1984 (5) TMI 226 - HC - Companies Law

Company Service of documents on members by, Meetings and Proceedings Extra Ordinary General Meeting, Meetings and proceedings - Restriction of exercise of voting rights of members who have not paid calls, etc.

Issues Involved:
1. Validity of the meeting held on November 7, 1981.
2. Validity of the notices sent for call money.
3. Validity of the meeting held on April 21, 1982.
4. Right of shareholders to vote and requisition meetings.
5. Authority to defend the petition on behalf of the company.

Detailed Analysis:

1. Validity of the Meeting Held on November 7, 1981:
The core issue was whether the meeting on November 7, 1981, was validly held. The court found that Col. P.S. Dhillon was the managing director until April 20, 1982, and produced the register containing the minutes of the meeting held on November 7, 1981. The meeting was attended by ten directors, exceeding the quorum requirement of six. The directors present included Niranjan Singh Domeli, who chaired the meeting, and other directors who later supported the requisition for the meeting on April 21, 1982. The court concluded that the meeting on November 7, 1981, was validly held and the resolution for a call on shares was legitimately passed.

2. Validity of the Notices Sent for Call Money:
The court examined whether notices for call money were properly dispatched following the resolution of November 7, 1981. Col. P.S. Dhillon produced the dispatch register and a copy of the letter sent to shareholders, which complied with Section 53 of the Companies Act regarding the service of documents. The court held that the notices were validly sent as per the legal requirements, and there was no evidence that any requisitionists had requested special service methods or provided funds for such service.

3. Validity of the Meeting Held on April 21, 1982:
The validity of the meeting on April 21, 1982, was questioned based on whether the shareholders who attended had the right to vote. The court noted that under Article 36 of the company's Articles of Association and Section 181 of the Companies Act, shareholders who had not paid the call money were not entitled to vote. Since many requisitionists had not paid the call money, they were not entitled to vote, making the meeting invalid. Consequently, the resolutions passed, including the election of Dr. Vikram Singh as managing director, were not valid.

4. Right of Shareholders to Vote and Requisition Meetings:
The court highlighted that only shareholders who had paid their dues could exercise voting rights and requisition meetings. Section 169 of the Companies Act specifies that only shareholders with voting rights can requisition a meeting. Since many requisitionists had unpaid call money, they lacked the right to requisition the meeting on April 21, 1982. Therefore, the requisition for the meeting and the subsequent resolutions were invalid.

5. Authority to Defend the Petition on Behalf of the Company:
Given the invalidity of the meeting on April 21, 1982, and the improper election of Dr. Vikram Singh and other directors, the court concluded that the board of directors represented by Dr. Vikram Singh was not validly constituted. Consequently, Ramesh Inder Singh, representing this board, had no right to defend the petition under Sections 397 and 398 of the Companies Act on behalf of the company.

Conclusion:
The court determined that the meeting on November 7, 1981, was valid, and the notices for call money were properly dispatched. However, the meeting on April 21, 1982, was invalid due to the lack of voting rights of many requisitionists. Therefore, the board of directors represented by Dr. Vikram Singh was not validly constituted, and Ramesh Inder Singh had no authority to defend the petition on behalf of the company.

The observations made in this judgment are not to be considered in any civil suit between the parties.

← Previous Next →