1979 (11) TMI 199 - HC - Companies Law

Court Jurisdiction of, Meetings and Proceedings Company Law Board s power to call annual general meeting

Summary

Issues Involved:
1. Validity of the delegates' election process.
2. Nomination of a branch secretary to the director board.
3. Legality of delegates from the SNDP Sabha.
4. Proper publication of candidates for the office of director.
5. Preparation and publication of the voters' list.

Issue-Wise Detailed Analysis:

1. Validity of the Delegates' Election Process:
The petitioner contended that the delegates who attended the meeting were not duly elected by the branches, asserting that the head office accepted lists from the branches beyond the time specified under Article 44. Additionally, there was discrimination in entertaining such lists. The court examined these claims and determined that the grievances pertained to internal management issues, which traditionally fall outside the purview of judicial intervention unless there is a clear breach of statutory provisions or the company's articles.

2. Nomination of a Branch Secretary to the Director Board:
The petitioner argued that the nomination of a branch secretary to the director board was against the provisions of Article 15. The court reiterated that issues related to internal management and adherence to the company's articles are typically not subject to judicial review unless they involve a violation of statutory rights or ultra vires acts.

3. Legality of Delegates from the SNDP Sabha:
The petitioner claimed that about 60 delegates admitted to the meeting belonged to the SNDP Sabha, which was once functioning in the Cochin-Kanayannur Taluk, and that those who elected them and they themselves were illegally treated as permanent members. The court found that such grievances, even if they involve a significant number of members, do not automatically confer jurisdiction on the company court to interfere, as they pertain to internal management and individual rights rather than corporate rights.

4. Proper Publication of Candidates for the Office of Director:
The petitioner contended that there was no proper publication under Section 257 of the Companies Act regarding the candidature of different persons for the office of director. The court clarified that while the Companies Act provides certain procedural safeguards, the remedy for such procedural lapses lies with the civil courts unless the Act expressly confers jurisdiction on the company court.

5. Preparation and Publication of the Voters' List:
The petitioner argued that the uniform practice of preparing and publishing a "voters list" much in advance of the meeting was not followed. The court emphasized that such procedural issues, even if they affect the election process, do not fall within the exclusive jurisdiction of the company court unless there is a specific statutory provision to that effect.

Conclusion:
The court concluded that Sections 10 and 166 of the Companies Act do not confer jurisdiction on the company court to interfere in matters relating to the annual general body meeting of a company and the election of its directors. The petitioner's remedy lies in instituting a regular civil suit before the appropriate civil court. The court reiterated the principle from Foss v. Harbottle that courts should not interfere in the internal management of a company at the instance of a minority of members dissatisfied with the conduct of its affairs by the majority. The company petition was dismissed, and the parties were directed to bear their own costs.