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TMI Blog1928 (9) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... e defendants from making any further nomination or nominations as Policyholders' Directors for the year 1928. 2. The claim arises under the following circumstances. The 1st defendant company has been carrying on the business of Life Insurance from about the year 1906 and in 1926 adopted new Articles of Association which came into force from 1927. Under Article 62 the number of directors of the 1st defendant company is to be not less than four and not more than nine and of these not more than two directors may be elected by or appointed on behalf of the policy-holders of the company. The directors so elected or appointed are to be known as Policy-holders' Directors . This provision is repeated in Article 70. Under Article 73 a meeting of the policy-holders for the purpose of electing not more than two Policy-holders' Directors from amongst themselves is to be convened by the directors in 1928 and each successive year. The date and the hour at which these meetings are to be held is to be determined by the directors and the meeting is to be held after the ordinary meeting (that is, the meeting of the share-holders) of the same year and within 15 days from the date of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the 1st defendant company convened a meeting of the policy-holders for the purpose of electing. Policy-holders' Directors on the 21st April, 1928 at 4 P.M. at the 1st defendant company's premises. It is not disputed by the plaintiffs that the requisite notices and advertisement as to the date of the meeting and the names of the candidates for election were issued. The candidates were Messrs. C. Munusami Chetti, R. Rangachariar, the 2nd plaintiff in this suit, B. Sitarama Rao, Watrap S. Subramania Aiyar, the 1st plaintiff and Vydhianathan, Assistant Professor of Mathematics, Pachaiappa's College, Madras. Of these, the first named was a pleader and the others, with the exception of the last named, were then vakils of the High Court and are now advocates. The meeting on the 21st April started at the appointed time and there were some 97 policy-holders present including the 7th defendant. The meeting commenced at about 4 P.M. and Mr. A.R. Venkatarama Aiyar, a Bench Clerk of the High Court of Madras, was elected chairman of the meeting. After this those attending the meeting were welcomed by the 7th defendant in a speech of some duration. After the election of Mr. Venka ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k place is to be found in a report in the columns of the Hindu of April 25. This report was put in by the defendants in the course of cross-examination and is an exhibit filed by the defendants and was put in as being an accurate report of what took place at the meeting and the witness was cross-examined upon it. There is, of course, also the evidence of the plaintiffs' witnesses which I think does not vary except possibly in certain trifling respects from the account given in the Hindu. The 1st plaintiff for the reasons already referred to suggested that there should be an adjournment of the meeting so that due notice might be given to the policy-holders of the company and sufficient time given for them to exercise their vote. At this point there was a discussion as to whether or not the result of an adjournment would be to cause the policy-holders to forfeit their right to elect directors, as certain speakers took the view that, if instead of electing directors at the meeting, the meeting were adjourned, the directors might be entitled to appoint directors themselves on the ground that the policy-holders had not chosen to elect directors at the meeting. After some discussion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urned meeting as well as in future elections. 4. This resolution was carried by a large majority, only four voting against it. The third resolution was as follows: That intimation of the adjourned meeting for the election of the Policy-holders' Directors be given forthwith in The Hindu, The Swarajya, The Justice, The Andhra Patrika, The Matrubhumi and The Swadesamitran. 5. This resolution was carried unanimously. The fourth resolution was as follows: That individual notices by post be given by this company forthwith to every policy-holder irrespective of the value of his policy or policies of the adjourned meeting for the election of the Policy-holders' Directors. 6. This resolution was carried unanimously. The fifth and last resolution was one for adjourning the meeting and was as follows: That this meeting for the election of the Policy-holders' Directors do stand adjourned to 5th May, 1928 at 5-30 p.m. in this company's premises. 