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TMI Blog2012 (6) TMI 496X X X X Extracts X X X X X X X X Extracts X X X X ..... the Plaintiff that in order to give the Plaintiff sufficient representation in management it was specifically decided that all the three Directors would equally partake in the Board Meetings so that the resolutions of the Board would be unanimous. The Articles of the Company came to be amended to make a specific provision in that regard. Article 51(f) of the Articles of Association of the Company dealing with (Directors and proceedings of the Board) came to be incorporated in the Article to make a specific provision for unanimous vote at the Board Meetings. Similarly under Article 51(e) it was specifically shown that the Plaintiff and Defendant Nos. 2 and 3 were permanent Directors of the Company and further appointment of any Directors, other than any additional Director, would be by the person nominated by the outgoing Director as a permanent Director. 3. Articles 51(e ) and (f) are, therefore, peculiar to Defendant No. 1 Company. 4. It may be mentioned that the Company does not carry on any business except manage the building which is the only property it owns. 5. Consequent upon the unanimity required in Board Meetings, which became impossible of actual performance, a deadl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch. 9. The Notice of Motion came to be amended to add a further prayer restraining Defendants 2, 3 and 6 from convening or holding any meetings of Defendant No. 1 Company or acting in pursuance of resolutions passed at the aforesaid meetings. 10. In short the Plaintiff, who is a Director of Defendant No. 1, seeks to stop all businesses of Defendant No. 1. Defendant No. 1, therefore, cannot be a company which can transact any business as a going concern. If the prayers of the Plaintiff must be granted, there would be a complete deadlock in business, if any, of Defendant No. 1. 11. Upon the premise that the Plaintiff would be entitled as a Director and member of the Company having a 33 per cent stake in the Company to such reliefs, the Plaintiff's case making out the reasons why such extreme relief should be granted is required to be seen. 12. The injunction in respect of the Board Meeting held on 5th August, 1993 cannot be claimed in a Notice of Motion taken out in 2009. The suit itself has been filed in 1997 to challenge the proceedings at the meeting held on 5-8-1993 which the Plaintiff had attended. 13. The Plaintiff has pressed the reliefs in respect of the meetings held i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t No. 2 who had appointed Defendant No. 12 as his alternate whilst he was abroad had returned to the State of Maharashtra after the appointment of Defendant No. 12 and consequently on and from such date Defendant No. 12 could no longer be a Director of Defendant No. 1 and his attendance as a Director was bad in law. 17. These two contentions of the Plaintiff have to be separately considered. 18. Defendant No. 2 appointed Defendant No. 12 as his alternate Director under the provisions of section 313 of the Companies Act, 1956. The validity of the attendance of the Defendant No. 12 shall be considered presently. 19. The quorum at the Board Meeting would be the three permanent Directors under Article 51(f) of the Articles of Association of the Company since the powers exercised by the Board of Directors were to be by an unanimous vote. Three Directors admittedly attended the Board Meeting dated 6-8-2009. It is only because the Plaintiff left the meeting after attending the meeting setting out her grievances in an objection letter dated 4-8-2009 that the Plaintiff claims that there was no quorum at that Board Meeting. 20. Quorum is the minimum number of Directors required to transa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that she had sent her objection letter dated 4-8-2009, refused to sign the attendance register and left the meeting. This would disable the other Directors present for transacting any business. The main aim of the Plaintiff was, therefore, only to disable her Co-Directors from transacting any business. Upon such a case the Plaintiff has claimed the relief of injunction restraining the Directors from taking steps in furtherance of the decision taken at that Board Meeting by way of the resolution passed therein. Therefore, a party who has herself derailed the proceedings has come to Court to obtain its stamp of approval upon her act. The excuse of the Plaintiff is that she was ridiculed and jeered at. From the conduct of the Plaintiff in challenging almost everything which the Company does, as is evidenced in prayer (i) itself it could be seen that the Plaintiff has brought about a total and complete deadlock in the Company. It would otherwise be a case for winding up of the 1st Defendant Company as it would be just and equitable to wind it up under section 433(f) of the Companies Act. However, the Plaintiff did attend the Board Meeting on 6th August, 2009. Having attended the Bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Scottish case the learned Judge nevertheless concluded upon the facts of the case before him that when the member opposing the resolution left the meeting before the vote was taken, the meeting in fact passed a valid class resolution because at the beginning of the meeting when it proceeded to business the quorum was present. 25. It is impossible to conclude that in this case the Plaintiff could be given protection by the Court for an act unbecoming of a Director and which was inconsistent with the duties of a Director. The quorum was therefore present and the business transacted cannot be challenged. 