1939 (8) TMI 27 - Commissioner - Companies Law

General provisions with respect to memorandum and articles - Effect of memorandum and articles, Meetings and proceedings Contents and manner of service of notice and persons on whom it is to be served and Directors - Right of person other than retiring director to stand for directorship

Issues Involved:
1. Validity of the extraordinary general meeting held on 28th May 1939.
2. Validity of the first resolution altering Article 98 of the company's articles of association.
3. Validity of the second resolution appointing additional directors under Article 102.

Detailed Analysis:

1. Validity of the Extraordinary General Meeting Held on 28th May 1939:
The plaintiff challenged the validity of the meeting, arguing that it was not properly convened as it contravened Article 63 of the articles of association, which requires that a meeting convened on requisition shall be held not more than two months after the date of delivery of the requisition. The requisition was dated 25th March 1939, and the meeting was held on 28th May 1939. However, evidence showed that the requisition was delivered to the company's office on 15th April 1939. The court accepted the evidence provided by the managing agent and his clerk that the requisition was indeed received on 15th April 1939. Thus, the meeting was held within the stipulated two-month period as per Article 68. The court also noted that the absence of the date of receipt in the notice of the meeting did not invalidate the meeting. Therefore, the first ground of objection taken by the plaintiff had no substance.

2. Validity of the First Resolution Altering Article 98 of the Company's Articles of Association:
The first resolution passed at the meeting stated, "That until otherwise determined by a general meeting the number of directors shall be not less than 3 or more than 11, and the present strength of the Board be increased to 11." The plaintiff claimed this resolution altered and replaced Article 98, which originally set the number of directors to be not less than 3 or more than 7. The court held that the resolution was made under Article 98, which allows for such changes. The court referenced the case of Gur Prasad v. Rameshwar Prasad, which had similar articles of association and held that a resolution increasing the number of directors was valid without requiring a special resolution. Therefore, the plaintiff's second ground also failed.

3. Validity of the Second Resolution Appointing Additional Directors Under Article 102:
The plaintiff argued that the power to appoint additional directors vested in the directors and not in the company under Article 102. The court examined Article 102 and other relevant articles (110, 111, 112, and 113) and concluded that the power of appointing additional directors lies with the company in a general meeting unless the company has divested itself of this power by its articles of association. The court cited Worcester Corsetry Ltd. v. Wittings, which held that the rights and powers of the company in a general meeting to appoint directors had not been circumscribed. The court found that the ordinary power of the company in a general meeting to appoint additional directors had not been excluded by the articles of association. Consequently, the second resolution appointing defendants 2 to 5 was not ultra vires the powers of the meeting.

Conclusion:
The court dismissed the suit with costs, holding that:
- The extraordinary general meeting held on 28th May 1939 was validly convened.
- The first resolution altering Article 98 was valid.
- The second resolution appointing additional directors was within the powers of the meeting and not ultra vires.

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