TMI Blog1973 (5) TMI 56X X X X Extracts X X X X X X X X Extracts X X X X ..... es in the Union Territory of Delhi and Uttar Pradesh. Any person wanting to indulge in these business activities relating to 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as ordered to take place on October 21, 1972 (in C.A. No. 496 of 1972), for electing office bearers, their number having to be resolved 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yas may, at the adjourned date, make a statement concerning the following matters : (1) Whether the cyclostyled list of members already filed is a complete 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 r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) Any meeting called, held and conducted in accordance with any such order shall, for all purposes, be deemed to be a meeting of the company duly called, held and conducted". 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 (secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nion Territory of Delhi and Uttar Pradesh. For this additional reason also it has become necessary to call a meeting of the company under section 186. Though the court will not convert itself into a shareholder 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 itse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... committee members shall be 16". This was done as preliminary to calling, holding and conducting a meeting, under section 186 of the Act, on October 21, 1972, for the purpose of electing such number of office bearers 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 resolu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... directions of the court by reason of the deeming provision, namely, section 186(2). It was Jogindar Singh, strangely enough, who made an application (C.A. No. 150 of 1973) bringing the above fact to the court's notice; he urged 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he meeting (and the election) held and conducted on 21st as that of the company. If it became necessary on the part of those to deviate from the directions given by the court in the matter of holding or conducting such a meeting the only 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on itself was not properly conducted; Secondly, that the mistakes committed may not be repeated and the precautions not taken may be taken. Analysing the voting that is stated to have taken place it is seen that there is discrepancy between the number of 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of any explanation it has to be taken that the control exercised in the matter of seeing that only authorised persons recorded their votes was not adequate. The requisition slips for ballot papers do not appear to have been signed by many voters. The ballot papers 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ever, that the election has to be set aside, in the narrow sense in which elections are ordinarily set aside on petitions being filed to set them aside. This court having called a meeting of the company under section 186 to take place on October 21, 1972, the correctness 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the company at least three days in advance of the date of the meeting, indicating who will vote at the meeting and what his position is in the firm or company, as the case may be. (2)No member of the company, which is a firm or limited liability company, will be entitled to vote 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 r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this court concerning the meeting along with the requisition slips, ballot papers, the attendance register, nominations, authorisations and any other document that may be considered relevant by the chairman, all in sealed container, within a week after the meeting. (13)Only the contesting candidates 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 wit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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