TMI Blog2013 (4) TMI 928X X X X Extracts X X X X X X X X Extracts X X X X ..... tion and injunction that the sale deeds No. 1741 (kha) and 1742 (kha) dt. 4.10.1995 executed in favour of defendants No. 9 to 14 be declared null and void. The plaintiffs further sought a decree of permanent injunction. 3. Plaintiffs pleaded that the suit land was granted on lease by late Sadashivrao Shastri to the defendant No. 1 Gwalior Dairy Limited a private company incorporated under the Companies Act, on a rent of ₹ 108/- per year. Defendant No. 1 was in possession over the suit land upto the year 1995. Naib Tehsildar granted Bhumiswami rights in favour of defendant No. 1 of the aforesaid suit land. The Collector also held that defendant No. 1 acquired Bhumiswami rights of the suit property vide order dt. 10.11.1987. Thereafter, a writ petition was filed by one Ompraksh Sharma before the High Court. High Court dismissed the writ petition and held that the land is of the ownership of the defendant No. 1. Against the aforesaid order, an SLP was filed before the Hon'ble Supreme Court, which was registered as SLP No. 16052/1988. Hon'ble Supreme Court vide order dt. 16.8.1995 dismissed the aforesaid SLP. Plaintiffs further pleaded that the Company Law Board ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le because they have no right to file the suit 7. Learned senior counsel appearing on behalf of the appellants contended that the order passed by the trial court is against the law. He further submitted that the plaintiffs/appellants are the share holders of the company and in accordance with Section 293 of the Companies Act 1956, the Board of Directors of a Public Company has no power to sell the land or otherwise dispose of the property of the company except with the approval of the general body in its meeting. Learned Senior counsel further submitted that the Memorandum of Association of the company does not override the provisions of the Companies Act, 1956. In support of his contentions, learned Senior Counsel relied on the judgment of the Hon'ble Supreme Court in the case of Godhra Electricity Co. Ltd. Vs. State of Gujarat reported in: AIR 1975 SC 32. 8. Contrary to this, learned counsel for respondent No. 14 submitted that the trial court has rightly held that the appellants/plaintiffs have no authority and power to file civil suit. He further submitted that the appellants have remedy to file appropriate application under Sections 397 and 398 of the Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (26) To sell, improve, manage, develop, lease, mortgage, dispose of, turn to account or otherwise deal with all or any of the rights, property and undertakings of the Company. Article 14 of the Article of Association of the company prescribes liability of the members, which is as under:- 14. Every member or his heirs, executors or administrators or other representative shall pay to the Company the portion of the Capital represented by his share or shares which may for the time being, remain unpaid therein, in such amounts at such time or times and in such manner as the Directors shall, from time to time, in accordance with the Company's regulations, require or fix for the payment thereof. 10. Section 293 of the Companies Act prescribes certain restrictions on powers of the Board. The relevant Section is as under:- 293. Restrictions on powers of Board.- (1) The Board of directors of a public company, or of a private company which is a subsidiary of a public company, shall not, except with the consent of such public company or subsidiary in general meeting,- (a) sell, lease or otherwise dispose of the whole, or substantial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... does not include loans raised for the purpose of financing expenditure of a capital nature.] Explanation [III]. - Where a portion of a financial year of the company falls before the commencement of this Act, and a portion falls after such commencement, the latter portion shall be deemed to be a financial year within the meaning, and for the purposes, of clause (e). (2) Nothing contained in clause (a) of sub-section (1) shall affect- (a) the title of a buyer or other persons who buys or takes a lease of any such undertaking as is referred to in that clause, in good faith and after exercising due care and caution; or (b) the selling or leasing of any property of the company where the ordinary business of the company consists of, or comprises, such selling or leasing. (3) Any resolution passed by the company permitting any transaction such as is referred to in clause (a) of sub-section (1) may attach such conditions to be permission as may be specified in the resolution, including conditions regarding the use, disposal or investment of the sale proceeds which may result from the transaction: Provided that this sub-section shall no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght to object about the decision of the Board of Directors of the company in regard to disposal of the property of the company because in accordance with Section 293 of the Companies Act without approval of the General Body, the substantial portion of the property of the Company could not be disposed of by the Board of Directors. The statutory provisions of Section 293 of the Companies Act override the provisions of Memorandum of Association of the company. 12. Hon'ble Supreme Court in the case of R.C. Cooper v. Union of India reported in AIR 1970 SC 564 has held as under in regard to jurisdiction of the court to grant relief if the rights of the individual civil holders are impaired:- Jurisdiction of the Court to grant relief cannot be denied, when by State action the rights of the individual share-holder are impaired, if that action impairs the rights of the Company as well. The test in determining whether the share holder's right is impaired is not formal; it is essentially qualitative: if the State action impairs the right of the shareholders as well as to the Company, the Court will not, concentrating merely upon the technical, operation of the action ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
