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TMI Blog2003 (12) TMI 334X X X X Extracts X X X X X X X X Extracts X X X X ..... he further direction that a committee comprising of the three nominee directors of the Reserve Bank of India, one of whom is the Chairman, and the two other Directors nominated by the Central Government, function as the Board till the application that was filed by the Central Government before it, for superseding the Board is finally decided. 2. Certain other directions also have been given in that order with regard to the holding of the Annual General Meeting which has been deferred by the Company Law Board in order that the share certificates may be despatched to the persons entitled thereto, as the number of such transfers is large, and the Investors Forum which had organised and effected purchase of about thirty four per cent of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en elected by the General Body, but had been co-opted to the Board. Such co-option in case of many of these Directors was by persons who had themselves been co-opted. This Banking company has not held its Annual General Meetings for over seven years. These Additional Directors assert a right to remain on the Board despite their admitted failure to convene and hold the Annual General Meetings. 6. Having regard to the unsatisfactory state of affairs of this Bank, the Central Government approached the Company Law Board initially with a petition under section 408, which was subsequently amended into one under sections 397 and 398, seeking suitable directions with regard to the management of the affairs of this Bank. One of the prayers is th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... man. He is a formal General Manager of another scheduled Bank. 10. This conduct on the part of the additional directors in trying to rest control of the Board for themselves and the manner in which they went about doing it by ousting the Chairman who had been appointed by the Reserve Bank of India in the public interest provoked the Central Government to apply to the Company Law Board, inter alia, seeking the supersession of the Board. The Company Law Board which took up the application for hearing immediately after it was filed was of the view that the developments brought to its notice warranted an ex parte supersession pending consideration of the application that had been filed by the Central Government. 11. The legality of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wise is suitable for serving on the Board, and whose presence in the Board is desirable in the interests of the company till upto the time the next annual general meeting is held. That provision is not meant to enable the company to keep on its Board a person as additional director for an indefinite period of time by not holding the annual general meeting. Section 260 of the Act, therefore, must necessarily be read with section 166 of the Act which stipulates that the annual general meeting be held every year and not more than fifteen months shall elapse between the date of one annual general meeting and the next. 15. A Division Bench of this Court comprising of Rajamannar, C.J., and Venkatarama Aiyar, J., as he then was in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a Division Bench of this Court in the case of A. Ananthalakshmi Ammal ( supra ). 19. All the additional directors, therefore are persons who have no right to remain on the Board as Directors as their term came to an end long ago on the date on which the annual general meeting for different years should have been held. Their failure to hold the meeting cannot be taken advantage of by them to hang on to the position of Directors indefinitely. 20. It was submitted by counsel that under section 167 the Central Government has power to call for an annual general meeting and that an attempt by a shareholder was in fact made to have such a meeting called but without success. We have not been shown the orders of the Central Government o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t now be held with utmost expedition. The Company Law Board has already directed that the process of distribution of share certificates to the members of the Investors Forum be completed before the 25th January, 2004, that the Members Register close as on that date, and that notice of the AGM be sent to those whose names appear in the Register of Members on that date. 25. We must however take note of the Reserve Bank of India s failure to act with a sense of urgency with regard to application said to have been sent to it some time in October 2003 with regard to the transfer of shares to four investment companies belonging to the Sterling Group. The transfer of shares in their favour has already been, we are told, approved by the Board o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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