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TMI Blog2016 (6) TMI 185X X X X Extracts X X X X X X X X Extracts X X X X ..... tion u/s 186 of the Act 1956, hence this petition is liable to be dismissed precisely when the respondents are agreeable to attend the meetings. In the light of the ratio decided in R. Rangachari v S. Suppiah by Supreme Court [1975 (9) TMI 75 - SUPREME COURT OF INDIA ], to pass an order under section 186, it is binding on this Bench to see that there must be impracticability for calling, holding and conducting General Meeting, when there is no impracticability for calling meeting, it can't be said that an order could be passed for holding and conducting general meeting alone. Therefore, the reasoning given in Pucci Dante's case (1998 (7) TMI 695 - COMPANY LAW BOARD) can't be applied in this cast. Here, the respondents categorically stated that they are ready and willing to attend the meeting. R-2 has shareholding in R-1 equivalent to the shareholding of P-2. R-2 and his group admittedly have 34,67% shareholding; of course R-2 alleged in the CP 140/2014, that his group had 42.38% holding in P-1 before their shareholding was reduced. If Section 186 is invoked just by being coasted on the allegations in the petition, by ignoring other shareholders reservations to attend general mee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ectors are residing in Lucknow itself. When P-2 wrote another letter on 22.06.2015, stating that the meeting would be held at the schedule time and date because the most of the records are maintained at New Delhi, therefore, it was imperative for the company to hold board meeting in the capital. To which, when R-2 replied that he was not agreeable to holding meeting at the registered office at New Delhi, if at all P-2 seeing any urgency to convene a meeting, he should convene it at Lucknow, and therefore, he could attend the board meeting, then the petitioner, on seeing such an obstinate stand from R-2, gave in to hold at Lucknow on 27.06.2015 instead of holding on 25.06.2015, for this also, R-2 raised an objection for convening meeting in the premises of VIL Ltd. i.e., P-1. For having P-2 noticed that R-2 is not interested in attending to any board meeting, he again wrote back to R-2 on 25.06.2015 requesting R-2 to attend the board meeting at the schedule time and place at Lucknow. However, at last, R-2 sent a mail on 26.06.2015 agreeing to attend board meeting in Lucknow with a request that, in future, board meetings should be convened at anywhere in Lucknow except at VIL premise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... query would be clarified and discussed provided R-2 attends to the board meeting. To avoid attending board meetings, R-2 again came up with a request to adjourn the board meeting schedule to be held on 30.08.2015. The company being helpless and having realised that it could not hold any board meeting to transact any business in the company that requires for the growth of the company. P-2 rescheduled the board meeting from 30.08.2015 to 04.09.2015 and requested R-2 to attend to the Board Meeting, but to the utter dismay of the petitioners, R-2 did not even attend to the meeting on 04.09.2015. 4. The outcome of this deadlock is, the company could not carry its functions due to cynical ploy of the respondents. R-2 is aware of the fact that the company could not do anything unless he attends meetings and it could not hold even General meetings for there is a clause in the Article-23(2) saying no business shall be transacted at any general meeting unless quorum of five members is present at the time when the meeting proceeds to business. Because of this reason, though the petitioners are two shareholders in the company, they could not pass any resolution by passing article 23 of AoA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... illegal acts committed by them. When R-2 received notice of board meeting dated 22.08.2015, he had sought the information below from the petitioner regarding the agenda of the meeting proposed to be held on 30.08.2015, the information sought on 24.08.2015 is as below: (a) Agenda Item 2; for supply of audited annual account with all the annexure, directors report and audit report for review (b) Agenda Item 5; for deletion of Item No. 5 because it needs to be complied with the provision of clause 38A of the Article of Association of the Company before considering any declaration of dividend (c) Agenda Item 10; for draft of the notice ensuing AGM with proper agenda to be discussed in the ensuing AGM before fixed date, time and place of such meeting 6. R-2 submits that the petitioners having sent only partial information, then R-2 was again obliged to send another letter on 29.08.2015 to R-2 seeking complete information viz; (a) Draft Director Report, Annual Report (b) Draft of AGM Notice with proper agenda need to be discussed in the board meeting dated 30.08.2015 (c) following details on draft balance sheet of F.Y. 2014-2015-ledger of unsecured loan, ledger of wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng general meeting, the Respondents submit that they will attend meetings. These petitioners cannot hold out seeking deferment of a meeting, request for change of venue and request for supply of material information connected to agenda items as a ground to invoke jurisdiction u/s 186 of the Act 1956, hence this petition is liable to be dismissed precisely when the respondents are agreeable to attend the meetings. 10. Now, the point for consideration is as below: Can CLB invoke its discretion to pass an order under section 186 as sought by the petitioners? 11. The petitioners submit that both of them hold about 90% shares in R-1 Company, but it is also an admitted fact that R-2 group, as on date, has 34.67% shareholding in P-1 as well, therefore, it can't hold out that as if P-2 alone has owned P-2 Company exclusively. 12. The case of the petitioners is that the company could not hold and conduct any general meeting for carrying the functions of the company for there being a hostile and obstructive attitude from R-2 to R-4. Since Article - 23 of the AoA says that there shall be a quorum of 5 to hold meeting, for R-2-4 wantonly remaining absent to any meeting tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of the respondents that they have not been supplied even audit report and other valuable documents that reflect the financial of the company. 