9911796707
TMI Blog2000 (5) TMI 965X X X X Extracts X X X X X X X X Extracts X X X X ..... e, S. R. Grover and Ms. S. Tondon for the Applicant. Navin Parikh and Mrs. V.D. Khanna for the Respondent . JUDGMENT Misra, J. Leave granted. 2. The present appeal is directed against the order dated 10-2-1999 passed by the Bombay High Court in Assessing Officer No. 1058 of 1998 in N/M No. 6325 of 1997 in Suit No. 6559 of 1997 dismissing appellants appeal from Bombay City Civil Court order dated 9-9-1998 dismissing aforesaid appellants notice of motion in the aforesaid suit. In the suit following interim injunctions were sought : "( a )Respondents 1 to 3 from acting on the resolution dated 13th November, 1997. ( b )Respondents from enrolling new members. ( c )Respondents 4 to 8 from acting as directors of the suit club and restraining respondents 1 to 8 and life members enrolled after 7th November, 1995 from casting their votes at the AGM. ( d )Respondents 1 to 8 from holding Board of directors meeting dated 19th December, 1997. ( e )for an order appointing Mr. Satish Shah, advocate, as a chairman of the meetings of the club/company." 3. The appellants are the directors of the Indian Automotive Racing Club ( the company ). As per the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was issued for a meeting of the Board of directors for 29-3-1997 for the co-option of another set of additional 12 directors, in place of the injuncted directors which included respondent Nos. 4 to 8. This led to the appellants to file another application on 27-3-1997 for injunction to restrain these respondents from holding the said meeting. The Court, by an order dated 27-3-1997, however, did not injunct the said meeting, but directed that any resolution passed at the meeting shall not be implemented for two weeks which was subsequently extended. As scheduled the said meeting was held, in which again 12 newly additional directors were appointed, including respondent Nos. 4 to 8, till such time as the injunction against the first set of twelve additional directors remained in operation. Next on 11-4-1997 notices were issued and served upon directors including those covered by the aforesaid order dated 27-3-1997, proposing a meeting for 17-4-1997. This, according to the appellants, was in breach of the order dated 27-3-1997, not to implement the resolution appointing them as directors. On an application thereafter made by the appellants, the Court by an order dated 17-4-1997 recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, it turned down the proposal to appoint 12 additional directors by the group of respondent No. 1 by the majority of 4 to 2. When parties are at variance, then they try to put each other down, disputes start cropping up from an insignificant to other magnified issues. One of such disputes raised is of the recording of the minutes of the meeting dated 4-7-1997. According to respondent No. 1, it was the prerogative of the secretary to write the minutes and, thus, the minutes recorded by him should be accepted. This dispute is because of the difference in the recording of the minutes between one recorded by the secretary of respondent No. 1 and the other submitted by Mr. Satish Shah. The significant difference is in the recording of item No. 6, of the agenda of 8-11-1995, under which the appointment of twelve additional directors was considered. There is neither recording nor any reference about this consideration in the minutes prepared by the secretary, while in the recording by Mr. Satish Shah, it clearly records this. The relevant part of his report under item No. 6 is quoted hereunder : "To appoint 12 additional directors whose influence, contact would assist the club to procu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecretary and it is his obligation to prepare the minutes of that meeting. Further, all decisions and resolutions other than the resolution dated 8-11-1995 are valid and binding on the appellants. When earlier suit was withdrawn all interim orders came to an end. 12. The trial court dismissed the appellants injunction application and also the contention that the consent order dated 30-6-1997 wiped off the earlier resolutions passed by the board of directors. The appellants earlier sought injunction in the earlier suit, against holding of this meeting dated 17-4-1997 in which new life members were to be taken in and the Court did pass an order not to implement any resolution passed therein. The appellants being aggrieved by the dismissal of the injunction application filed an appeal before the High Court which was dismissed. The High Court held, there was no effective resolution annulling, rectifying or modifying the resolution dated 8-11-1995. The Court rejected the appellants contention that order dated 30-6-1997, wiped off all the earlier resolutions passed. It held, neither party agreed nor the Court set aside the resolution dated 8-11-1995. It ordered for holding the annua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passed in a meeting at the behest of the first respondent where he presided as chairman, are patently illegal and have no force of law. 15. Challenge to the resolution dated 29-3-1997 is also the same. Its base is also the resolution dated 8-11-1995, which was also held under the chairmanship of the first respondent and it also stands wiped off by the consent order dated 30-6-1997. As said before, when this meeting was to be held, appellants applied for injunction to restrain respondents from holding this meeting. On this, the Court ordered that any resolution passed in this meeting shall not be implemented. By this resolution, as aforesaid, 2nd set of 12 additional directors was appointed. 16. Next challenge is to the resolution dated 17-4-1997. This resolution is also challenged on the same ground, viz., it was illegally chaired by respondent No. 1. Even for this meeting court directed resolution passed therein shall not be implemented. Submission is, this meeting was also held in hot haste to overreach the order of the Court. On 10-4-1997, the aforesaid A O No. 274 of 1997 was adjourned to 21-4-1997 for admission. Coming to know of this, on 11-4-1997, notice was issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... meeting dated 13-11-1997. The question is, whether passing of the consent order in the earlier suit obliterates the meeting and resolutions passed on 29-3-1997 and 17-4-1997? Also what was the resolution passed in the meeting dated 4-7-1997 and in this context, whether the minutes prepared by the secretary or what is prepared by Mr. Satish Shah should be accepted? 