1992 (4) TMI 184 - HC - Companies Law

Court Jurisdiction of Meetings and Proceedings Extra Ordinary General Meeting Manner of taking poll Presumptions to be drawn where minutes duly drawn and signed

Issues Involved:
1. Validity of the interim injunction restraining the respondents from holding an extraordinary general body meeting.
2. Legality of the election of the applicants as directors.
3. Validity of the requisition for an extraordinary general meeting.
4. Jurisdiction of the civil court in company matters.

Issue-Wise Detailed Analysis:

1. Validity of the Interim Injunction:
The applicants sought an interim injunction under Order 14, Rule 8 of the Original Side Rules, read with Order 39, Rules 1 and 2 of the Civil Procedure Code, to restrain the respondent from holding an extraordinary general body meeting. The court found a prima facie case in favor of the applicants and granted the interim injunction on March 26, 1991. The court held that the applicants had established a prima facie case to sustain the interim injunction as absolute till the disposal of the suit. The court emphasized that the election of the applicants was conducted lawfully, and any subsequent resolution to nullify this election would be invalid.

2. Legality of the Election of the Applicants as Directors:
The applicants were elected as directors during the 120th annual general body meeting held on December 24, 1990. The election was conducted by a poll, and the results were announced on December 29, 1990. The respondents contended that the election was manipulated and that the resolutions passed were void under sections 169 and 263 of the Companies Act. However, the court found that the election process was lawful and in compliance with the provisions of the Companies Act. The court noted that the minutes of the meeting were duly recorded and signed by the chairman, and the necessary forms were filed with the Registrar of Companies. The court rejected the respondents' contention of malpractice and upheld the validity of the election.

3. Validity of the Requisition for an Extraordinary General Meeting:
The respondents issued a notice dated March 7, 1991, under section 169 of the Companies Act, calling for an extraordinary general meeting to declare the poll conducted on December 24, 1990, void and to elect the respondents as directors. The court held that while section 169 provides a mandatory obligation for the company to convene an extraordinary general meeting upon receiving a valid requisition, the requisition in this case was not valid. The court noted that the requisition aimed to remove the duly elected directors and appoint the respondents, which would disrupt the lawful administration of the company. The court emphasized that the requisitionists could wait for the next vacancy to arise rather than convening an extraordinary general meeting for the purpose of removing the current directors.

4. Jurisdiction of the Civil Court in Company Matters:
The court addressed the jurisdiction of the civil court in company matters, noting that the Companies Act does not expressly exclude the jurisdiction of civil courts except in specific matters like winding up. The court held that the civil court has jurisdiction to decide the rights of parties in matters not expressly excluded by the Companies Act. The court emphasized that the personal rights of the shareholders and directors could be adjudicated by the civil court, and the applicants were entitled to seek relief from the court to prevent the illegal removal of duly elected directors.

Conclusion:
The court allowed the Original Applications Nos. 288 and 289 of 1991, making the interim injunction absolute till the disposal of the suit. The court dismissed Applications Nos. 2595, 2596, 2597, and 2598 of 1991 filed by the respondents, thereby rejecting the respondents' request to vacate the interim injunction. The court upheld the validity of the election of the applicants as directors and ruled that the requisition for an extraordinary general meeting was not valid. The court also affirmed its jurisdiction to adjudicate the matter, providing relief to the applicants to prevent their illegal removal as directors.

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