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TMI Blog1969 (5) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... oner company depended on two resolutions of the board of directors of the petitioner company, dated July 31, 1964 (exhibit P.W. 1/8), and dated August 7, 1964 (exhibit P. W. 1/9). The petitioner company's case is that the resolution dated July 31, 1964, which authorised Surinder Nath to institute the petition for winding up, was passed by two directors only which did not constitute a valid quorum and, therefore, the said resolution was, in the meeting dated 7th August, 1964, in which quorum was present, confirmed. The resolution dated 7th August, 1964, reads: "Resolved that the proceedings of the meeting held on 31st July, 1964, are hereby confirmed with Brig. F.J. Dillon not exercising his vote." In the rejoinder the petitioner company stated that Surinder Nath was authorised "by name to file the petition on behalf of the petitioner company.........The authority to file the petition was given to me (Surinder Nath) as an individual. The board did not authorise the managing director to file the petition, but authorised me as an individual to file the petition". I have made a mention of this fact for that relieves me from deciding whether Surinder Nath could, without the aid of aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at J. E. da Fonseca be taken as a director of the company. The resolution is stated to have been carried unanimously. Article 47 of the articles of association of the petitioner company, exhibit P.W. 1/11, prescribes a quorum of "five members personally present" when the number of members of the company exceeds twelve. The number of members was admittedly more than twelve at that time. Articles 49 and 50 provide that where a quorum of members is not present the meeting shall stand adjourned to the next working day at the same hour and place and if at the adjourned meeting the requisite quorum be not present within half an hour after the time fixed for the meeting, the meeting shall stand dissolved. On 28th February, 1963, a resolution was passed in the board of directors' meeting of the petitioner-company resolving that "it is hereby confirmed that Mr. J. E. da Fonseca has been appointed director of the company with effect from today". In the annual general meeting dated 29th June, 1963, the proceedings of the general meeting dated 27th June, 1962, were confirmed and it was resolved that Mr. W. Williamson proposed the name of Mr. J.E. da Fonseca as director of the company. This was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... une 27, 1962, must have been signed by me. It is incorrect that I purposely sent an incomplete copy. It is also incorrect that the writing against item No. 7 was added by me afterwards. The secretary of the company can explain the omission, but to me it appears that it must have been because of negligence on the part of my secretary or some other employee in the office. I did not read the statement although the statement was verified by me as correct." The suggestion of Mr. Khanna, the learned counsel for the petitioner-company, was that cross-examination of Surinder Nath proceeded on the assumption that proceedings of every general meeting had to be sent to the Registrar and whether or not the said 7th item was included in the proceedings so sent, whereas the correct position is that no such proceedings, except a copy of the special resolution, if any, passed at a general meeting, has to be sent to the Registrar of Companies. Mr. Sawhney, the learned counsel for the respondent-company, on the other hand, contended that questions about the copy of the record of the meeting held on 27th June, 1962, had reference to the return of directors, exhibit D.W. 8/1, as well and, in any case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not been filed and asserting that Fonseca had not been elected as a director in the general meeting held on 27th June, 1962, and Surinder Nath had taken that position to save the petition from dismissal. It was prayed that the petitioner be directed to file in this court a true copy of the proceedings of the said general meeting. On 28th March, 1967, a copy of the resolution was filed and the respondent-company again filed an application, being C.A. No. 71 of 1967, alleging that the resolution was fabricated to save the dismissal of the petition. I have mentioned these facts because the explanation rendered by Mr. Sawhney to Mr. Khanna's objection that forgery had nowhere been alleged in the written-statement and the allegation in the written-statement was confined merely to a statement that no valid and legal resolution authorising Surinder Nath to institute the proceedings had been passed depended on these circumstances and said that the respondent-company could not have raised a more specific objection in the absence of a copy of the resolution which the petitioner company had deliberately kept back. Mr. Sawhney also said that in C.A. 71 of 1967 a positive allegation of