9911796707
TMI Blog2012 (12) TMI 1149X X X X Extracts X X X X X X X X Extracts X X X X ..... s not obtained on fraud or fabricated documents ? B. Whether the CLB could not have entertained an application filed by the 1st Respondent, which was in effect and even stated to be for review of an earlier order passed by the CLB ? C. Whether the CLB could not have vacated its Order dated May 21, 2012 on the same grounds on the basis of which the Order dated May 2012 was passed ? D. Whether the CLB is required to pronounce its orders and whether an order merely posted by speed post without its being pronounced is not a judicial order in the eyes of law? E. Whether the CLB could not have permitted the 1st Respondent from implementing a resolution purportedly passed at its Extraordinary General Meeting when: (i) the CLB itself permitted amendment of the Company Petition impugning the convening of the said EOGM, and (ii) the CLB had adjourned another Company Application for further amendment of the Company Petition questioning the conduct at the impugned EOGM? F. Whether the CLB could not have permitted the 1st Respondent to implement the resolution purportedly passed at the impugned EOGM when the conduct of the impugned EOGM was under serious dispute and cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion to the shareholders of the first respondent company. 3. Jer Rutton Kavasmaneck @ Jer Jawahar Thadani (herein after referred as JRK) is original first claimant in Company Petition No. 87/397-398/CLB/MB/2010. Darius Rutton Kavasmaneck (herein after referred as DRK) is original second claimant in the said Company Petition. DRK is a son of JRK. The first respondent is a company (hereinafter referred as the said company) in which the appellants and the respondents are shareholders. The second respondent Mr. Keki Hormusji Gharda (herein after referred as Dr. Gharda) is the brother of JRK and is Chairman and Managing Director of the said company. The third respondent is wife of Dr. Gharda and also a Director of the said company. The fourth respondent is wife of ex Chairman and Director of the said company. The fifth respondent is Chartered Accountant and is on the Board of Directors of the said company. The sixth to eighth respondents were joined as additional respondents to C.A. No. 73 of 2012 before the CLB. The sixth respondent is daughter of JRK and sister of DRK. She owns and/or controls 3814 equity shares of the said company constituting approximately 6%. The seventh resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... By letter dated 17th May 2001, the first respondent Company informed the appellant No. 2 that a transfer notice dated 15th May 2001 from Ms. P.E. Daruwalla had been received by the Company expressing her desire to transfer her shares of the first respondent company and requesting the company to offer the same to all members as per Article 57 of the Articles of Association of the Company. The Company requested appellant No. 2 to intimate his desire to purchase any or all such shares offered by Mrs. B.E. Daruwalla within 15 days as stipulated in Article 57 of the Articles of Association. 8. By another letter dated 28th May 2001, the first respondent company intimated the second appellant about a transfer notice dated 23rd May 2001 received from Shakuntala C. Gandhi expressing her desire of transferring 35 equity shares of the first respondent company and requesting appellant No. 2 to intimate his desire to purchase any or all her shares within 15 days. 9. By letter dated 6th June 2001, appellant No. 2 informed the first respondent Company which read as under : I have received Transfer Notices dated 17th May and 28th May from Mrs. B.E. Daruwalla and Mrs. S.C. Gandhi, circula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Court in Company appeal, did not interfere with the interim order passed by the CLB on 25th January, 2010 however directing that the hearing of the C.P. (132 of 2009) be held and permitted inter member transfers. On 14th May 2010, the CLB dismissed C.P. (132 of 2009) filed by JRK and DRK on the ground that the Company was a public limited company and article 57 of the Articles of Association was consequently invalid. 14. On 28th June, 2010 this Court admitted the appeal filed by JRK and DRK under Section 10F of the Companies Act, 1956 and granted interim relief. During the pendency of the said appeal, the said company convened an EOGM for deleting Article 57 on the ground that it was declared as invalid by the CLB by an Order dated 14th May, 2010. In the month of October, 2010, JRK and DRK filed C.P. (87 of 2010) before the CLB interalia challenging the action of the said company to convene an EOGM for deleting Article 57 of the Articles of Association. On 9th November, 2010, the CLB rejected the interim injunction prayer for by JRK and DRK to restrain holding of the proposed EOGM. CLB however, directed hearing of the petition on a later date and the parties were directed to c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dinary General Meeting which was scheduled to be held on 10-12-2010 has been adjourned/postponed. A fresh notice will be issued intimating the date of the Extra Ordinary General Meeting. 4. In these circumstances, the Learned Counsel Mr. Samdhani appearing for the Appellants seeks leave to withdraw this Appeal with liberty to adopt appropriate proceedings, in case an occasion arises and if fresh meeting is convened. 5. The application for withdrawal is granted. The Company appeal is allowed to be withdrawn and is dismissed as such with liberty to the Appellants to adopt appropriate proceedings in case a fresh Extra Ordinary General Meeting is convened. All contentions of both the sides in that behalf including the maintainability are kept open. 6. Needless to, therefore, state that if the Appellants adopt appropriate proceedings, the Company Law Board or such other Forum may decide the same on its own merits and in accordance with law. 7. Needless to state that a fresh Extra Ordinary General Meeting is convened, that would necessarily mean a fresh cause of action and once this Appeal is withdrawn, there is no doubt that the Company Law Board or such other forum which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considering and/or passing resolution referred to in the said notice dated 25th April 2012 or any part thereof or any other resolution similar thereto. 24. On 19th May 2012, one of the requisitionist Ms. Mahrukh Oomrigar respondent No. 6 holding 6% shares addressed a letter to her Advocates and Solicitors M/s. Juris Corp instructing to support the C.A. (73 of 2012) filed by the appellants and to concede to the injunction prayed for in the said application. The sixth respondent conveyed that she did not propose to move or support the proposed resolution for deletion of Art. 57. She informed that a copy of the said letter was also sent to the Registrar of CLB and to the Advocates for the petitioner/applicants. 25. On 19th May 2012, M/s. Godrej Industries Ltd., addressed a letter to the first respondent company informing that the Godrej Industries Ltd., was pledgee of 6355 shares of Gharda Chemicals standing in the names of Darius and Jer Kavasmaneck and hold the said shares as security for loan aggregating to ₹ 10.34 crores granted by Godrej Industries Ltd. to them and to certain other shareholders of the company. The said shareholders had executed loan/pledge agreement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vening of EOGM by the R-1 Company which is in the affairs of the R1 Company in which a petition No. 87/10 is pending adjudication on completion of pleadings which are not complete as yet. It is noted that CP. No. 87/10 has not become infructuous as alleged by the Respondents. Besides the issue of deletion of Articles (including Article 57) of this Public Ltd. Company which is not a listed company, the petitioners have made other allegations as well as the CLB in its order dated 9-11-2010 had required the parties to complete pleadings in the matter. In the facts and circumstances of this case, it is noted that filing of SLP before the Apex Court which has also allowed the interim injunctions granted by the Hon'ble High Court at Mumbai to continue, does not fetter the rights of the requisitionists to move for convening of EOGM, nor does it restrict the R-1 company from convening of EOGM. The R-1 Company has not choice under Section 169 of the Act but to convene the meeting. Even if the R-I Company does not convene the meeting, the requisitionists have the right, after the prescribed period, to go ahead with convening of the meeting. This right of the shareholders is, except in ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e member proposing to transfer any shares (hereinafter called the proposing transferor) shall give notice in writing (hereinafter called a transfer notice) to the Company that he desires to transfer the same; (c) Within the period of seven days from the receipt of a transfer notice as aforesaid the Company shall offer to each of the existing members of the Company respectively such number of the shares included in the transfer notice as a pro rata or as nearly as may be to the holding of each member respectively on the footing that if he desires to purchase any or all of such numbers of the said shares at the fair value he shall within fifteen days of the offer be entitled to apply for the purchase and transfer of the same and the Company shall be bound, upon payment to the transferor of the fair value of such shares to transfer the shares of member applying; (d) In case of any member or members shall not have applied for the purchase and transfer of any or all of the shares to which he is entitled, the Company shall within seven days of the date at which the offer closed, offer the untaken shares to such of the members as have applied for the purchase and transfer of all of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cle Nos. 57(h), 57(i), 57(j) and 57(k) were inserted as additional clauses to Article 57 pursuant to Special Resolution dated 15th February, 1990. Nothing contained in clauses 57(a) to 57(g) hereof shall apply to any transfer of shares which falls under any one or more of the following circumstances:- 57(h) transfer by a person to another person who is a relative within the meaning ascribed thereto in the Companies Act, 1956. 57(i) transfer to a body corporate in which a majority of directors (or other persons who in law are to be regarded as Directors) or shareholders holding not less than 51% of the voting rights are persons who are the members of the company. 57(j) transfer by way of gift whether on account of love and affection between persons who are relatives of each other or by way of philanthropy. 57(k) transfer by a person to another person who is an existing member of the company. PROVIDED THAT in each case the question as to whether the case falls under any of the foregoing circumstance shall be subject to a decision by the Board of Directors who shall be entitled to call for such information and particulars as may be reasonably required to examine as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of two years from such commencement, enhance its paid-up capital to one lakh rupees. (4) Every public company, existing on the commencement of the Companies (Amendment) Act, 2000, with a paid-up capital of less than five lack rupees, shall within a period of two years from such commencement, enhance its paid-up capital to five lakh rupees. Section 9. Act to override memorandum, articles, etc.:- (a) the provisions of this Act shall have effect notwithstanding anything to the contrary contained in the memorandum or articles of a company, or in any agreement executed by it, or in any resolution passed by the company in general meeting or by its Board of directors, whether the same be registered, executed or passed, as the case may be, before or after the commencement of this Act; and (b) any provision contained in the memorandum, articles, agreement or resolution aforesaid shall, to the extent to which it is repugnant to the provisions of this Act, become or be void, as the case may be. Sec. 10F.: Appeals against the order of the Company Law Board:- Any person aggrieved by any decision or order of the Company Law Board may file an appeal to the High Court within sixty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions relating to the matters specified in clause (iii) of sub-section (1) of section 3 and the number of its members may be, or may at any time be reduced, below seven: Provided further that in computing the aforesaid percentage, account shall not be taken of any share in the private company held by a banking company, if, but only if, the following conditions are satisfied in respect of such share, namely; (a) that the share--- (i) forms part of the subject-matter of a trust, (ii) has not been set apart for the benefit of any body corporate, and (iii) is held by the banking company either as a trustee of that trust or in its own name on behalf of a trustee of that trust, or (b) that the share--- (i) forms part of the estate of a deceased person, (ii) has not been bequeathed by the deceased person by his will to any body corporate, and (iii) is held by the banking company either as an executor or administrator of the deceased person or in its own name on behalf of an executor or administrator of the deceased person, and the registrar may, for the purpose of satisfying himself that any share is held in the private company by a banking company as aforesaid, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if it has no share capital, in its membership, or in any other manner whatsoever, and that by reason of such change, it is likely that the affairs of the company will be conducted in a manner prejudicial to public interest or in a manner prejudicial to the interests of the company, may apply to the Company Law Board for an order under this section, provided such members have a right so to apply in virtue of section 399. (2) If, on any application under sub-section (1), the Company Law Board is of opinion that the affairs of the company are being conducted as aforesaid or that by reason of any material change as aforesaid in the management or control of the company, it is likely that the affairs of the company will be conducted as aforesaid, the Company Law Board may, with a view to bringing to an end or preventing the matters complained of or apprehended, make such order as it thinks fit. Sec. 402. Powers of Company Law Board to apply under section 397 and 398:-Without prejudice to the generality of the powers of the Company Law Board under section 397 or 398, any order under either section may provide for (a) the regulation of the conduct of the company's affairs in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns as the Board may specify by general or special order. (4) A copy of every interim order granting or refusing or modifying interim relief and final order passed on any petition or reference shall be communicated to the petitioner or the applicant and to the respondents and other parties concerned free of cost: Provided that in the case of an order under section 17 confirming change of registered office, two copies of the order shall be supplied to the petitioner company free of cost. (5) If the petitioner or the applicant or the respondent to any proceeding requires a copy of any document or proceeding, the same shall be supplied to him on such terms and conditions and on payment of such fee as may be fixed by the Bench by general or special order. (6) The Bench may make such order or give such direction as may be necessary or expedient to give effect to its orders or to prevent abuse of its process or to secure the ends of justice. (7) It shall be lawful for a Bench to fix, and award, costs to any of the parties before it where it is of opinion that the award of such costs is necessary. 