9911796707
TMI Blog1947 (3) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... f an order of the learned District Judge of Cawnpore, dated 26th April, 1946, confirming a previous ex parte order passed by him on 28th March, 1946, directing the calling of a general meeting of the company on 27th April, 1946. It is contended that the said orders passed by the learned District Judge were beyond his jurisdiction and the general meeting of the company held in pursuance of those orders on 27th April, 1946, was null and void. The facts leading up to the orders in question may now briefly be stated. Article 46 of the Articles of Association of the company provides that an annual general meeting of the company shall be held in every calendar year before 31st March at such time and place as the Council for the time being may determine. Section 76 of the Indian Companies Act, however, makes a general provision for the holding of a general meeting of every company in the following terms: "76 (1). A general meeting of every company shall be held within eighteen months from the date of its incorporation and thereafter once at least in every calendar year and not more than fifteen months after the holding of the last preceding general meeting. (2) If default is made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h had been called to take place on 28th March, 1946. On the other hand, it is emphatically contended that though the Secretary directed notices to be issued on March 13, 1946, yet for certain reasons, which need not be mentioned here, they were not actually posted until 15th March, 1946, so that there could be no clear fourteen days' notice of the meeting as required by Article 49. In fact, it appears that one of the members of the company, who received a notice of the annual general meeting to be held on 28th March, 1946, actually raised an objection that the notice was invalid and sent a written communication to that effect to the President of the Council who at that time was Mr. Uma Shanker Mehrotra, who is opposite party No. 1 in the petition before us. It is alleged that this written communication actually reached the President on 25th March, 1946, and thereupon he cancelled the general meeting which had been called to take place on 28th March, 1946, and notices of that cancellation were immediately issued. On 28th March, 1946, that is, the date fixed for the holding of the annual general meeting in the notice previously issued, the President made an application to the learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It may be mentioned here that according to the company's Articles of Association at every annual general meeting there is an election of the members of the governing body styled "the Council" including the President and the Vice-President. It is definitely alleged on behalf of the petitioner that the election of the members of the governing body was made in accordance with the rule and the Chairman of the meeting sent in due course the directors' report and the balance sheet of the company for the year 1945 to the Registrar of Joint Stock Companies. The learned District Judge heard the parties on 9th April, 1946, and after recording the evidence produced on both sides finally passed an order on 26th April, 1946, confirming his previous ex parti order of 28th March, 1946. The petitioner, whose objection was rejected by the learned District Judge, has come up in revision to this Court. In his order of 26th April, 1946, the learned District Judge framed the following four issues for his decision: (1)Was a general meeting of the Chamber held on 28th March, 1946, at about 9-0 a.m? (2)Was it impracticable to hold a general meeting of the Chamber on 28th March, 1946? (3)If a m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... without recording any definite finding on the fourth issue which raises a very important question of law. In dealing with that issue the learned District Judge has made the following observations: "But the objector argues that, even if the meeting could not be validly held on 28th March, the President had no need to come to me because he could still have held a meeting within 15 months of the last meeting. The President has explained that he was not sure whether the provisions of Section 76 of the Act prevailed over Article 30 of the Articles of Association, which insisted that a general meeting should be held before 31st March. I do not think it matters which rule prevails. It is agreed that I have the power to call a meeting after 31st March. If the President also had that power, I am merely doing for him what he could do himself, i.e., calling a meeting in April: the fact that I may have intervened unnecessarily would not take away the President's power to call that meeting. If, on the other hand, the President had not the power to call a meeting after 31st March, without approaching the Court, my orders are necessary. I have held that the meeting of 28th March was invalid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpanies Act presumes that there is no contest as to the fact that the annual general meeting of a company has not been called and the calling of that meeting has become impracticable. The argument on behalf of the opposite party is that a company and its directors are bound by the Articles of Association and as soon as it is found that the calling of the annual general meeting has become impracticable in the manner prescribed by the Articles of Association, a right arises in favour of any member of the company or the directors to invoke the power of the Court to call a meeting under section 79(3) of the Companies Act. It is contended that upon a true interpretation of the language of section 79(3) the question of the impracticability of calling the annual genera1 meeting must be determined only in the light of the Articles of Association of the company and even if the general provision contained in section 76 of the Companies Act is taken into consideration, still the right, which arises in favour of every member of the company to seek the assistance of the Court in the event of the calling of the annual general meeting becoming impracticable in the manner provided by the Articles ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 28th March, 1946, directing the calling of the annual general meeting of the Company on 27th April, 1946. The challenge was made on the ground that the said order of the learned District Judge of Cawnpore was beyond his jurisdiction and on that basis the petitioner claimed the relief that the said order and the annual general meeting of the company held in pursuance thereof should be declared to be null and void. The matter came up for consideration before a Bench of this Court and from the argument addressed by the parties two questions having an important bearing on the administration of the company law arose for determination. In view of the importance of those questions, and the fact that they were not covered by any precedent of this Court or of any other High Court the Bench seized of the matter made the present reference with the object of having those questions fully considered and finally decided by an authoritative pronouncement of this Court. The material facts of the case and the points raised in the course of the argument have been set out at great length in the order of reference made by the Bench and we think it would be an obvious waste of time and labour to cover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its