1961 (5) TMI 12 - HC - Companies Law

Summary

Issues Involved:
1. Legality of the executive committee meeting held on October 12, 1960.
2. Validity of the election of office-bearers.
3. Authority of the Registrar of Companies to decide on the validity of the meeting and election.
4. The Registrar's refusal to accept returns filed by the petitioners.
5. Appropriate remedy for the petitioners under the Companies Act.

Issue-wise Detailed Analysis:

1. Legality of the Executive Committee Meeting Held on October 12, 1960:
The petitioners claimed that the meeting on October 12, 1960, was attended by 19 out of 21 members, and Alakh Prakash Mayor was unanimously elected as chairman. However, respondents contended that all 21 members were present, and Satya Paul was elected chairman by 11 votes to 10. The dispute arose over the right of a member (respondent No. 4) to vote without a written consent filed with the Registrar of Companies, leading to respondents Nos. 5 to 12 walking out in sympathy with respondent No. 4.

2. Validity of the Election of Office-Bearers:
According to the petitioners, Alakh Prakash Mayor was elected president unanimously, and other office-bearers were elected in his presence. Conversely, respondents claimed that K.K. Sehgal was elected president by 11 votes to 3, and other office-bearers were elected in their continued meeting after petitioners walked out. This led to conflicting returns filed with the Registrar of Companies by both groups.

3. Authority of the Registrar of Companies to Decide on the Validity of the Meeting and Election:
The main contention was whether the Registrar had the authority to declare the validity of the meeting and the election of office-bearers. The Registrar, in his letter dated December 1, 1960, stated that the meeting on October 12, 1960, was valid and the election of K.K. Sehgal as president was final under section 178 of the Companies Act. The petitioners argued that the Registrar overstepped his statutory duties, as his role under section 306 was merely to enter particulars received under section 303 and not to adjudicate on the validity of meetings or elections.

4. The Registrar's Refusal to Accept Returns Filed by the Petitioners:
The Registrar returned the returns filed by petitioner C.D. Sharma, stating that the election of respondents Nos. 4 to 8 was valid. The Registrar maintained that his decision was an executive one, subject to any contrary decision by a competent court. The petitioners argued that the Registrar had no authority to return the papers or to make any decision on the matter.

5. Appropriate Remedy for the Petitioners under the Companies Act:
The respondents raised a preliminary objection that the writ petition was not competent as adequate remedies were available under the Companies Act. The Letters Patent Bench had previously indicated that the dispute could be settled by the members themselves or through proper court proceedings. The petitioners had also filed a petition under section 186 of the Companies Act, which was rendered ineffective by the Letters Patent Bench's decision.

Judgment:
The court held that the Registrar acted beyond his statutory powers by declaring the validity of the meeting and elections. The Registrar's role under section 306 was limited to entering particulars received under section 303 without adjudicating on their validity. The court quashed the Registrar's decision conveyed in his letter dated December 1, 1960, and directed the Registrar to receive the returns filed by C.D. Sharma. The Registrar was instructed not to make any entries until the respective claims were decided by a competent court. The petition succeeded, and the recognition given by the Registrar was held to be of no legal effect. No order as to costs was made.