33. Registers of petitions and applications:- (2) In every register, ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of V.S. Krishnan Vs. Westfort Hi-tech Hospital Limited and Ors.: (2008) 3 S.C.C. 363 and more particularly para 16 which reads: 16. It is clear that Section 10F permits an appeal to the High Court from an order of the Company Law Board only on a question of law i.e., the Company Law Board is the final authority on facts unless such findings are perverse based on no evidence or are otherwise arbitrary. Therefore, the jurisdiction of the appellate Court under Section 10F is restricted to the question as to whether on the facts as noticed by the Company Law Board and has placed before it, an inference could reasonably be arrived at that such conduct was against probity and good conduct or was mala fide or for a collateral purpose or was burdensome, harsh or wrongful. The only other basis on which the appellate Court would interfere under Section 10F was if such conclusion was (a) against law or (b) arose from consideration of irrelevant material or (c) omission to construe relevant materials. 36. Mr. Samdani, learned senior counsel appearing for the appellant submits that the question of law have been framed in appeal and are to be found at Paragraphs (A) to (J). It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the distinction between questions of law and questions of fact and to defeat the policy underlying sections 66(1) and 66(2). One should hesitate to accept a contention which leads to consequences so startling, unless there are compelling reasons therefore. Far from that being the case, both principle and authority are clearly adverse to it. 37. In rejoinder on this issue the learned counsel appearing for the respondent no. 2 distinguished the judgment of the Supreme Court in the case of Sree Meenakshi Mills (supra) on the ground that the said judgment did not pertain to appeal under section 10F of the Companies Act, 1956 and in any event does not hold that the question of law means mixed question of facts and law or that this court is empowered to reconsider the facts and come to a different conclusion on such reconsideration. It is reiterated that plain reading of section 10F of the Companies Act makes it clear that the appeal may be filed only on the question of law. The CLB has rendered findings of facts and thus interference of this court under section 10F is not permissible. 38. In my view, the appeal lies to the High Court under Section 10F on any question of law arisin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellants. It is submitted that the nature of the order dated 21st May, 2012 has to be ascertained on the perusal of the order itself. From the reading of the order, it clearly states that the order of 21st May, 2012 was not ad interim order but was interim order disposing of the application regarding injunction. The only new event was that the impugned meeting had now been held. It is submitted that merely because meeting was held would not entitle the respondents to seek vacation/modification/review of the order dated 21st May, 2012. The CLB had already considered possibility of the resolution being passed. 41. Mr. Bobde, the learned senior counsel appearing on behalf of the respondents, on the other hand submits as under: (a) The power of review is vested in civil courts by section 114 and order XLVII Rule 1 of Code of Civil Procedure, 1908 in relation to final decrees/orders passed under the Code. The order sought to be reviewed must have finally disposed of the case. No review is permissible under the Criminal Procedure Code. Variation, modification or vacation of interim order does not amount to review of that order. By its very nature, interim order or ad interim ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he companies Act, 1956 read with regulation 44 which saves inherent power of the Bench. It is submitted that on a conjoint reading of Regulation 44 and 29(4), the CLB has inherent powers to grant interim relief and to modify or vacate or refuse interim relief as may be necessary for the ends of justice or to prevent the abuse of the process of the Bench. 44. Mr. Kadam, the learned senior counsel appearing for respondent no. 1 submitted that no provisions in law can control inherent powers of the court. The inherent powers are exercised to do complete justice. It is submitted that the order dated 21st May, 2012 passed by CLB clearly provide that the same was till further orders . The first respondent company had applied for vacating the said ad interim order and the said application was not for seeking any review. It is submitted that the as per Order XXXIX rule 4, the order of injunction also may be varied if there is change in circumstances or if hardship is caused to the party. The learned counsel for the first respondent placed reliance upon the judgment of the Supreme Court in the case of Gujarat Bottling Co. Ltd. Vs. Coco Cola Co.: (1995) 5 S.C.C. 545 and more particularly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us: Part heard. Company Application No. 74 of 2012 with respect to interim injunction as prayed for in Company Application No. 73 of 2012. R-I company is hereby allowed to hold EOGM scheduled on 22-5-2012 at 11.30 a.m. That the resolution if any passed, shall not be given effect to till further orders. Detailed order follows. 46. Mr. Sen, the learned counsel submits that it is clear that the order passed by the CLB on 21st May, 2012 was pro tem/ad interim order and the matter being part heard, was to be heard subsequently after EOGM was held on 21st May, 2012. Company Application (73 of 2012) was specifically kept part heard. The learned counsel submits that thus the CLB has not passed any order reviewing its earlier order but has passed the final order on the Company Application (85 of 2012) after hearing the parties after EOGM meeting came to be held. The final order dated 13th August, 2011 also records that the order dated 21st May, 2012 was ad interim order and the matter was part heard. It is submitted that the order dated 21st May, 2012 was thus operative only until further orders as recorded in the said order. Since no date was posted, the matter did not appear on boar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation/Vacation of an ad interim order of CLB in a Company Application/Company Petition can by no stretch of imagination be called review of CLB's orders. It has also been correctly pointed out that this order was till further orders in this matter which can in all events be considered for Vacation/modification/Variation depending upon the facts and circumstances of a case. Considering the facts and circumstances of this case, in view of the final hearing of Applications in this mater and perusing of further affidavits clarifying the parties contentions before the higher courts, I find no reason for not considering the Applicant's prayer for modification/Vacation of the ad interim given till further orders. 49. The question that arises for consideration of this court is whether the impugned order passed by CLB on 13th August, 2012 in Company Application (85 of 2012) is in the nature of review of its earlier order dated 21st May, 2012 and if it is in the nature of review, whether CLB has power to review its earlier order under the provisions of the Companies Act, 1956 or under the Company Law Board Regulation, 1991. By the impugned order dated 13th August, 2012 the CLB ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. From the perusal of the order dated 21st May, 2012, it is clear that the said order was an ad interim order and was operative only until further orders. Company Application (73 of 2012) filed by the appellants for seeking interim injunction was part heard and was pending. The CLB had not fixed any further date for hearing of the said company application and this mater did not appear on board. The first respondent thereafter applied for vacating/modifying and or varying the said order dated 21st May, 2012 in view of the meeting having been held on 22nd May, 2012 and the resolution to delete article 57 having been passed by requisite majority. The record indicates that the CLB considered the detailed affidavits filed by the parties in response to the said application (85 of 2012) and considering those affidavits and considering the fact that the resolution was already passed by the requisite majority to delete article 57, ad interim order passed on 21st May, 2012 came to be modified and/or vacated. The CLB itself had directed convening of the meeting on 22nd May, 2012 while passing ad interim order dated 21st May, 2012 and was conscious of the fact of passing of resolution if any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aw Board Regulation 1991 does not empower the CLB to review its order. The judgment relied upon by the respondents in the case of Manoharlal (supra) and in the case of Gujarat Bottling (supra) are not applicable to the facts of this case as the said judgments does not deal with similar provisions, either under the provisions of the Companies Act, 1956 or under the CLB Regulation 1991. 53. In my view, CLB does not have power to review its earlier order. However, in the facts of this case, after considering the pleadings and record, I have already taken a view that the respondent company had not sought any review in Company Application No. 85 of 2012 and the CLB has not reviewed its earlier order. In my view, thus CLB has rightly entertained an application filed by the 1st respondent (85/2012) for modification and/or vacation of the order dated 21st May, 2012 as the said order was ad-interim order operative during the pendency of the Company Application (85 of 2012). On perusal of the impugned order passed by CLB, it is clear that the CLB has not vacated its earlier order dated 21st May, 2012 on the same grounds on which order dated 21st May, 2012 was passed. It is common ground t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her case, the delivery in open court makes the judgment effective against the parties because it stands communicated to them. (b) Where the Act or Rules do not require pronouncement in open court , the pronouncement or delivery does not have the effect of making the judgment known to the parties. The manner of making such pronouncement or delivery is a matter of practice of that tribunal and it matters not how it is done. While the tribunal cannot alter the judgment so delivered, the parties come to know when the copies of the judgment are communicated to them by post or e-mail or hand delivery. Such communication makes the judgment fully effective so far as the parties are concerned by imparting to them knowledge of the judgment. (c) The real purpose of delivery in open court and delivery otherwise, followed by communication, is to make known to the parties what the judgment is. The essence of both modes is communication of the judgment to the parties. There is no universal or inflexible rule or principle of law that a judgment must always be pronounced in open court by every tribunal. The mode of delivery of judgment or order depends on the particular Act and Rules o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provision obviates the need for applying for certified copies which needs to be done when an order or judgment is pronounced in open court under Order XX of Civil Procedure Code, 1908. Communication imparts knowledge of the order and concludes and binds the parties. (g) It is further submitted that it is settled law that even in cases covered by the CPC and Cr.P.C. where the judgment has to be pronounced in open court, the Hon'ble Supreme Court has held that small irregularities in the manner of pronouncement or the mode of delivery do not matter and irregularities in the manner which the judgment is authenticated or signed and sealed can be cured because they are all rules designed to secure certainty about the contents of the judgment. 