1957 (12) TMI 15 - HC - Companies Law

Company Membership of, Meeting and Proceedings Power of Company Law Board to Order Meeting to be Called

Summary

Issues:
1. Shareholders' meeting called under section 186 of the Companies Act, 1956.
2. Validity of voting rights of certain shareholders.
3. Alleged unauthorized allotment of shares.

Analysis:

Issue 1: Shareholders' meeting called under section 186 of the Companies Act, 1956
The judgment pertains to a company where shareholders were divided into two groups, leading to a struggle for control. The court passed an order under section 186 of the Companies Act, 1956, directing a meeting for both groups on October 12, 1957. The meeting was held as directed, and objections were raised post the meeting regarding the chairman's report and the voting process.

Issue 2: Validity of voting rights of certain shareholders
Three objections were raised regarding the validity of voting rights. The first objection was about shareholders in arrears, which the chairman resolved based on the company's books showing no arrears. The second objection concerned minor shareholders, whose votes were cast by their guardians with common consent, as minors were deemed capable of holding shares and exercising voting rights. The third objection related to the alleged issuance of shares beyond the authorized limit, which the chairman deemed irrelevant for excluding voting rights.

Issue 3: Alleged unauthorized allotment of shares
The objection regarding the unauthorized allotment of shares beyond the authorized limit was dismissed by the chairman, stating that shareholders who had paid all dues were entitled to vote. The judgment cited relevant sections of the Companies Act, 1956, emphasizing that shareholders could not be excluded from voting based on unauthorized allotments. The court upheld the meeting's validity, conducted under its order, and dismissed all objections, deeming the meeting duly called, held, and conducted in accordance with the law.

In conclusion, the court found the shareholders' meeting to be in compliance with the Companies Act, 1956, and dismissed the objections raised, ruling that the meeting was validly conducted.