1967 (3) TMI 75 - HC - Companies Law

Meetings and proceedings Company Law Board s power to call annual general meeting, Powers of court to grant relief in certain cases

Issues Involved:
1. Court's power to call, hold, conduct, or control annual general meetings beyond the time appointed by the Companies Act.
2. Application under section 633(2) of the Companies Act, 1956, for relief from liabilities for not holding annual general meetings and not filing balance-sheets and profit and loss accounts.
3. Validity and legality of repeated applications by the directors for relief from liabilities.
4. Grounds put forward by the applicants for not holding annual general meetings and not filing balance-sheets and profit and loss accounts.
5. Discretionary power of the court under section 633(1) and (2) of the Companies Act.
6. Interpretation of the word "relieve" in section 633 of the Companies Act.
7. Statutory provisions under sections 166, 167, and 186 of the Companies Act regarding annual general meetings.
8. Applicability of rule 7 of the Companies Rules regarding enlargement or abridgment of time.

Detailed Analysis:

1. Court's Power to Call, Hold, Conduct, or Control Annual General Meetings Beyond the Time Appointed by the Companies Act:
The court concluded that it has no power under the present law in India to call, hold, conduct, or control annual general meetings of companies beyond the time appointed by the Companies Act. The judgment emphasized that such power is not vested in the court and any attempt to hold past annual general meetings in subsequent years would be a farce of company law and management.

2. Application Under Section 633(2) of the Companies Act, 1956, for Relief from Liabilities:
The application was made under section 633(2) of the Companies Act, 1956, seeking relief from liabilities for not holding annual general meetings from 1961 to 1965 and for not filing balance-sheets and profit and loss accounts for the corresponding years. The court highlighted that this application was extraordinary and essentially sought to convert statutory annual general meetings into quinquennial meetings, which is not permissible under the Companies Act.

3. Validity and Legality of Repeated Applications by the Directors for Relief from Liabilities:
The court noted the history of repeated applications by the directors, who had previously obtained similar orders for relief from liabilities on multiple occasions but had violated their undertakings each time. The court deemed these orders irregular, illegal, and beyond its powers and jurisdiction. The repeated violations and attempts to seek relief were considered deplorable and a misuse of the court's process.

4. Grounds Put Forward by the Applicants for Not Holding Annual General Meetings and Not Filing Balance-Sheets and Profit and Loss Accounts:
The applicants cited the death of auditors and the unavailability of company books due to legal proceedings as reasons for non-compliance. The court rejected these grounds as frivolous and false. The court pointed out that the death of auditors could not explain non-compliance from 1961 to 1964, and the claim about the unavailability of books was contradicted by the applicants' own statements in previous proceedings.

5. Discretionary Power of the Court Under Section 633(1) and (2) of the Companies Act:
The court emphasized that the power to grant relief under section 633(1) and (2) is discretionary and should only be exercised when the defaulting director has acted honestly and reasonably. The court must be satisfied that the director ought fairly to be excused. The court found no justification to exercise this discretion in favor of the applicants, given their repeated violations and lack of genuine reasons for non-compliance.

6. Interpretation of the Word "Relieve" in Section 633 of the Companies Act:
The court interpreted the word "relieve" in section 633 to mean relief from liability, such as fines and penalties, and not the power to extend the time for holding annual general meetings or filing statutory documents. The court held that section 633 does not empower it to suspend the operation of the Companies Act or extend statutory deadlines.

7. Statutory Provisions Under Sections 166, 167, and 186 of the Companies Act Regarding Annual General Meetings:
The court reviewed sections 166, 167, and 186 of the Companies Act, which outline the requirements and provisions for holding annual general meetings. Section 166 mandates the holding of annual general meetings within specified timeframes, with limited extensions allowed by the Registrar or the Central Government. Section 167 provides for the Central Government's power to call an annual general meeting in case of default. Section 186 explicitly excludes annual general meetings from the court's power to order meetings. The court concluded that these provisions do not allow for the extension of time to hold annual general meetings beyond the statutory limits.

8. Applicability of Rule 7 of the Companies Rules Regarding Enlargement or Abridgment of Time:
The court rejected the argument that rule 7 of the Companies Rules, which allows the court to enlarge or abridge time, could be applied in this case. The court held that this rule is confined to the time appointed by the rule or fixed by an order of the court for doing any act or taking any proceeding. Since the statute does not grant the court the power to extend the time for holding annual general meetings, rule 7 is not applicable.

Conclusion:
The court dismissed the application with costs, finding it devoid of merit and frivolous. The court reiterated that it has no power to extend the time for holding annual general meetings or filing statutory documents beyond the timeframes specified in the Companies Act. The judgment emphasized the importance of adhering to statutory requirements and the limited scope of the court's discretionary power to grant relief from liabilities.

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