TMI Blog1992 (5) TMI 170X X X X Extracts X X X X X X X X Extracts X X X X ..... "Elaborate and lengthy arguments were advanced by counsel for the applicant as well as counsel for the respective respondents and very many decisions have been referred to in respect of the respective contentions. Since the meeting is to be held on April 23, 1992, at 4 p.m. it will not be possible for this court for want of time to pronounce final orders in the above application. Hence, having regard to the urgency of the matter and bearing in mind the interest of all parties the following interim order is passed subject to the ultimate final orders in the above matter. The extraordinary general body meeting to be held on April 23, 1992, pursuant to the notice dated March 28, 1992, will go on and resolutions, if any, passed in the said meeting will not be implemented and given effect to. This above order is subject to final orders in the above application". The applicant herein and four others have filed the main company petition under sections 397 and 398 of the Indian Companies Act, 1956, against the second respondent and his associates for mismanagement and oppression of the affairs of the first respondent-company. While the main company petition was pending before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... without complying with the mandatory provisions of section 169 of the Act. ( e )The present notice includes various items of business not listed in the earlier requisition lodged by the second respondent with the company. ( f )Section 284 of the Act has not been complied with by the second respondent since he wanted to remove the third respondent as the managing director of the company and he was also not given any opportunity to show cause about the receipt of the requisition from the second respondent. Thus, Mr. A.K. Mylsamy, learned counsel appearing for the applicant, contends that looking from any point of view the notice convening the extraordinary general meeting by the second respondent on April 23, 1992, to consider various items of business as set out in the said notice is illegal and opposed to the mandatory provisions of the Act. Therefore he prays that an injunction order should be issued restraining the second respondent and his associates from holding an extraordinary general meeting on April 23, 1992, pursuant to the notice dated March 28, 1992, or any other adjourned date pending disposal of the main company petition. The second respondent, M. Sekaran, file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accordance with the provisions of the Act. (9)Since the board of the respondent-company did not even con sider the requisition and it failed and neglected to take steps to convene the requisition meeting, the requisitionists themselves have every right to convene this meeting as per the provisions of law. Mr. Subramaniam, learned counsel appearing on behalf of Mr. S. Sandurkar, learned counsel for the respondents Nos. 3, 6 and 7, has also raised the following submissions at the time of hearing: (1)The applicant has no locus standi to file this application. (2)The fundamental requisites under Order 39, rule 1 have not been satisfied. (3)There is no violation of section 169 of the Act. According to Mr. Subramaniam, there is a distinction between sections 169 and 172 of the Act. Under section 172 of the Act the statement of the business to be transacted must be given whereas under section 169, it is enough if the matters are mentioned. There is no further requirement. It is only when the notice under section 172 is sent, the details are necessary. Even if the notice contains additional matters to be considered it is for the general body to decide on the consideration of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eral documents in like form, each signed by one or more requisitionists. (4) The number of members entitled to requisition a meeting in regard to any matter shall be ( a )in the case of a company having a share capital, such number of them as hold at the date of the deposit of the requisition not less than one-tenth of such of the paid up capital of the company as at that date carries the right of voting in regard to that matter ; ( b )in the case of a company not having a share capital, such number of them as have at the date of deposit of the requisition not less than one-tenth of the total voting power of all the members having at the said date a right to vote in regard to that matter. (5) Where two or more distinct matters are specified in the requisition, the provisions of sub-section (4) shall apply separately in regard to each such matter ; and the requisition shall accordingly be valid only in respect of those matters in regard to which the condition specified in that sub-section is fulfilled. (6) If the board does not, within twenty-one days from the date of the deposit of a valid requisition in regard to any matters, proceed duly to call a meeting for the consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... place and the day and hour of the meeting, and shall contain a statement of the business to be transacted thereat. (2) Notice of every meeting of the company shall be given ( i )to every member of the company, in any manner authorised by sub-sections (1) to (4) of section 53 ; ( ii )to the persons entitled to a share in consequence of the death or insolvency of a member, by sending it through post in a prepaid letter addressed to them by name, or by the title of representatives of the deceased, or assignees of the insolvent, or by any like description, at the address, if any, in India supplied for the purpose by the persons claiming to be so entitled, or until such an address has been supplied, by giving the notice in any manner in which it might have been given if the death or insolvency had not occurred ; and ( iii )to the auditor or auditors for the time being of the company in any manner authorised by section 53 in the case of any member or members of the company: Provided that where the notice of a meeting is given by advertising the same in a newspaper circulating in the neighbourhood of the registered office of the company under sub-section (3) of section 53, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... val of a director holding office for life on the 1st day of April, 1952, whether or not he is subject to retirement under an age limit by virtue of the articles or otherwise: Provided further that nothing contained in this sub-section shall apply where the company has availed itself of the option given to it under section 265 to appoint not less than two-thirds of the total number of directors according to the principle of proportional representation. (2) Special notice shall be required of any resolution to remove a director under this section, or to