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TMI Blog1954 (4) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... Bullen Co. Ltd. has been the managing agent of the defendant company for a long time. Some share holders are in favour of such sale of the shares of Kettlewell Bullen Co. Ltd. and others against it. There are allegations that they are being sold at a fabulous price which allegations are denied. Rivalry between Lala Lakshmipat Singhania and Messrs. Mugneeram Bangur Co. is alleged to be the main motive of these proceedings. At the moment the present controversy relates to a meeting of the shareholders where it was decided that such transfer should be made. The actual resolution before the company was: "That the proposed sale of the 100 percent. interest of the ordinary shareholders in Kettlewell Bullon Co. Ltd, the managing agents of the company to Messrs. Mugneeram Bangur Co., of 7, Lyons Range, Calcutta, be and is hereby approved and that the directors be and are hereby authorised to notify the managing agents of this company's approval of such sale." At the meeting of March 16, 1954, the chairman declared the resolution passed with 1,164 votes for and 313 votes against. The voting was not by a show of hands but by a poll. The suit filed by the plaintiff challe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the applicant which, according to the company, was lodged too late and proxies in respect of 1,292 ordinary shares and 61 first preference shares to the same Geoffrey Gardner. It is contended on this issue by the company that shares registered in the names of the banks and their nominees are in the majority of cases shares that belong to the constituents of such banks, and in respect of such shares the banks are trustees and are bound to vote as their respective constituents may direct. It is also said that it is the usual practice for banks to issue different proxies in respect of different parcels of shares. It has also been shown on a calculation (which appears as Annexure F to Gardner's affidavit) that even if the opponents of the resolution had been allowed to vote in respect of the disputed 445 shares in respect of which registration was refused and even if all the proxies lodged in time which are alleged to have been improperly rejected were counted and corresponding deductions were made from the total of votes cast in favour of the resolution, the said resolution would still have been passed with a majority. The Advocate-General contends that Annexure F shows a peril ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which should guide these courts in granting an interlocutory injunction in these matters. In fact, Lord Justice Cotton in the same case observed at page 81 as follows: "The appellants seem to consider that it was for the respondents to justify and support the chairman's decision. In my opinion that is their fallacy; it is for them to satisfy us that that decision was wrong not for those who rely upon that decision to bring evidence to show that in fact it was right." The principle is also emphasised in a more recent decision in Wall v. Exchange Investment Corporation Limited. There an article of association provided that no objection should be made to the validity of any vote except at the meeting at which it was tendered, and that every vote, whether given in person or by proxy, not disallowed at any meeting should be deemed valid for all purposes. It was held, affirming Romer J., that the decision of the chairman, who, in the bona fide exercise of the power conferred upon him by the article, had refused to disallow a vote by proxy to which objection had been taken at the meeting, was final and would not be reviewed by the court. Pollock M. R., at page 145, delivering j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facie case, the chairman's decision should prima facie be allowed to stand before the suit is heard and a decision is given at the trial. The results of my review of the authorities on this point show that the courts have evolved certain well-defined principles which regulate company meetings. Primarily the articles of association and the company statute provide the matrix of the company law on the point. Secondly, the courts are generally reluctant to interfere with the decisions taken at company meetings, unless there is almost a manifest breach of the articles or the statute, because it is the company and not the court which is responsible for its management. The court is hardly a substitute for the company in this respect except in specified cases provided by statute and these again are mostly cases where the company itself finds it difficult to manage its own affairs as in liquidation or schemes or where in public interest the court has to interfere or sanction as in cases of fraud by the majority on the minority or cases of amalgamation or reduction. This is the rule of domestic forum applied to company jurisprudence. The third principle which the courts have evolved as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one proxy and others to another proxy. The basis of the argument is the plausible one that a shareholder being one person, whether a company or a corporation, cannot be expected to say "yes" and "no" on the same resolution. The answer that is given is that each share carries the right to vote, and, therefore, logically and legally every share has a voice to be heard and there is nothing in law which prevents such voice being exercised in any way as the holder chooses to do. He may say "yes" and "no" in the same resolution and make himself foolish or he may say that he has not been able to come to a Decision one way or the other and so distribute his votes equally to maintain the balance by distributing his votes equally on either side. Nor is it unknown in company meetings or other meetings for the chairman to have a casting vote in addition to the one he has as a member and there is nothing in the rule of law or practice which prevents the chairman from using his original vote for, and his casting vote against, the resolution. The learned Advocate-General, who appears for the plaintiff in this case, then proceeds to contend that this view cannot be supported because it is inappl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er it could be done or not. The reason, therefore, of an Act of Parliament was to clarify the law and to set all this conflict at rest. It is abundantly made clear by a reference to paragraph 135 of the Cohen Committee's Report on English company law amendment where it is recorded: ''When a nominee holds shares in a company on behalf of more than one beneficial owner, he normally consults the persons on whose behalf be holds the shares before voting on any resolution before the shareholders. The beneficial owners of the shares may have divergent views on the proposals put before them. Some will instruct the nominee to vote for the proposals, some will instruct him to vote against. Nominees usually carry out these instructions. It is however doubtful whether it is legal for a shareholder to use some of his voting power in support of a resolution and some of it against the same resolution, though in practice, it is obviously desirable that a nominee should express as faithfully as possible the views of the persons on whose behalf he acts. We accordingly suggest that it should expressly be laid down that a shareholder may, if he wishes, either in completing a proxy form or in voting h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ersons can be counted, and will be counted, when a poll is demanded, and that it is intended that their voice shall be heard on that occasion only. It seems to me that a decision to that effect would create great injustice to the members present at a meeting by proxy only, because, according to the decision in R. v . Government Stock Investment Company the proxies do not seem able to demand a poll. I think that, under these circumstances, I ought to hold that the chairman of this company was right in counting the votes of the members who were present by proxy. The votes of those persons must be counted as the votes of persons actually present, not according to the number of shares they hold, but each person present by proxy must vote as one person and one person only, and the chairman must ascertain the way in which he wishes to vote from his proxy." This case was not followed by Chitty J. in the year 1896 in Ernest v. Loma Gold Mines Limited. There Chitty J. came to the conclusion that at a meeting of the shareholders of a company convened for the purpose of a special resolution, though the regulations of the company provide that votes may be given personally or by proxy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nse it is remarkable how this argument has been developed. It is accepted without demur that X holding some forty shares with a vote for each share will have forty votes and he can exercise all these forty votes on one side. Yet it is the argument that while all the votes can be used on one side they cannot be used one against the other, because it is said to be against common sense that a person should be allowed to vote both for and against the same resolution. Supposing a man wishes to do so, he may be whimsical or he can make himself a nuisance or he may genuinely be vacillating or he may genuinely think that his voting rights should be distributed in some proportion both for and against the same resolution. The central idea in solving this particular problem, apart from authorities, is to remember and consider that each share carries with it a right to vote. The fact that all the shares happen to be in the hands of one person does not merge the different voting rights and make them one. The plurality of votes cannot disappear because of the singularity of the person who holds these votes. It is settled in company law that the right to vote attached to a share is property and i ..... 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