fabricat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appointed as a director in the general meeting dated 29th June, 1963, he would be a properly appointed director at that time. I will now deal with the objections to the validity of the meeting dated 29th June, 1963, and they are two--(i) there was no quorum present; and (ii) as admitted by Surinder Nath in his statement recorded on 25th September, 1968, the meeting had been originally summoned to be held at the registered office of the petitioner company but was actually held at 1, Man Singh Road, New Delhi, the residence of D. Fonseca. With respect to the second of the said objections, Surinder Nath stated that the decision to change the venue of the meeting was taken on the morning of the date of the meeting and the outside members could not be informed about the change of the venue. According to him, however, one man had been posted at the registered office of the company "to direct any member attending the meeting to the address, 1, Man Singh Road, New Delhi." He further stated that "at the time of this meeting there were more than 30 members. Some of the members were living outside Delhi". I will assume that this meeting suffered from the irregularities mentioned hereinbefor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all. The section does not say that the acts of a person acting as director shall be valid notwithstanding that it is afterwards discovered that he was not appointed a director. Even if it did, it might well be contended that at least a purported appointment was postulated. But it does not do so, and it would, I think, be doing violence to plain language to construe the section as covering a case in which there has been no genuine attempt to appoint at all." I do not find from the judgment of the House 01 Lords either affirmance or rejection of the various propositions laid down by Lord Greene M.R. It is not necessary in this case to deal with the consequences that will ensue if the term of office of a director has expired but he nevertheless continued to act as a director and the impact of the words in the section dealing with that situation in section 290, as that problem does not arise before me. I will only indicate that the termination contemplated by section 290 is restricted to termination "by virtue of any provision contained in this Act or in the articles". What is the position in this case. There was a purported appointment. The resolution was confirmed in the subsequent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apital of the company is Rs. 1,32,000 odd. Rs. 2,250 have been paid in advance on account of calls. The total brought forward loss is about Rs. 2,30,000 and the profit during the year, Rs. 810. The main assets, shown of the value of about Rs. 3,00,000, consist of old pictures, which can have a very little value, if at all, at present. Admittedly, no balance-sheet has been issued by the respondent-company after 1962 though the blame is sought to be laid for this on Surinder Nath, who is alleged to be withholding account books and various other documents of the respondent-company. Joginder Nath appeared as a witness (D.W. 7) and admitted : "On account of this petition the company has suffered so much that it is now in a miserable condition and the only staff is one peon. When this petition was filed, the respondent-company had a credit balance, but I do not know the amount. The credit balance now-a-days may be Rs. 100 or Rs. 200. The last agreement entered into between the respondent-company and the producers was in respect of 'Naya Qanun' and this was in 1963......The losses as given in the last balance-sheet as on 31st of March, 1962, have been reduced by about Rs. 85,000 or more. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... genuineness of the letters dated 2nd July, 1957 (exhibit P.W.1/1), dated 6th July, 1957 (exhibit P.W. 1/2), dated 10th July, 1957 (exhibit P.W. 1/3) and dated 10th July, 1957 (exhibit P.W. 1/3A). I need not, however, elaborate on these objections as it is sufficiently established from other evidence that the loan was taken by the respondent-company. Joginder Nath admitted the execution of exhibit P.W. 1/5A. W.N. Choudhry who signed the letter was the secretary of the respondent-company and, as I have mentioned already, the amount is shown in the balance sheet. Even Joginder Nath's statement goes to support the petitioner company. I should not be understood as saying that if a petitioner by imposing legal proceedings on a company reduces it to financial insolvency it would, in all cases, justify winding up of the company for it is well established that a person cannot be allowed to take advantage of his own wrong. If, therefore, I were satisfied that the respondent company has been reduced to its present unsound position by reason only of the petition, I would have declined to wind up the respondent company. I am, however, satisfied that, apart from the effect of the petition, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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