56. The learned senior counsel Mr. Bobde, placed reliance upon the judgment of the Supreme Court in the case of State Bank of India and Ors Vs. S.N. Goel (2008) 8 S.C.C. 92 and more particularly paragraph 28 which reads thus: The position is different with reference to quasi judicial authorities. While some quasi judicial tribunals fix a day for pronouncement and pronounce their orders on the day fixed, many quasi judicial authorities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he order in communication under certain circumstances may be taken to be the date of the communication of the order or the date of the order but ordinarily and generally speaking, the order would be effective against the person affected by it only when it comes to his knowledge either directly or constructively, otherwise not.... 59. The learned counsel placed reliance upon the judgment of the Supreme Court in the case of Commissioner of Central Excise Vs. M.M. Rubber and Co. 1992 Supp (1) S.C.C. 471 and more particularly para 13 which reads thus: The knowledge of the party affected by such a decision, either actual or constructive, is thus an essential element which must be satisfied before the decision can be said to concluded and binding on him. Otherwise, the party affected by it will have no means of obeying the order or acting in conformity with it or of appealing against or otherwise having it set aside. This is based upon, as observed by Ranmannar, CJ in Muthia Chettiar vs. CIT, AIR 1951 Mad. 204 a salutary and just principle. The application of this rule so far as the aggrieved party is concerned is not dependent on the provisions of the particular statute, but is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant since the order already have been communicated upon pronouncement. It is submitted that Regulation 29 therefore, has not required pronouncement of the order in the open court. 62. In rejoinder Mr. Samdhani learned senior counsel appearing for the appellant submits that the Regulation 29 itself caste obligation on the CLB to pronounce the judgment and order. It is submitted that the word pronouncement indicate that it can only be done in the open court. The learned counsel invited attention of this court to order at page 380, Vol. III which is another order of CLB to demonstrate that it was practice of CLB of making pronouncement of order/judgment in the open court. The learned counsel submits that even the judgment relied upon by the second respondent and particularly reported in: AIR 1954 S.C.C. 194 : (1988) 1 S.C.C. 80 holds that the communication of the judgment has to be done in the judicious way by pronouncing it. It is submitted that the judgment that is not signed but pronounced is a valid whilst the judgment that is signed but not pronounced is invalid. 63. It is not in dispute that the impugned order dated 13th August, 2012 passed by the CLB was not pronounced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , but admittedly communicated either on the same or the next day at most, it would lead to small irregularity in the matter of pronouncement or mode of delivery and cannot be construed as illegal or invalid order. I am not inclined to accept the submissions made by Mr. Samdani the learned senior counsel appearing for the appellant that the impugned order was though served by the CLB, however, not having been pronounced in the open court, is invalid and/or illegal. 64. Though the learned counsel for both the parties have placed reliance on various judgments referred to in the earlier paragraphs of this order, in view of the clear wording of Regulation 29, I need not to deal with all the judgments referred to and relied upon by the learned counsel in detail. In my view there was no illegality committed by the CLB in not pronouncing the impugned order in the open court. 65. As far as question 2D formulated by the appellant regarding pronouncement of the order is concerned, in my view issue raised by the appellant raises question of law. I have already dealt with this question in detail and have taken a view that even if impugned was not formally pronounced in the open court but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion therein. The observations made in the impugned order with regard to the conduct of the EOGM held on 22nd May, 2012, the decision of the Chairman and passing of the resolution therein are correct and does not require any interference. The CLB was correct in making observations in relation thereto in the impugned order and no fault can be found in not having heard the Company Application (91 of 2012). 68. In its alternate submission, the respondent no. 2 submits as under: The pleadings, facts and documents in Company Application No. 91 of 2012 filed in the present appeal in Volume VII cannot be considered for the purposes of the present appeal since the same were not the record before the Hon'ble CLB and not under consideration for the purposes of the impugned order dated 13.8.2012. The facts contained therein are therefore, beyond the scope of and can not be considered in a section 10F appeal filed against an order passed in Company Application (85 of 2012). 69. In rejoinder, Mr. Samdhani learned senior counsel for appellants submits that all the parties have made their submissions on the various claims and issues raised by the appellants in Company Application (73/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l. It is not in dispute that though the respondents initially opposed that fact that pleadings and documents forming part of the Company Application Nos. 91 of 2012 and 73 of 2012 were not subject matter of Company Application No. 85 of 2012, this court shall not permit the appellants to agitate those issues in this appeal, however, have during the course of argument relied upon the pleadings and documents filed by the respondents on those issues and have made their detail oral and written submissions in the present proceedings. This court, therefore, permitted all parties to make their submissions on all such issues which are forming part of the Company Application Nos. 91 of 2012 and 73 of 2012 and has dealt with all those issues in the subsequent paragraphs of this order. 72. Mr. Samdhani, the learned senior counsel appearing for the appellant submits that by convening EOGM On the requisition of the requisitionist for the purpose of deleting Article 57 was without any such direction in the order passed by Shri Justice S.C. Dharmadhikari and was during the pendency of Special Leave Petition filed by the appellant challenging the said order, the 1st and 2nd respondents have com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cle 76 of the Articles of Association. There was no option available to the first respondent company but to call EOGM in compliance with the provisions of the law. The respondents place reliance upon section 169 of the companies Act and Article 76 of the Articles of Association which reads as under: Section 169 -Calling of extraordinary general meeting on requisition: (1) The Board of directors of a company shall, on the requisition of such number of members of the company as is specified in sub-section (4), forthwith proceed duly to call an extraordinary general meeting of the company. (2) The requisition shall set out the matters for the consideration of which the meeting is to be called, shall be signed by the requisitionists, and shall be deposited at the registered office of the company. (3) The requisition may consist of several documents in like form, each signed by one or more requisitionists. (4) The number of members entitled to requisition a meeting in regard to any matter shall be-- (a) in the case of a company having a share capital, such number of them as hold at the date of the deposit of the requisition, not less than one-tenth of such of the paid- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... day after the expiry of that period. (8) Where two or more persons hold any shares or interest in a company jointly, a requisition, or a notice calling a meeting, signed by one or some only of them shall, for the purposes of this section, have the same force and effect as if it had been signed by all of them. (9) Any reasonable expenses incurred by the requisitionists by reason of the failure of the Board duly to call a meeting shall be repaid to the requisitionists by the company; and any sum so repaid shall be retained by the company out of any sums due or to become due from the company by way of fees or other remuneration for their services to such of the directors as were in default. Article 76 of the Articles of Association: 76. All General Meeting other than Annual General Meeting shall be called Extraordinary General Meeting. The Board may, whenever it thinks fit, call an Extraordinary Meeting. The Board shall also call an Extraordinary General Meeting on the requisition of members of the Company in accordance with all the provisions of Section 169 of the Act, which shall apply to this Company. (d) The provisions of section 397 can not be attracted to passing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but may yet be oppressive and, therefore, the test as to whether an action is oppressive or not is not based on whether it is legally permissible or not since even if legally permissible, if the action is otherwise against probity, good conduct or is burdensome, harsh or wrong or is mala fide or for a collateral purpose, it would amount to oppression under Sections 397 and 398. (e) Once conduct is found to be oppressive under Sections 397 and 398, the discretionary power given to the Company Law Board under Section 402 to set right, remedy or put an end to such oppression is very wide. (f) As to what are facts which would give rise to or constitute oppression is basically a question of fact and, therefore, whether an act is oppressive or not is fundamentally/basically a question of fact. 76. In my view, in the proceedings filed under Sections 397 and 398, the petitioners have to show that there has been some sort of oppression on the part of majority shareholders of the company on the minority shareholders. In my view, an isolated act or incident is not oppressive. Petitioner has to prove the act of oppression which must continue upto the date of filing of the petition. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, 1956 which shall be dealt with by this court in the later part of this order. 80. Both parties have addressed this court at length on the issue as to whether order dated 14th November, 2008 passed by Shri Justice A.M. Khanwilkar in Company Petition No. 77 of 1990 would apply to the present appellant and would operate in rem and also on the issue as to whether order and judgment dated 14th June, 2011 in Company Appeal No. 24 of 2010 would be executable and binding on the parties in the absence of stay of the said judgment by the Supreme Court in the pending Special Leave Petition filed by the appellants. Both parties have also addressed this court on the effect of the pendency of Special Leave Petition filed by the appellants on the present proceedings. The submission of the respondent is that admittedly, the judgment delivered by this court on 14th June, 2011 in Company Appeal No. 24 of 2010 has not been stayed and was not even applied for by the appellant whereas the submission of the appellant is that the issues arises in the present appeal is subjudice before the Supreme Court in the pending Special Leave Petition and thus order and judgment delivered by this court on 14t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany by virtue of section 43(A) of the Companies Act. 1st respondent company had accordingly issued notice of EOGM on 2nd April, 2001 seeking to amend Article 3 of the Articles of Association and also to change its name from Gharda Chemicals Ltd. to Gharda Chemicals Pvt. Ltd. and thereby revert to be a private limited company. In the said meeting, the appellant and other members of Kavasmaneck Rebello group collectively held 32% of the shareholding of the 1st respondent defeated the said resolution. As a consequence thereof on and from 5th May, 2001, the 1st respondent company became and continued to be a public limited company. As a result thereof, all the statutory filing of the 1st respondent have been made on the basis of the fact that it is a public company. It is not in dispute that the 1st respondent has more than 50 members and has more than three directors as is obligatory under the Companies Act, 1956 in case of a public limited company. The 1st respondent has also accepted the deposit in the form of fixed deposit from the public and is public limited company for all purposes. It is not in dispute that the appointment of the managing director of the 1st respondent was a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugned order has rendered a finding that passing of the resolution by the shareholders of the company in exercise of their democratic rights in a EOGM requisitioned by the shareholders of the company does not in any manner amount to oppression or mismanagement and cannot form a subject matter of a petition under Section 397/398 of the Companies Act and thus there is no reason to interfere with the internal democracy of the company. In my view the conclusion drawn by the CLB that passing of a resolution by the shareholders of the company in EOGM did not in any manner amount to oppression or management and cannot be subject matter of the petition under section 397/398 of the Companies Act cannot be interfered with. In my view, the decision was taken by the majority of the share holders and the said decision was rightly upheld by the CLB keeping in mind principles of corporate democracy. In my view, the CLB has rightly vacated the ad-interim order dated 21st May, 2012. In my view, the respondents have not committed any act as alleged by the appellants which can be called as an act of oppression by the majority shareholders on minority shareholders. 