9911796707
TMI Blog1993 (4) TMI 238X X X X Extracts X X X X X X X X Extracts X X X X ..... defendant is concerned. The plaintiff in C.S. No. 1246 of 1992 is the only respondent in these two applications. Application No. 5998 of 1992 was filed by the plaintiff for the following relief : This court should be pleased to ensure that the applicant's powers as joint managing director of the third defendant company as on June 24, 1992, are maintained pending disposal of the above suit. The sixth defendant is the only respondent in that application. The short facts are as follows : The plaintiff has filed C.S. No. 1246 of 1992, against the first defendant company (in short "NPBS"), four other newspaper companies and six other persons. There are in all 14 defendants. This suit is primarily concerned with the validity of a board meeting of the second defendant, Indian Express (Bombay) Limited, held on January 23, 1991, and certain resolutions for appointing additional directors. The plaintiff also prays for declaration and permanent injunction in respect of various acts committed by the sixth defendant along with other directors, particularly Nusli Wadia, the seventh defendant and Venu Srinivasan, the eighth defendant. Many interlocutory applications have been filed by the pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interim injunction restraining the plaintiff from exercising any powers or functions in excess of what has been conferred upon him by resolution dated September 5, 1992, passed by the board of directors of the third defendant company or in the alternative to vacate the order passed by J. Kanakaraj J. on October 1, 1992, on the ground that the plaintiff had violated the undertaking given to the court. The two violations referred to were : (i)the applicant/plaintiff accepted the resignation of Mr. A.C. Venkatakrishnan ; (ii)the applicant/plaintiff had declared bonus and ex gratia payment for the employees. It was urged before my learned brother Thanikkachalam J. that the power of the plaintiff was restricted to recruitment, appointment, promoting or altering the terms and conditions of employees and hence, there was no bar on accepting the resignation and that the plaintiff had not acted in excess of his power. As far as payment of bonus is concerned, this was done under a wage settlement arrived at under section 18 of the Industrial Disputes Act and those persons drawing more than Rs. 2,500 were entitled to get ex gratia payment as Deepavali bonus. After hearing the arguments, Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intly with some employees at Bombay, which, according to the plaintiff, is a deliberate act of humiliation. The plaintiffs counsel also submits that the correctness of the resolution is doubtful. It is further stated by the plaintiff that the above resolutions are also contrary to the provisions of the Companies Act, particularly section 291. Under the said section, the board can delegate powers subject to the provisions contained in the Act or in the memorandum, articles, etc. Section 2(26) defines a managing director as a director entrusted with substantial powers of management, the words "substantial powers of management" were substituted for "any power of management" by the Companies (Amendment) Act, 1960. Therefore, according to Mr. Arvind P. Datar, learned counsel for the plaintiff, the board of directors cannot pass resolutions taking away substantial powers of management of a managing director or a joint managing director. Such resolutions, which take away substantial powers, will be void, therefore, on a joint reading of section 291 read with section 2(26) of the Companies Act, the resolutions dated June 24, 1992, September 5, 1992, and September 13, 1992, will not be vali ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has also been marked to the sixth defendant and the plaintiff. The plaintiff does not deny or dispute that he had sent the letter dated November 12, 1990, and hence, according to the sixth defendant, the plaintiff cannot now make a grievance of the effect of his own voluntary acts. In so far as the transfer effected on January 5, 1991, is concerned, according to the sixth defendant, the same is reflected in the annual return which is signed by C. Rajendra Kumar, company secretary, whose affidavit is relied on by the plaintiff. According to Mr. P. Chidambaram, learned senior counsel, the minutes of the board of directors meeting held on September 26, 1990, contain only a pious wish of R.N. Goenka. It is, according to learned senior counsel, not a resolution. The plaintiff in his capacity as a director alleges no knowledge of the board of meeting of January 5, 1991, which according to Mr. P. Chidambaram, learned senior advocate, is falsified by the minutes of the next board meeting of the first defendant company on April 7, 1991, presided over by the plaintiff. The seventh defendant was present at the meeting. The plaintiff did not ask the seventh defendant why and how he was prese ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 