vide section 79(3)) given the power to call such an annual general meeting to the court. This change in India followed the change which was made in England where following the recommendation of a committee headed by Mr. Justice Cohen the power to convene an annual general meeting was taken away from the court and vested in the Board of Trade in order " to save expense". At the annual general meeting the following items of business (which shall be deemed to be special) have to be set out on the agenda : (1)Consideration of accounts, balance-sheet and report of the board of directors and auditors; (2)declaration of dividend; (3)appointment of directors in the place of those retiring; (4)appointment and fixing the remuneration of auditors (section 173). The above items are within the purview of the annual general meetings. Section 257 enables a person to stand for directorship at any general meeting, which may be held, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... holder of the company or be concerned with the internecine squables of the company it is none-the-less the duty of the court, even of its own motion, to call a meeting of the company when it is impracticable to call such a meeting. In this view by order dated March 8, 1973, I directed the issue of notice to those persons who claimed to have been elected as members at the meeting said to have taken place on December 16, 1972 (who are parties to suit No. 81 of 1973) as well as to the persons who are said to have been elected as members of the executive committee at the meeting dated October 21, 1972 (except Shri Desai, among them, who was impleaded earlier on his own application) for March 27, 1973. Notices were accordingly served upon all of them and they were duly represented by their counsel who also filed their representations in writing. Their counsel were also heard. The contention that the original order calling a general meeting of the company for October 21, 1972, was itself one without jurisdiction in the sense that it had not become impracticable to call a meeting and that a general meeting could not be called for the purpose of electing directors does not seem to deserve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the executive committee as may be resolved upon. Without this direction being strictly complied with there could not be, as I shall explain presently, a meeting of the company and consequently there could be no valid election either. It is seen from the report of Shri Daljit Singh, who presided at the said meeting held on October 7, 1972, that B. R. Kundra moved a resolution as directed by me, and that the same was seconded by O. P. Verma. An amendment was moved at the meeting by Jogindar Singh without any prior notice as required for a special resolution, that instead of 16 the number of members of the executive committee should be 18. This amendment was accepted by B. R. Kundra and carried unanimously. It is worth recalling that what had been directed to be considered at the said meeting was the resolution fixing the number of directors as 16 and that the same had been directed to be considered as a special resolution of the company. This was the only resolution on the agenda for the meeting on October 7, 1972, pertaining to article 23. If any other amendment had to be moved it had to be moved by way of a special resolution after giving the requisite notice which was admitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that there was no valid resolution supporting the election of 18 office bearers and hence the meeting (and the election) held on October 21, 1972, was not legally effective. Shri Ved Vyas filed a reply on behalf of those who were then contesting (the present application) on the ground that this was an entirely new plea which was not taken earlier and that it could not, therefore, be allowed to be raised; it was also asserted that the resolution passed at the meeting held on October 7, 1972, pertaining to article 23 was valid. The persons who were newly added by my order dated March 8, 1973, had not even referred to this aspect, but Jogindar Singh had again referred to this aspect in the rejoinder which he filed to the reply to the representations made by the newly added parties. No attempt was made before me to justify the deviation from the court's directions concerning the resolution pertaining to article 23 passed at the meeting held on October 7, 1972. I take it that no justification has even been attempted for the reason that no justification seems possible. I am conscious that it may in a sense be somewhat absurd to regard the resolution pertaining to article 23 passed una ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly appropriate course would have been to apply to the court itself to alter the directions or give such further directions as may be considered necessary. The members of their own accord, once a meeting is called under section 186, cannot choose to even agree among themselves regarding how the meeting should be conducted other than by way of carrying out the directions given by the court. I am free to state, however, that what happened at the meeting on October 7, 1972, seems to have been done perfectly bona fide, but it seems obvious that what happened on October 7, 1972, does not conform to the requirements of law and/or the directions of the court. There can be no question of estoppel either, for there can be no estoppel against statute or law or against the directions given by the court. What is the course, then, that has to be adopted in these circumstances ? Section 186 has been worded so widely and such extensive powers also have been given to the court. The court, even of its own motion, can direct a meeting to be called under section 186. The directions can go to the extent of even departing from the provisions of the statute and the articles to meet the exigencies of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... members who have signed the register in token of their having been present at the meeting and the number of requisition slips issued: while 442 requisition slips