TMI Blog2001 (3) TMI 932X X X X Extracts X X X X X X X X Extracts X X X X ..... right issue for which a letter of offer was issued on 20-3-1999 by which total 4,48,55,480 equity shares were to be issued having value of Rs. 10 each share with a premium of Rs. 5 per share. As per the decision of the defendant-Company, each right share to be issued with one detachable warrant which will entitle the holder thereof to apply and to be allotted one ordinary share of Rs. 10 within 12to 18 months at a discount of 25 per cent of average market price of last 6 months. 4. As per the terms and conditions of the letter of offer, per share, the plaintiff since applied in the right issue, he was offered 250 shares and plaintiff applied for additional 50 shares which all were allotted to the plaintiff. Therefore, the plaintiff, at the time of filing the present suit, was having original 100 shares and 500 shares which were allotted to the plaintiff. 5. According to plaintiff, in accordance with the provisions of the Companies Act, for conversion of the share warrants into shares a resolution was required to be passed by the shareholders of the Company and the defendant-respondent issued a notice dated 6-1-2001, according to which extraordinary general meeting of the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... some of the shareholders of the company are having even only 10 shares, 20 shares or 50 shares and they will have to go to Mumbai to attend the extraordinary general meeting. According to plaintiff, in last 50 years from incorporation of the defendant-Company, none of the annual general meeting or extraordinary general meeting was held outside of Udaipur. 8. The plaintiff also filed an application under order 39, rules 1 and 2 of the Code of Civil Procedure for seeking ad interim injunction against the defendant from holding extraordinary general meeting on 6-2-2001 at Mumbai, outside from the city of Udaipur. 9. The defendant-respondent submitted a detailed reply to the application moved under order 39, rules 1 and 2 of the Code of Civil Procedure by the plaintiff and submitted that the decision to convene the meeting was taken by the Board of Directors on 6-1-2001. Notice to that effect was issued on 9-1-2001 by U.P.C. whereas the suit was filed on 2-2-2001. Therefore, the application deserves to be dismissed only on the ground of delay and the plaintiff is not entitled for any equitable relief of injunction. 10. The defendant-respondent further submitted that as p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on was dismissed on 5-2-2001 a day before the date of meeting to be held on 6-2-2001 at Mumbai. The present appeal was filed on 19-2-2001 and an ad interim order was passed by this Court on 23-2-2001 restraining the defendant-Company from taking any step in furtherance to the decision taken in the meeting dated 6-2-2001. At the request of both the parties, on 19-3-2001 and subsequent dates, this appeal was heard finally. 14. The learned counsel for the appellant vehemently submitted that the order passed by the court below dated 5-2-2001 is absolutely illegal, perverse and hence deserves to be set aside. The learned counsel for the appellant also submitted that the trial Court has not even dealt with the points which were raised by the appellant. 15. The learned counsel for the appellant, in support of his arguments, submitted that it is an admitted fact that the Company s registered office is situated at Udaipur in Rajasthan and it is also an admitted fact that since last 50 years from the time of incorporation of the defendant-company, all the meetings were held at Udaipur City only, but, now to give benefit to one Shri P.K. Tayal, Chairman of the respondent-company and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llage in which the registered office of the company is situate : Provided that the Central Government may exempt any class of companies from the provisions of this sub-section subject to such conditions as it may impose: Provided further that ( a )a public company or a private company which is a subsidiary of a public company, may by its articles fix the time for its annual general meeting and may also by a resolution passed in one annual general meeting fix the time for its subsequent annual general meetings; and ( b )a private company which is not a subsidiary of a public company may in like manner and also by a resolution agreed to by all the members thereof, fix the times as well as the place for its annual general meeting." 20. It is further relevant to refer relevant sub-sections of section 169 which read : "Calling of extraordinary general meeting on requisition. (1) The Board of directors of a company shall, on the requisition of such number of members of the company as is specified in sub-section (4), forthwith proceed duly to call an extraordinary general meeting of the company. (2) The requisition shall set out the matters for the consideration of whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Articles of Association reads : "74. The Directors may, whenever they think fit and they shall, on the requisition of the holders of not less than one-tenth of the issued share capital of the Company upon which all calls or other sums then due have been paid forthwith proceed to convene an Extraordinary General Meeting of the Company and in the case of such requisition the provisions of section 78 of the Act shall apply. The provisions of clause ( a ) of sub-section (2) of section 79 of the Act for the calling of a meeting by two or more members holding not less than one-tenth of the total share capital paid up, shall not apply." 24. In reply to above submissions, the learned counsel for the respondents submitted that the plaintiff cannot be permitted to travel beyond the pleadings which he has raised in his pleadings in the plaint. The learned counsel for the respondents, for which, invited my attention to the pleadings in the plaint and submitted that a bare perusal of the reading of the plaint it is clear that the plaintiff was fully aware that there can be an annual general meeting and there can be an extraordinary general meeting. The plaintiff, in his plaint, specifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt that section 166 and section 169 are the source of powers of the Board of Directors to convene the extraordinary general meeting. The annual general meeting is an obligatory meeting which is required to be held within the specified period as provided under section 166 and meeting under section 169 is also an obligatory meeting which can be convened only on requisition if made by the shareholders having shareholding of 1/10th of paid up capital of the Company and in case the Board does not convene the meeting as provided under sub-sections of section 169 the meeting may be called even by the requisitionists them selves as provided in sub-section (2) of section 169. Therefore, the above provision of section 169 is only a provision to safeguard the interest of the minority shareholders and it is not the only provision in which extraordinary general meeting can be requisitioned. 