86. The question that now arises f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany shall be freely transferable. In my view, article 57 which provides right of preemption became redundant and infructuous in view of the change of status of 1st respondent company as public limited company. In my view, 1st respondent company could no longer be governed by Article 57 in view of the change of status. The 1st respondent company is thus right in passing resolution to delete such article which had become redundant, infructuous and dead in view of the change in status of the 1st respondent company in conformity with Section 9 of the Companies Act which reads thus:- 9. Act to override memorandum, articles, etc.-Save as otherwise expressly provided in the Act- (a) the provisions of this Act shall have effect notwithstanding anything to the contrary contained in the memorandum or articles of a company, or in any agreement executed by it, or in any resolution passed by the company in general meeting or by its Board of directors, whether the same be registered, executed or passed, as the case may be, before or after the commencement of this Act; and (b) any provision contained in the memorandum, articles, agreement or resolution aforesaid shall, to the extent t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... satisfy the conditions for attraction of Sections 397 and 398 of the Companies Act in this case. In my view requisitioning of a meeting by the board of the 1st respondent company was a ministerial act of convening EOGM for the purpose of deleting Article 57 so as to comply with the provisions of law and to delete the articles which has become redundant and void and does not amount to act of oppression under section 397 of the Act. In my view, deletion of Article 57 and allowing free transferability of shares is for the benefit of all the shareholders of first respondent company and in the interest of justice and public interest. 91. In my view, the appellants have failed to prove that conduct on the part of the majority shareholders is harsh, burdensome, wrong, malafide, is for collateral purpose, advantageous to some of the shareholders vis-a-vis others, against probity and good conduct. CLB can exercise discretionary powers under Section 402 read with Section 397 of the Companies Act to set right, remedy or put an end to such oppression only if the criteria laid aforesaid are satisfied. Thus in my view, petition filed by the petitioner under Sections 397, 398 read with Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and on the basis of the mutual trust and confidence. There exists a special underlying obligation between the members where in the event one partner chooses to sell his share, the same should be first offered to the others so that any outsider cannot be permitted to enter the venture without the consent of the other partners. In fact, GCL is a glorified partnership and the principles of partnership would apply. 81] It is submitted that Articles of Association constitute a contract not only between the company and its members but also amongst the members inter se. The right of preemption contained in the Articles is a solemn contract not only between the shareholders and the company, but also between the members inter se. In fact, the right of preemption that has been enshrined in the articles is merely a reiteration of the earlier understanding whereby a stranger cannot be inducted in the partnership (which was taken over by GCL) without the consent of the other partners and forms the fundamental understanding on the basis on which the families got together to constitute and continue GCL. 82] It is further submitted that breach of Articles would be ultra vires and breach of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company which had become a public company by virtue of section 43A. Accordingly, section 111A is not applicable to GCL. Thus, there is no provision that provides for free transferability of shares of GCL. (f) Alternatively, there is nothing in the Companies Act that prohibits a 'public company' from providing any of the matters set out in sections (a) to (d) of Section 3(1)(iii). Thus, the Articles of a public company can contain a right of preemption. (g) Section 82 of the Companies Act, 1956 provides that the shares are movable property transferable in the manner provided in the Articles. The Articles of GCL continue to provide for preemption and Section 9 thereof has no applicability. Whether the attempt by the majority shareholders to sell the shares in breach of the right of preemption constitutes oppression; and (h) whether taking away or cancelling a right of preemption by amending the Articles will also amount to oppression and will be actionable. 85] Mr. Samdani submits that if the judgement of the Company Law Board is perused carefully, it would be apparent that there is no finding rendered on sections 111A(1) read with section 111A(14), although a s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on that on the basis of available record, the company petition should not have been dismissed and therefore, this appeal deserves to be allowed. 86] On the other hand, Mr. V.A. Bobde, learned Senior Counsel appearing on behalf of respondent No. 2 submits that the company petition filed before the Company Law Board alleged breach of preemptive rights, adoption of unfair dividend squeezing and respondent No. 2 unjustly enriching himself. He submits that first two grounds relate to oppression and third is mismanagement. He submits that the presumption on which the allegations in the petition proceed is that the respondent No. 1 is a glorified partnership and, therefore, the appellants continue to have preemptive rights under Article 57. Further, the company is not a public limited company under section 3(1)(iv) but a deemed public company under section 43A(1)(A) and, therefore, section 111A(2) is inapplicable. In other words, the shares are not easily transferrable. 87] Mr. Bobde submits that first two grounds and contentions based thereon are not available in view of the unconditional withdrawal of the appellants from the Company Petition No. 77 of 1990. That company petition c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shares applicable to a private limited company would not apply and it would be open to the present appellants to sell the shares to any outsider as per the price finalised with them inter se. Mr. Bobde submits that the effect of the judgement in the company petition must be considered. However, he submits that respondent No. 2 is not running away from answering this issue and core question. 89] In this behalf, Mr. Bobde submits that the two events of vital importance occurred in 2001 which, taken even singly, made the company cease to be a private company as defined by Section 3(iii) and to become a public company as defined by section 3(1)(iv). The first event was that notice was given on 2nd April 2001 for a meeting on 5th May 2001 for the purpose of incorporating the requirements of clause (d) of section 3(1)(iii) which was added in 2000 and for changing the name to 'Private Ltd'. The Appellants and their supporters opposed the resolution and the same was defeated. They voted to make the company, which had been a deemed public company, into a public company. Thus, the EOGM of the company decided that the Articles shall not contain the provision required by clause (d) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l force and made the shares of the respondent No. 1 public company freely transferable. 109] Both sides also made a reference to section 9 to point out that the Companies Act, 1956 would over ride the memorandum and Articles of Association even if there is anything contrary contained in the same. Thus, the argument is that by sub-clause (b) of section 9 any provision contained in the memorandum/Articles/agreement or resolution to the extent to which it is repugnant to the provisions of this Act become void as the case may be. 110] Then comes section 43 and 43A which read thus: 43. Where the articles of a company include the provisions which, under clause (iii) of sub-section (1) of section 3 are required to be included in the Articles of a Company in order to constitute it a private company, but default is made in complying with any of those provisions, the company shall cease to be entitled to the privileges and exemptions conferred on private companies by or under this Act, and this Act shall apply to the company as if it were not a private company: Provided that the Central Government on being satisfied that the failure to comply with the conditions was accidental or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e word Private before the word Limited in the name of the company upon the register and shall also make the necessary alterations in the certificate of incorporation issued to the company and in its memorandum of association. (2A) Where a public company referred to in subsection (2) becomes a private company on or after the commencement of the Companies (Amendment) Act, 2000, such company shall inform the Registrar that it has become a private company and thereupon the Registrar shall substitute the word private company for the word public company in the name of the company upon the register and shall also make the necessary alterations in the certificate of incorporation issued to the company and in its memorandum of association within four weeks from the date of application made by the company (3).... (4).... (5).... (6) (7) omitted by Act 31 of 1988 (8).... (a).... (b)..... (c)..... (d)..... (9)....... (a)...... (i)..... (ii)...... (iii)....... (b)........ (c)........ (10)....... (11) Nothing contained in this section, except subsection (2A), shall apply on and after the commencement of the Companies (Amendmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate is deleted it becomes a public company. However, there was nothing which permitted such public company to again become private company and that is achieved by insertion of section 43(2A). Sub-section 43A(11) which also was inserted by Act 53 of 2000 from 13th December 2000, clarified that nothing contained in section 43A, save and except sub-section 2A shall apply on and after the commencement of Companies (Amendment) Act 2000. In other words, whole of section 43A except for one subsection viz., subsection 2A ceases to apply after the commencement of Companies (Amendment) Act, 2000. The reason for this is obvious because the Parliamentary Standing Committee submitted a report which is known as 64th report on Companies Second Amendment Bill 1999. It recommended that entire section 43A must be deleted. The recommendation was that some part and particularly section 43A(4) may be retained so that deemed public companies may submit certificate of incorporation to Registrar of Companies for correction by adding the word Private before the word Limited , in the name as indicated in the certificate of incorporation. However, when that bill became an Act, new subsection 2A came to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany a private company which is a subsidiary of a company which is not private. If the holding company is not a private company but its subsidiary is a private company such subsidiary also becomes a public company now. If all this is read together and seen as a whole, it becomes at once clear that the Legislature did not desire to continue any concept of deemed public company which was in force on account of the amendment made in the year 1974 to the Companies Act. The effect and implication of 1974 amendment is to be wiped out completely and that has been done by the 2000 Act to the extent it made the whole of section 43A except sub-section 2A inapplicable and from ineffective from 13th December 2000. 116] It is clear from the factual position that the attempt to amend the Memorandum and Articles of Association of the first respondent was unsuccessful. The said resolution proposed in the meeting held on 5th May 2001 was not carried but in fact defeated. Once it was defeated, then, the first respondent which had become a public company on 17th August 1988 continued with that status. It would be of relevance to note that the resolution was moved in the meeting held on 5th May ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is on the words on and after as appearing in Section 43A(11) will not be of any assistance to the appellants. 118] In any event, as far as the principles of statutory interpretation are concerned, long back in a decision reported in A.I.R. 1988 S.C. 740 Bhagatram Sharma Vs. Union of India, the Supreme Court held that it is a matter of legislative practice to provide, while enacting and amending a law, that an existing provision would be deleted and a new provision substituted. Such deletion has effect of repeal of the existing provision. Such a law may also provide for introduction of new provision. There is no real distinction between repeal and amendment . The Supreme Court holds that amendment is in fact a wider term and it includes abrogation or deletion of a provision in a existing statute. If the amendment of existing law is small the act professes to amend the Act. If it is wide, it repeals a law and re-enacts it. (see paras 16 to 18 pgs. 745-746). 