1992 (5) TMI 170 - HC - Companies Law

Summary

Issues Involved:
1. Validity of notice requisitioning the extraordinary general meeting.
2. Compliance with section 173(2) when requisitionists issue the notice.
3. Applicability of section 284 to the case.
4. Locus standi of the petitioner to maintain the application.
5. Entitlement of the petitioner to an order of injunction.

Summary:

1. Validity of Notice Requisitioning the Extraordinary General Meeting:
The court examined whether the notice dated March 28, 1992, requisitioning the extraordinary general meeting, conformed to statutory requirements. It was established that the requisition dated February 8, 1992, clearly mentioned the purpose for which the meeting was to be called, thus complying with section 169 of the Companies Act. The notice of the meeting issued on March 28, 1992, was also deemed valid as it set out the business proposed to be transacted and was issued within the stipulated period.

2. Compliance with Section 173(2):
The court referred to the Supreme Court's decision in LIC of India v. Escorts Ltd., which clarified that the obligation to annex an explanatory statement to the notice of the meeting is on the company, not the requisitionists. Therefore, the requisitionists were not required to provide an explanatory statement under section 173(2). The court found no merit in the contention that the requisition notice and meeting notice were invalid.

3. Applicability of Section 284:
Section 284, dealing with the removal of directors, was discussed. The court concluded that this section did not apply to the removal of the managing director by the board. The business proposed at the meeting related only to the removal of Mr. Dorairaj as managing director, not as a director. Hence, section 284 was not applicable.

4. Locus Standi of the Petitioner:
The court considered whether the petitioner had the locus standi to maintain the application. It was noted that the main company petition was validly presented with the required share qualification. Even though the petitioner alone could not have presented the petition initially, he could continue the proceedings. The court cited its previous judgment, which allowed substitution and continuation of proceedings by a shareholder without the required share qualification.

5. Entitlement to an Order of Injunction:
The court reiterated that a shareholder has the statutory right to call an extraordinary general meeting and cannot be restrained from doing so. The requisition and notice of the meeting were found valid. Citing the Supreme Court's ruling, the court emphasized that no injunction can be granted to restrain a shareholder from convening an extraordinary general meeting. Consequently, the application for an injunction was dismissed.

Conclusion:
Company Application No. 602 of 1992 was dismissed, and no costs were awarded.