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TMI Blog1956 (7) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... fying or supplementing the operation of the provisions of the Companies Act and of the company's articles relating to the calling, holding or conducting of the meeting. The applicant also seeks for an order that at the meeting the resolutions mentioned in the requisition notice annexed to the petition marked "B" be considered and if thought fit be passed with or without modifications. The further order sought by the applicant is that the respondent company must be directed to comply with the provisions of sub-sections (3) and (4) of section 284 of the Companies Act, 1956. Before I discuss the implications of an application under section 186 of the Companies Act, 1956, it would be necessary to state a few facts for the better appreciation of the actual point involved. The dispute is fundamentally between two rival groups of shareholders, one called the Jatia group and the other called the Singhania group. In 1954 the Jatia directors appointed K.L. Jatia as chairman of the board of directors. On the 25th May, 1954, there was a requisition for an extraordinary general meeting by the present applicant. On the 25th August, 1954, an extraordinary general meeting was held at which K.L. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment. It is an innovation introduced by the Act of 1956. It provides power for the court to order company meetings. The conditions under which such power of the court to order company meetings should be exercised require analysis. It is expressly stated in that statutory provision that "if for any reason it is impracticable to call a a meeting of the company, other than an annual general meeting, in any manner in which meetings of the company may be called, or to hold or conduct the meeting of the company in the manner prescribed by this Act or the articles, 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, ( a )order a meeting of the company to be called, held and conducted in such manner as the court thinks fit; and ( b )give such ancillary or consequential directions as the court thinks expedient, including directions modifying or supplementing in relation to the calling, holding and conducting of the meeting the operation of the provisions of this Act and of the company's articles." Now the first essential condition is that the court must have reason ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of directors is K.L. Jatia whose conduct will be under criticism and whose removal the resolutions demand. Mr. Sanyal's argument is that a chairman of a meeting cannot be a judge in his own cause and for that purpose he relied upon the case of N.V.R. Nagappa Chettiar and Another v. Madras Race Club ILR 1949 Mad. 808 . There the well-settled principle is reiterated that no man can preside at his own election and return himself, and that in the case of a chairman of a meeting whose function is to decide as to the validity of certain nominations such chairman should not decide the validity of his own nomination. In my judgment there are many answers to this argument. The court under section 186 of the Companies Act of 1956 must have a good reason to hold that it is impracticable to conduct the meeting of the company in the manner prescribed by the Act or the articles of the company. It is, therefore, not the purpose of this section as I read it that this court should intervene to conduct a company meeting not in the manner prescribed by the Act or by the articles of the company and to override the express provisions thereof. Naturally enough when the court directs a meeting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the meeting. If the applicant has on its side 55 per cent, of the votes of the shareholders, I do not see why they should be at all frightened. The chairman's power is very limited. He has a vote as a shareholder and director. That gives him no special position to control the meeting. He has, in the event of an equality of votes between two rival groups, a casting vote. But on the applicant's own showing there is no question of equality of votes in this case because the applicant's group is much larger than the respondent's group. Therefore, even the possibility of a casting vote is remote. The only other scope of intervention by the chairman is in the matter of poll. But even a poll may be demanded under article 118 by any member if not more than 7 members are personally present, and if more than 7 members are present then by any two members, so that even in the matter of poll the chairman cannot exclude a poll. All that the chairman can do under article 102 is that if a poll is demanded, the chairman will direct it to be taken either at once or after an interval or adjournment or otherwise and shall determine the time and place and the manner in which it shall be taken. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asily intervene in any company meetings either in holding or calling or in conducting such meetings. This section is a piece of incongruous paternalism of an outside agency, the court in, the self-government of joint stock companies whose main principle is management by their own directors and shareholders who are the most interested and responsible persons in the good government of companies. It is an extraordinary power in the historical context of the evolution of company law when one recalls the ordinary principle of company law that where a company cannot carry on its own management and there is a deadlock, the traditional course is to wind up the company. This new power is also unsuited to the court because its substance is a purely executive function of calling, holding and conducting a meeting. The court can discharge that function only vicariously through a chairman or president whom it appoints. Judicial work of court through a delegate is never an efficient innovation in jurisprudence. Section 186 of the Companies Act 1956 introduces this power which is also by its nature irresponsible. It is an irresponsible power because even after the court has called, held and conduc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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