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2022 (2) TMI 87 - HC - Indian LawsValidity of meeting dated December 26, 2021, of the Northern India Regional Council (NIRC) of the ICSI - validity of appointment of office bearers made in the alleged meeting dated 26th December, 2021 - election to the posts of Chairman, Vice-Chairman, Secretary and Treasurer of NIRC, who are elected for one year, otherwise, normally the tenure is four years - It is the case of the petitioners that the notice for the 259th meeting and the agenda thereof suffers from irregularities and legal infirmities as the same are in violation of Regulation 90 of the Regulations of 1982 and SS-I, and as such there was no valid notice/agenda for the 259th meeting - HELD THAT - It is clear that the presence of words ordinarily not less than seven days indicate that the Regulation 90 of the Regulations of 1982 does not mandatorily stipulate a period of seven days in sending notice to the members unlike Paragraph 1.3.7 of the SS-I. The words, by stipulating notice for every meeting shall be sent ordinarily not less than seven days before the date of the meeting, confer a discretion on the Chairman to give a notice of even less than seven days. This is so, because, SSI cannot take away / dilute, the discretion vested with the Chairman by the Regulation of 1982 to give, a notice of less than seven days. The word ordinarily denotes, that the underlying provision does not promote a cast-iron rule. On the issue of agenda, the Regulations only contemplate, as far as practicable, a statement of the business to be transacted be provided, unlike the SS-I, which stipulates, agenda and agenda notes be mandatorily sent seven days prior to the meeting. In this instance as well, a discretion has been conferred on the Chairman by the provisions of the Regulations of 1982 to, as far as practicable, send a statement of the business to be transacted to the members. Even if it is not sent, the same is not fatal. The above is not to be construed to mean that the SS-I should not be followed at all. If in a given case it is followed, the same shall be proper / justified. In other words, if a notice of less than seven days is given along with a statement of the business to be transacted, the same shall not be held to be illegal merely because the notice of not less than seven days along with the agenda and agenda notes have not been sent. Validity / Legality of the meeting of December 26, 2021 - HELD THAT - The process of holding the scheduled meeting on December 26, 2021 at 11 AM started on December 18, 2021 with the issuance of notice to all the members of NIRC stating that the same is for electing office bearers for the year 2022. The notice of December 18, 2021 satisfies the requirement of ordinarily not less than 7 days as contemplated by Regulation 90 of the Regulations of 1982. The e-mails also inform the business to be transacted, i.e., election of office bearers of NIRC for the year 2022. Such a report of an independent authority has to be given credence and cannot be ignored. The report suggests that the meeting of December 26, 2021 and the election of the office bearers held therein are justified. Agenda / Notes on Agenda - HELD THAT - With the agenda being sent on December 23, 2021, i.e., four days prior to the scheduled meeting and the Regulation 90 of the Regulation of 1982 stipulating ordinarily not less than seven days , which gives discretion to the Chairman to send it even within seven days, the notice of December 18, 2021 informing the business of election for the year 2022 to the members and even sending the agenda in the manner depicted above, are not in violation of Regulation 90 of the Regulations of 1982 - the agenda / agenda notes circulated on January 11, 2022 for the meeting proposed to be conducted on January 18, 2022, with which the petitioners are satisfied, is nothing but a coalescence of the minutes of the 258th meeting held on December 20, 2021 and the agenda / notes for the meeting of December 26, 2021 sent on December 23, 2021. In fact, Mr. Kathpalia has heavily relied upon the agenda for January 18, 2022 to contend that it is in that manner, the agenda note should have been circulated. Hence, even on this ground, the plea of the petitioners that agenda / agenda notes were not circulated, resulting in the petitioners not being aware of the manner in which the modalities and process of election was to take place, is unsustainable. The Chairman had no power to adjourn the proceedings as per Regulation 95 of the Regulation of 1982 by himself. The plea of Mr. Kathpalia that the Chairman was asked by the members to take a decision in the meeting because no consensus could be arrived at and he had subsequently postponed the meeting in terms of Regulation 91 of the Regulation of 1982 is unmerited as the same is not borne out from the record and also the facts, and as it is clear from the report of the Regional Director / Returning Officer that, nine members stayed back to continue the meeting. This report of the Regional Director / Returning Officer of December 26, 2021 is not under challenge. Powers of the President / Secretary of ICSI - HELD THAT - The plea of Mr. Kathpalia that the respondent Nos.4 to 7 have not challenged the email dated December 26, 2021 of the Chairman informing the postponement of the 259th meeting of NIRC is also unmerited. They have rightly refrained from challenging the same in view of the subsequent email of the Regional Director / Returning Officer; conclusion of the President of ICSI and circulation of the names of the elected office bearers of all Regional Councils by the ICSI itself. Thus it must be held that the meeting held on December 26, 2021 is proper, in accordance with the Regulations of 1982, and the business transacted thereof, i.e., election of office bearers of NIRC for the year 2022, cannot be faulted with. Having said that, the e-mail of the incumbent Chairman dated December 31, 2021 scheduling the 259th meeting on January 8, 2022 (as re-scheduled to January 18, 2022) and circulating the agenda thereof with regard to election of the office bearers of NIRC for the year 2022 would be unsustainable and cannot be acted upon. Petition dismissed.
