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TMI Blog1967 (7) TMI 88X X X X Extracts X X X X X X X X Extracts X X X X ..... e by rotation. The 94th annual general body meeting was called by the board of directors who were in charge of the affairs of the Fund and who were statutorily obliged to call for such a meeting. Such annual general body meeting was proposed to be convened at 2 p.m. on April 22, 1967, at the Gokhale Hall, No. 9, Armenian Street, Madras-1. The contention of the applicant is that after calling for the said meeting, the board of directors, including respondents Nos. 2 to 5 left the hall abruptly along with the secretary of the Fund after distributing the agenda and the printed balance-sheet for the financial year ending with October 31, 1966. As the board of directors and the secretary left, without sufficient cause, the meeting hall, the shareholders who were present there continued the meeting and considered the agenda after electing Mr. S. T. Shanmugesan as the chairman thereto. Several resolutions were passed in the said meeting, including the election of directors in the place of respondents Nos. 2 to 5, who ought to have retired normally if the meeting was held. The applicant therefore states that respondents Nos. 2 to 5 can no longer hold their office and, in fact, they have ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any merits. The applicant, in his reply, reiterates what was said in the opening affidavit and affirms that the meeting should be deemed to have commenced by the distribution of the agenda and the balance-sheet and by the congregation of the members in response to a call to hold the meeting. The petitioner's main contention is that the board has no power to adjourn the meeting specifically convened for electing directors, except under the provisions of section 256 of the Companies Act. He denies what all has been said by the secretary in his counter affidavit and alleges that the Registrar of Companies rejected the request of the petitioner for extension of time for holding the 94th annual general body meeting. He, therefore, presses that respondents Nos. 2 to 5 who are deemed to have ceased to hold the office of directorship should be restrained from acting as directors of the Fund. Company Application No. 131 of 1967 is by the Fund and the only material prayer asked for is for the appointment of an independent chairman for holding and conducting the 94th annual general body meeting of the Fund, as it could not be held earlier though called for by the board of directors. This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... avit states that the Registrar has recognised and approved the minutes of the alleged annual general meeting held by the shareholders after the board expressed its inability to hold it and that several matters in this application are sub judice in the City Civil Court and that this court has no jurisdiction under section 186 of the Companies Act to call for an annual general meeting of the Fund and that what the alleged shareholders did on April 22, 1967, is valid and cannot be disturbed and that therefore there is no need for the holding of a second annual meeting for the same purpose. It is significant to note that the applicant in Company Application No. 124 of 1967, also has filed a counter affidavit almost on similar lines with that filed by Mr. Shunmugesan and others. In reply, the secretary of the Fund repudiates every contention of the respective shareholders in each of their affidavits and reiterates the material facts already traversed by me. His main contention is that the Registrar has not recognised the so-called holding of the annual general meeting by the alleged shareholders on April 22, 1967, and that there can be no impediment in the circumstance for the grant o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was impossible to commence the meeting or to hold the meeting that the president recorded in the minutes book as a fact as to what transpired therein and said that the annual general meeting could not be held for the reasons stated in the minutes book. Exhibit A-1 which is the record of such a fact in the minutes book, as noted by the president of the Fund and countersigned by the secretary, runs as follow : "As there is confusion in the hall on account of people rushing into the hall without verification of their signatures and as it is not possible to conduct the meeting, the meeting could not be held. " That this is so is practically corroborated by Mr. S. T. Shanmugesan in his letter dated April 28, 1967, marked as exhibit A-3, in which he accepts that the secretary and the board of directors were not present in the hall to conduct the annual general meeting. The expression used by Shanmugesan that the directors were unable to conduct the annual general meeting is of special significance, in so far as this case is concerned. The secretary would also state in the affidavit that after recording the minutes as per exhibit A-1, they remained in the hall and announced over t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nded, however, is that the meeting has been convened and the meeting was commenced and that such an annual general meeting having commenced, the resolutions passed by a majority of the shareholders present at that alleged annual general meeting after the directors having recorded the fact that it was impossible to hold a meeting on April 22, 1967, as previously announced, should be deemed to be a regular annual general meeting of the Fund and all the business transacted in the so-called annual general meeting under the chairmanship of S. T. Shanmugesan should be deemed to be valid, regular and enforceable. I am unable to be persuaded to accept this argument. To quote the words of Beasley J., in Watrap S. Subramania Aiyar v. United India Life Insurance Co. Ltd. [1928] AIR 1928 Mad. 1215, 1227. : "It seems to me that it would be a travesty of the law if a person who has deliberately brought about a state of affairs should be allowed to take exception to that state of affairs and use that changed state for his own advantage. " It is a common law principle that a meeting can adjourn itself if the circumstances do warrant. In this case, the pandemonium and the confusion that w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... giving such directions as are necessary. In fact, this aspect really arises in Company Application No. 131 of 1967 which I shall deal with presently. Suffice it, however, to say that the congregation by the shareholders (said to be shareholders) after the board of directors decided that it was impossible for them to hold the meeting is valid and regular is something which is unheard of and which cannot be implemented or given effect to. A fortiori it cannot be said that the resolutions passed by some of the shareholders at the meeting held under the chairmanship of S. T. Shanmugesan, as set out in exhibit A-3 can be deemed to be resolutions passed by the body of shareholders regularly assembled at a meeting properly convened and held for the purpose, in the eye of law. This is not a case wherein the court is directing the board of directors to call for a meeting. This is a case where the court is called upon to interpret whether the meeting convened and called by the board of directors did commence at all. I am of the opinion that the meeting never commenced at all and, therefore, the question of holding a meeting does not really and strictly arise. The decision in Kailash Chand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of such a call by the board of directors, and since the agenda and the balance-sheet were distributed by the authorities. He also urged relying upon judicial precedents that the meeting said to have been convened after the announcement by the board of directors that it was not possible to hold it, is a valid one in the eye of law and there is no necessity for the fund to call for another annual general meeting and seek directions from this court for the appointment of a chairman to preside therein. He referred to a passage at page 422 of Gore-Browne's Hand Book on Joint Stock Companies, forty-first edition, which runs as follows : "It is only at general meetings that the shareholders can exercise any control over the affairs of the company......It is the duty (of the chairman) to preserve order, conduct proceedings regularly, and take care that the sense of the meeting is properly ascertained with regard to any question before it." But this principle has no relevancy in so far as this case is concerned, because no meeting was commenced for the general body to exercise its powers or the chairman to act. A passage in Halsbury's Laws of England, second edition, was referred to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Br. India Corporation v. Robert Mensies [1936] 6 Comp. Cas. 250 ; AIR 1936 All. 568 , in which it was held that the company court has got ample inherent jurisdiction to issue directions for the purpose of enabling the company to perform its statutory duties as provided in the Companies Act. In this case, it is obvious that the company has got to perform its statutory duty of convening an annual general body meeting and several important matters and businesses have got to be transacted at that annual general meeting. It is for no fault of the company that it is not in a position to convene the meeting and it is clear that this is a case in which the company ought to and is anxious to perform and carry out its statutory duties. Under the circumstances, I am of opinion that this court has ample inherent jurisdiction to issue necessary and appropriate directions both to direct the company to perform its statutory duty and also enable the company to perform its statutory duty." I respectfully agree with the observations of the learned judge and find that Company Application No. 131 of 1967 is maintainable and this court has got jurisdiction to issue the directions prayed for, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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