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TMI Blog1995 (4) TMI 223X X X X Extracts X X X X X X X X Extracts X X X X ..... the members of the bank including the Directors proposed to be removed. The Secretary of the bank put up the notice Ext. B16 along with the resolutions and his note to the effect that the resolutions were in order. On 14-9-1994 the board of directors considered the said resolutions and decided to take legal opinion on the validity or otherwise of the said resolutions. It was also resolved that subject to permission to be obtained from the Register of Companies the annual general meeting may be postponed to 19-10-1994. Ext. B20 is the minutes of the meeting and item No. 78 of the agenda relates to this decision. 2. After the legal opinion was received, the Board considered the question of the validity of the notice to remove the members of the Board at this meeting on 20-9-1994. It is seen that the legal opinion was to the effect that since a notice under section 284 of the Companies Act ought to conform to section 188 of the Act, the resolutions moved by the three members were not valid. It was, therefore, decided to rule out the resolutions Exts. A23 to A25. One of the Directors opposed the rejection of the said resolutions and the two Reserve Bank of India nominee Directors i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ording to the appellants, the meeting held on 28-9-1994 was validly held and therefore there were no further occasion for the holding of an annual general meeting on 20-10-1994 and hence the holding of any such meeting also should be restrained in addition to preventing these members who had ceased to be members, from functioning as members of the Board of Directors. The application for injunction was opposed by the respondents therein and the court posted the interim application for counter to 20-10-1994. On the request of the respondents, the petition was again adjourned to 24-10-1994. Due to same confusion the petition was not called on 24-10-1994 and hence the appellants filed an application for advancing the hearing of LA. 7929 of 1994. It is to be noted that the postponed annual general meeting was to be placed on 29-10-1994. Arguments were heard on 27-10-1994 and 28-10-1994 and on 29-10-1994 the court passed an order refusing to grant the interim injunction prayed for by the appel- lants. Subsequently, a meeting was held on 29-10-1994 and it was adjourned for direct polling to 31-10-1994 and for proxies to 1-11-1994. Meanwhile on 31-10-1994, the appellants moved this court b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eral Clauses Act, cannot have any application in the case of the company. He also submitted that the position in law was that the Directors of a Limited Company in the absence of express authority in the Articles of Association have no power to postpone a general meeting of a company properly convened. He cited Smith v. Paringa Mines Ltd. [1906] (2) Ch. D. 193 on support of this contention. He also cited passages from Palmer on Company Law 23rd Edn., Vol. I, Page 743 and Pennington on Company Law 4th Edn., page 560 in support of this submission. He also strongly relied on the decision of the Supreme Court in Chandrakant Khaire v. Shdntaram Kale AIR 1988 SC 1665 and a passage from Shackleton on Meetings 4th Edn. Page 169. The learned Advocate General on the other hand submitted that the decision in Chandrakant Khaire's case has been discussed and clarified by the Supreme Court in J.M. Patel v. AS. Mehta AIR 1989 SC 1289.He also submitted that by virtue of the Articles of Associations the Board of Directors act on behalf of the company and of under the Articles of Association they have the right to call the statutory meeting under section 166 of the Companies Act, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting of the shareholders, and a meeting was convened for a certain day. It matters not why, but Blair, not wishing the meeting to take place at the time and place at which it was convened purported to postpone it by a notice was duly issued by the authority of the board, and was given at the proper time and to every shareholder. I entirely agree with the opinion given by counsel that it was not competent for the board postpone the meeting. The articles provide for the adjournment of a general meeting in certain events, but they contain no provision for postponement. It is said that the directors must be able to postpone the meeting because they may fix the time and place at which the meeting is to be held; but in my opinion that is not so. On the other hand, if the directors had power to postpone, and a meeting adverse to the directors was called they might postpone it for a week or a month, or perhaps sine die. I cannot see that there is any doubt upon the point...." Various test books on Company Law cited by Mr. T.R. Govinda Warriyar relied on the above decision to advance a proposition that the Board of Directors may not have power to postpone a meeting which has already bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a meeting which was duly convened before the said meeting commenced and to convene the same on a subsequent occasion. Their Lordships also observed that this power must be exercised bona fide and for justified purposes. In other words, in J.M Patel's case ( supra ) the Supreme Court took the view that the power to postpone a meeting which is called, is inherent in the authority that convened that meeting and the only question was whether that authority had acted bona fide in postponing the originally scheduled meeting. Of course, the decision in J.M. Patel's case ( supra ) was also not one where the powers arising out of a compact alone was involved unlike in the present case. 8. The learned Advocate General appearing on behalf of the respondents submitted that whenever a power is conferred on a body to do something incidental power of postponing the doing of its or of doing it in a proper manner, must also be vouchsafed to the body concerned and from that point of view the Board of Directors conferred with the power under article 41 of the Articles of Association must be conceded the power to postpone the meeting if the circumstances warranted such postpone- ment. He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... General Meeting. As observed by Satish Chandra J. in Rajpal Singh v. State of U.P. [1968] 1 Comp. L.J. 21 it will be an undue restriction on the power of the Board, if it were to be held that the Board would not have the implied or the ancillary power to postpone an Annual General Meeting for which they have issued a notice. Further as observed by Lord Denning M.R. in Pandram Developments v. Fidelis Fabrics [1971] 3 All. ER 16 times have changed and a strict view as the one adopted in Smith's case ( supra ) ; would cause considerable practical difficulties in the working of a company. The company normally acts through its Board of Directors and if the Board of Directors are held to be not have even having the power or discretion to take steps or to alter the steps taken to fulfil the statutory obligations of the company, within the framework of the statute, it will impede the smooth working of the company. In a given situation the court would also be justified in implying a term, if necessary, to given efficacy in the business sense, to the articles of a company, to make it smoothly workable. 11. Section 291 of the Companies Act confers on the Board of Directors o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eholders proposing to move an ordinary resolution for the removal of three of the existing directors. Though the Company Secre- tary supported by the authority of a decision of the Karnataka High Court held that the resolutions were in order and placed them before the Board for decision as to their inclusion in the agenda for the annual general meeting, the Board felt that legal opinion was necessary for the purposes of deciding whether the resolutions were in order or whether they were bad for non-compliance with section 188 of the Companies Act. The legal adviser to the bank took the view that since it related to the removal of the Directors of a Company a power which is conferred under section 284 of the Companies Act on the Company, the resolution by an individual member for the removal of a Director in office cannot be held to be valid and such a resolution has to be in compliance with section 188 of the Companies Act. I do not think that it is for this court at this interlocutory stage, to consider whether the legal advice was tendered to the bank was correct or not. There cannot be any doubt that the legal advice was tendered bona fide and the Board of Directors cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ress, prima facie, I do not think that it is possible to hold that the Board of Directors were totally unjustified in postponing the Annual General Meeting itself. In other words I am not satisfied that I will be justified without the entire evidence being in coming to a conclusion that the Board of Directors acted mala fide in postponing the annual general meeting originally called by them. 15. In view of my conclusions as above, prima facie I do not think it necessary to go into the various other questions that were raised and argued before me by Mr. Warriyar on behalf of the plaintiffs and the Advocate General on behalf of the respondents. Since I have already held that the Board of Directors had prima facie, the power, either incidental or ancillary, to postpone the Annual General Meeting and the postpone-ment has not prima facie been shown to be vitiated by absence of bona fides on their part, I am necessarily in agreement with the conclusion of the court below that the injunction prayed for by the plaintiffs need not be granted. 16. The question of the balance of convenience has also to be considered. The company is a Banking institution having a number of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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