Issues Involved:
1. Legality of the meeting held on December 26, 2021. 2. Compliance with the Company Secretaries Regulations, 1982 and Secretarial Standard-I (SS-I). 3. Authority of the President and Secretary of ICSI to adjudicate election disputes. 4. Validity of the appointment of office bearers. Detailed Analysis: 1. Legality of the Meeting Held on December 26, 2021: The petitioners contended that the meeting held on December 26, 2021, was illegal and invalid as it did not comply with the Act of 1980, the Regulations of 1982, and SS-I. The notice for the meeting was sent on December 18, 2021, and the agenda was circulated on December 23, 2021. The meeting was initially scheduled for 11 AM but was advanced to 9:30 AM. The petitioners argued that the notice and agenda did not comply with the required regulations and standards. However, the court noted that the notice of December 18, 2021, satisfied the requirement of "ordinarily not less than seven days" as contemplated by Regulation 90 of the Regulations of 1982. The agenda was sent four days prior to the scheduled meeting, which was within the discretionary power of the Chairman under the Regulations. The court also observed that the advancement of the meeting time from 11 AM to 9:30 AM was communicated six days prior to the meeting, which complied with Regulation 91 of the Regulations of 1982. The court concluded that the meeting held on December 26, 2021, was proper and in accordance with the Regulations of 1982, and the business transacted, i.e., the election of office bearers of NIRC for the year 2022, could not be faulted with. 2. Compliance with the Company Secretaries Regulations, 1982, and Secretarial Standard-I (SS-I): The petitioners argued that the notice and agenda did not comply with SS-I, which was adopted by NIRC in its 226th meeting held on January 23, 2016. They contended that the notice did not provide an option to participate through virtual/electronic mode, and the agenda notes were not circulated at least seven days before the meeting. The court noted that while SS-I was adopted by NIRC, the Regulations of 1982, having statutory force, would prevail over SS-I. The Regulations allowed for a notice of less than seven days and did not mandate the inclusion of agenda notes seven days prior to the meeting. The court found that the notice and agenda sent for the meeting on December 26, 2021, were in compliance with the Regulations of 1982. 3. Authority of the President and Secretary of ICSI to Adjudicate Election Disputes: The petitioners contended that the President and Secretary of ICSI had no authority to adjudicate the dispute regarding the elections of the office bearers of NIRC. They argued that the President's decision to approve the election held on December 26, 2021, was beyond his powers. The court acknowledged that the President and Secretary of ICSI did not have the authority to adjudicate election disputes under the Regulations of 1982. However, it was the petitioner No. 1 who had sought the intervention of the President through an email dated December 27, 2021. The court found that the petitioners' challenge to the President's decision was an afterthought and not sustainable. 4. Validity of the Appointment of Office Bearers: The petitioners argued that the appointment of office bearers made on December 26, 2021, was illegal as the meeting was postponed by the Chairman. They contended that the election process was not transparent and did not follow the required regulations. The court noted that the Chairman had no power to adjourn the meeting by himself under Regulation 95 of the Regulations of 1982. The report of the Regional Director/Returning Officer indicated that the meeting continued after the Chairman left, and the quorum was maintained. The court found that the election of the office bearers held on December 26, 2021, was valid and in accordance with the Regulations of 1982. Conclusion: The court dismissed the petition, holding that the meeting held on December 26, 2021, was proper and in accordance with the Regulations of 1982. The appointment of office bearers for the year 2022 was valid, and the subsequent email of the Chairman scheduling another meeting on January 8, 2022, was unsustainable. The court also dismissed the application for stay as infructuous.
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