119] Therefore, in my view, once the first respondent is a public company as evidenced by the certificate referred to above, with effect from 17th August 1988, then, the amendment made in 2000 would be applicable and se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, within four months from the date on which the instrument of transfer, or the intimation of transmission as the case may be, was delivered to the company. (4) If-- (a) the name of any person--- (i) is, without sufficient cause, entered in the register of members of a company; or (ii) after having been entered in the register, is, without sufficient cause, omitted therefrom; or (b) default is made, or unnecessary delay takes place, in entering in the register the fact of any person having become, or ceased to be a member including a refusal under sub-section (1) The person aggrieved, or any member of the company, or the company, may apply to the Tribunal for rectification of the register. (5) The Tribunal while dealing with an appeal preferred under sub-section (2) or an application made under sub-section (4) may, after hearing the parties, either dismiss the appeal or reject the application, or by order--- (a) direct that the transfer or transmission shall be registered by the company and the company shall comply with such order within ten days of the receipt of the order; or (b) direct rectification of the register and also direct the company to p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) If default is made in complying with any of the provisions of this section, the company and every officer of the company who is in default, shall be punishable with fine which may extend to five hundred rupees for every day during which the default continues; (13) Nothing in this section and section 108, 109 or 110 shall prejudice any power of a private company under its articles to enforce the restrictions contained therein against the right to transfer the shares of such company; (14) In this section company means a private company and includes a private company which had become a public company by virtue of section 43A of this Act. 121] A bare perusal of the entire section would denote that by virtue of Act 22 of 1996 section 111(14) was inserted with effect from 20th September 1995. By insertion of this provision it has been clarified that section 111 applies to a company which is a private company and includes a private company which had become public company by virtue of section 43A of the Act. Once section 43A ceases to apply in the present case to GCL, then, there is substance in the argument of Mr. Bobde that Section 111 is inapplicable. In this behalf it mu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lic company. Nonetheless it remains a public company and merely because its shares are not listed in any recognised stock exchange does not mean that there is any restriction on their transfer. They are and continue to be freely transferable as they are shares of a public company. The broad distinction as noticed above, between the term 'Private and Public company, is enough to turn down this alternate argument. 126] Mr. Bobde, learned senior counsel appearing for respondent No. 2 and Mr. Sen appearing for respondent Nos. 1, 4 and 5 urge that any wider question or controversy need not be gone into because the essential difference between a preemptive and restrictive right conferred by Articles of Association and an agreement between members inter se or with third parties providing for a preemptive right must be borne in mind. The inter se agreement conferring such right is de hors the Articles of Association and is, therefore, not affected by the character of the company, whereas, what is impermissible by the Statute is that in case of a public limited company, the Articles, even if having any such right, the same stands over-ridden by the statutory provision and enactmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accepted Mr. Bobde's arguments that there cannot be any third category viz., deemed public company . The arguments of Mr. Bobde are accepted because on noticing the amendments made to the Companies Act, 1956 and particularly in the year 2000, the third category as projected (deemed public company), cannot be carved out or if existing earlier, cannot be held to be continuing any further. The arguments of Mr. Samdani that despite this amendment, the character and fabric of GCL is not altered or changed and it remains a glorified partnership or a private company or a family concern, essentially revolves around the same category noted by me above. For the reasons that have persuaded me not to read into or add any third category other than a private company and public company, these arguments must also fail. Once again, it must be clarified that the categorisation that has been highlighted before me is in the context of the assertions of the appellants that GCL is a deemed public company. It must be clarified that I have not held that the Act does not envisage any company other than a private company or public company limited by shares. The act itself points out that there can be c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wn for the first time to the respondent in February 2005. It is common ground that even the present petitioners are signatories to the said memorandum of understanding. In fact, even the present petitioners have sold 27 and 66 shares respectively to Godrej Soaps Ltd., without following the regime of Article 57. On the one hand, the petitioners were questioning the intention of the 2nd respondent but at the same time, the petitioners were themselves indulging in act which was not only illegal but against the interests of the company. According to the respondents, the petitioners group was bent upon selling their shares to a person who happens to be the competitor of respondent company. Besides, it is the petitioners group who on the one hand were opposed to increase of authorised share capital resulting in respondent No. 1 not being able to declare bonus shares; and on the other hand were acting against the interests of the company by committing themselves to sell their shares to person who happens to be the competitor of respondent company. According to the respondents the present petition is a speculative petition for which reason also the grievance made at the instance of petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as now become a public limited company. Even on account of this change, it has become redundant to entertain the grievance of the present petitioners in relation to the issues concerning extra ordinary general meeting dated 15th February 1990. More so, when the stand taken by the present petitioners at the time of arguments plainly suggests that they are interested in walking out of the company and sell their shares at a fair price. 131] In the earlier part of his judgement in para 47 the learned Judge has dealt with the argument regarding declaration of low dividend and found no substance in the allegation of oppression based on the same. My attention is also invited to the earlier paras of this judgement and in particular paras 35 to 37 wherein this charge of low dividend has been dealt with extensively. 132] The argument is that the appellants were not parties to this judgement and, therefore, it does not bind them. However, it is pertinent to note that the appellants were original petitioners. They withdrew from Company Petition No. 77 of 1990. There is nothing on record to indicate that they withdrew with liberty to raise the pleas raised by them again. Once the learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , I am of the view that the judgement rendered by the Hon'ble Single Judge, Justice A.M. Khanwilkar, J dated 14th November, 2008 in Company Petition No. 77 of 1990 applies to the appellants as well. I have indicated the reasons for this conclusion in the foregoing paragraphs. Therefore, it is not necessary for me to decide any wider controversy and particularly whether the judgement of the learned Single Judge (Khanwilkar, J) could be said to be a judgement in rem and or whether the Civil Procedure Code and particularly Order XXIII of the same applies to the present proceedings or not. The submission of Mr. Samdani is that this judgement cannot be a judgement in rem. Assuming it is not so, yet, it binds the appellants for the reasons indicated above. The appellants may have withdrawn from Company Petition No. 77 of 1990 but in their independent proceedings before the CLB on which the impugned order has been passed, they relied on the same material and same circumstances as were set out in Company Petition No. 77 of 1990. They relied upon the same amendments which were to Company Petition No. 77 of 1990. There allegations are also the same viz., of low dividend and unjust enrich ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssistance of Mr. Samdani and Mr. Bobde. In WMDC's case, the challenge was to an arbitration award rendered by a sole arbitrator. The arbitration covered a dispute between two public companies. The WMDC, a Government of Maharashtra undertaking held 27% of shares of Maharashtra Scooters Ltd. (MSL), a public limited company whereas the respondent - Bajaj Auto held 24% shares. The balance 49% is held by public. The dispute as noted by the learned Single Judge between the parties was whether clause 7 of the agreement could form a valid basis for the conclusion of the arbitrator or not. The learned Judge held that the shares in question are of a public limited company. Those shares are freely transferable. The stipulation in clause 7, therefore, is inapplicable and reliance was placed on the provisions of the Companies Act in this behalf so also the judgements of the Supreme Court. The learned Judge concluded that section 111A applies to public companies and noticing the difference between private company and public company, he concluded that the effect of clause 7 is to create a right of preemption between the petitioner and respondent before me in the event either of them seeking t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereof to urge that the respondent No. 2 cannot transfer the shareholding to any third party and the shares must be first offered to the appellants in terms of this Article. Whether this article and the right of preemption recognised therein is itself applicable after the status of the company has been altered and changed is the only issue before me. Therefore, the controversy with regard to the judgement rendered by the learned Single Judge in WMDC and whether it is rightly over-ruled or not cannot be taken note of in the peculiar facts of this case. However, it must be immediately noted that the Agreement or a consensual arrangement relating to their own shares between shareholders would bind them or not or whether that is void as not surviving in the teeth of Section 9 or Section 111A of the Companies Act, 1956, was the core issue in Messer Holding (supra) (see paras 48 to 57). 139] Mr. Samdani is in error in urging that the CLB has based its conclusion in the present case only on the view taken by the learned Single Judge in WMDC's case. A complete reading of the judgement of the CLB would show that the conclusion is with regard to the status of GCL and merely to suppor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 and Mr. Tulzapurkar and Mr. Subramanian, learned Senior Counsel appearing for respondent Nos. 2 and 3. 144] After having heard the learned Counsel at some length on this issue, I am of the opinion that interest of justice will be served if this interim order in terms of prayer clause (iii), is continued for a period of six weeks from today, save and except, the bracketed portion. The grant and continuation of interim order is without prejudice to the rights and contentions of all parties. The prayer clause (iii) after deleting bracketing portion reads as under:- (iii) that pending the hearing and final disposal of the appeal, this Hon'ble Bench be pleased to restrain the 2nd/3rd respondents by themselves and/or through their servants and or agents from in any manner howsoever, directly or indirectly, from selling, transferring, alienating, pledging, encumbering or in any manner creating any third party rights in to over or upon or in respect of the shares held, directly or indirectly, by the 2nd/3rd respondents in the company. 94. The learned counsel appearing for the respondent No. 2 submits that by order dated 22nd July, 2011 and 27th July, 2011, the Supreme Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Supreme Court and the S.L.P. Is not rendered infructuous. The CLB was clearly right in holding after careful consideration, that the proceedings in the Supreme Court are not being pre-empted or interfered with. It is submitted that the finding that the company is a public company is clearly a judgment in rem and decides the status of the company, a juristic person, and binds everyone generally; it is 'conclusive against all the world . Similarly, the finding that the status of property viz. shares of the shareholders, is that they are freely transferable, is equally binding and conclusive. The effect of the judgment in rem is, firstly, to declare finally the status of the company as being a public company and make it binding on the Company, its members and all other generally, secondly, to declare the status of the property viz. shares in such company as being freely transferable, and thirdly, to preclude every member of the Company or any outsider, including a transferee of shares from re-agitating the same issues again. The judgment of this Hon'ble Court dated 14-11-2008 precludes all argument from anyone about the status of the company as a public company and the fre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... holds the field and the first respondent company is declared to be public company and Article 57 is declared void in view of section 9 of the Companies Act, 1956. The said judgment also covers the issue in this appeal. It is submitted that in the said order and judgment dated 14th June, 2011, it is submitted that the resolution being in consonance with the binding precedent can never be oppressive which foreclosed the primary issue in the petition itself. The learned counsel further submits that the findings recorded by this court in the order and judgment dated 14th November, 2008 in Company Petition (77 of 1990) are not based on concession. It is submitted that even if it is assumed that it is based on concession, respondent no. 1 company has invited the finding from this court on the basis that the first respondent company is a public company and are bound by it, first respondent will have to comply. The appellants have invited the findings from this court on the basis that the respondent company is a public company. The learned counsel submits that even in the said judgment this court has held that the appellants who withdrew from the said petition are also bound by the company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be quashed and set aside. Since the termination of the petitioner is a consequence of the order of the Scrutiny Committee, the termination order dated 24-1-2002 will also have to be quashed and set aside. 