TMI Blog1985 (1) TMI 254X X X X Extracts X X X X X X X X Extracts X X X X ..... es in India (hereinafter called "the said area")....... ( f )To accept property to be held by the association: (1)for the general purpose of the association and the Baptist Churches, Baptist Unions, Church Unions, Church Councils and Baptist Missionary Society. Articles of association 1.For the purpose of registration, the number of members of the association is declared not to exceed fifty. 2.These articles shall be construed with reference to the provisions of the Companies Act, 1956 (hereinafter referred to as "the Act"), and the terms used in these articles shall have the same respective meanings as they have when used in that Act. 4.The members of the association shall be the (1) subscribers to the memorandum of association ; (2) such persons not exceeding seven in number as may be nominated by the Baptist Missionary Society, and (3) such other persons, making a total membership including subscriber members and nominees of the Baptist Missionary Society not exceeding fifty in all, as may be nominated by the council of Baptist Churches in Northern India or by such other churches, church or union of churches as may be authorised by a general meeting of the associat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s as may be granted by the Registrar in terms of proviso to section 166 of the Act......... 18.The officers of the association may, whenever they think fit, and they shall, if required in writing by such number of members as have, at the date of receipt of requisition, not less than one-tenth of the total voting power of all the members having at the date a right to vote in regard to the matter for consideration of which the meeting is to be called, convene an extraordinary meeting. Every such requisition shall express the object of the meeting proposed to be called and shall be left with the Secretary and thereupon an extraordinary meeting shall be convened by the said officers to be held within forty-five days from the date of the receipt of such requisition......... 20.A quorum at a general meeting shall consist of one-fifth of the members of the association. 21.Twenty-one days' notice at least specifying the place and time of meeting, and (in case of special business) the general nature thereof, shall be sent to each member of the association, but non-receipt of any such notice by any member shall not invalidate the proceedings of any general meeting. With the consent in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of Northern India, similar disputes arose over management and suits were filed in the courts of Delhi, Agra and Bhiwani. The said suits are pending. So far as the Utkal Christian Church Central Council is concerned, some of the churches constituting the council left the Baptist faith and in or about 1970 joined "Church Union" under the Church of North India which does not follow the Baptist faith and is not authorised to nominate members to the trust association. Some of the churches of the said Utkal Christian Church Central Council did not join the Church of North India. It is not in dispute that two rival groups in the Bengal Baptist Union and the Baptist Union of Northern India are running two parallel organisations and that the Utkal Central Church Council has ceased to exist since 1970. The aforesaid disputes in the several nominating bodies were reflected in the management and functioning of the trust association. On February 10, 1976, at the annual general meeting of the trust association for the year 1975, no business could be transacted as there were allegations that petitioner No. 2 as the secretary had inducted a number of non-members at the said meeting. No off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Acharya Jagadish Chandra Bose Road, Calcutta, the original registered office, on and from February 19, 1977, were irregular as proper notices were not issued for the same and that there was no quorum. The Registrar also found that petitioner No. 2 has continued to be the secretary of the trust association since November, 1974, and meetings called by him at Elliot Road, Calcutta, in 1977, were in conformity with the articles of the trust association. In such background, that trust association some time in June, 1982, made an application before the Company Law Board under section 186 of the Companies Act, 1956, for, inter alia , the following orders: ( a )An enquiry into the affairs of the trust association to determine, inter alia , the persons who are entitled to its membership as well as those who are entitled to hold office, as members of its committee of management. ( b )To order a meeting of the trust association to be called, held and conducted in such manner as the Company Law Board thinks fit. Petitioner No. 2 opposed the application of the trust association and affirmed an affidavit on or about April 16, 1983, which was filed before the Company Law Board. It was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and gave the following directions: ( a )A general meeting of the trust association will be called. ( b )The said meeting will be conducted by an independent chairman. ( c )Shri Sukumar Bhattacharya, advocate, was appointed the chairman of the meeting. ( d )Notices of the said meeting will be issued to the seven members nominated by the Baptist Missionary Society and the four members nominated by the Church of Mizoram at addresses to be furnished to the chairman by respondent No. 2 in accordance with the procedure as provided in the Companies Act, 1956, and the articles of the trust association. ( e )Respondent No. 2 will submit to the chairman a copy of the memorandum and articles of the trust association well in advance so that the notices can be given to shareholders for the requisite period. ( f )The quorum for the meeting be five persons to be personally present. ( g )The chairman will decide the venue and time of the meeting. ( h )Respondent No. 2 will meet the expenses of holding the meeting and the remuneration of the chairman fixed at Rs. 1,100. ( i )The chairman will submit a report to the Company Law Board within two weeks from the date of the meeting. