1973 (5) TMI 56 - HC - Companies Law

Meeting and Proceedings - Power of Company Law Board to Order Meeting to be Called, Directors - Right of person other than retiring director to stand for directorship

Summary

Issues Involved:
1. Impracticability of calling a general meeting.
2. Validity of the extraordinary general meeting held on October 7, 1972.
3. Validity of the election held on October 21, 1972.
4. Allegations of irregularities and fraud in the election process.
5. Necessity of calling a fresh meeting under Section 186 of the Companies Act, 1956.

Issue-wise Detailed Analysis:

1. Impracticability of Calling a General Meeting
The court examined whether it was impracticable to call a general meeting of M/s. Motion Pictures Association, Delhi, under the usual procedures. The company had not held an annual general meeting since May 3, 1969, leading to a deadlock in the election of office bearers. The court noted that the company had voluntarily agreed not to hold any meetings until a dispute was resolved, which was later compromised. Subsequent attempts to call a meeting were marred by invalid signatures and withdrawals, making it impracticable to call a meeting in the ordinary manner. The court thus invoked its powers under Section 186 of the Companies Act, 1956, to call a meeting.

2. Validity of the Extraordinary General Meeting Held on October 7, 1972
The court had directed an extraordinary general meeting on October 7, 1972, to amend Article 23 of the company's articles of association, fixing the number of executive committee members at 16. However, an amendment was moved at the meeting, without prior notice, to fix the number at 18, which was carried unanimously. The court found this amendment to be illegal as it was not moved as a special resolution with the requisite notice. The court emphasized that any deviation from its directions, even if unanimously agreed upon, could not be deemed valid under Section 186(2).

3. Validity of the Election Held on October 21, 1972
The election of office bearers on October 21, 1972, was conducted based on the invalid resolution passed on October 7, 1972. The court noted that the meeting and election could not be deemed as meetings of the company under Section 186(2) because they did not comply with the court's directions. The election of 18 members was thus rendered invalid.

4. Allegations of Irregularities and Fraud in the Election Process
The applicant, Joginder Singh Sood, alleged irregularities in the election process, including the issuance of more ballot papers than the number of members present, lack of proper records, and unauthorized voting. The court found discrepancies between the number of members who signed the attendance register and the number of ballot papers issued. It was noted that 101 requisition slips were issued to those who did not sign the attendance register, and at least 7 unauthorized persons had voted. Additionally, 33 limited companies had cast votes without proper authorizations under Section 187 of the Act. The court concluded that the election was not conducted with adequate safeguards and proper checks.

5. Necessity of Calling a Fresh Meeting under Section 186 of the Companies Act, 1956
Given the irregularities and the invalid resolution, the court found it necessary to call another meeting under Section 186 to resolve the deadlock and ensure proper management of the company's affairs. The court issued detailed directions for conducting the fresh meeting in two stages:
1. First Stage: A general meeting on August 18, 1973, to amend Article 23, fixing the number of executive committee members at 18.
2. Second Stage: A general meeting on October 13, 1973, to elect 18 office bearers, with specific procedures to ensure proper authorization and voting.

The court appointed a chairman and an alternate chairman to oversee the meetings and issued comprehensive guidelines to prevent any irregularities. The application was ordered accordingly, with no order as to costs.