1992 is concerned with the validity of the meeting of the board of directors of the first defendant company held on January 5, 1991, and the board of directors' meeting of the second defendant company held on January 23, 1991, and certain other resolutions for appointing additional directors. The plaintiff had also filed C.S. No. 1247 of 1992 against the first defendant and six others challenging the transfer of shares in the meeting of the board of directors held on January 5, 1991, and for a declaration that 24.32 per cent, shares have been held in trust for the benefit of the plaintiff's brother Mr. Anil K. Sonthalia. In order to appreciate the controversies between the parties and the contentions raised by Mr. Harish N. Salve, learned senior advocate and Mr. Arvind P. Datar for the plaintiff, Mr. P. Chidambaram, learned senior advocate for the sixth defendant, Mr. Navroz H. Seervai, learned senior advocate for the seventh defendant and Mr. Arun Jetley, learned senior advocate for defendants Nos. 1 to 3, it is necessary to refer to the following facts. Admittedly, the late Mr. R.N. Goenka is the founder of the Indian Express group of companies, which is publishing "Indian E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the first defendant company was held on January 5, 1991, at Bombay. At the said meeting, defendants Nos. 7 to 9 were appointed as additional directors and they participated in the said meeting after their appointment. The late R. N. Goenka and the sixth defendant had participated. In the said meeting, certain shares were transferred in the name of R.N. Goenka, which were standing in the names of the plaintiff and the sixth defendant either individually or jointly. According to the plaintiff, the said meeting is invalid because he had no notice of the said meeting and, therefore, there was no occasion for granting leave of absence. It is relevant to notice that the whole case of the plaintiff rests on the validity or otherwise of the aforesaid meeting held on January 5, 1991. It is rightly pointed out by Mr. P. Chidambaram that the controversy between the parties started only from January 5, 1991. There is also no controversy that the sixth defendant has been holding 50.40 per cent, shares of NPBS even in 1986 and 50.56 per cent, in September, 1989. It is also not in dispute that he became the first joint shareholder of 12.16 per cent, in 1989, and is entitled to exercise his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 5, 1992, the board of directors of the third defendant company was held at Bombay. This meeting was attended by the plaintiff and defendants Nos. 6 to 8, 11 and 13. In the said meeting the sixth defendant was appointed as chairman of the board of directors. This resolution was carried by a majority and the plaintiff and Mrs. Saroj Goenka voted against the proposal. It was further resolved at the said meeting to delimit the powers of the plaintiff and Mrs. Saroj Goenka. By the subsequent circular resolutions dated September 13, 1992, the financial powers of the sixth defendant, the plaintiff and Saroj Goenka were delimited. The following facts will emerge from what is stated above: . (a)Defendants Nos. 1 and 3 are board-managed companies and the board of directors are entitled to exercise all the powers by virtue of section 291 of the Companies Act and the articles of association of the company. (b)The sixth defendant has been indisputably holding majority shares in the first defendant company even ignoring the disputed share transfers. (c)The plaintiff does not hold any share in the first defendant company. (d)The plaintiff has been accepting the appointment of defend ants N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r section 286 of the Companies Act, was given to the plaintiff and the fourteenth defendant. On the very same ground, the extraordinary general meeting and the board meeting held on January 23, 1991, is also sought to be assailed. He also invited my attention to pages 331, 346, 442 and 446 of compilation 'A' in C. S. No. 1246 of 1992 filed by the plaintiff. According to Mr. Arvind P. Datar, the plaintiff was not informed about the appointment of additional directors or about the transfer of shares. Learned counsel for the plaintiff raised an impassioned plea that the plaintiff has given a personal guarantee on behalf of the company to the tune of several crores of rupees and that he has been stripped of his powers as joint managing director in stages and that he has been subjected to humiliation. All these events, according to learned counsel, are against the theme of the late Goenka that the plaintiff and the sixth defendant, who are his grandsons, should "work as a team". Therefore, it is contended that the plaintiff should be given powers befitting his status as joint managing director. I have given my anxious consideration to the above contention. I am unable to countenance a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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