15. It is not the case that the petitioners have exclusive control over the company; however R-2 says he has participatory role in P-1 Company as much as he has in R-1 Company, therefore, the petitioners cannot take the entire control to themselves and pass resolutions under the refuge of Section 186 of the Companies Act. Since there are two directors on the Board, one out of two is always entitled to call a Board meeting. It is a fact that no Board Meeting could be held unless those two directors present to the meeting and these two petitioners could also not hold and conduct general meeting unless the Respondents present to fulfil the quorum strength of five. P-2 already tried to hold general meeting basing on the requisition notice given by P-1. In this scenario, the petitioners filed this CP for a direction to call, hold and conduct Board Meeting as the absence of the Respondents called for the direction above u/s 186 of the Companies Act, 1956. 16. To know what section 186 says is, it is essential for reading the section m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore of the said contingencies the court has to order the calling of a meeting of the company and its holding and conducting in such manner as the court thinks fit. The use of the word 'and' between the words 'held' and 'conduct' in clause (a) of sub-section (1) clearly shows that the court has no power to make any order regarding the holding and conducting of any meeting which has already been called without ordering a meeting of the company to be called in place of the meeting already called. If an order under clause (a) has been made such ancillary or consequential directions as the court thinks expedient could be given under clause (b) including a direction within the meaning of the explanation appended thereto. The language of sub-section (2) further fortifies the above interpretation of sub-section (1) and makes any meeting called, held and conducted in accordance with an order under sub-section (1) to be a meeting of the company duly called, held and conducted. The use of the word or in the first part of sub-section (1) may be disjunctive or conductive in the manner we have interpreted above. But undoubtedly the order under clause (a) has got to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hareholders, and therefore it is important to see whether canvass of some out of these shareholders is for collective interest or for the interest of them alone. At times, it is challenging task to delineate collective interest of the shareholders and interest of a group of shareholders of the company. 21. It is needless to say when apex court of us already held an interpretation to Indian Law; it is not possible to take out a ratio from English citation, which is inconsistent to the law of the land. In section 135 of the Companies Act 1948 of English Act, it is applicable to any general meeting, whereas under our Act. It is applicable to a general meeting other than Annual General Meeting. Exigencies for holding AGM are certainly different for holding EGM. There are separate sections under Indian Law. 22. The petitioner relied upon In re El Sombrero Ltd (1958) 3 W.L.R 349 (Chancery Division) to say that there is nothing to prevent the court intervening in a proper case and where Section 186 application before the court is opposed by other shareholders, when the respondents are failing to perform their statutory duty to call General Meeting. 23. In re El Sombrero Ltd, this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnai, concluded as below:- 15. On the facts and circumstances of the present case, where there are serious disputes among the petitioner on the one hand and the first respondent as well as Mr. Faiz Mohammed on the other hand, the first respondent and Mr. Faiz Mohammed have an insignificant stake in the company when compared to the petitioner; the requisition dated February 9, 1998, of Pucci SRL is under dispute and there is a serious deadlock in relation to the management of the company and also taking a reasonable, prudent and common sense view of the whole of the matter. I am satisfied that it may he impracticable to call, hold and conduct an extraordinary general meeting of the company. Accordingly, in my considered opinion, in the present case, there is need to exercise my discretion under Section 186. It is in these circumstances and in the light of the principles enunciated in various decisions cited supra as well as the unequivocal statement made by counsel for the first respondent, that he is ready and willing to attend the board meeting, if convened by the company, it is hereby directed that a board meeting shall be convened to fix a date for an extraordinary general ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olders addresses are not known to the company and their whereabout are not known to the company. But not in a case where shareholders are very much present and it is not impracticable to call the meeting, more especially in a case where shareholders express their willingness to attend the meeting. 31. The petitioner relied upon Sanjay Gambhir Ors. v. D. D. Industries Ltd Ors 2013(135)DRJ187 to say that holistic approach has to be adopted for holding EOGM to restore corporate democracy. 32. On perusal of the case supra, it is pertinent to note, it is an order passed when a company petition filed under sections 397/398 of the Companies Act, 1956. The reason for passing such an order is - only one director was left in the board, therefore, that order was passed reconciling the provisions of Section 403 r/w 186 and 169 of the Act, 1956, it is also said that the facts and circumstance of each case will determine the extent to which it is practicable to hold meeting of a company. In that case, the MD representing minority group captured the board of directors, thereby a situation of minority oppressing the majority can be said to exist. In that situation it would be futile for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he present case. 37. The Respondents relied upon In Re: Ruttonjee co. Ltd. (AIR 1969 Cal 550) to say that section 186 cannot be invoked in the facts and circumstances the petitioners raised, to which, the respondents relied upon the para below: 40. It is manifest that the Mallya group wants to eliminate the Bhesania group from the Board altogether although at the inception it was solemnly agreed that two of the Bhesanias would be permanent directors. It may be that, if the two permanent directors were indulging in activities injurious or prejudicial to the interests of the company, there was no reason why they should be retained on the Board: but before a Court is asked to exercise its powers under Section 186 and to dispense with the special notice provided for in Section 284, the Court should at least be told what the specific charges against these two permanent directors are. I have gone through the petition but have not discovered any such charges against them, apart from the statement that some persons are contending that they have ceased to be directors for contravention of Section of the Companies Act, 1956. We shall consider the charge of contravention later; but ..... X X X X Extracts X X X X X X X X Extracts X X X X
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