7. This resolution was carried with one dissentient. The meeting accordingly adjourned until the 5th May. On the 1st May, 1928, however, the following notice appeared in the Hindu, It is headed 'United India Life ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay wrote to say that it was unable to arrange for the holding of the adjourned meeting at the premises of the company. It was then arranged with Mr. Venkatarama Aiyar, the chairman of the meeting, that as the 1st defendant company had declined to allow the policy-holders to meet in its premises on the 5th May the meeting should be held instead at the Mahajana Sabha Hall, Mount Road, and this change of venue was on the same day and on the next advertised in the press and hand-bills to the same effect were distributed and on the day of the adjourned meeting persons were stationed at the office of the 1st defendant company to re-direct any policyholders to the Mahajana Sabha Hall in case they should have failed to have notice of the change of venue. The meeting of the policy-holders was duly held on the 5th May and the plaintiffs were elected by ballot. There were present 62 policyholders and the same formalities were gone through as at the previous meeting with regard to the attendance of policy-holders, namely each policy-holder was required to sign his name in the attendance book and did so. I do not think it necessary to refer to the correspondence on matters of a later date. I wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n this case a man is necessarily a share-holder in order to be a director, and as a director he is entitled to fees and remuneration for his services, and it might be a question whether he would be entitled to the fees if he did not attend meetings of the board. He has been excluded. Now, it appears to me that this is an individual wrong, or a wrong that has been done to an individual. It is a deprivation of his legal rights for which the directors are personally and individually liable. He has a right by the constitution of the company to take a part in its management, to be present, and to vote at the meetings of the board of directors. He has a perfect right to know what is going on at these meetings. 11. And on page 613 the contention of the defendants upon this point is completely negatived by the following statement: But in a case of an individual wrong, another share-holder cannot on behalf of himself and others, not being the individuals to whom the wrong is done, maintain an action for that wrong. 12. If further authority is needed it is to be found in the 10th edition of Buckley on the Companies Acts at page 621 where it is stated: A single share-holder may su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Articles of Association were framed that it would be necessary to adjourn the policy-holders' meeting which is merely for the purpose of transacting the business of electing Policy-holders' Directors and no provision was therefore made for such a contingency. Whereas when the company had to consider the Articles with regard to the ordinary general meeting it had clearly to provide for a very obvious contingency, namely, the adjournment of such a meeting at which a great deal of business must necessarily be disposed of and which it would be likely on some occasions could not be disposed of at one meeting. The fact that no reference is made in the Articles of Association to an adjournment of the policy-holders' meeting is in my view clearly due to the failure to realise that such a contingency might arise. Nor can I see any reason why there should be any distinction intentionally drawn between the ordinary general meeting and the meeting of the policyholders or why it should be argued that it was intended that the one could be adjourned and not the other. For these reasons, in my view, Mr. Doraiswami Aiyar's contention that an adjournment of the policy-holders ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Blanc, J., said: Common sense shows that the charter must have meant that the corporate body should have power to adjourn in order to conclude such business as they had regularly begun, otherwise it would be in the power of any person by contrivance to protract the business and prevent the claims being effectual. Upon these grounds it strikes me that a peremptory mandamus ought to go. 16. Bayley, J., said: I have no difficulty in saying that the Corporation must of necessity have the power of adjournment, in order to conclude such business as they began, and had not time to finish on the charter-day. The business to be done is to fill up vacancies in the Corporation, and to receive the claims and hear the proofs of such persons as claim. That is the general business of the day; which I take it, constitutes one entire business, as much as the election of a mayor. 17. Dampier, J., said: It seems to me, from the very nature of this case, to be absolutely necessary that the corporate body should have the power of adjournment, in order to give effect to the inchoate rights of the claimants, and to guard against the possibility of their claims being frustrated by any contr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was called to transact. Mr. Doraiswami Aiyar, however, contends that this was not a bona fide adjournment of the meeting. He frankly concedes that the plaintiffs and those policy-holders who voted in favour of the adjournment were moved to do so from the purest and most honest of motives. He stated at the end of the plaintiffs' case that he did not propose to call any evidence for the purpose of contradicting any statement which any of the witnesses for the plaintiffs, and the first plaintiff himself, had made in the witness-box. He accepted the whole of the evidence of these persons and did not in any way desire to challenge it. That admission of Mr. Doraiswami Aiyar is a very frank one indeed and it is one which, in my view, goes the full length of establishing the plaintiffs' case that the meeting was adjourned for the purpose of getting a better representation of policy-holders at the adjournment meeting and that only. That is what all the witnesses for the plaintiffs have said. Attempts were made in cross-examination to show that the object of the adjournment was to defeat the proxies and to secure the election of persons who would otherwise not have been elected ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olders were not unreasonable in regarding the procedure with regard to calling the meeting and also with regard to the proxies as most imperfect and with regard to the proxies undesirable as well. Mr. Doraiswami Aiyar admitted that, even if the Articles of Association were strictly complied with, there must still be a large number of policy-holders in the mofussal and outside the presidency itself who did not get notice of the meeting of policy-holders. This, I think, must be obvious, because it is only those policy-holders who hold policies aggregating to ₹ 3,000 who are entitled even to a written notice. The other policy-holders who are a very large majority have to depend on the advertisement in certain newspapers in the Madras City and it may be only by mere chance that they come to know of any notice with regard to the meeting, and it was in order to remedy this that the resolution to that effect was passed by the meeting. As I say it was entirely out of order. With regard to the proxies I think that the policy-holders were perfectly justified in the criticisms which they made and which resulted in the resolution being passed although that was out of order. The position ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oes not need much common sense or effort of imagination to suppose that the 1st defendant company had collected these proxies for the purpose of using them in a certain way. The 1st defendant company was not through its agents collecting proxies merely as curios; the intention to do something with those proxies must be attributed to the 1st defendant company. I think it is beyond question that the intention of the 1st defendant company was to secure the election of two candidates of their own selection and certainly to bring about the defeat of the 1st plaintiff Mr. Watrap Subramania Aiyar. I say that for the following reasons. During the trial the nomination papers with regard to the candidates nominated for election were put in and I find this, that one of the candidates, Mr. B. Sitarama Rao, who was one of those subsequently appointed as a Policy-holders' Director by the directors themselves, was proposed as a candidate by Mr. T.K. Sundaresa Aiyar, an agent of the 1st defendant company, who was the holder of all these proxies at the policy-holders' meeting. It does not seem to me to be a violent inference to draw that Mr. Sundaresa Aiyar would have used the proxies he ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r own protection? There are in this Insurance Company as in others a very large number of policy-holders, a great many of whom have no doubt paid their premia for very many years and have done so with the object that at their deaths the policy money should go to their representatives, or, if they had insured for a term of years that they themselves should get the policy money. Why should they not form an association to protect their interests when they have invested a very large amount of money in the company in the shape of premia? But the fact that Mr. Watrap Subramania Aiyar was supposed to be the candidate of this supposed association, that is the Policy-holders' Protection Association, clearly shows one thing, namely, that he was on account of that association a person whom the directors did not desire to have elected to the board as a Policy-holders' Director. Mr. Watrap Subramania Aiyar, from what I have seen of him in the witness-box, is what can be described as a live wire and the fact that the 1st defendant company regard the formation of an association for the protection of policy-holders as being an association hostile to themselves, as they obviously do, leads ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... corruption or constructive dishonesty . On page 46 dealing with that argument Lord Watson said as follows: I feel bound to protest against the view expressed by some of the Scotch Judges in the cases to which we have been (referred at the Bar, with regard to what they call 'constructive corruption.' I suppose that as well as 'constructive corruption' you may have 'constructive bribery' and 'constructive falsehood.' The meaning of it appears to be this that in order to satisfy the ends of justice in dealing with the validity of an award, it is necessary to invoke this constructive principle of which I have under all circumstances the greatest distrust; and that for the purpose of doing justice it is necessary to call a man 'corrupt' who is not corrupt but honest, to call a man ' bribed' who never listened to an improper suggestion from any quarter, to call a man 'false' who never uttered a falsehood. I do not doubt that corruption might be inferred from the terms of an award; and it is clear that, if Lord Thurlow used the expression 'constructive corruption' in Colquhoun v. Corbet (1784) 2 Paton's App. 626, he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he adjourned meeting Mr. Sundaresa Aiyar could have appeared at the adjourned meeting and used all the proxies in his name for whatever purpose he desired. It is perfectly clear that an adjourned meeting is the same meeting and merely a continuation of the meeting. This question of the availability of proxies at an adjourned meeting has been dealt with in the English Courts. In Maclaren v. Thompson (1917) 2 Ch. D. 261 it was held that where the articles of a company provided that the instrument appointing a proxy shall be deposited at the registered office of the company not less than two clear days before the day for holding the meeting at which the person