1967 (7) TMI 88 - HC - Companies Law

Meetings and proceedings - Annual General Meeting ,Company Law Board s power to call annual general meeting and Power of Company Law Board to Order Meeting to be Called

Summary

Issues Involved:
1. Validity of the Annual General Meeting (AGM) held on April 22, 1967.
2. Continuation of respondents Nos. 2 to 5 as directors of the Fund.
3. Appointment of an independent chairman for the AGM.

Issue-wise Detailed Analysis:

1. Validity of the Annual General Meeting (AGM) held on April 22, 1967:

The applicant, a shareholder, contended that the AGM commenced with the distribution of the agenda and balance-sheet, and the shareholders continued the meeting after the board of directors and the secretary left the hall. The applicant argued that the board had no power to adjourn the meeting except under section 256 of the Companies Act. The Fund, however, countered that the meeting could not be held due to confusion and pandemonium caused by unauthorized entry of members and non-members, leading to the president recording in the minutes book that the AGM could not be held. The court concluded that the meeting never commenced as there was no orderly congregation with the intent to conduct the AGM. The court emphasized that the mere distribution of the agenda and balance-sheet did not signify the commencement of the meeting. The court held that the resolutions passed by the shareholders in the absence of the board of directors were not valid.

2. Continuation of respondents Nos. 2 to 5 as directors of the Fund:

The applicant argued that respondents Nos. 2 to 5 ceased to hold office after the AGM on April 22, 1967. The court, however, found it unnecessary to determine whether respondents Nos. 2 to 5 had retired, as the AGM had not commenced or been held. The court noted that directors could only retire when an AGM is held, and since the AGM was not held, respondents Nos. 2 to 5 continued to be directors.

3. Appointment of an independent chairman for the AGM:

The Fund sought the appointment of an independent chairman to conduct the AGM, citing the disorder during the previous attempt. The court acknowledged the necessity of appointing an independent chairman to ensure a peaceful and orderly AGM. The court appointed an advocate, Sri K. Venkateswara Rao, as Commissioner to act as chairman of the AGM, granting him the authority to decide the manner of election of directors and the handling of proxy votes. The court emphasized its inherent jurisdiction to issue such directions to assist the Fund in fulfilling its statutory duties.

Conclusion:

The court dismissed Company Application No. 124 of 1967, denying the applicant's request to restrain respondents Nos. 2 to 5 from acting as directors. The court allowed Company Application No. 131 of 1967, appointing an independent chairman to oversee the AGM, ensuring the Fund could perform its statutory obligations.