9911796707
TMI Blog1985 (1) TMI 254X X X X Extracts X X X X X X X X Extracts X X X X ..... ...... (f)To accept property to be held by the association: (1)for the general purpose of the association and the Baptist Churches, Baptist Unions, Church Unions, Church Councils and Baptist Missionary Society. Articles of association 1.For the purpose of registration, the number of members of the association is declared not to exceed fifty. 2.These articles shall be construed with reference to the provisions of the Companies Act, 1956 (hereinafter referred to as "the Act"), and the terms used in these articles shall have the same respective meanings as they have when used in that Act. 4.The members of the association shall be the (1) subscribers to the memorandum of association ; (2) such persons not exceeding seven in number as may be nominated by the Baptist Missionary Society, and (3) such other persons, making a total membership including subscriber members and nominees of the Baptist Missionary Society not exceeding fifty in all, as may be nominated by the council of Baptist Churches in Northern India or by such other churches, church or union of churches as may be authorised by a general meeting of the association so as to nominate members, any necessary provisions as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 66 of the Act......... 18.The officers of the association may, whenever they think fit, and they shall, if required in writing by such number of members as have, at the date of receipt of requisition, not less than one-tenth of the total voting power of all the members having at the date a right to vote in regard to the matter for consideration of which the meeting is to be called, convene an extraordinary meeting. Every such requisition shall express the object of the meeting proposed to be called and shall be left with the Secretary and thereupon an extraordinary meeting shall be convened by the said officers to be held within forty-five days from the date of the receipt of such requisition......... 20.A quorum at a general meeting shall consist of one-fifth of the members of the association. 21.Twenty-one days' notice at least specifying the place and time of meeting, and (in case of special business) the general nature thereof, shall be sent to each member of the association, but non-receipt of any such notice by any member shall not invalidate the proceedings of any general meeting. With the consent in writing of all the members entitled to vote, a meeting may be convened a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e courts of Delhi, Agra and Bhiwani. The said suits are pending. So far as the Utkal Christian Church Central Council is concerned, some of the churches constituting the council left the Baptist faith and in or about 1970 joined "Church Union" under the Church of North India which does not follow the Baptist faith and is not authorised to nominate members to the trust association. Some of the churches of the said Utkal Christian Church Central Council did not join the Church of North India. It is not in dispute that two rival groups in the Bengal Baptist Union and the Baptist Union of Northern India are running two parallel organisations and that the Utkal Central Church Council has ceased to exist since 1970. The aforesaid disputes in the several nominating bodies were reflected in the management and functioning of the trust association. On February 10, 1976, at the annual general meeting of the trust association for the year 1975, no business could be transacted as there were allegations that petitioner No. 2 as the secretary had inducted a number of non-members at the said meeting. No office bearers were elected at the said meeting and the old committee of management and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bruary 19, 1977, were irregular as proper notices were not issued for the same and that there was no quorum. The Registrar also found that petitioner No. 2 has continued to be the secretary of the trust association since November, 1974, and meetings called by him at Elliot Road, Calcutta, in 1977, were in conformity with the articles of the trust association. In such background, that trust association some time in June, 1982, made an application before the Company Law Board under section 186 of the Companies Act, 1956, for, inter alia, the following orders: (a)An enquiry into the affairs of the trust association to determine, inter alia, the persons who are entitled to its membership as well as those who are entitled to hold office, as members of its committee of management. (b)To order a meeting of the trust association to be called, held and conducted in such manner as the Company Law Board thinks fit. Petitioner No. 2 opposed the application of the trust association and affirmed an affidavit on or about April 16, 1983, which was filed before the Company Law Board. It was contended, inter alia, by petitioner No. 2 that no order could be passed under section 186 of the Act ina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng will be conducted by an independent chairman. (c)Shri Sukumar Bhattacharya, advocate, was appointed the chairman of the meeting. (d)Notices of the said meeting will be issued to the seven members nominated by the Baptist Missionary Society and the four members nominated by the Church of Mizoram at addresses to be furnished to the chairman by respondent No. 2 in accordance with the procedure as provided in the Companies Act, 1956, and the articles of the trust association. (e)Respondent No. 2 will submit to the chairman a copy of the memorandum and articles of the trust association well in advance so that the notices can be given to shareholders for the requisite period. (f)The quorum