2013 (1) TMI 307 - Board - Companies Law

Directions for the purpose of holding and conducting such General Meeting of the shareholders - petitioners are 75% shareholders of the issued, subscribed and paid-up share capital of the company - in EOGM held on 3rd November, 2006 resolutions passed for removal of some directors - petition against order stating that the power to order the convening of AGM of the company is vested with the CIS under section 186 of the Companies Act, 1956 - Held that - The power to order for convening of meeting lies with the Company law Board under section 186 of the Companies Act, 1956.If for any reason it is Impracticable to call, hold and conduct meeting of a company, the power is vested with the Company law Board to pass order to call, hold and conduct the meeting of the company in such manner as the Bench thinks fit. The Company Law Board has been further empowered to give such ancillary or consequential directions as the Bench thinks expedient including directions modifying or supplementing in relation to the calling, holding and conducing of the meeting, the operation of the provisions of this Act and of the company s articles - Thus when convening of extraordinary general meeting in terms of provisions of section 169 fails or meeting does not take place for any reasons and/or it is not practicable, only then provisions of section 186 can be invoked. Where convening of the extraordinary General Meeting in terms of the provisions of section 169 fails or the meeting does not take place for any reasons and/or it is not practicable, only then the provisions of section 186 comes into play, and can be invoked. The petitioner was required to make compliance of section 169 by undertaking the entire exercise afresh before filing the instant petition. It seems that the petitioner is relying upon the earlier compliance made in the year 2006, when the dispute arose. Such compliance cannot be said valid as the outcome of the same are already under challenge, in the civil suits pending before High Court. Therefore, the respondents has rightly argued that the petition is bad for non-compliance of section 169 - petition is liable to be dismissed.

Issues Involved:
1. Convening of a general meeting of the shareholders.
2. Validity of the resolutions passed in the EOGM held on 3rd November 2006.
3. Appointment and removal of directors.
4. Jurisdiction and power of the Company Law Board under Section 186 of the Companies Act, 1956.
5. Compliance with statutory provisions under Sections 169, 190, and 284 of the Companies Act, 1956.
6. Principle of res judicata and issue estoppel.
7. Pending civil suits and their impact on the current petition.

Issue-wise Detailed Analysis:

1. Convening of a General Meeting of the Shareholders:
The petition sought directions for convening a general meeting of the shareholders of the company to consider the agenda filed as Annexure "Q" or any other agenda deemed fit by the Board. The petitioners also requested the appointment of a fit and proper person to preside over the meeting as Chairman with adequate police protection to ensure a peaceful meeting.

2. Validity of the Resolutions Passed in the EOGM Held on 3rd November 2006:
The petitioners, who claimed to hold 75% of the issued, subscribed, and paid-up share capital of the company, passed resolutions in an EOGM on 3rd November 2006 to remove certain directors and appoint new ones. These resolutions were challenged by the removed directors in Civil Suit No. 311/2006 in the Hon'ble High Court of Calcutta, seeking a permanent injunction against the petitioners from acting on the basis of the EOGM.

3. Appointment and Removal of Directors:
Resolutions were passed in the EOGM to remove directors Gynesbwar Misbra, Projesh Kumar Roy, Mohan Kumar Mukherjee, Arun Chakraborty, and Ashoke Saha, and to appoint new directors in their place. The removed directors contested these resolutions, leading to ongoing disputes regarding the rightful composition of the board.

4. Jurisdiction and Power of the Company Law Board under Section 186 of the Companies Act, 1956:
The petitioners argued that the power to order the convening of a general meeting lies with the Company Law Board under Section 186. The Hon'ble High Court, in a previous order, also held that the inherent power to convene a meeting rested with the Company Law Board. The Board has the authority to call, hold, and conduct meetings in a manner it deems fit, including giving ancillary or consequential directions.

5. Compliance with Statutory Provisions under Sections 169, 190, and 284 of the Companies Act, 1956:
The respondents argued that the petition was liable to be dismissed due to non-compliance with Sections 169 (calling of extraordinary general meeting on requisition), 190 (resolutions requiring special notice), and 284 (removal of directors). The Company Law Board noted that these statutory requirements must be complied with for convening a meeting.

6. Principle of Res Judicata and Issue Estoppel:
The respondents raised a preliminary objection that the petition was barred by the principle of res judicata, as similar reliefs had been sought and dismissed by the Hon'ble High Court in a previous application (GA No. 1467/2007). The Company Law Board, however, held that where the Court lacks inherent jurisdiction, the findings do not operate as res judicata, and thus, the petition was not barred.

7. Pending Civil Suits and Their Impact on the Current Petition:
The ongoing civil suits (CS No. 311/2006 and CS No. 302/2006) in the Hon'ble High Court of Calcutta involve disputes over the validity of the EOGM and the resolutions passed therein. The Company Law Board noted that any consideration or adjudication of the agenda in the current petition would encroach upon the jurisdiction of the Hon'ble High Court and could preclude the respondents from exercising their rights to sue.

Conclusion:
The Company Law Board dismissed the petition, holding that although it has the power to call, hold, and conduct a meeting under Section 186 of the Companies Act, 1956, it would not be just, equitable, appropriate, or proper to allow the petition in view of the peculiar facts of the case and the pending civil suits. The Board also noted the non-compliance with statutory provisions and the potential impact on the respondents' rights to sue. No order as to costs was made.

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