1990 (4) TMI 260 - HC - Companies Law

Court Jurisdiction of Meetings and proceedings - Annual General Meeting Sections 171 to 186 to apply to meetings Passing of resolution by

Issues Involved:
1. Validity of the notice for the annual general meeting (AGM).
2. Enrolment of new members.
3. Approval of the agenda and president's report.
4. Presentation of audited accounts.
5. Change of election officer.
6. Allegations of mala fide actions.

Detailed Analysis:

1. Validity of the Notice for the AGM:
The plaintiffs challenged the validity of the notice issued on December 8, 1989, for holding the AGM on December 29, 1989. They argued that the notice was invalid due to non-compliance with the articles of association and the Indian Companies Act. The court found that the notice was valid, as the requisite resolution approving the agenda for the AGM and the president's report was duly approved in the meeting held on December 4, 1989. The court also noted that the notice contained a clear agenda and an explanatory note about the accounts not being presented due to technical objections.

2. Enrolment of New Members:
The plaintiffs contended that the enrolment of 645 new members was done without the approval of the executive committee and was aimed at securing a voting majority for the president. The court found that the applications for new membership were processed by a scrutiny committee, of which plaintiff No. 1 was a member. The applications were received throughout the year and were approved by the executive committee in the meeting held on November 29, 1989. The court observed that the plaintiffs and defendant No. 3 were involved in the enrolment process and had recommended several new members themselves. The court concluded that the enrolment was conducted in accordance with the established practice and the articles of association.

3. Approval of the Agenda and President's Report:
The plaintiffs argued that the agenda for the AGM and the president's report were not approved by the executive committee. The court found that the minutes of the meeting held on December 4, 1989, revealed that the agenda and the president's report were duly approved. The court rejected the plaintiffs' sweeping denial and noted that the minutes book was maintained in the regular course of business and showed the attendance and signatures of the plaintiffs and defendant No. 3.

4. Presentation of Audited Accounts:
The plaintiffs claimed that the AGM could not be held without presenting the audited accounts, as required by sections 166, 210, and 220 of the Act. The court found that the accounts could not be audited due to a technical objection raised by the outgoing auditors, and this matter was brought to the notice of the Institute of Chartered Accountants and the Company Law Board. The court held that the AGM could be convened without the audited accounts, as the meeting could be adjourned for this purpose, citing judgments of the Calcutta High Court in M.D. Mundhra v. Assistant Registrar of Companies and Sudhir Kumar Seal v. Assistant Registrar of Companies.

5. Change of Election Officer:
The plaintiffs challenged the change of the election officer from Lt. Col. M.S. Jaspal to Mr. M.S. Joshi, alleging that the resolution for this change was not circulated to all members. The court found that the resolution was duly circulated and passed by a majority of the members. The court noted that the plaintiffs participated in the electoral process before the new election officer, indicating their acceptance of him. The court concluded that there was no contravention of section 289 of the Act.

6. Allegations of Mala Fide Actions:
The plaintiffs alleged that the actions of the president and other defendants were mala fide, aimed at retaining control over the DDCA. The court found no prima facie evidence of mala fide intentions. The court observed that the decisions were taken by the executive committee, of which the plaintiffs and defendant No. 3 were members, and there was no indication of any ultra vires acts or fraud.

Conclusion:
The court dismissed the application for an interlocutory order, finding no prima facie case for interference in the holding of the AGM. The court directed that the AGM be convened under the supervision of Mr. M.S. Joshi, assisted by Mr. R.D. Verma, as per the resolution dated December 5, 1989. The main matter was listed for further proceedings on May 21, 1990.

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