1975 (3) TMI 80 - HC - Companies Law

Issues Involved:
1. Validity of the election of directors held on September 30, 1974.
2. Validity of the removal of directors.
3. Impracticability of holding a meeting and the need for court intervention.
4. The effect of an injunction order on holding the meeting.
5. The jurisdiction and power of the court under Section 186 of the Companies Act.
6. The maintainability of the appeal under Section 4 of the Karnataka High Court Act, 1961.

Issue-wise Detailed Analysis:

1. Validity of the Election of Directors Held on September 30, 1974:
The appellant, a shareholder of Mysore Paper Mills Ltd., challenged the validity of the election of directors at the 39th annual general meeting held on September 30, 1974. The appellant alleged that the election was irregular due to non-compliance with Section 263 of the Companies Act. The appellant, along with other shareholders, served a notice under Section 169 of the Act to convene an extraordinary general meeting to address these issues. The company resisted the petition, asserting that the election was held regularly as evidenced by the minutes of the meeting.

2. Validity of the Removal of Directors:
The appellant also contested the removal of certain directors, claiming that it was void under Section 263 of the Companies Act as it was not separately and individually voted upon. The appellant sought resolutions to place on record the invalidity of these removals and proposed the appointment of new directors in their place.

3. Impracticability of Holding a Meeting and the Need for Court Intervention:
The appellant argued that it had become impracticable to hold the extraordinary general meeting scheduled for February 5, 1975, due to the chairman's alleged bias and the company's refusal to provide necessary records. The appellant requested the court to appoint an advocate-chairman to conduct the meeting and direct the company to make available all necessary books and records.

4. The Effect of an Injunction Order on Holding the Meeting:
The company informed the requisitionists that it could not convene the meeting due to an order of temporary injunction issued by the court of the Fifth Munsiff, Howrah, restraining the company from holding any general meeting. The court noted that the order of temporary injunction was still in force, making it impracticable for the board of directors or the requisitionists to call a general meeting.

5. The Jurisdiction and Power of the Court Under Section 186 of the Companies Act:
Section 186 of the Companies Act allows the court to order a meeting to be called if it is impracticable to do so in the prescribed manner. However, the appellant did not request the court to order a meeting but only sought the appointment of an advocate as chairman of the already called meeting. The court held that it could not grant relief that would violate another court's order unless it had the power to annul or modify that order. The court also noted that the power under Section 186 had been transferred to the Company Law Board by the Companies (Amendment) Act, 1974, effective from February 1, 1975.

6. The Maintainability of the Appeal Under Section 4 of the Karnataka High Court Act, 1961:
The court did not express an opinion on the maintainability of the appeal, as the constitutionality of Section 4 of the Karnataka High Court Act, 1961, was upheld by a Full Bench of the court, and the appeal against that order was pending before the Supreme Court. The court also did not address whether a meeting could be held after the expiry of three months from the date of the requisition under Section 169(7) of the Act.

Conclusion:
The appeal was dismissed, and the court did not grant the relief sought by the appellant. The court emphasized that it could not provide relief that would contravene an existing court order and that the appellant should have requested the court to order a meeting to be called under Section 186 of the Companies Act. There was no order as to costs.

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