for the meeting be five persons to be personally present. (g)The chairman will decide the venue and time of the meeting. (h)Respondent No. 2 will meet the expenses of holding the meeting and the remuneration of the chairman fixed at Rs. 1,100. (i)The chairman will submit a report to the Company Law Board within two weeks from the date of the meeting. (j)The meeting will consider, inter alia,- (i)The location of the registered office of the trust association. (ii)Determination of the church ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uisition should be served and it was doubtful if any meeting convened or held on the requisition of either group would be lawful. (j)There was no dispute that respondent No. 2 was a member of the trust association. (k)The application under section 186 of the Act was held to be maintainable as having been filed by a member of the trust association. There was no delay in submitting this application. Section 186 of the Companies Act did not prescribe any time limit and there could be no question of limitation. (l)It was not possible nor practicable in fact for respondent No. 2 to submit any requisition to the domestic forum for calling an extraordinary general meeting of the trust association under section 169 of the Companies Act. (m)Respondent No. 2 had submitted a list of persons stated to be the lawful members of the trust association with corroborative evidence as also the register of members of the trust association and the letters of acceptance by such members. The Council of Baptist Churches of Northern India through its affidavit affirmed by its secretary on June 8, 1983, had confirmed that the list submitted by respondent No. 2 was the correct list of members. (n)The se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng upon the respondents, namely, the Member, Company Law Board, Koshy George, six other members nominated by the Baptist Mission Society, four members nominated by the Mizoram Union of Churches, the Regional Director, Company Law Board; the Registrar of Companies, West Bengal, and the Union of India, to show cause why appropriate writs should not be issued directing the Member, Company Law Board, to cancel, withdraw or rescind his order dated December 1, 1983, restraining the respondents from giving any further effect or from taking any steps pursuant thereto and also for quashing the said order. An interim order was passed on the same date restraining the respondents from giving effect to or acting in terms of or taking any steps or passing any resolution in the meeting of the trust association proposed to be held on December 29, 1983, on the basis of the impugned order dated December 1, 1983. It is contended in the petition, inter alia, that respondent No.' 2 had no cause of action for invoking the jurisdiction of the Company Law Board under section 186 of the Companies Act and that the allegations made against petitioner No. 2 could at best be grounds for proceeding under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contended, did not have any authority or jurisdiction to decide as to the correctness or otherwise of the list of members of the trust association submitted by respondent No. 2. The Company Law Board further erred in holding that the Limitation Act did not apply or that there was any delay in making the said application under section 186. In directing the dispute about the registered office of the trust association to be considered in the said meeting, another error was committed as the same could not be the subject-matter of an extraordinary general meeting except in cases where the registered office was shifted from one district to another or from one State to another. By the impugned order, the control of the trust association, it is contended, has been made over to the Baptist Missionary Society, London, who were a minority. It is contended that the impugned order is illegal, invalid, without jurisdiction and bad on the grounds aforesaid. Respondent No. 2 has affirmed an affidavit on February 9, 1984, which has been filed in opposition to the petition. It is alleged in this affidavit, inter alia, that by reason of the disputes between the two groups who were functioning s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions raised in the affidavit of respondent No. 2 affirmed on February 9, 1984. He also submitted that on the undisputed facts on record, it was established that it was not practicable to hold any meeting of the members of the trust association lawfully and that the Company Law Board came to the correct conclusion and has directed an extraordinary general meeting to be called. Learned counsel submitted further that under section 186 of the Companies Act, while directing a general meeting to be called, the Company Law Board had ample jurisdiction and authority to give all consequential and ancillary directions for the holding of such a meeting. Under the powers conferred, it was open to the Company Law Board to decide as to which of the members would attend the meeting and also what business the meeting would conduct. He submitted that the meeting directed to be called by the Company Law Board was valid and lawful and the decision of the Company Law Board should be sustained. In support of the respective contentions of the parties, decisions were cited at the Bar which are considered hereafter. (a) Lothian Jute Mills Co. Ltd., In re [1951] 21 Comp. Cas. 290 . Here, a learned judg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 166 of the statute, power was given under section 167 to the Central Government to intervene on the application of any member and call for a general meeting of the company to be deemed to be an annual general meeting. (d) Clive Mills Co. Ltd., In