9911796707
TMI Blog1967 (3) TMI 75X X X X Extracts X X X X X X X X Extracts X X X X ..... their liabilities for not holding such annual general meetings. The present application also seeks to relieve the petitioners for not filing balance-sheets and profit and loss accounts for the years ending on the 30th June, I960, 30th June, 1961, 30th June, 1962, 30th June, 1963,30th June, 1964 and 30th June, 1965. The application is presented by Charu Chandra Chatterjee, Bakhand Mundra and Lahoriram Parasar, who describe themselves as directors of the Coal Marketing Company of India Private Limited. This is an extraordinary application. To come forward with an application to hold six annual meetings of 1960, 1961, 1962, 1963, 1964 and 1965, not held at all so far and to hold them all in 1967 is to make a farce of company law and company management. How can there be annual general meetings any more of those years? This is really an application to convert statutory annual general meetings which must be held annually under the Companies Act into quinquennial meetings, unknown under the Companies Act. The matter has a history which must be set out first before proceeding to discuss the law. The company was incorporated on or about the 29th July, 1951. From 1963 attempts like the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b and that their senior partner died, therefore the meetings could not be held, the annual returns, balance-sheets, and profit and loss accounts could not be filed. This ground is attempted to be supported by a letter from George Read and Company, dated 12th October, 1965. But then that can be no ground for not holding annual general meetings or filing balance-sheets or profit and loss accounts or annual returns in 1961, 1962, 1963 and 1964, long before his death. The death of the senior partner of George Read and Company in 1965 could not obviously be a reason for such non-observance of the mandates of the statute; nor could it be a ground for violating solemn undertakings by these petitioners to this court both under orders dated 23x4 .December, 1963, and 20th July, 1964, a year and two years before the death of the senior partner of George Read and Company. The second ground put forward by the applicants is that one Mr. B. Mukherjee, Chartered Accountant of Messrs. N. Sarkar and Company, internal auditors, was supposed to approach this company for appointment as auditor of the company but again Mr. B. Mukherjee died. All this was happening on the 12th October, 1965, and 13th J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the company and its directors have bluffed this court and have repeatedly taken time and have done nothing. Indeed, the Registrar of Companies applied to the Chief Presidency Magistrate, Calcutta, on the 30th November, 1966, who fined each director of the company Rs. 200 for not filing annual return on January 31, 1966, and for not holding annual general meeting on 31st December, 1965, and for not filing profit and loss account for 1965 on January 31, 1966. The fine was paid by each director of the company. Monied directors always flaunt their monies and pay the fine without the least compunction because the fines are mostly paid out of company's funds in some shape or other. Fines unless exemplary have little or no deterrent effect to tone up the present company administration. The idea is growing fast today that, all that the Companies Act does, to punish the recalcitrant directors, who flagrantly commit breaches of the Companies Act, disobey their own undertakings to the court repeatedly and who violate orders of the court, is to let them off on payment of paltry fines and permit them to be easily relieved of their statutory liabilities and obligations. This is really a trave ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om liability in this context means relief from the consequences, namely, fines and penalties, that follow under section 168 of the Act from the negligence, default, breach of duty, misfeasance or breach of trust. Relief from liability cannot mean power to suspend operation of the Companies Act, directing holding of annual general meetings or filing annual returns, balance-sheets and profit and loss accounts. It cannot be overemphasised that the words of section 633 of the Companies Act are confined to relieve "officers" of the company from fines and penalties, and not the company from calling, holding or conducting annual or even other meetings of the companies according to this statute and suspending the operation of. the relevant sections of the Companies Act in respect of such meeting and extend such time. I, therefore, hold that on a proper interpretation of section 633(2) of the Companies Act this court has no power by way of relief from liability for the default mentioned therein to extend the time for holding the annual general meetings, to file statutory annual returns or balance-sheets or profit and loss accounts. In any event, this power of relief is discretionary. I am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y within 9 months after the expiry of each financial year. This is followed by a proviso permitting the Registrar for any special reason to extend the time within which the annual general meeting (not being the first annual general meeting) shall be held by a further period not exceeding six months. It is also provided in that section that except in the cases referred to in the proviso which is immediately mentioned, not more than fifteen months shall elapse between the date of one annual general meeting and that of the next. The above is a fair summary of the provisions of section 166(1) of the Companies Act. It shows the anxiety of the statute to direct that the annual general meeting is a meeting of a very special character and it most be held within the time mentioned in the statute and the only permissible extension is the extension expressly recognised in the statute and in the provisos just mentioned. The present application does not come within the time limit or the exemption provided in the statute, and is plainly beyond them. The only other provision is in section 166(2) of the Companies Act which by way of proviso says: "Provided that the Central Government may exemp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 even modifying the operation of the Act and the company's articles in respect of calling, holding and conducting of the meeting. Such meeting so 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. The crucial words are "other than an annual general meeting," in section 186(1) of the Act. This expression makes it quite clear that Parliament did not want this court to exercise any power with regard to annual general meeting but granted this power to the court to order meeting in respect of m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as procedures to break the deadlock. No doubt they are provisions to resolve the deadlock. But the provisions being statutory and the company being a creature of the statute, the deadlock must be resolved only according to the procedure prescribed by the statute and not otherwise. The English provision in section 135 of the English Companies Act, 1948, providing for the power of the-court to order meetings is very different from section 196 of the Indian Act which expressly excludes annual general meetings. But even then such provisions as section 135 of the English Act of 1948, and section 186 of the Indian Companies Act, 1956, require that there must be reason to hold that it is impracticable to call a meeting of the company in a manner prescribed by the Act or the articles. I am entirely satisfied on the records and facts of this case that nothing satisfactory has been shown to me why it was impracticable for this company to hold its annual general meetings in 1961, 1962, 1963, 1964 and 1965 and to file the statutory returns, profit and loss accounts and balance-sheets in respect of those years. It follows, therefore, that even if I had the power, which I hold I have not, I wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omission and the terms of that section 76 of the Indian Companies Act, 1913, were mandatory and made no reference to the balance-sheets, the preparation of which has nothing to do with the matter. See the observation of Buckland J., at pages 410 and 411. It will not be necessary to refer to that decision-any more because the Act has changed. It would also not be necessary in this context to refer to the English decision in In re El Sombrero Limited [1958] 28 Comp. Cas. 519; [1958] 3 All. ER 1 . Finally it was submitted by Mr. Ray Chowdhury, learned counsel for the applicants, that under rule 7 of the Companies Rules, the court has power to enlarge or abridge time in any case in- which it shall deem fit. In the first place, I do not consider it to be a case at all fit in which I shall enlarge the time. The matter, therefore, ends there. In the second place this power of the court to enlarge or abridge the time is only confined to the time appointed by this rule or fixed by an order of the court for doing any act or taking any proceeding. If the statute and the interpretation of its relevant section show that the court itself has no power to extend the time for holding the an ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