appear to have been issued only 347 have signed the register. This is explained by Shri Ved Vyas as being possibly due to the considerable interval of time between the meeting and the voting. The meeting commenced at 10'30 a.m.; it was presided over by Shri P. A. Behl. According to his report he read out to the members present the list of the names of the candidates whose nominations had been received in the association's office in time and obtained the consent of the concerned candidates. The scrutineers, to whom no one objected, were appointed. It was announced at the meeting (at 12 noon) that voting would commence at 2 p.m. and that the members could have lunch during the interval. The list of the candidates contesting the election was finally drawn up and sent for cyclostyling. A copy of the list was also issued to whoever wanted it and also attached with the ballot paper. Since the ballot papers were not ready the actual voting commenced only at 2.30 p.m.; it was announced that voting would come to an end at 7 p.m. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs were handed over to the voters without getting their signatures on the requisition slips. Not much effort appears to have been made to ensure that every voter signed the requisition slip after signing the attendance register as well; it was not possible, therefore, to make checks in order to find out whether the particular person who voted on behalf of the concerned member had authority to do so in cases where the member did not vote in person. In the case of firms, which are members, duly written authorisations bad to be obtained from the firm to enable the person who turned up to vote on behalf of the concerned firm. Shri K. K. Mehra submitted a list of 33 limited companies who are members but had recorded their votes without producing authenticated copies of resolutions passed under section 187 of the Act to enable them to vote on behalf of these companies. In the result at least thirty-three votes, cast by members which were limited companies, have not been shown to have been properly cast in the sense no resolution (or authenticated copy thereof) under section 187 had been filed. The arguments went on for several days in this case; Mr. Ved Vyas was content to take the sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rectness or legality of which has not even been seriously called in question until recently, this court is under a duty to call another meeting of the company when it is not possible to resolve the deadlock concerning the affairs of the company in any other manner by reason of the manner in which it was conducted. The company is seen to deal with so many motion picture distributors and exhibitors in this vast area, who cannot carry on their business except by becoming members of this important organisation. A situation which was thought on all hands to be capable of being resolved by the simple process of calling a meeting of the company under section 186 has for various reasons-most of which were not even anticipated-failed to resolve the conflicts and tensions which prevailed previously; I am afraid, it has even made matters worse. This evil result, I am satisfied, was not due to the meeting itself being called by the court-which was and still is seen to be the only way out of the difficulty-but by reason of the necessary checks not being exercised and precautions not taken in the matter of conducting the meeting (and the elections). The only way of putting the company on a norma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ote unless such written authorizations or authenticated copies of resolutions, as the case may be, are sent by the companies or firms concerned and received by the secretary of the company within the afore-said time. In the case of partnership-firms the authorizations will be confined to one of the partners. If the same person is a partner in more than one member-firm he can on being authorised by the concerned firm or firms vote for the firm or firms concerned. In such cases, (i.e.), where the person concerned is representing more than one member-firm when signing the attendance register at the meeting he will indicate therein the firm/firms which he is representing. (3)All proprietary concerns can vote only in person, subject to identity and membership being verified. (4)The nominations along with the consent of the person nominated in the case of those wishing to be elected as office bearers will reach the secretary of the company on or before 5 p.m. on 27th September, 1973. The nominations will be scrutinised by the chairman. The last date of receipt of objections to nominations will be on or before 5 p.m. on September 29, 1973. The chairman will go into the objections, scru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... didates will be allowed to be present inside the premises when the polling and counting take place; no other person on his behalf to help the candidates will be allowed to be present. The chairman will not allow the staff of the company to participate in the matter of conducting the election. (14)Any application for new membership from to-day onwards will be put up before the chairman and his initials obtained thereon before a new member is admitted. (15)The chairman (Shri Prithvi Raj Sachdev) will be paid a remunera tion of Rs. 2,000, the alternate chairman (Shri A.L. Joshi) Rs. 1,000 and the four scrutineers (Sarvashri B. Mohan, R. N. Dikshit, Rishi Kesh and K. L. Budhiraja) Rs. 500 each, by the company. A copy of this order will be caused to be cyclostyled or printed by the secretary of the company (association) and the same sent, under certificate of posting, to all the members within three weeks. The chairman will have the necessary authority to visit the aforesaid premises of the company, as often as he may wish, to see that all the directions given herein are implemented by the secretary of the company. The application is ordered in the above terms. There will be no ord ..... X X X X Extracts X X X X X X X X Extracts X X X X
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