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee of management and it was not known as to which set had been duly elected to the committee. ( i )It was also not clear as to who could requisition a future meeting and to whom such requisition should be served and it was doubtful if any meeting convened or held on the requisition of either group would be lawful. ( j )There was no dispute that respondent No. 2 was a member of the trust association. ( k )The application under section 186 of the Act was held to be maintainable as having been filed by a member of the trust association. There was no delay in submitting this application. Section 186 of the Companies Act did not prescribe any time limit and there could be no question of limitation. ( l )It was not possible nor practicable in fact for respondent No. 2 to submit any requisition to the domestic forum for calling an extraordinary general meeting of the trust association under section 169 of the Companies Act. ( m )Respondent No. 2 had submitted a list of persons stated to be the lawful members of the trust association with corroborative evidence as also the register of members of the trust association and the letters of acceptance by such members. The Council of B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Churches of Mizoram would be entitled to attend the meeting as directed. The present petition was moved by the Baptist Church Trust Association and Ajay Kumar Saha on December 28, 1983, when a rule nisi was issued calling upon the respondents, namely, the Member, Company Law Board, Koshy George, six other members nominated by the Baptist Mission Society, four members nominated by the Mizoram Union of Churches, the Regional Director, Company Law Board; the Registrar of Companies, West Bengal, and the Union of India, to show cause why appropriate writs should not be issued directing the Member, Company Law Board, to cancel, withdraw or rescind his order dated December 1, 1983, restraining the respondents from giving any further effect or from taking any steps pursuant thereto and also for quashing the said order. An interim order was passed on the same date restraining the respondents from giving effect to or acting in terms of or taking any steps or passing any resolution in the meeting of the trust association proposed to be held on December 29, 1983, on the basis of the impugned order dated December 1, 1983. It is contended in the petition, inter alia , that respondent No.' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing under section 186 of the Companies Act. It is contended that the Company Law Board held wrongly that the annual general meetings of the trust association subsequent to 1974 were all under challenge. The Company Law Board, it is contended, did not have any authority or jurisdiction to decide as to the correctness or otherwise of the list of members of the trust association submitted by respondent No. 2. The Company Law Board further erred in holding that the Limitation Act did not apply or that there was any delay in making the said application under section 186. In directing the dispute about the registered office of the trust association to be considered in the said meeting, another error was committed as the same could not be the subject-matter of an extraordinary general meeting except in cases where the registered office was shifted from one district to another or from one State to another. By the impugned order, the control of the trust association, it is contended, has been made over to the Baptist Missionary Society, London, who were a minority. It is contended that the impugned order is illegal, invalid, without jurisdiction and bad on the grounds aforesaid. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the very last stage of hearing. The Company Law Board by accepting such nomination had made over the control of the trust association to a minority group. Learned counsel for respondents Nos. 2, 3, 4, 5, 6, 7, 8, 9, 10 and 11 reiterated the contentions raised in the affidavit of respondent No. 2 affirmed on February 9, 1984. He also submitted that on the undisputed facts on record, it was established that it was not practicable to hold any meeting of the members of the trust association lawfully and that the Company Law Board came to the correct conclusion and has directed an extraordinary general meeting to be called. Learned counsel submitted further that under section 186 of the Companies Act, while directing a general meeting to be called, the Company Law Board had ample jurisdiction and authority to give all consequential and ancillary directions for the holding of such a meeting. Under the powers conferred, it was open to the Company Law Board to decide as to which of the members would attend the meeting and also what business the meeting would conduct. He submitted that the meeting directed to be called by the Company Law Board was valid and lawful and the decision of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. v. N. Govindan, AIR 1959 Ker. 254. Here, a Division Bench of the Kerala High Court construed section 167 of the Companies Act, 1956, and held that only in a restricted contingency, where there was a default in holding an annual general meeting in accordance with section 166 of the statute, power was given under section 