2016 (9) TMI 1569 - Tri - Companies Law

Oppression and Mismanagement - default in holding its 28th annual general meeting to be held in the year June, 2013 - case of respondent is that 28th and 29th annual general meeting as was held on July 10, 2014 is without notice to the members as laid down in clause 32(a) of the articles of association of the company and the election of the office bearers of the said committee was done without casting of votes of general members in the annual general meeting held on July 10, 2014. HELD THAT - The memorandum of association and the articles of association is amended up to 2014 but the petitioner being a member of the Bengal Chemist and Druggist Association is not aware with regard to the amendment of 2014 and filed the company petition sometime in the year 2015 taking resort the articles of association and the memorandum of association as amended up to 2005 - Even after the lapse of one year, the petitioner has never come with any application for the amendment and even after receiving the reply by the respondent in the form of affidavit wherein the memorandum of association and the articles of association as amended up to 2014 is annexed and marked as annexure A, the petitioner was sitting idle. It is an established principle that every alteration of the memorandum of association and the articles of association be filed with the Registrar of Companies. The respondents have also failed to explain and/or file any documents to show when the resolution was/were taken to amend the memorandum of association and the articles of association, as amended up to 2014 with due notice to member(s) - On the other hand, it is also found that the respondents have failed to show/prove and/or annexed any copy of the notices of annual general meeting which are issued to the petitioner which is mandatory as per their own articles of association as amended up to 2014. It is admitted by the respondents that the petitioner is the member of Bengal Chemist and Druggists Association. As per the articles of association of the company, 2005 as enclosed by the petitioner with the petition, at clause 32. A general meeting will be held once in every year at such time by giving at least 21 days notice to its members (not being more than fifteen months after the holding of the preceding general meeting) and at such place as the Committee shall fix. Any other general meeting hold during a year will be called extraordinary general meeting and clause 32(b) requires three months' notice which is as per the own record of the respondent - in both the memorandum of association and articles of association of the company whether it is of 2005 and/or amended as of 2014 provision of issuance of notice has been made mandatory and is binding upon the company and its members. The petitioner has not been able to controvert to the contentions of the respondents and in the instant case the respondent has failed to show any document and/or correspondence which will establish and prove that due notice of three months' has been served upon the petitioner in respect of holding of the annual general meeting on July 10, 2014 as per clause 32(a) of the articles of association, consequent upon which Committee was formed and office bearers have been elected without casting of votes by the members in Asansol Zone - respondents has totally failed to prove that they have followed the due process of law in holding the annual general meeting as stipulated in the memorandum of association and in the articles of association and that notices of the meetings have duly been served upon the petitioner/s as per clause 32(a) of the memorandum of association and the articles of association of 2005 vis-a-vis 2014 and the Executive Committee members were elected by way of casting the votes by the ordinary members. The pre-conditions of holding the annual general meeting have not been fulfilled as the respondent has failed to produce the proof of service of notice of the annual general meeting held on July 10, 2014 to the members, attendance sheet of the said annual general meeting and the minutes of meeting thereof - respondent is hereby directed to convene the annual general meeting afresh and form the Executive Committee following the due process of law as per the memorandum of association and the articles of association as amended up to date so as to regularise the association and for the interest of its members including the petitioner, the list of which is annexed with the company petition as per annexure A3 as also to ensure that the petitioner and/or the members of the company are not prejudiced. Application disposed off.

Summary

Issues Involved:

1. Validity of the 28th and 29th Annual General Meeting (AGM) held on July 10, 2014, without proper notice.
2. Legality of the election of office bearers without casting votes of general members.
3. Appointment and authority of the Convenor for the Asansol Zone.

Issue-wise Detailed Analysis:

1. Validity of the 28th and 29th AGM held on July 10, 2014, without proper notice:

The petitioner alleged that the 28th and 29th AGMs were convened without following the proper notice period as mandated by clause 32(a) of the Articles of Association. According to the petitioner, the AGM should have been convened with at least three months' prior notice, but the meeting was held just 22 days after the notification, contrary to the rules. The respondent argued that the meeting was held per the amended Articles of Association up to 2014, which they claimed the petitioner was unaware of. The Tribunal found that the respondents failed to provide proof of serving the requisite notice to the petitioner, thereby violating the mandatory notice period stipulated in both the 2005 and 2014 Articles of Association.

2. Legality of the election of office bearers without casting votes of general members:

The petitioner contended that the election of office bearers during the AGM was conducted without the casting of votes by the general members, rendering the election process illegal and arbitrary. The respondent countered this by stating that the elections were conducted per the amended Articles of Association and that the petitioner lacked the requisite standing to challenge the process. The Tribunal observed that the respondents did not provide evidence of the election process, including minutes of the meeting or proof of voting, thereby supporting the petitioner's claim of an improper election process.

3. Appointment and authority of the Convenor for the Asansol Zone:

The petitioner challenged the appointment of Shri Amitava Roy as the Convenor of the Asansol Zone, alleging that the Executive Committee meeting purportedly held on April 18, 2014, to appoint him did not occur. The respondent did not provide satisfactory evidence to counter this claim. The Tribunal found the appointment of the Convenor to be arbitrary and not in compliance with the procedural requirements, thus invalidating the appointment.

Conclusion:

The Tribunal partially allowed the petition, directing the respondent to convene the AGM afresh and form the Executive Committee following the due process of law as per the Articles of Association. This decision was made to regularize the association and protect the interests of its members, including the petitioner. The Tribunal emphasized the importance of adhering to the procedural requirements and maintaining transparency in the election process.

Additional Observations:

The Tribunal noted that despite the provision for arbitration in the Articles of Association, it decided to impart equity and justice by addressing the petition. The Tribunal also disposed of related company applications (C.A. No. 1114 of 2015 and C.A. No. 908 of 2015) with the same observations, ensuring no prejudice to the petitioner's rights.

Order:

The Tribunal directed the respondent to convene the AGM afresh, form the Executive Committee following the due process of law, and ensure that the petitioner's and other members' interests are protected. No order as to costs was made.