1995 (2) TMI 332 - HC - Companies Law

Court Jurisdiction of, Company Service of documents on members by, Meetings and proceedings - Presumptions to be drawn where minutes duly drawn and signed, Removal of director

Summary

Issues Involved:
1. Validity of the Extraordinary General Meeting (E.G.M.) held on February 22, 1994.
2. Compliance with statutory requirements for calling and conducting the E.G.M.
3. Suppression of material facts by the plaintiffs in Civil Suit No. 33 of 1994.
4. Jurisdiction of the Patiala court to entertain the suit.
5. Interim injunction and possession of the industrial unit.

Detailed Analysis:

1. Validity of the Extraordinary General Meeting (E.G.M.) held on February 22, 1994:
The court examined whether the E.G.M. was actually held and if it was legally valid. The defendants claimed the meeting was held with three attendees: T.K. Ramaswamy, Shalendra Sharma (representing Budgam), and Gurpal Singh. However, Gurpal Singh denied attending the meeting through a letter dated April 7, 1994, and an affidavit dated July 27, 1994. The court found that the presence of only one shareholder (Shalendra Sharma) did not constitute a valid meeting, as a meeting requires the presence of at least two persons. The court also noted several suspicious circumstances, such as the lack of an attendance register and the failure to mention the E.G.M. in earlier legal proceedings, which led to the conclusion that the meeting was not held.

2. Compliance with statutory requirements for calling and conducting the E.G.M.:
The court analyzed the compliance with sections 169 and 284 of the Companies Act, 1956. The requisition for the E.G.M. was allegedly sent by Budgam on January 3, 1994, but there was no evidence of proper service of notice to all shareholders. The court emphasized that special notice is required for removing directors, which was not properly served. The failure to meet these statutory requirements rendered the resolutions passed at the E.G.M. invalid. Additionally, the court highlighted discrepancies in Form No. 32 filed with the Registrar of Companies, indicating that some directors had already resigned before the E.G.M.

3. Suppression of material facts by the plaintiffs in Civil Suit No. 33 of 1994:
The court found that the plaintiffs in Civil Suit No. 33 of 1994 had suppressed material facts, such as the existence of earlier suits filed at Rajpura and the failure to obtain interim relief in those suits. The court cited the principle that plaintiffs must come to the court with clean hands and disclose all relevant facts. The suppression of these facts led the court to conclude that the plaintiffs were not entitled to the discretionary relief of an injunction.

4. Jurisdiction of the Patiala court to entertain the suit:
The court examined whether the Patiala court had jurisdiction to entertain the suit. The plaintiffs claimed jurisdiction based on the alleged conspiracy hatched at Patiala and the presence of branch offices of some defendants in Patiala. However, the court found these allegations vague and unsupported by evidence. The registered office and factory unit of B.S.B. were located within the jurisdiction of the Rajpura court, and the court concluded that the Patiala court lacked territorial jurisdiction to entertain the suit.

5. Interim injunction and possession of the industrial unit:
The court addressed the issue of interim injunction and possession of the industrial unit. The plaintiffs in Civil Suit No. 460 of 1994 had a prima facie case, and the balance of convenience was in their favor. The court granted an ad interim injunction restraining the defendants from interfering with the affairs of the company based on the alleged resolutions passed at the E.G.M. The Chief Judicial Magistrate, Patiala, who was in possession of the industrial unit under court orders, was directed to give physical possession of the unit to the plaintiffs in Civil Suit No. 460 of 1994.

Conclusion:
The court concluded that the plaintiffs in Civil Suit No. 33 of 1994 failed to establish a prima facie case for an interim injunction, and the suit was dismissed. The court granted an ad interim injunction in favor of the plaintiffs in Civil Suit No. 460 of 1994, restraining the defendants from interfering with the company's affairs. The court also ordered the consolidation of both suits for joint trial and decision by the Additional Senior Sub-Judge, Rajpura. The decision was made solely for the purpose of the interim applications and should not be construed as an expression on the merits of the cases.