167 to the Central Government to intervene on the application of any member and call for a general meeting of the company to be deemed to be an annual general meeting. ( d ) Clive Mills Co. Ltd., In re [1964], 34 Comp. Cas. 731 (Cal. Here, it was held by a learned judge of this court that the power of the court under section 186 of the Companies Act, 1956, to direct a general meeting of the company was wide and extraordinary in nature and should be used sparingly and with great caution. If, for any reason, it was impracticable to hold or conduct a meeting of the company as prescribed by the Act or the articles of the company, the court would exercise its power under the section and order a general meeting to be called. In the facts of the case, it was held that the articles of the company provided that holders of not less than 1/10th of the paid-up sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deadlock otherwise irremovable. It is convenient to note here the relevant statutory provisions. Section 79(3) of the Indian Companies Act, 1913, which conferred power on courts to call a general meeting of companies. The said section reads as follows: "If for any reason it is impracticable to call a meeting of a company in any manner in which meetings of that company may be called or to conduct the meeting of the company in manner prescribed by the articles or this Act, the court may, either of its own motion or on the application of any director of the company or of any member of the company who would be entitled to vote at the meeting, order a meeting of the company to be called, held and conducted in such manner as the court thinks fit, and where any such order is given, may give such ancillary or consequential directions as it thinks expedient and 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." The Companies Act, 1956, when promulgated, conferred similar powers on the court under section 186 thereof. The said section has since been amended and such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted. Delay: The petitioners have contended that the disputes in the trust association arose in 1974. Long thereafter, in 1982 the application was made before the Company Law Board. The application should not have been entertained on the ground of delay. The condition precedent for ordering a meeting of a company under section 186 is the impracticability of calling such a meeting in the usual course for any reason. If such a condition exists, then the Company Law Board can exercise its power and direct the calling of such a meeting. It is the case of the petitioners that the disputes in the trust association have continued since 1974. It is not the case that such disputes came to an end in 1982 and there was no impediment in calling a meeting of the company in the usual course. Therefore, the fact that there have been disputes in the trust association for a long time is of little consequence. The cause of action of the applicant before the Company Law Board would be deemed to have continued and there can be no question of limitation. The contentions of the petitioner as to delay are, therefore, rejected. Impracticability: It has been held by the Company Law Board that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... members, there were internal disputes resulting in litigation. It was found that the said nominating bodies were sought to be represented by two parallel and contesting groups. The Company Law Board came to the conclusion that any nomination of members by such bodies would be a matter of controversy and dispute. Therefore, the Company Law Board accepted the members whose nomination came from bodies which were functioning without dispute and permitted them to take part in the meeting. The above approach and decision of the Company Law Board, in my view, cannot be held to be erroneous. It was not open to the Company Law Board to go into the internal dispute of the other nominating bodies or resolve the same. The only practical and feasible solution has been prescribed. The finding that under the articles of the trust association, the Baptist Missionary Society is empowered to nominate up to seven members cannot also be held to be erroneous. The contention of the petitioners that the number of members to be nominated by the Baptist Missionary Society would vary with the total strength of the membership is without substance. On a plain reading of the articles of the trust associat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ociation. It is contended that the Company Law Board had no power or jurisdiction to dictate the agenda and in any event a general meeting of the trust association was not entitled to resolve the dispute over the location of its registered office. In view of the wide language of section 186, it appears that the Company Law Board can give all ancillary and consequential directions in relation to the holding of a meeting. Under such powers, in my view, the Company Law Board has the power to direct the corporate body to consider matters as suggested. It does not appear from the impugned order that any agenda has been dictated. It has been left to the chairman to issue notices of the meeting which will no doubt contain suitable agenda. It also appears that the power under section 186 of the Act is invoked where a company is not functioning normally and it is not practicable for the company to call a meeting. When the Company Law Board exercises its extraordinary power under the section and directs the calling of a meeting, it necessarily follows that the agenda of such meeting has to be determined by the Company Law Board because such an agenda cannot be decided or finalised throug ..... 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