20. It is very unfortunate, though very common, in any organisation, including companies, there is tussle for holding dominant position to control the functioning of such organisation. It is often said, "It is not like sportsman spirit". Meaning, the spirit of a sportsman is treated to be highly cooperative even in the hour of defeat. He is always in the best of spirit. But such spirit now even in the field of sports seems to have receded to oblivion. The present company is also one of such companies, working in the field of sports. But this spirit between the parties is lacking. The battle of supremacy to control started between respondent No. 1 and appellant since 8-11-1995 leading to two separate suits and the battle is still raging for about five years. 21. Now, we proceed to test the submissions for the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreed that the items of agenda of the said meeting which was held on 8th November, 1995 should be convened de novo and under the said Mr. Satish Shah, Advocate." 22. On the other hand, the learned counsel for the respondents submits that neither the said consent order nor the resolution passed on 4-7-1997, in any way sets aside any resolutions passed prior to the said consent order. Thus, it would be deemed that they continued notwithstanding holding of the said meeting dated 4-7-1997. 23. We have considered the submissions made by the parties including the various orders passed, both in the earlier and the present suit. In our considered opinion, the culmination of the appeal, the suit, by its withdrawal as per Court s order, as a consequence of the consent order indicates one and the only inference that once the parties agreed to hold a fresh meeting under the chairmanship of Mr. Satish Shah to re-consider afresh the agenda of the meeting dated 8-11-1995, then it implicitly voices, what was resolved in the said meeting earlier is wiped off and has become non est . The very re-consideration of the earlier agenda clinchingly reveals that what was done then is wiped off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... item did not survive because it has been agreed in principle to hold the annual general meeting. Mr. Swadi, Mr. Futehally and Mr. Bhiwandiwalla concurred. Mr. Bhathena and Mr. Goenka opposed. Mr. Bhathena said that he was disagreeing because in his view fresh blood was required on the Board. Mr. Rao abstained. The view of Mr. Hoosein was adopted by a majority of 4 to 2." 25. Before drawing our conclusion we may refer to section 193 of the Act. The relevant portion of section 193 is quoted below : "Minutes of proceedings of general meetings and of Board and other meetings (1) ****** (1A) Each page of every such book shall be initialled or signed and the last page of the record of proceedings of each meeting in such books shall be dated and signed ( a )in the case of minutes of proceedings of a meeting of the Board or of a committee thereof, by the chairman of the said meeting or the chairman of the next succeeding meeting. . . . ****** Explanation : The chairman shall exercise an absolute discretion in regard to the inclusion or non-inclusion of any matter in the minutes on the grounds specified in this sub-section." (6) If default is made in complying with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the resolution dated 4-7-1997. The resolution dated 27-3-1997, was itself a consequential resolution to the resolution dated 8-11-1995, as it appointed 2nd set of 12 additional directors in its place till injunction against the first set was in operation. This 27-3-1997 resolution itself was temporary in nature. Hence, we conclude after passing of the consent order and passing of the resolution dated 4-7-1997 so far appointment of 12 additional directors cannot survive. 28. This leaves us to the last relevant resolution dated 17-11-1997 in which 57 life members were inducted. This is a meeting admittedly presided by respondent No. 1 to which appellants had due notice. Appellant No. 1 also participated, under protest and without prejudice. So far those inducted life members, we tried to find out from the parties, whether there is any prerequisite or minimum qualification for their induction. Parties could not point any such. The dispute, if any, could be that those inducted, were brought in by respondent No. 1 to muster his majority in the annual general meeting. 29. The learned counsel for the appellants referred to The Conduct of Meetings by TPE Curry and J Richard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tussle between the two was continuing. If the resolution dated 8-11-1995 evaporated, authority of respondent No. 1 to preside under it also dissolved, unless some fresh authority was given to him. Thus, without any fresh authority respondent No. 1 could not preside in any Board s meeting. In fact this meeting dated 17-4-1997, at that point of time was challenged and the Court on this date injuncted the respondents to implement the resolution passed in this meeting. It is during continuation of this injunction order the said consent order was passed. Consent order was to consider 8-11-1995 agenda de novo . In view of this then, how could resolution passed in this meeting survive after passing of the consent order ? 33. In the meeting dated 4-7-1997, no resolution was passed as to who shall henceforth preside in the meeting of the board of directors. The resolution dated 4-7-1997 could be construed that the parties deferred the question as to who shall preside the meeting till holding of fresh election of the board of directors in the annual general meeting. It is significant in the minutes recorded by Mr. Satish Shah that before item No. 1 was taken up Mr. Bhiwandiwalla and Mr. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral irregularities. This was part of the tussle between the two groups to gain the majority over the other. However, it would not be proper to reject the life members application. So in order to keep the interest of the life members, we direct that their cases be placed before the next annual general meeting to be held for its consideration. 35. Since the dispute, as to who shall preside, is still not resolved, in spite of this long-drawn litigation which can only come to an end by fresh election of the board of directors in the next annual general meeting, it is proper in the interest of the company that neither appellant No. 1 nor respondent No. 1 presides in any board of directors meeting. 36. Thus, so far the direction of the High Court to hold annual general meeting under the chairmanship of Mr. A.P. Kothari, the Company Registrar, seems to be proper, hence needs no interference to that extent. The relevant portion of this is quoted hereunder : "However, it is clear that a meeting of the Board of directors had been held pursuant to an order passed by this court and it is common ground before me that the Board of directors decided to hold the annual general meeting ..... X X X X Extracts X X X X X X X X Extracts X X X X
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