appoint somebody instead of a director so removed at the meeting at which he is removed. (3) On receipt of notice of a resolution to remove a director under this section, the company shall forthwith send a copy thereof to the director concerned, and the director (whether or not he is a member of the company) shall be entitled to be heard on the resolution at the meeting. (4) Where notice is given of a resolution to remove a director under this section and the director concerned makes with respect thereto representations in writing to the company (not exceeding a reasonable length) and requests their notification to members of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... derogating from any power to remove a director which may exist apart from this section". It is also necessary for me to refer to the contents of the notice of requisition dated February 8, 1992, and the notice of the extraordinary general body meeting dated March 28, 1992 : From M. Sekaran, Managing Director, Venkateswara Solvent Extraction (Pvt.) Ltd., Pudukottai Road, Annavasal, Pudukkottai Dist., Phone: 47 Extn./55 per./48 R.H. Dated February 8, 1992. To Venkateswara Solvent Extraction (Pvt.) Ltd., Pudukottai Road, Annavasal, Pudukkottai Dist. Dear Sirs, Sub: Extraordinary general meeting Request to convene the extraordinary general meeting under section 169 of the Companies Act, 1956. I am having 49.2 per cent, shareholding in our company and I request to convene the extraordinary general meeting immediately to fill the vacancy in our board and elect proper managing director for our company. Thanking you, Yours faithfully, (Sd.) M. Sekaran. C. Ct. All directors, The Registrar of Companies, Sastri Bhavan, Haddows Road, Madras. Venkateswara Solvent Extraction Pvt. Ltd., 16, K.M. Pudukkottai Road, Annavasal-622 101, Pudu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ember of the company. 2.The proxy should be lodged at the registered office of the company not later than 48 hours of the time of commencement of the meeting. 3.The explanatory statement in regard to business under items 1 to 3 is annexed. (Sd.)........................ Requisitionist. Explanatory statement as required under section 173 of the Companies Act, 1956. Items (1) to (3) of the agenda: The directors referred to under items (1) to (3) were on the board of the company as first directors. Over the years Mr. P.R. Muthiah and Mr. A.A. M. Ismail died while they were holding office of director. Mr. N.M.A. Jamal Mohideen resigned from the board. However, the said vacancies on the board were not filled up. Hence this meeting is requisitioned to consider the following names who have been proposed to the office of director by one of the shareholders, i.e. , appointment of ( a )Mr. K.P. Palaniandi Pillai, age 65, in place of vacancy under item (1); ( b ) Mr. K.Kandaswami Pillai, age 52, in the place of vacancy under item (2); ( c ) Mr. K. Natesan Pillai, age 47, in the place of vacancy under item (3). Each of them who have consented to be director are businessmen and tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rdinary general meeting. Such a shareholder cannot be restrained by injunction from calling the meeting and he is not bound to disclose the reasons for the resolutions proposed at the meeting. Nor are the reasons for the resolutions subject to judicial review. Though section 169 uses the expression "such number of members of the company" in the plural, yet the requirements of the provisions would be satisfied even if one member holding the 'requisite number of shares or voting rights makes the requisition. It is also well settled that words in the plural include the singular. As already stated by me the requisition dated February 8,1992, clearly mentions the purpose for which the extraordinary general meeting is to be called. Therefore it has to be held that the requisition dated February 8, 1992, made by the second respondent is in strict conformity with the statutory requirements of section 169 of the Act. The notice of the meeting by the requisitionists issued on March 28, 1992, to all shareholders has been issued because the company did not call the extraordinary general meeting within 21 days from February 8, 1992 (date of deposit of the requisition) and therefore the seco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce Corporation of India cannot be restrained from doing so nor is it bound to disclose its reasons for moving the resolutions". Thus it is clear that the obligation to annexe an explanatory statement to the notice of the meeting is only on the company when it calls for a meeting to transact special business. When a requisitionist calls for an extraordinary general meeting under section 169, there is no obligation on the requisitionist to annex an explanatory statement to the notice of the meeting. There is in my view no warrant for imposing such an obligation on the requisitionists. Therefore, I am of the view that there is no merit in the contention of Mr. A.K. Mylsamy, learned counsel for the petitioner, that the requisition notice dated February 8, 1992, and the notice of the meeting dated March 28, 1992, are bad and that they contravene the provisions of the Companies Act. Hence points Nos. 1 and 2 are answered against the applicant in Application No. 602 of 1992. Then comes point No. 3 in regard to the satisfaction of the requirements of section 284 of the Act. Section 284 of the Act deals with the removal of directors. This section does not deal with the power of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Estates Ltd. [1992] 74 Comp Cas 30 (Mad.), this contention of Mr. M. Subramaniam does not deserve acceptance. In my aforesaid judgment it has been held by me as follows (head-note): "Once a petition under sections 397 and 398 of the Companies Act, 1956, is validly presented, it is open to a shareholder to ask for substitution and prosecute the proceedings even though such a shareholder by himself could not have presented a petition under section 397 for want of the required share qualification. The court has, in such a case, only to consider whether the petition was a valid petition at the time of its presentation. The requirement as to the share qualification is relevant and material only at the time of institution of proceedings and once there is a valid petition and a shareholder seeks to substitute himself in order to merely continue such a valid petition, such a shareholder need not hold 10 per cent, of the share capital. It is not incumbent upon the court to dismiss a petition because a proceeding under section 397 or 398 of the Act is a representative proceeding. Even if the original petitioner does not want to continue the proceedings, the court cannot be compelled to ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