100. The learned counsel relied upon the Judgment reported in (2005) 11 SCC 723 para 23 to 27 in support of the plea that any action contrary to law is ultra vires. 101. The learned counsel for respondent no. 2 submits that the order passed by this court on 14.11.2008 in Company Petition No. 77 of 1990 operates in rem and is binding also on the appellants, respondents, CLB and this court. The learned counsel placed reliance on the following paragraphs of the said order which read thus : 6. As aforesaid, the original Petitioner Nos. 1, 2, 3, 6 and 7 have withdrawn from the present proceedings unconditionally. As per their request, they have been deleted from the array of Petitioners. The effect of unconditional withdrawal from the proceedings by the said Petitioners is that they have given up their challenge with regard to the alleged acts of oppression and mismanagement. In that, those Petitioners have consciously acquiesced in the acts complained of. It is further signi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nconditionally. Insofar as the present Petitioners are concerned, as a matter of fact they are free to deal with the shares held by them. In that, the shares are now freely transferable. Indeed, when the Petition was presented at the relevant time, the Respondent No. 1 Company was a Private Limited Company. As a result, there was restriction in the transfer of shares. However, it is common ground that now the Respondent No. 1 Company has become a Public Limited Company-as a result of Special Resolution moved in the Extra Ordinary General Meeting dated 5th May 2001 having been defeated. Having acquired the status of a Public Limited Company, the restriction on the right to transfer the shares which was applicable to Private Limited Company, would naturally get diluted. That however, does not mean that there would be no right in the Board of Directors to consider the transfer request on case to case basis on its own merit, keeping in mind the best interests of the Company so as to prevent any undesirable person becoming its member and if enrolment of such person as a member, is likely to be prejudicial to the Company. In other words, the Board of Directors would be justified in decli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of any share. In my opinion, the principal relief claimed by the present Petitioners would stand addressed with the above arrangement. 11. I shall now proceed to consider the alternative reliefs pressed during the course of arguments by the Counsel for the present Petitioners. Indeed, although the present Petitioners have submitted that the reliefs to be presently reproduced are alternative reliefs, the same in fact, are the substantive reliefs. I would straightaway refer to the said reliefs pressed by the present Petitioners, which read thus: (c) That the 2nd Respondent be restrained by an order of permanent injunction from exercising any rights or receiving any dividends or any rights or bonus shares or any accretions in respect of the said 3000 share purportedly registered in the name of the 2nd Respondent and the 1st Respondent; (d) For orders and directions directing Respondents 1 2 to offer the said 3000 equity shares of the face value of ₹ 100/- each (together with all accretions thereto) to the Petitioners in accordance with Article 57 of the Articles of Association at the value determined in accordance therewith and directing the 1st Respondent to register ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e name of Respondent No. 5 and 7 to any outsider non-member of the company; (hhh)(iv) that this Hon'ble Court be pleased to declare that the purported sale or transfer of shares from Respondent Nos. 33 to 36 in favour of Respondent No. 27 to 32 and the Respondent No. 1 Company's registration of such transfers as per particulars set out in Exhibit-QQ20 hereto is void, invalid and illegal; (hhh)(v) that this Hon'ble Court be pleased to order and declare that the purported sale or transfer of the said shares in favour of Respondent Nos. 27 to 32 by Respondent Nos. 33 to 36 and the registration of the transfer of the said shares in the Register of Members of the Respondent No. 1 Company be cancelled and set aside and the Register of Members of Respondent No. 1 Company be rectified accordingly; (hhh)(xix) that it may be ordered and declared that the purported transfer of the said 5 shares referred to in paragraph 16(S)(1) (xiii) hereto from the names of Respondent Nos. 2 4 to the name of Respondent no. 44 is contrary to the Articles of Association of the 1st Respondent Company and therefore illegal null and void and is liable to be set aside; (hhh)(xx) that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 of the Articles of Association at the value determined in accordance therewith and directing the 1st Respondent to register the same in the name of the petitioners and make consequential notings on the 1st Respondent's records. (ii)(1) that it may be ordered and declared by this Hon'ble Court that the Extra Ordinary General Meeting purported to have been held on 15th February, 1990 and the business conducted therein/resolutions purported to have been passed therein are all null and void and bad in law; (2) that Respondent No. 1 be restrained by an Order and Injunction of this Hon'ble Court from taking any steps or action on the basis or in pursuance of the resolutions purported to have been passed at the said meeting of 15th February, 1990 or from in any manner whatsoever giving effect thereto. (3) that it may be ordered and declared that the purported transfer of 3,000 equity shares by Respondents No. 5 in favour of 2nd Respondent is illegal, null and void; (4) that this Hon'ble Court be pleased to rectify the register of members of the 1st Respondent by deleting the name of Respondent by deleting the name of Respondent No. 2 and 4 in respect of 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cessary to separately deal with the same. 62. Taking overall view of the matter, I have no hesitation in concluding that no case regarding oppression of minority shareholders has been established by the present Petitioners. Assuming I were to hold to the contrary, I would still be inclined to hold that no tangible grounds are made out to conclude that it is just and equitable to wind up the Respondent No. 1 Company. For, on this finding as observed in the case of Jaladhar Chakraborty (supra), no further direction needs to be issued. However, insofar as the direction pressed by the present Petitioners against the majority shareholders to buy out the shares of the present Petitioners, I have already dealt with that aspect in the earlier part of this Judgment. 102. The learned senior counsel for respondent no. 2 submits that the order passed by this court on 14th November, 2008 in Company Petition No. 77 of 1990 was a judgment in rem and not in action in personam. It is submitted that the proceedings under Sections 397 and 398 are not personal actions for enforcing personal rights but are representative actions on behalf of the shareholders and the public at large since public i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been judicially described as 'a specialised and somewhat misleading term of art limited to judgments concerned with status. A judgment in rem may be defined as the judgment of a court of competent jurisdiction determining the status of a person or thing, or the disposition of a thing, as distinct from the particular interest in it of a party to the litigation. Apart from the application of the term to persons, it must affect the subject matter of the proceedings in the way of condemnation, forfeiture, declaration of status or title, or order for sale or transfer. 103. Mr. Bobde, the Learned Senior Counsel appearing on behalf of the respondent no. 2 distinguishes the judgment of this court in case of M/s. Holdings Ltd. vs. Shyam Madanmohan Ruia Ors. Reported in 2010 112 (9) Bom. L.R. 4005 on the ground that the said judgment has been considered and dealt with in the judgment and order dated 14th June, 2011 passed by this Court. It is submitted that ratio in the said case has no application to the facts of this case. He submits that the said judgment in case of M/s. Holdings Ltd. (supra) case reported only deals with a scenario where a restriction on transfer of shares by w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 57 is a complete code. Further, that judgement is based on a consensual arrangement between the Petitioners in CP 77 and the Respondents and as such it is a judgement by concession by parties. Relying upon the judgment of Supreme Court reported in: AIR 2001 SC 1273 it is submitted that the judgment obtained by concession is not a binding precedent. In the alternative it is submitted that it is a consensual judgment and therefore cannot bind persons who are not parties thereto. The Appellants names in the said Petition had been deleted. The appellants placed reliance on Halsbury laws of England, 3rd Edition, para 370 which reads thus:- 370 Consent judgment in rem. Although a judgment by consent may well create an estoppel between the parties (m), it is at least doubtful whether a judgment in rem obtained by consent of parties (o) can ever be conclusive against persons who were not and do not claim through the parties to it, except so far as may be necessary to protect the title of a person who purchases the res on the faith of the judgment. It has been laid down that a judgment by consent cannot effect a res judicata so as to bind the public or absent parties (p), and that a jud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and S. 189 of the Companies Act, 1956. (g) The grievance of the appellants against the attempt of the majority shareholders to remove Article 57 from the Articles of Association on the ground that it has been declared as void cannot amount to defiance of the Order of this Court when the correctness of the judgment is presently pending in the Supreme Court. (h) It is true that the said Judgment dated 8th August, 2011 is not stayed. However, by Order dated August 8, 2011 Shri Justice Dharmadhikari, has given liberty to adopt appropriate proceedings to challenge a fresh EOGM if convened for the purpose of deleting Article 57. This order was passed after the learned Judge was informed of the fact that an SLP had been filed against his earlier Order dated June 14, 2011 in which the Supreme Court had issued notice and granted injunction. The learned Judge has also stated that the said fresh proceeding would be decided uninfluenced by the earlier order . Whether earlier order means the Order of CLB dated November 9, 2010 or the Order of High Court dated June 14, 2011 - the effect is the same - that the fresh proceedings should be decided uninfluenced by the earlier finding that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ir contention that the resolution was wrongfully passed on 22nd May, 2012, it would give rise to innumerable complications and multiplicity of proceedings to set the clock back. It is submitted that it would be impossible to set the clock back as several third party rights may have been created on the basis that there is no right of pre-emption. 106. In my view the proceedings filed under section 397 and 398 are not personal action in personal rights but are representative actions on behalf of the shareholders and public at large in view of the fact that the public interest is the factor for consideration in these sections. In my view learned counsel Mr. Bobde is right in his submission that the petition filed under section 397 and 398 (Company Petition No. 77 of 1990) was an action in rem and therefore, the judgment dated 14th November, 2008 passed therein by this court is a judgment in rem. Shri Justice A.M. Khanwilkar in the said judgment has given categorical finding that respondent no. 1 company is a public limited company. The present appellants who are parties to the said petition filed under section 397 and 398 had not obtained any leave to file the proceedings again on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng on CLB. In my view the said decision of this court has been rightly followed by CLB. There is no substance in the submission made by Mr. Samdani that if this court had already decided the issue as to whether Article 57 was invalid or void, there was no requirement for this court to decide the said judgment again and render finding to that effect. Shri Justice S.C. Dharmadhikari has followed the judgment of this court delivered by Shri Justice A.M. Khanwilkar. 108. I shall now decide as to whether the judgment dated 14th June, 2011 passed by this court in Company Appeal No. 24 of 2010 was binding on the CLB and also this court, not having been stayed by the Supreme Court and as to whether the appellant can agitate the issues which are already decided by this court in order dated 14th June, 2011 in the present proceedings. 