1975 (9) TMI 75 - SC - Companies Law

What is the meaning and scope of section 186 of the Companies Act, 1956? Held that - On the occurring of any one or more of the said contingencies the court has to order the calling of a meeting of the company and its holding and conducting in such manner as the court thinks fit. The use of the word and between the words held and conducted in clause (a ) of sub-section (1) clearly shows that the court has no power to make any order regarding the holding and conducting of any meeting which has already been called without ordering a meeting of the company to be called in place of the meeting already called. If an order under clause (a) has been made such ancillary or consequential directions as the court thinks expedient could be given under clause (b), including a direction within the meaning of the explanation appended thereto. The language of sub-section (2) further fortifies the above interpretation of sub-section (1) and makes any meeting called, held and conducted in accordance with an order under sub-section (1) to be a meeting of the company duly called, held and conducted. The use of the word or in the first part of sub-section (1) may be disjunctive or conjunctive in the manner we have interpreted above. But, undoubtedly, the order under clause (a) has got to be for all the three purposes and not merely for holding or conducting of the meeting. Appeal allowed.

Summary

Issues:
Interpretation of section 186 of the Companies Act, 1956 regarding the power of the court to order a meeting to be called, held, and conducted.

Detailed Analysis:

The case involved an appeal by special leave regarding the interpretation of section 186 of the Companies Act, 1956. The main issue was to determine the meaning and scope of section 186, specifically in the context of the appointment of a chairman for a company meeting. The background of the case involved a dispute between two managing directors of a company, which led to shareholders requisitioning an extraordinary general meeting for their removal. The shareholders sought the court's intervention under section 186 to appoint an Advocate-Commissioner as the chairman of the meeting to ensure proper conduct.

The High Court initially dismissed the application under section 186, stating that it was not impracticable to hold or conduct the meeting. However, an appeal was filed, and a Division Bench of the High Court allowed the appeal, appointing an advocate of the court as the advocate-chairman to hold and conduct the meeting. The meeting was directed to take place at the company's registered office.

The appellant raised three points in support of the appeal. Firstly, it was argued that the power under section 186 could only be exercised if it was impracticable to call and hold a meeting, and the court could not appoint a chairman without ordering the meeting. Secondly, it was contended that the High Court erred in finding it impracticable to hold the already called meeting. Lastly, the appellant pointed out that the jurisdiction under section 186 had been transferred to the Company Law Board by an amendment in 1974.

The Supreme Court analyzed the provisions of section 186 and emphasized that the court could order a meeting to be called, held, and conducted only in specific circumstances where it was impracticable to do so otherwise. The court clarified that the order under section 186 must include all three purposes - calling, holding, and conducting the meeting. Since the application in this case did not seek an order for calling a meeting, the court deemed it not maintainable under section 186.

Ultimately, the Supreme Court allowed the appeal, set aside the High Court's judgment, and dismissed the application under section 186 as not maintainable. The parties were directed to bear their own costs throughout, concluding the legal proceedings in this matter.