terms in extenso The section runs as follows: "If for any reason it is impracticable to call a meeting of a company in any manner in which meetings of that company may be called or to conduct the meeting of the company in manner prescribed by the articles or this Act, the Court may, either of its own motion or on the application of any director of the company or of any member of the company who would be entitled to vote at the meeting order a meeting, of the company to be called, held and conducted in such manner as the Court thinks fit, and where any such order is given may give such ancillary or consequential directions as it thinks expedient, and any meeting called, held and conducted in accordance with any such order shall for all purposes be deemed to be a meeting of the company duly called, held and conducted." For the purposes of appreciating the points raised before us in the argument on behalf of the petitioner it is necessary also to set out here the terms of section 76 of the Indian Companies Act which runs as follows: "76. (1) A general meeting of every company shall be held within eighteen months from the date of its incorporation and thereafter once at lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay be called. So far there is and can be no contest. On behalf of the petitioner the challenge against the jurisdiction of the learned District Judge is sought to be supported on two grounds and they give rise to the two points of law which we have to determine. The first ground is that the question of the impracticability or otherwise of calling an annual general meeting must be decided not only in the light of the company's Articles of Association, but also of the general provision contained in section 76(1) which has been cited above. It is contended on that basis that in the circumstances of the present case, the calling of the annual general meeting of the company had not become impracticable, inasmuch as though the time-limit prescribed by the company's Articles of Association had expired, yet the wider limit laid down by section 76(1) was still available and having regard to the fact that the last preceding annual general meeting had taken place on 3rd February, 1945, the annual general meeting for the year 1946 could validly be called at any time before 3rd May, 1946. It has been very strenuously argued on behalf of the petitioner that in the present case a conflict had ari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nflict with some mandatory provision of the Act applicable to all companies. In the former case it would obviously be necessary to refer to the Act when deciding the question of the impracticability or otherwise of calling a meeting. In the latter case the mandatory provision of the Act will prevail and the provision contained in the Articles of Association will have to be disregarded. Apart from these exceptional cases, the question of the impracticability or otherwise of calling a meeting must be decided only by reference to the company's Articles of Association. We find further that in the circumstances of the case before us no conflict could really arise between the general provision contained in section 76 and the company's Articles of Association. Section 76 in sub-section (1) lays down two mandatory provisions of general application to all companies relating to the calling of the annual general meeting ; firstly, that the meeting shall be held once at least in every calendar year and secondly, that it shall be held not more than fifteen months after the holding of the last preceding general meeting. This sub-section does not prohibit any company from prescribing any time-lim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that meeting may have been valid, but it could not be a meeting called and held either in accordance with the company's Articles of Association or the provisions of section 76. The meeting could be called and held with the consent of all the members, but the possibility of such a meeting being called and held cannot be taken into account for the purpose of deciding the question whether the calling of the annual general meeting had or had not become impracticable on the date on which the jurisdiction of the learned District Judge under section 79(3) was invoked. We are, therefore, of the opinion that the general provisions contained in section 76 of the Act have no application to the period intervening between the time-limit for calling and holding an annual general meeting fixed by a company's Articles of Association and the wider time-limit for calling and holding such a meeting prescribed by section 76(1). At any time before the expiry of the wider limit prescribed by section 76(1) the jurisdiction conferred upon the Court by section 79(3) comes into operation and it can be invoked by a director or a member of any company for calling the annual general meeting. We find further th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to decide the question of the validity or otherwise of a meeting must necessarily be inferred from the fact that no appeal has been provided from an order made by the Court in the exercise of its jurisdiction under that section. In dealing with this question we must first of all point out that all jurisdiction under the Indian Companies Act has been conferred by section 3(1) in the first instance upon "the High Court having jurisdiction in the place at which the registered office of the company is situate." We do not think that it can be argued with any force or reason that the High Court has no jurisdiction to enter into and decide the question of the validity or otherwise of a meeting. There is further provision in the same section that the Central Government may, by notification in the official gazette and subject to such restrictions and conditions as it thinks fit, empower any District Court to exercise all or any of the jurisdiction by this Act conferred upon the Court, and in that case such District Court shall, as regards the jurisdiction so conferred, be the Court in respect of all companies having their registered offices in the district. The District Judge at Cawnpore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be determined by the Court. There is nothing in the language of section 79 (3) upon which the contention of the learned counsel for the petitioner can be founded. It was strenuously contended by learned counsel that the determination of such an issue might often involve the decision of complicated questions of fact and law and it must, therefore, be inferred that the law did not contemplate the determination of such a question in a miscellaneous proceeding under section 79(3). We are not impressed at all by this argument because we do not think that in the large majority of cases any complicated questions of law and fact will arise for consideration. The question of the validity or otherwise of a meeting will in a vast majo rity of cases turn upon the interpretation of the company's Articles of Association and some general provisions of the law. We see no reason for holding that the Court acting under section 79(3) is for any reason less competent to try and decide such questions than the civil Court to which learned counsel for the petitioner seems to attach a peculiar sanctity. It has to be borne in mind that the District Court empowered under section 3(1) of the Indian Comp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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