1975 (3) TMI 60 - HC - Indian Laws

Summary

Issues involved: The judgment involves issues related to the validity of resolutions passed at a general body meeting held in violation of an inhibitory order, the court's power to invoke section 151 of the Code of Civil Procedure to rectify such violations, and the impact on third-party rights arising from actions taken in contravention of court orders.

Validity of Resolutions Passed in Violation of Inhibitory Order:
The case involved an extraordinary general body meeting of Century Flour Mills Ltd., Madras, held on September 14, 1974, despite an order staying the meeting. The appellants sought to declare the resolutions passed at the meeting as void, illegal, and inoperative. The court considered whether the resolutions could stand validly despite the meeting being held in violation of the inhibitory order.

Court's Power under Section 151 of the Code of Civil Procedure:
The appellants argued that the court should exercise its inherent powers under section 151 of the Code of Civil Procedure to rectify the wrong done by holding the meeting in violation of the court's order. The court examined previous cases and observed that the inherent power under section 151 should be invoked to set right any injustice caused by actions taken in disobedience of court orders.

Impact on Third-Party Rights:
A contention raised was that third parties had acquired rights by virtue of the resolutions passed at the meeting, and therefore, the court's power to set aside such rights was limited. The court clarified that its concern was with the meeting being prohibited and not with the actions taken at the meeting. It held that the court's duty was to put the parties back in the same position as before the meeting, without interfering with third parties' rights.

Conclusion:
The court allowed the application to declare the resolutions passed at the meeting as void. It held that the parties should be restored to the position prior to the meeting, rendering the meeting and its resolutions ineffective. The court dismissed other related applications.