109. Apart from the fact that in the present proceedings, I have already taken a view after considering the pleadings documents and arguments advanced by the parties that respondent no. 1 company is a public limited company and shares are freely transferable and that the resolution passed by the first respondent company in its EOGM held on 22.5.2001 can no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rge and/or allegations leveled of having oppression, the minority shareholders other than present appellant can not on the same material succeed in pursuing the said allegations. This court also observed that the appellants were raising the same issues based on the same allegations and identical arguments. This court after considering the arguments of the parties and the order and judgment delivered by Shri Justice A.M. Khanwilkar in Company Petition No. 77 of 1990 held that the finding rendered in the said judgment were fully applicable to the facts in the said Company Appeal No. 24 of 2010 and there was no justification for taking a different view. This court rendered a finding that the appellants had failed to substantiate their charge of oppression of minority and the allegations being serious, the appellants ought to have brought adequate and substantial proof which the appellants had failed. This court took a view that on the basis of the material produced it could not be held that there was any oppression of minority. This court also took into consideration the conduct of the appellants in withdrawing from the proceedings of Company Petition No. 77 of 1990 and settling their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt shall not consider the finding rendered by Shri Justice S.C. Dharmadhikari in view of the pendency of special leave petition is concerned, it is common ground that the said judgment has not been stayed by the Supreme Court so far. The appellants are not even able to show that the appellants had prayed for stay of the said judgment before the Supreme Court. The CLB in para 30 of the impugned order has dealt with the interim order passed by the Supreme Court in the Special Leave Petition arising out of the order dated 14th June, 2011 passed by this court. The CLB has held that the Supreme Court has denied the modified relief sought by the appellants and the special leave petition has not been admitted as yet. The CLB has also rendered a finding in para 33 of the impugned order and has held that the petitioners were not claiming that any of the action of the respondents amounted to the breach of the order of the Supreme Court or that it gave rise to any matter in the nature of contempt of any court and on the contrary the petitioners elected to approach CLB impugning EOGM as none of the legal issues raised in the special leave petition transgraced to the corporate democracy and sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bserving that the fresh proceedings would be decided influenced by the earlier order. In my view, the record produced by the parties in the present proceedings read with order dated 8th August, 2011 passed by this court makes it clear that this court was referring to the earlier order passed by CLB dated 9th November, 2010 which was impugned therein and not the order passed by this court. In view of the fact that the judgment delivered by this court is not stayed. I am bound by the decision of this court unless I take a different view and refer the matter to larger bench which I don't propose to do. 118. The CLB has in para 30 of the impugned order has followed the judgment of this court in Company Appeal No. 24 of 2010 on the issue that the 1st respondent company is the public company and once it is held to be a public company, then its shares are freely transferable and article would not hold good as they are contrary to the status. In my view, the order and judgment dated 14th June, 2011 passed by Shri Justice S.C. Dharmadhikari not having been stayed by the Supreme Court is binding on the CLB as well as on single judge of this court. The CLB has thus rightly followed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imited company and its shares are freely transferable, in my view the question of exercise of right of preemption in such situation does not arise. The resolution thus passed by the 1st respondent company in deleting Article 57 with a view to give effect to the said position in accordance with law does not amount to an act of oppression. The CLB in para (40) of its order has rendered finding that passing of resolution by the share holders of the company in exercise of their democratic rights in extra ordinary general meeting requisitioned by the shareholders of the company does not in any manner amount to oppression and mismanagement and cannot form a subject matter of the petition under sections 397 and 398 of the Companies Act and there is no reason to interfere with the internal democracy of the company. The CLB has also rendered a finding that keeping in view the rights of the shareholders the principles of corporate democracy in the absence of prima facie case shareholders' decision is prejudicial to the public interest or at large CLB has no justification in restraining the first respondent company from implementation of the special resolution passed and from filing of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed company would naturally get diluted. It is held that restriction under Article 57 shall have no relevance after the 1st respondent company had admittedly become public limited company. It is held that minimum of 50 members may apply to the private limited company will have no relevance any more. 125. It is common ground that the order passed by Shri Justice A.M. Khanwilkar in the said Company Petition No. 77 of 1990 was not challenged by any of the parties. It is also not in dispute that the present appellant did not obtain leave while seeking liberty to their withdrawal from the said proceedings unconditionally and for deleting their names from the array of the petitioner. In the order passed by this court, it has been clearly recorded that the appellant herein have consciously withdrawn from the proceedings unconditionally and have given up their challenge with regard to the alleged act of oppression and mismanagement. Thus in my view the said judgment delivered by Shri Justice A.M. Khanwilkar is binding on the appellants and other parties to the said proceedings, CLB and this Court and also operates in rem. 126. The next submission of Mr. Samdhani, the learned senior co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... though one of the requisitionist had alleged to have withdrawn her consent before such meeting came to be held on 22nd May, 2012. It is not in dispute that respondent nos. 6 to 8 collectively holding 12.5% of the paid up share capital issued by the 1st respondent company issued a notice on 31st March, 2012 under section 169 of the Companies Act read with Article 76 of the Articles of Association to convene EOGM of the members of the company to transact the business by special resolution amendment of Articles of Association of the company for deletion of Article 57 of the Articles of Association of company . It is not in dispute that the said notice issued by respondent nos. 6 to 8 was received by the 1st respondent company on 20th April, 2012. It is also not in dispute that when the said notice was received by the 1st respondent company to requisition a meeting, the notice was issued by such members having not less than 1/10th of paid up capital of the 1st respondent company and had right of voting in that regard to the matter. Pursuant to the receipt of such notice under section 169 of the Companies Act read with Article 76 of the Articles of Association, the 1st respondent compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , respondent no. 6 holding 6% shares to her advocates and solicitors instructing to support the Company Application (73 of 2012) filed by the appellants and to concede to the injunction prayed for in the said application, in my view does not amount to withdrawal of consent by the 6th respondent in holding EOGM. In any event, once a valid requisition was received by the company from its members having requisite numbers in accordance with section 169 read with Article 76 of the Articles of Association, even if any of the requisitionist withdraws his consent or such member ceased to be the member, in my view, the board of directors have no option but are obliged to call such EOGM. In my view, once required number of members have requisitioned the meeting in accordance with section 169(4) of the Act read with Article 76 of the Articles of Association and such notice for convening EOGM is received by the company, subsequent withdrawal of consent or that any member ceased to be a member subsequently does not give any discretion to the board of directors not to call a meeting due to such change. Mr. A. Ramaiya in his work Guide to the Companies Act, 1956 Part II 17th Edition has comment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present case neither has been done. (iii) The loan cum pledge power of attorney could never have been accepted by the 1st respondent Company as the same had already rejected these powers of attorney (Vol VII page 1363) in the past and had filed a suit for cancellation thereof. (iv) These powers of attorney are admittedly not registered with 1st respondent and it does not recognize/accept power of attorney that are not registered. (v) The record indicates that these Powers of Attorney are also not lodged 48 hours before the commencement of impugned EOGM and the entire exercise of introducing the Godrej documents was ante dated. (vi) On May 16, 2012 Godrej Industries Ltd. writes to the minority shareholders to vote for the resolution. This letter presupposes that Godrej would not be attending the meeting. (vii) On May 17, 2012 Maharukh Oomrigar - one of the requisitionists addresses a letter dated May 16, 2012 indicating that she will oppose the resolution. This would result in Dr. Gharda's not having the adequate 3/4th majority to carry the resolution. (viii) all letters lodging a proxy contain the time of receipt and the inward number. Alleged letter da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtant position and he is responsible for the proper conduct of the meeting. The chairman must exercise his powers bona fide. It is submitted that where it is shown that the chairman has acted mala fide or that the chairman has acted in a manner contrary to law, the affected shareholders are entitled to question the decision of the chairman. The appellants placed reliance on the judgment reported in (1943) 2 All ER 567 and judgment of Kolkata High Court reported in AIR 1937 Cal. 645 and unreported judgment of this court dated 7th April, 1995 in case of Kavasmaneck vs. Gharda. 133. The learned counsel appearing on behalf of the respondent no. 2 on the other hand submits on these issues as under : (a) Godrej lodged 11 powers of attorney that Appellant No. 1 has issued in favour of Godrej. Each of these powers of attorney issued in favour of Godrej permit Godrej to attend and vote at meetings in respect of an aggregate of 1710 shares. Each of these powers of attorney are irrevocable and are coupled with consideration/interest and shall take precedence over another power of attorney issued by Appellant No. 1. The 11 powers of attorney by themselves operate as a proxy entitling Go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of Association, has permitted Appellant No. 1 to vote through one such power of attorney holder of Appellant No. 1. The said act cannot be construed as denial of the right to vote, since votes were in fact cast in relation to the 1710 shares. Similarly the votes in respect of the balance shares of Appellant No. 1 other than the aforementioned 1710 shares have also been allowed to be cast by Mr. Hegde and have been allowed. The challenge therefore is not in relation to a denial of a right to vote of Appellant No. 1 since the votes have been allowed as opposed to rejected. (f) The letter dated 16.03.2005 did not relate to any of the 11 powers of attorney issued by Appellant No. 1 to Godrej, but related to the power of attorney issued by Maharukh Oomrigar (Respondent No. 6 to the present appeal) and hence the same is irrelevant. Furthermore the rejection of the power of attorney was in a completely different context, i.e. with regard to a request for splitting of shares and hence is irrelevant for the purposes of the issue at hand. (g) The mere filing of the suit bearing No. 1170 of 2005 is of non consequence especially when no orders have been passed in the said suit declar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the Appellants arose in March 2012. In these circumstances, Godrej took the aforesaid steps. It is the Appellants own case that prior to the year 2012 the Appellants and Godrej had a common interest and that seems to be the reason why Godrej may not have attended earlier meetings or exercised their right to do so under the powers of attorney. The fact that Godrej did not attend any earlier meeting is of no consequence. The allegation that there is not time of receipt or inward number etc., on the letter is of no consequence since the letter is on record and Godrej stands by it. The date of receipt of the letter and the two proxies are clearly noted as 19/05/2012 and the time does not matter because even midnight of 19/05/2012 is more than 48 hours before the EOGM. Mere suspicion cannot be the basis for doubting the existence and authenticity of the said letter. There is no averment of material to establish that these documents are inserted later or that there is any wrongdoing on the part of a named person. The Company in its affidavit in rejoinder dated June 2012 in Company Application No. 85 of 2012 in Vol. VI pages 1187-1190 has fully explained the position with regard to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sue as to whether the power of attorney can be treated as a proxy was not considered by the Chairman of the company while deciding the validity of the votes cast by the power of attorney holder. That issue was raised by the applicants for the first time before the learned Company Judge. As we have held that the votes cast under both the power of attorneys are valid, it is not necessary to consider the issue as to whether the power of attorney is a proxy or not. However, the above issue being raised and decided by the Company Judge and the counsel on both sides have also canvassed respective arguments before us, we deem it proper to deal with the said issue as well. 30. In our opinion, a shareholder may execute an instrument of power of attorney or an instrument of proxy empowering a specified