1979 (4) TMI 137 - HC - Companies Law

Summary

Issues Involved:
1. Prima facie case for temporary injunction.
2. Legality of the rejection of proxies.
3. Balance of convenience.
4. Jurisdiction of the High Court under Section 115 of CPC.
5. Powers of the sub-committee regarding proxies and election results.

Issue-wise Detailed Analysis:

1. Prima Facie Case for Temporary Injunction:
The plaintiff sought a temporary injunction to restrain the sub-committee from announcing the election results and considering the rejected proxies. The trial court found that the plaintiff had no prima facie case, as the sub-committee was acting within its powers conferred by the resolution. The appellate court upheld this finding. The plaintiff's argument that he had a fundamental right in the company's management was rejected, as the entire body of shareholders also had a right to choose their management.

2. Legality of the Rejection of Proxies:
The secretary of the company had rejected five proxies, which was deemed illegal and unauthorized by the trial court. The sub-committee, appointed to adjudicate the validity of these proxies, found them valid. Consequently, the court held that the plaintiff had no prima facie case for an injunction to restrain the sub-committee from considering these proxies.

3. Balance of Convenience:
The trial court determined that the balance of convenience was not in favor of the plaintiff. The plaintiff had already acted as a director under the resolution he was now challenging. The court noted that the plaintiff could not approbate and reprobate by taking advantage of one part of the resolution while challenging another part. The appellate court agreed with this finding.

4. Jurisdiction of the High Court under Section 115 of CPC:
The High Court emphasized that its jurisdiction under Section 115 of the CPC is limited and does not extend to correcting errors of fact or law unless they relate to the jurisdiction of the court to try the suit. The court cited several Supreme Court rulings to support this view, including D.L.F. Housing and Construction Co. (P) Ltd. v. Samp Singh, Hindustan Aeronautics Ltd. v. Ajit Prasad, and State of Orissa v. Pyarimohan Samantary.

5. Powers of the Sub-Committee Regarding Proxies and Election Results:
The sub-committee was authorized by a resolution to adjudicate the validity of disputed proxies and announce the election results. The plaintiff argued that the sub-committee exceeded its powers by inviting proxies to cast their votes after June 6, 1977. The court found that the sub-committee was acting within its powers, as the resolution implied that the sub-committee could allow proxies adjudged valid to cast their votes. The court also noted that the poll had not concluded on June 6, 1977, and the meeting was deemed to be continuing until the results were announced.

Conclusion:
The High Court dismissed the revision, agreeing with the lower courts that the plaintiff had no prima facie case, the balance of convenience was not in his favor, and the sub-committee was acting within its powers. The court reiterated that its jurisdiction under Section 115 of CPC is limited and does not allow for interference with the lower courts' findings unless jurisdictional errors are involved. The interim orders passed by the court were vacated.