named in such instrument proposes to vote, proxies lodged after the date of an original meeting, but more than two days before the day fixed for an adjournment thereof, cannot be used for the purpose of voting at the adjourned meeting. The reason for so deciding was that the adjourned meeting is merely a continuation of the first meeting; in other words, the adjourned meeting is to be considered as the original meeting. Warrington, L.J., on page 266 after dealing with the Articles of Association in which it is quite clear that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een an adjournment till the following day at 9 o'clock, and would not the meeting which was then resumed have been part of the meeting which had taken place the day before? I cannot doubt it for a moment; and whether the adjournment be only for three hours or for three days, if the proceeding be bona fide, can make no difference. 25. On page 1023 Lord Chelmsford made observations which are useful upon the points raised in this case both as regards the regularity of ran adjourned meeting and the power of a meeting to adjourn itself. He said as follows: I should have thought, that when a meeting is to be held, and business to be transacted, and where it is possible that at the original meeting the whole of the business may not be got through, there must be power to adjourn that meeting, and that the adjourned meeting must be considered as part of the original meeting. 26. The cases to which I have referred make it quite clear that the meeting of the 5th May was a part of the meeting of the 21st April and that the meeting was therefore a perfectly regular one. 27. But the defendants who seem to me to have raised every possible contention in the course of what I can onl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learly and definitely declined to allow the office to be used for the purpose of the adjourned meeting. The policy holders therefore selected the Mahajana Sabha Hall. It was the deliberate act of the defendants that caused this change of venue and Mr. Alladi Krishnaswami Aiyar has argued with great force that it does not lie in the mouth of any one who has by his own act prevented something taking place afterwards to take exception to that state of affairs and to use that state of affairs for his own benefit. I think that that argument is a perfectly sound one. It seems to me that it would be a travesty of the law if a person who has deliberately brought about a state of affairs should be allowed to take exception to that state of affairs and use that changed state for his own advantage. Two cases were referred to, which are cases arising out of contract, where the principle of law that a party shall not take advantage of his own wrong or of an event brought about by his own act or omission was discussed. The first case is New Zealand Shipping Co. v. Societe des Ateliers et Chantiers de France (1919) A.C. 1 (H.L.). In that case the respondents contracted to construct a steamer for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... old Mining Co. Limited v. Ward and ten Ors. (1920) A.C. 222 (P.C.) this principle was also dealt with. I think that the defendants cannot be heard to say that the change of venue was an irregularity such as to make the meeting of the 5th May invalid. Quite apart from this I think that this is an objection which the defendants themselves are not entitled to make. It is true that the Articles of Association provide for the meeting being held in the 1st defendant's office, but in what way have the defendants been injured? They have not shown that they suffered any injury whatever by the change of venue. The only persons who might complain - and they have not - are the policy-holders. And, moreover, I cannot see that the provision in the Articles of Association that the meeting is to be held at the company's office is an essential one. So long as the meeting was properly convened and regularly conducted, it does not seem to me to matter very much where the meeting is held. But in any case the first meeting was in fact held in the company's office strictly in compliance with the Articles of Association and I think that it would have been permissible at that meeting when it p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The only part of that Article which it is suggested by the defendants can possibly apply is that part which relates to the policy-holders present not choosing to elect any person. It is true that at the first meeting no directors were elected, but it is perfectly manifest that so far from not choosing to elect Policy-holders' Directors the whole of the efforts of the policy-holders was directed to obtaining a better representation amongst the policy-holders at the election with a view to the candidate who would be the real choice of the policy-holders being elected; and it is clear the directors cannot take advantage of Article 77 and that the appointment of the two directors by the defendants was invalid. 31. There is only one other thing that I desire to say and it is this. I trunk that it is a most deplorable thing that this case was not settled and that it should have been fought out to the bitter end by the defendants. Efforts were made by disinterested persons to bring about a settlement and at one time it did appear that a settlement reasonable and honourable to both parties would result, but nothing came of those efforts. However during the course of Mr. Doraiswami A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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