person to vote on his behalf at the meeting of the company. If the instrument, is in conformity with the proxy form set out in the Schedule IX of the Act, then the company would register it and issue voting slip to such authorised person. Thus, a person authorised to vote under a validly executed power of attorney under The Powers of Attorney Act, 1882 may not be entitled to vote if the ins ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petition. Mr. Bakshi has voted as per the authority given to him by Godrej which is valid. (c) Without prejudice to the foregoing, Godrej is a valid POA holder for Jer. Mr. Bakshi validly represented Godrej in respect of the Jer Kavasmaneck PAO. Mr. Bakshi is in the employment of Godrej and all his acts are ratifyble ex post facto. Without prejudice, Godrej hereby confirms Mr. Bakshi's authority to represent Godrej and if necessary even ratify all the acts of Mr. Bakshi pursuant to the Authority given to him by Godrej and recorded in the letter dated May 19, 2012. The authority given by Godrej to Mr. Bakshi reads as follows : The powers of attorney expressly authorise GIL to attend, vote and otherwise take part in all meetings held in connection with the Company in relation to the shares and to sign proxies for the purposes of voting thereat or for any other purposes connected therewith as freely as the said shareholder could themselves do. Pursuant to the said power contained in the irrevocable powers of attorney, GIL hereby authorise Mr. Rajiv Bakshi, Executive Vice President - Legal to attend, participate in and to vote at the extraordinary general meeting of the Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... LB ought to have adjudicated upon the validity of the conduct of the EOGM before allowing the resolution to be implemented. The challenge to the conduct is not moonshine or illusory - but substantial questions have been raised by the Appellants particularly regarding the denial of the 1st Appellant's right to vote on 1710 equity shares. If the 1st Appellant was permitted to vote on the said 1710 shares, the resolution would not have been passed. (b) In the impugned Order in paragraphs 28 and 29 it is recorded that CA 91 of 2012 is pending. CA 91 of 2012 contains the specific challenge to the conduct of the impugned EOGM dated May 22, 2012. (c) The CLB in paragraphs 37 and 38 of the impugned Judgment has rendered findings on the correctness and conduct of the impugned EOGM. What is stated in the said paragraphs are matters concerning CA 91 of 2012 which was not even adjudicated upon. In any event the said statements are factually incorrect. (d) The Chairman at the meeting held that Mr. Bakshi is entitled to vote (on behalf of Godrej) on the basis of power of attorney dated March 9, 2012. This is also what is recorded in the purported Minutes and admitted by Godrej. B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Appellant was denied her right to vote in respect of 1710 equity shares. As such, by allowing Mr. Bakshi to vote on shares which belongs to the 1st Petitioner, she was denied the right to vote. 138. Section 175 of the Companies Act provides that unless articles of the company otherwise provide members personally present at the meeting shall elect one of themselves to be the chairman thereof on a show of hands. (The chairman has prima facie authority to decide all questions which arise at the meeting which require decision at the time, member by submitting his ruling and voting upon a resolution which the Chairman allows to be put is not precluded from maintaining by litigation that he was wrong). Section 176 provides that any member of the company entitled to attend and vote at the meeting of the company shall be entitled to appoint another person whether member or not as his proxy to attend the vote instead of himself but proxy so appointed shall not have any right to speak at the meeting. Section 176(5) provides that the instrument appointing proxy shall be in writing and shall be signed by the appointer or his attorney duly authorised in writing or if the appointer is a bod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tanding the previous death or insanity of the principal or the revocation of the proxy or of the authority under which the proxy was executed or of the transfer of the shares in respect of which the proxy is given, provided no intimation in writing of such death, insanity revocation or transfer shall have been received by Company at its officer for the commencement of the meeting or adjourned meeting at which the proxy is used. 109. The instrument of proxy shall be as near as practicable in the form set out in schedule IX of the Act. 113. No objection shall be made to the validity, if any, except at the meeting or poll at which such vote shall be cast and every vote whether given personally or by proxy not disallowed at such meeting or poll shall be deemed valid for all purposes of such meeting or poll whatsoever. 139. The appellants through their learned senior counsel emphasized that the power of attorney referred by the Chairman to the meeting while permitting Mr. Rajiv Bakshi to vote was not in respect of 1710 equity shares of the appellant. The counsel led emphasis on the issue that the appellant was not permitted to vote in respect of 1710 shares and Mr. Bakshi was a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts in favour of Godrej Industries Ltd. were in force on the date of EOGM,. Since Godrej Industries Limited being a company could not itself attend the meeting, it was entitled to authorize a person to attend the said meeting as its representative. The said company accordingly by its letter dated 19th May, 2012 authorised Mr. Rajiv Bakshi to vote in the EOGM proposed to be held on 22nd May, 2012 to appoint representative on power of attorneys and the said authority letter dated 19th May, 2012 it is clear that Mr. Bakshi was appointed to attend the meeting and to vote in respect of the 1710 shares on behalf of the first appellant duly authorised by Godrej Industries Limited which was authorised by the first appellant. It is not in dispute that the said authority letter dated 19th May, 2012 was also filed with first respondent company by Godrej Industries Limited. On the basis of such power of attorneys and such authority letter dated 19th May, 2012, Mr. Bakshi exercised his powers on behalf of the appellants to sign the proxy in favour of himself to vote. In my view, since the relevant power of attorney authorised Godrej to vote and the authority letter dated 19th May, 2012 inturn a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd 'power of attorney' to include any instrument empowering a specific person to act for and in the name of the person executing it. 24. Section 176 of the Companies Act, 1956 provides that a member of the company entitled to vote at the meeting of the company can appoint any other person (whether a member or not) as a proxy to attend and vote instead of himself. 25. Article 114 of the Articles of Association framed by the appellant No. 1 company reads as under: 114. On a poll taken at a meeting of the Company, a member entitled to more than one vote, or his proxy or other person entitled to vote for him as the case may be, need not, if he votes, use all his votes or cast in the same way all the votes he uses. (Emphasis supplied) 26. On perusal of the aforesaid provisions of Companies Act and the articles of association of the company, it is seen that at the meeting of the company not only the shareholder and the proxy holder but some other duly authorised person is also entitled to vote. In other words, at the meeting of the company the vote can be cast by the shareholder and in his absence his proxy or other person entitled to vote for him. As rightly cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ains all the requisite particulars set out in the form in Schedule IX it can be treated as a proxy. If an instrument like power of attorney contains all the requisite particulars, such as the name of the company, the name of the person executing the instrument, the name of the person empowered to vote as a proxy, etc. as set out in the form in Schedule IX to the Companies Act then such an instrument can be treated as a proxy. As stated earlier, the instrument of proxy is executed to empower a third person to vote at the meeting of the company for and on behalf of the person executing the instrument of proxy. Proxy is one acting for another. It is an authority or power to do a certain thing. A proxy is a lawfully constituted agent. A power of attorney is an authority given by a formal instrument whereby one person, who is called the donor or principal, authorises another person, who is called the donee, attorney or agent, to act on his behalf. In the absence of any specific bar, a power of attorney that substantially complies with the requirement of Schedule IX can be considered as proxy. In the present case, it is not dispute that the power of attorney executed by the applicant Nos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of Godrej Industries Limited clearly indicate that it contains all the particulars set out in schedule IX including power to vote on behalf of the appellants. In my view, the Chairman was right in issuing voting slips in favour of Mr. Rajiv Bakshi to vote in respect of 1710 shares and such decision cannot be faulted with. The Division Bench of this court has already held that the proxy form as set out in schedule IX is not mandatory. So long as any instrument contains all the requisite particulars set out in the form in schedule IX, it can be treated as proxy. In my view separate proxy itself was not required in view of the fact that he power of attorney itself authorized Godrej Industries Limited to vote and the said company in turn and rightly authorized Mr. Bakshi to exercise the votes on behalf of the appellants. In my view, the entire ruling of the Chairman has to be considered as a whole and not few sentences in isolation. Considering the entire ruling of the Chairman and the minutes of the meeting held on 22nd May, 2012, it is clear that Chairman was right in permitting Mr. Bakshi to cast vote on behalf of the appellants as duly authorised. I am bound by the view taken by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cle 109 provides that the instrument of proxy shall be as far as possible in the format set out in schedule IX. This instrument of power of attorney read with letter of authority satisfies all the conditions required to treat the said document as instrument of proxy. The learned counsel rightly placed heavy reliance on article 19 of the Articles of Association which provides that the Chairman of any meeting shall be sole Judge of the validity of every vote tendered at such meeting and shall be sole judge of validity of any vote tendered at such poll. 147. In my view, Mr. Bobde, the learned senior counsel is right in his submission that the Chairman was right in permitting Mr. Bakshi to cast vote in respect of 1710 shares. In my view, all the documents which were on record of the company before voting including power of attorneys and letter of authority were required to be considered by the Chairman to find out whether it satisfies the requirement of proxy. In my view, the appellants had failed to show that the ruling given by the Chairman is erroneous on any point of law. The appellants had failed to show that any serious prejudice is caused to the minority shareholders by virtu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n my view since M/s. Godrej Industries Limited has not disputed the authority of Mr. Rajiv Bakshi to vote and in view of the fact that Godrej Industries Limited was authorised by 11 power of attorneys to vote on behalf of the appellants, in my view no illegality is committed by the Chairman in permitting Mr. Rajiv Bakshi to vote on behalf of the first appellant. I am therefore, of the view that there is no merit in any of the submissions made by Mr. Samdani, the learned senior counsel appearing for the appellant that the procedure followed by the Chairman in conducting the EOGM was illegal. In my view the ruling of the Chairman is final unless the same is erroneous on question of law. 150. The CLB in paragraph 37 and 38 of the impugned order has considered even the issue arising out of the power of attorneys, letter of authority and proxies and has rendered finding of fact that the petitioners themselves were guilty of issuing multiple power of attorneys which were in force at the same time, causing confusion and forcing the Chairman to take the decision, which he did in the bona fide manner. It is recorded that the petitioners by having issued multiple power of attorneys being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der passed by CLB. 152. In my view, the appellants have failed to prove that the conduct of the chairman in conducting impugned EOGM as well as ruling given by the chairman is illegal or that he acted malafide or the same was part of any alleged pro-conceived, deliberate, oppressive desire. The appellants have not proved that affair of the 1st respondent company were conducted in the manner prejudicial to public interest or in the manner oppressive to the appellants. It is also not proved that the facts exist which would justify making of order for winding up of respondent no. 1 on the ground that it is just and equitable to do so but to wind up the company would unfairly prejudice to the appellants. 153. Thus in my view, the company law board was right and justified in vacating and/or modifying its earlier order dated 21st May, 2012 and not restraining the 1st respondent from implementing the resolution passed in the EOGM held on 22nd May, 2012. No interference is thus warranted by this Court under Section 10F of the Companies Act, 1956. I, therefore, pass the following order:- (a) Company Appeal (L) No. 41 of 2012 is dismissed. (b) There shall be no order as to cost ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