28. The learned counsel for the respondent gave few instances to substantiate his submission that extraordinary general meeting can be called by the Board of Directors and this power vests in the Board of Directors as recognised by section 291 and, in case such power is held to be not available to the Bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t this was the notice issued by the defendant wherein it is stated that the meeting convened is extraordinary general meeting and because of this reason only the plaint contained the averment of extraordinary general meeting. Otherwise the meeting when not convened as provided under section 169 on the requisition of the shareholders then the meeting can be only under section 166. The submission made by the learned counsel for the appellant cannot be accepted in view of the fact that the appellant was conscious and aware of the fact that the meeting may be annual general meeting or extraordinary general meeting. The appellant himself specifically in his plaint mentioned that whatever meeting is convened including annual general meeting can be held at the registered office of the company or in the City where the registered office is situated. Not only this, there is no pleading of the plaintiff-appellant that though the meeting has been described as extraordinary general meeting but in fact it is annual general meeting. It is also clear from the various provisions of the Companies Act that the meeting convened is not an annual general meeting of the Company. Even in relief, the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... para 2 of the reply of the injunction application. In Para 2 of the reply to the injunction application, the defendant-company said that extraordinary general meeting can be convened as per section 169 but it nowhere says that the present meeting is convened under section 169 upon requisition of the shareholders. It appears that in reply, reference of section 169 is there but it was only a reference of provision of law which also deals with the calling of an extraordinary general meeting and this was referred only in the context to substantiate objection of jurisdiction of Civil Court to be barred under section 10 of the Act. In the subsequent paras itself the defendant relied upon article 74 of the articles of association of the company and it is clearly stated by the defendant that there is a provision for calling extraordinary general meeting under article 74 and in this article itself it is clearly mentioned that meeting can be called at any place. I may now quote relevant part of Article 74 which is as under : "The Directors may, whenever they think fit, and they shall on the requisition of the holders of not less than one-tenth of the issued share capital of the company. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Directors of the company are entitled to exercise all such powers and to do all such acts and things as the company is authorised to exercise and to do. Therefore, the statutory provision authorizes the Board of Direc tors to exercise all the powers. So far as proviso to section 291 is concerned, it also, in fact, further recognises the power of the Board of Directors to do the things and excludes only limited fields. The proviso merely says that the Board shall not exercise any power or do any act or thing which is directed or required to be done by the company in general meeting if it is provided by the Companies Act or by the Memorandum or Articles of the Company or otherwise. The learned counsel for the appellant could not point out whether the power of calling of extraordi nary general meeting has been given by the Companies Act or by Memorandum or Articles of company to the annual general meeting of the company. 42. The learned counsel for the respondent submitted that neither section 169 nor section 291 are the sole power of source of calling meeting by the Board. According to the learned counsel for the appellant statutory power of calling of extraordinary general m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The learned counsel for the appellant further submitted that even if it is an extraordinary general meeting, then the meeting cannot be held outside the place of registered office. The learned counsel for the appellant submitted that in view of section 166 when the Legislature itself has thought fit to permit the companies to hold annual general meeting at the place of registered office, then it can be presumed that that is a reasonable restriction on the power of the Board and it was also submitted by the learned counsel for the appellant that it has its own reason for holding the meeting at the place where the registered office is situated. According to the learned counsel for the appellant in the extraordinary general meeting, a shareholder of the company, if wants to refer the record of the company which is kept at the registered office, he will be deprived of his valuable right and this will result into same wrong decision. It is also submitted that when the company itself has decided to have its registered office at a particular place, then the company cannot and should not be permitted to say that holding of meeting at place of registered office may cause inconvenience to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the fact that it is not the case of the plaintiff that Shri P.K. Tayal and his persons will not be able to participate in the meeting at Udaipur nor this can be a ground for granting any interim relief in favour of the appellant. It is also relevant to mention here that the plaintiff has not said a single word how much loss he is going to suffer by acceptance of resolution of the Company and so far as the contention raised regarding hardship due to going to Mumbai by the plaintiff is concerned, the same deserves to be rejected on the face of it. If the appellant thinks that hardship will be caused to him by going to Mumbai from the place of his residence then certainly he is fully aware that the shareholders who are not residing in Udaipur will have to come from their residence to Udaipur and those shareholders of Mumbai who are large in number will have to come to Udaipur and that will cause great hardship to large number of persons as compared to the plaintiff alone. 50. It is further relevant to mention here that the suit filed by the plaintiff is in his individual capacity, pleading his own hardship. The suit is not in representative capacity nor the shareholders whose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bove, and all meetings except annual general meeting are extraordinary general meeting as per Article 47 of the Companies Act. 54. The learned counsel for the appellant cited judgments reported in : M.R.S. Rathnavelusami Chettiarv. M.R.S. Manickavelu Chettiar AIR 1951 Madras 542 and Bloom Dekor Limited v. Subhash Himdtlal Desai [1994] 6 SCC 322, but they are not applicable to the facts of the present case. 55. In view of the above facts and the law discussed above, I do not find any prima facie case in favour of the plaintiff for grant of injunction and the plaintiff also failed to prove any irreparable injury. The balance of convenience is also not in favour of the plaintiff as the plaintiff s total stake in the present controversy is negligible and no other shareholder has joined with the plaintiff in this suit. 56. Before parting with, I may deal with the request of the learned counsel for the respondent for initiation of proceedings for criminal contempt against the plaintiff-appellant. The learned counsel for the respondent submitted that the present litigation is absolutely an abuse of process of the Court and in view of the events referred by the responde ..... X X X X Extracts X X X X X X X X Extracts X X X X
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