9911796707
TMI Blog2002 (9) TMI 774X X X X Extracts X X X X X X X X Extracts X X X X ..... tion against M/s. Muthialpet Benefit Fund Limited, hereinafter referred to as the company to convene and hold Annual General Meetings for the years 2000, 2001 and 2002. 2. The appeal is filed by the second respondent in the company application, viz., Mohan. We are of the opinion that it is necessary to refer to certain facts for the disposal of the appeal. Muthialpet Benefit Fund Limited is a Mutual Benefit Fund and it is stated that the company was started in the year 1895 and incorporated under the provisions of the Indian Companies Act, 1882 and the company has been functioning for more than 107 years. The company is a Nidhi company and its main business is lending loans on jewels and landed property and accepting fixed deposits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Directors at the Annual General Meeting which are required to be held for each year. 2. It is rightly pointed out by counsel that under section 167 of the Companies Act, the power to convene the Annual General Meetings, notwithstanding what is contained in the Act or Articles, is vested in the Company Law Board. Anyone of the members of the Company who are parties to this proceeding, or any other member may approach the Company Law Board and seek appropriate directions with regard to the convening and holding of the Annual General Meetings for the years 2000 and 2001. The directions from the Company Law Board can also be sought with regard to the holding of Annual General Meetings for the year 2002. 3. It is advisable that these Annua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing between the directors and, after referring to the civil suit and the appointment of the Commissioner to administer the company, he has stated that he along with other directors filed an appeal before this Court in O.S.A. Nos. 23 to 25 of 2000. He also referred to the order of the Division Bench dated 11-4-2002 and according to him, the Division Bench has directed for the holding of Annual General Meeting. Accordingly, he prayed the Company Law Board to fix the time for election in September 2002. 5. The Commissioner has filed a counter stating that he has no objection for passing orders for convening Annual General Meetings for the years 2000, 2001 and 2002. The Commissioner has also stated that directions are required for the conve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lan, learned senior counsel representing Mr. V. Venkadasalam, learned counsel for the appellant submitted that the order of the Company Law Board is not sustainable in law and according to him, the Company Law Board has not properly exercised its discretion under section 167 of the Act, as the convening of Annual General Meetings would not be appropriate. According to the learned senior counsel, before the Commissioner convenes Annual General Meetings, he has to finalise accounts of the company for three years and the accounts are required to be advertised and since the financial condition of the company, a Nidhi company, is not sound, there will be a rush by all depositors for getting back their money resulting in the closure of the compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act provides for penalty in the case of default of the company to hold Annual General Meeting or to comply with the directions of the Company Law Board to hold Annual General Meeting. We are of the view that the Company Law Board was correct in its finding that the holding of Annual General Meeting is a mandatory requirement on the part of the company and the Company Law Board was justified in calling for Annual General Meetings of the company. 10. We also find that the Company Law Board is not solely guided by the directions of this Court in O.S.A. Nos. 23 to 25 of 2000. The Company Law Board has referred to the observations made by the Division Bench of this Court, but we find that the observations have not influenced the Company L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat accounts would be displayed or disclosed is not a ground to hold that Annual General Meetings need not be held. We are also unable to accept the submission that there will be a rush by the shareholders for the return of deposits knowing the financial instability of the company. We are of the view that it is merely speculative and even assuming that the shareholders may approach for the return of the deposits, it is always open to the company to regulate the return of the deposits in the best manner possible. 12. The submission made by the learned senior counsel regarding the conduct of previous management is not acceptable, because by holding Annual General Meeting it is not expected that the persons who were in previous management ..... X X X X Extracts X X X X X X X X Extracts X X X X
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