1950 (8) TMI 9 - HC - Companies Law

Meetings and proceedings - Annual General Meeting, Power of Company Law Board to Order Meeting to be Called, Chairman of Meeting and Directors vacation ofoffice by

Summary

Issues Involved:
1. Maintainability of the suit.
2. Validity of the shareholders' meeting and resolution removing the plaintiff from the managing directorship.

Issue-wise Detailed Analysis:

1. Maintainability of the Suit:

The primary question was whether the suit was maintainable. The learned District Munsif of Devakottai found the suit maintainable, stating it was not a matter of mere internal management or a domestic matter. However, the Subordinate Judge of Devakottai reversed this decision, applying the rule in *Foss v. Harbottle*, which posits that courts should not interfere with the ordinary management of a company acting within its powers, and litigation must be in the company's name unless there is something illegal, oppressive, or ultra vires.

The High Court, however, concluded that the rule in *Foss v. Harbottle* did not apply here. Instead, it referenced *Pulbrook v. Richmond Consolidated Mining Co.*, where it was established that a director excluded from acting as such could sustain an action in his own name for individual injury. The Court also cited *Srinivasan v. Watrap Subramania Aiyar*, affirming that a suit to enforce a shareholder's individual rights is maintainable. Therefore, the plaintiff's suit was deemed maintainable as it concerned an individual wrong, not a general shareholder grievance.

2. Validity of the Shareholders' Meeting and Resolution:

The second issue was whether the meeting held on 3rd November 1948, and the resolution passed therein, were valid. The facts revealed that the meeting was initially scheduled at the company's registered office but was moved to another location (286, Kallukatti East Street) due to the premises being locked. The lower appellate court inferred that the plaintiff's actions led to this change of venue and presumed under Section 114 of the Evidence Act that the meeting was validly held at the new location.

The appellant argued that the meeting was not a proper adjournment and should have been conducted afresh under the Indian Companies Act or by court order under Section 79(3). The Court, however, rejected the narrow interpretation of Section 79(3) proposed by the appellant, stating that "to conduct" includes the entire process of holding a meeting. It concluded that the impracticability of holding the meeting at the registered office justified the change of venue.

Furthermore, the Court addressed whether the plaintiff could contest the validity of the meeting given his role in making the registered office unavailable. Citing *Subramania Aiyar v. The United India Life Insurance Co. Ltd.*, the Court held that a person who prevents a meeting from being held cannot later claim the meeting's invalidity due to the change of venue. This principle, supported by the maxim "nullus commodum capere potest de injuria sua propria" (no man can take advantage of his own wrong), was applied to preclude the plaintiff from disputing the meeting's validity.

Conclusion:

The second appeal was dismissed with costs, affirming that the suit was maintainable and the meeting and resolution of 3rd November 1948 were valid. The plaintiff's conduct in making the registered office unavailable precluded him from challenging the meeting's validity.