1960 (10) TMI 40 - HC - Companies Law

Meeting and Proceedings Power of Company Law Board to Order Meeting to be Called and Restriction on exercise of voting rights of members who have not paid calls, Etc.

Issues Involved:
1. Maintainability of the petition under Section 186 of the Companies Act.
2. Petitioner's right to file the petition.
3. Impracticability of calling a meeting in the ordinary manner.
4. Utility of holding an extraordinary general meeting.
5. Authority to call an annual general meeting.

Issue-wise Detailed Analysis:

1. Maintainability of the petition under Section 186 of the Companies Act:
The petitioner sought an order under Section 186 of the Companies Act to convene an extraordinary general meeting of Pasari Flour Mills Ltd. The court examined the maintainability of the petition and the objections raised. It was argued that an application under Section 186 was not maintainable. However, the court found that the petition was maintainable as there was non-compliance with Section 166, which mandates holding an annual general meeting within specified timeframes.

2. Petitioner's right to file the petition:
Shri K.L. Mishra raised a preliminary objection that Radheylal, holding only one share and allegedly owing Rs. 700 to the company, had no right to file the petition. The court reviewed Articles 63, 96, and 97 of the company's articles of association and concluded that these articles did not debar Radheylal from being a member or from filing the petition. The court emphasized that Article 97, which required a minimum of five shares to vote, was inoperative as it conflicted with Section 182 of the Companies Act, which does not allow restrictions based on the number of shares.

3. Impracticability of calling a meeting in the ordinary manner:
The court considered whether it had become "impracticable" to call a meeting in the ordinary manner due to serious disputes between the parties, including step-brothers Birmadutt and Keshavdeo. The court noted that the term "impracticable" was distinct from "impossible" and, based on the circumstances and serious disputes, concluded that it was indeed impracticable to call a meeting in the ordinary manner.

4. Utility of holding an extraordinary general meeting:
The court examined whether holding an extraordinary general meeting would serve any useful purpose. It was noted that under the Companies Act, 1956, only the Central Government could call an annual general meeting, while the court could call an extraordinary general meeting. The court found that the main objective of the petitioner was to elect new directors, which could only be done at an annual general meeting. Thus, calling an extraordinary general meeting would be futile as it could not achieve the desired outcome of appointing directors or auditors or laying balance-sheets.

5. Authority to call an annual general meeting:
The court highlighted the bifurcation of powers under the Companies Act, 1956, where the Central Government is empowered to call an annual general meeting, and the court can call an extraordinary general meeting. The court emphasized that it could not direct the appointment of directors, auditors, or the laying of balance-sheets at an extraordinary general meeting. Consequently, the court concluded that it could not grant the main relief sought by the petitioner.

Conclusion:
The petition was dismissed as the court could not grant the main relief of convening an extraordinary general meeting to elect and appoint a board of directors. The court also found the prayer for directing the meeting to transact other business too vague. All parties were left to bear their own costs.

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