1980 (11) TMI 122 - HC - Companies Law

Summary

Issues Involved:
1. Maintainability of the application under rules 9 and 11(b) of the Companies (Court) Rules, 1959.
2. Legality of convening the extraordinary general meeting at a place other than the registered office.
3. Appointment of an independent chairman or advocate-observer for the meeting.
4. Applicant's apprehension of physical intimidation and manipulation of records.

Detailed Analysis:

1. Maintainability of the Application:
The court first examined whether the application filed under rules 9 and 11(b) of the Companies (Court) Rules, 1959, was maintainable. The applicant sought the appointment of an independent chairman for an extraordinary general meeting already called by the company. The court noted that no substantial provision of the Companies Act had been invoked except for rules 9 and 11(b). The applicant himself reserved the right to challenge the actions of respondents at an appropriate time and place. The court referenced the Supreme Court decision in R. Rangachari v. S. Suppiah, which held that an application under section 186 of the Companies Act for appointing a chairman for a meeting already called by the company was not maintainable. Consequently, the court concluded that the application was not maintainable.

2. Legality of Convening the Meeting at a Different Place:
The applicant contended that the extraordinary general meeting convened by the second respondent at a place other than the registered office was unauthorized. The court acknowledged the applicant's claim but emphasized that the decision to shift the registered office was resolved in a board meeting held on October 27, 1980. The court did not find sufficient grounds to challenge the legality of the meeting's location solely based on the applicant's assertions.

3. Appointment of an Independent Chairman or Advocate-Observer:
The applicant initially sought the appointment of an independent chairman but later requested an advocate-observer to ensure the meeting's fairness. The court reiterated the Supreme Court's stance that once a meeting is called by the company, the court cannot appoint a chairman or observer. The court emphasized that the inherent powers under rule 9 could not be invoked to interfere with the corporate functions of the company. The court also noted that an observer would not have the authority to make decisions or issue directions during the meeting, rendering the appointment ineffective in safeguarding the applicant's interests.

4. Applicant's Apprehension of Physical Intimidation and Manipulation:
The applicant expressed concerns about physical intimidation and manipulation of records during the meeting. The court acknowledged these apprehensions but stated that the applicant could seek police assistance if his right to participate in the meeting was threatened. The court also highlighted that the applicant could challenge any improprieties or illegalities in the meeting through appropriate legal proceedings. The court concluded that the mere expression of apprehension was insufficient to justify the appointment of an outsider to be present at the meeting.

Conclusion:
The court dismissed the application as not maintainable, emphasizing that the applicant had other remedies available under the Companies Act to address any grievances arising from the meeting. The court held that invoking rule 9 to appoint an observer was not appropriate and could potentially disrupt the corporate functions of the company.