1954 (4) TMI 24 - HC - Companies Law

Trust not be entered on register of members, Meetings and Proceedings Chairman s declaration of result of voting by show of hands to be conclusive and Right of Member to use his Votes Differently

Summary

Issues Involved:
1. Injunction to restrain the defendant from acting upon and communicating resolutions.
2. Legality of the rejection of proxies.
3. Prima facie case for granting an interim injunction.
4. Voting rights and splitting of votes by shareholders.

Issue-wise Detailed Analysis:

1. Injunction to restrain the defendant from acting upon and communicating resolutions:
The plaintiff sought an injunction to prevent the defendant, Fort Gloster Jute Manufacturing Company Limited, from acting upon and communicating resolutions passed in a meeting held on March 16, 1954. The controversy centered around the transfer of shares and the managing agency of the company. The plaintiff challenged the resolution's validity, alleging fraudulent rejection of proxies by the chairman and directors in collusion with the scrutineers.

2. Legality of the rejection of proxies:
The plaintiff argued that the rejection of proxies was improper and illegal, contending that votes of a shareholder could not be split between different proxies. The company countered that the rejection was justified, as the proxies were issued in respect of different parcels of shares. The court noted that the chairman's decision on the admission or rejection of votes, if made in good faith, is prima facie final and conclusive, as per Article 90 of the company's articles of association.

3. Prima facie case for granting an interim injunction:
The court emphasized that for an interlocutory injunction, there must be a prima facie case on both facts and law. The court found that the plaintiff failed to establish a prima facie case against the defendants on the disputed proxies. The court highlighted the principle that the chairman's decision at company meetings should stand until proven wrong at trial, citing relevant case law to support this principle.

4. Voting rights and splitting of votes by shareholders:
The plaintiff contended that a shareholder could not split votes between different proxies, while the company argued that each share carries a right to vote, and there is no legal prohibition against splitting votes. The court reviewed authorities and concluded that proxies have the right to vote and that each share's voting right is distinct. The court rejected the argument that splitting votes was against common sense, noting that the right to vote is attached to each share, not the shareholder's personality.

Conclusion:
The court dismissed the application for an interlocutory injunction, holding that the plaintiff failed to establish a prima facie case. The court found that the chairman's decision should stand prima facie until proven otherwise and that there was no legal basis to prevent the splitting of votes by shareholders. The application was dismissed with costs, and the motion was certified for two counsel.