re [1964], 34 Comp. Cas. 731 (Cal. Here, it was held by a learned judge of this court that the power of the court under section 186 of the Companies Act, 1956, to direct a general meeting of the company was wide and extraordinary in nature and should be used sparingly and with great caution. If, for any reason, it was impracticable to hold or conduct a meeting of the company as prescribed by the Act or the articles of the company, the court would exercise its power under the section and order a general meeting to be called. In the facts of the case, it was held that the articles of the company provided that holders of not less than 1/10th of the paid-up share capital of the company could convene an extraordinary general meeting and it was not shown why it was impracticable to requisition such a general meeting. The court in that case did not interfere under section 186 of the Act. (d) Rohtas Industries Ltd. v. S. D. Agarwal [1969] 39 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a meeting of a company in any manner in which meetings of that company may be called or to conduct the meeting of the company in manner prescribed by the articles or this Act, 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, order a meeting of the company to be called, held and conducted in such manner as the court thinks fit, and where any such order is given, may give such ancillary or consequential directions as it thinks expedient and any meeting 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 Companies Act, 1956, when promulgated, conferred similar powers on the court under section 186 thereof. The said section has since been amended and such power was given to the Company Law Board. The section reads as follows: "Power of Company Law Board to order meeting to be called.-(1) If, for any reason, it is impracticable to call a meeting of a company, other than an annual general meeting, in any manner in which meetings of the company may be called ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 186 is the impracticability of calling such a meeting in the usual course for any reason. If such a condition exists, then the Company Law Board can exercise its power and direct the calling of such a meeting. It is the case of the petitioners that the disputes in the trust association have continued since 1974. It is not the case that such disputes came to an end in 1982 and there was no impediment in calling a meeting of the company in the usual course. Therefore, the fact that there have been disputes in the trust association for a long time is of little consequence. The cause of action of the applicant before the Company Law Board would be deemed to have continued and there can be no question of limitation. The contentions of the petitioner as to delay are, therefore, rejected. Impracticability: It has been held by the Company Law Board that it is not practicable to call a meeting of the trust association in the usual course. The grounds on which the conclusion has been arrived at have been found to be, inter alia, that the trust association had become a divided entity and was being sought to be run by two rival groups each of which was seeking to carry on management th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oard accepted the members whose nomination came from bodies which were functioning without dispute and permitted them to take part in the meeting. The above approach and decision of the Company Law Board, in my view, cannot be held to be erroneous. It was not open to the Company Law Board to go into the internal dispute of the other nominating bodies or resolve the same. The only practical and feasible solution has been prescribed. The finding that under the articles of the trust association, the Baptist Missionary Society is empowered to nominate up to seven members cannot also be held to be erroneous. The contention of the petitioners that the number of members to be nominated by the Baptist Missionary Society would vary with the total strength of the membership is without substance. On a plain reading of the articles of the trust association, it is quite clear that the Baptist Missionary Society has the unfettered option to nominate up to seven members and this option is not dependent on the number of members to be nominated by the other bodies. The contention of the petitioners that the Company Law Board has wrongfully exercised authority, assumed jurisdiction and went into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and consequential directions in relation to the holding of a meeting. Under such powers, in my view, the Company Law Board has the power to direct the corporate body to consider matters as suggested. It does not appear from the impugned order that any agenda has been dictated. It has been left to the chairman to issue notices of the meeting which will no doubt contain suitable agenda. It also appears that the power under section 186 of the Act is invoked where a company is not functioning normally and it is not practicable for the company to call a meeting. When the Company Law Board exercises its extraordinary power under the section and directs the calling of a meeting, it necessarily follows that the agenda of such meeting has to be determined by the Company Law Board because such an agenda cannot be decided or finalised through the usual machinery. It has not been established that the subjects which have been directed to be considered in the proposed meeting are beyond the purview or jurisdiction of such meeting. Natural justice : The petitioners have invoked the principles of natural justice to impugn the nominations made by the Baptist Missionary Society and the Churches ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