26. It is contended on behalf of the Plaintiff that Defendant No. 12 who was the other Director present at the meeting could not have remained present as Director. He was an alternate to the Defendant No. 2. He was appointed when Defendant No. 2 was to leave India. Defendant No. 2 is stated to be carrying on business in Singapore. After his appointment Defendant No. 2 returned to India, but had not attended any Board Meetings thereafter. 27. The Plaintiff has shown on a separate single sheet of paper dated 12-4-1999 the signatures of Defendant No. 2 with herself obtained by her ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d until the Director returns to the State in which the meetings of the Board are ordinarily held as set out in sub-sections 1 and 2 thereof respectively would show not only a temporary return, but an intention to stay in that State so as to able him to transact the business of the Company in the State where board meetings are ordinarily held. If a Director such as Defendant No. 2 merely comes to the State and leaves India again he would not be able to transact business. Hence the alternate Director would require to continue until the Director appointing him would have continued. In this case it would be permanently or until Defendant No. 2 resigns or is removed is as Director or otherwise vacates office under section 283 of the Companies Act. 32. What precisely the Section contemplates by the term "the original Director returns to the State", must be read as contemplating only such return which would have some amount of permanence. The Director must return to carry on the business. He must return for a length of time. The intent of the Director must be not to make his visit merely temporary when he does not partake in the management of the Company and when he intends to go abroad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commencing the meeting cannot be whittled down by the improper discontinuation of the meeting and the improper disallowance to continue the meeting by the Plaintiff. 37. Protection of the Court which would be a premium on the default of the Plaintiff cannot be granted. This has been similarly held when a tenant who had defaulted in making payments of rent under section 13(4) of the Bombay Rent Act, 1947, but whose defence was not applied to be struck off by the landlord was held not entitled to take advantage of the inaction on the part of the landlord (See in the case of Prakash Chand v. Firm Pohap Singh Kishan Sahai 2006 (4) Raj. 2763, 2006(4) WLC 248). Similarly the defaulting parties to an arbitration who sought to adopt their own procedure was not permitted to insist later that the Arbitrator should have been appointed as per procedure indicated in the arbitration clause on the same principal (See in the case of HBHL-VKS (J.V.) v. Union of India (UOI) 2007 (1) ARBLR 252 (Delhi). Also when parties settled their dispute in a suit upon a mortgage requiring a preliminary decree to be passed, but which procedure was circumvented by their settlement, were held not entitled to cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Because of the continuous and persistent objections of the Plaintiff for holding any of the meetings and transacting any business there has been a complete deadlock in the Company. If the Plaintiff's contents were to be countenanced even for considering whether she has been oppressed, her singular act has resulted in and would result in a complete deadlock. In the case of Krishan Lal Ahuja v. Suresh Kumar Ahuja [1983] 53 Comp. Cas. (Delhi) one such company started by four brothers as a family partnership and continued by their heirs who had irretrievably fallen from each other it was observed that collaboration in management of the company was out of question. Consequent upon the deadlock the brothers were directed to buy out the heirs upon a fair price being ensured. 40. In the case of Sishu Ranjan Dutta v. Bhola Nath Paper House Ltd. [1983] 53 Comp. Cas. 883 (Cal.) there was a complete deadlock and two groups in the family could go together. It was observed that though the business was flourishing the Court had the power to wind up the company (as it would just and equitable to wind it up under section 433(f) of the Companies Act) as it could not be managed in the 'present sit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom acting thereupon. This argument is wholly erroneous. What the Articles of the Company as well as the section 171 of the Companies Act relating to notices for general meetings contemplate is the giving of the notice of the requisite period. If a notice is given of not less than 7 days in writing and is put in post it matters not that the addressee receives it much later or less than 7 days before the meeting or even thereafter. What matters is whether the Company has sent the notice more than 7 days in advance. 45. Under section 53 of the Companies Act any document served upon any member of the Company by the Company sent by post shall be deemed to be properly effectuated by properly addressing, prepaying and posting a letter containing the document in post. Under section 53(2)(b) the service will be deemed to have been effected 48 hours after the same is posted in case of a notice of a meeting. The notice of the EGM is sent by the Company to the Plaintiff is deemed to have been received by the Plaintiff on 23-8-2009, more than 7 clear days prior to 31-8-2009, the date of EGM. 46. In the case of Shailesh Harilal Shah v. Matushree Textiles Ltd. AIR 1994 Bom. 20/[1995] 82 Comp. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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