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TMI Blog1924 (7) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 5,95,00,000, while at the end of June 1923 they had gone down to 3,37,00,000 of rupees. It is also in evidence that the Manager of the Bank had found it difficult to carry on the business of the Bank. At this time the Central Bank had a capital of one crore of rupees consisting of 2,00,000 shares of rupees 50 each. In respect of each share Rs. 25 were paid. A Thus, in June 1923, the condition of that Bank was fifty lacs of rupees paid up capital and thirty lacs reserve fund, with deposits amounting nearly to thirteen crores of rupees. It is also in evidence that the market value of the Central Bank shares was Rs 30 and a little over, and the market value of the Tata Bank shares was Rs. 14-8-0 per share. It may be remembered that in respect of the Central Bank shares the shareholders were liable to pay Rs. 25 per share and in respect of the Tata Hank shares the shareholders were liable to pay Rs. 52-8-0 per share. This was the state of the Banks when the negotiations commenced. The result of the negotiations is to be found in the agreement which came to be signed on July 5, 1923, by Mr. Commissariat and the Central Bank of India, Limited. According to that agreement the Central ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the Central Bank of India Limited, which agreement is conditional upon your sanction of the scheme of amalgamation and a copy of the conditional agreement which bears date July 5, 1923, is open for inspection by any member of your company at the registered office. 4. The attention was drawn in the circular to Section 213 of the Indian Companies Act and to the rights of the shareholders under that section and it was pointed out that those dissentient shareholders, who would not like to take up the shares of the Central Bank of India, Ltd., would be paid as provided, i. e., Rs. 15 per share or such amount as may be fixed by arbitration in the manner prescribed under Section 213. It also mentioned that the Central Bank was not bound to proceed with the scheme of amalgamation if more than one-third of the shareholders dissented. These were the materials circulated to the members and they had an opportunity under the terms of the circular to inspect the agreement if they were minded to do so. 5. With reference to this notice it is urged:-- (1) That the interest of the directors in this arrangement has not been disclosed; (2) that the difference of opinion among the di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the directors were in any way placed more favourably with reference to their liability for these debts under the agreement-than they were before the agreement with reference to the Tata Bank. Therefore so far as the suggestion that the notice is bad because the directors' interest or any secret arrangement with regard to the directors' interest has not been disclosed in the notice is concerned, it seems to me that the contention of the appellants must fail for the simple reason that there is no evidence whatever on the point in favour of the plaintiffs. On the contrary there is clear and reliable evidence to the effect that there was no arrangement between the two banks except that disclosed and stated in the terms of the agreement of July 5, 1923. 9. I have so far dealt with the question of the directors' interest which is said not to have been disclosed and also incidentally with the point that there was an undisclosed agreement which should have been stated in the notice. The next point is that the difference of opinion among the directors should have been referred to in the notice. I am quite unable to accept this contention. It is true that apparently ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tata Bank thought it proper to do so, they could have done so. But the fact that they have not done so does not, in my opinion, constitute any defect in the notice, much less such a defect as would invalidate it. The information given in the circular was broadly speaking what the shareholders would require as to how they would stand under the proposed agreement with reference to their interest in the bank. It was made clear to them in the circular that so far as they were concerned they were getting the equivalent of their shares with this added difference that the outstanding liability of Rs. 105 on every two shares would be reduced to Rs. 25. It cannot be said that anything more was necessary. It seems to me that the basis which has been disclosed by Pochkhanawalla in his evidence is merely a sort of rough calculation for the guidance of the Banks But there is nothing on the record to show that that basis was accepted in writing on any occasion. Broadly speaking the basis so far as the Tata Bank was concerned was that all the assets such as they were at the date of this agreement were to be taken over by the Central Bank, subject to their liability to give one share of the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otice and sufficient details were given, which were necessary for the purpose of enabling the shareholders to consider the question. I may state that several cases have been cited with reference to the point of defective notice. I shall mention only Alexander v. Simpson (1889) 43 Ch. D. 139; Kaye v. Groydon Tramways Company [1898] 1 Ch. 358; and Tiessen v. Henderson [1899] 1 Ch. 861. 15. The net result is that where there is any secret agreement or any interest of the directors in the agreement not disclosed in the circular, or in the notice, the Court will view with strictness any omission to refer to it in the notice or in the circular accompanying the notice; and the omission to mention any secret arrangement would constitute a serious defect in the notice But where no secret agreement is proved or suggested and where there is no indication that there was anything to conceal the Court will as far as possible take a liberal view of the terms of the notice and will not upset the proceedings taken on a notice for some defect, which might have been avoided, but which was not avoided on account of some honest mistake. On this point, I think the following observation of Cotton L.J. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he amalgamation is also based upon an incorrect appreciation of the meaning of the word. As regards the meaning of this word it is enough to refer to two cases. In Wall v. London and Northern Assets Corporation [ 1898] 2 Ch. 469, the observations of Lindley M.R. are as follows:-- No very precise meaning can be given to the word ' amalgamate ' when we talk about amalgamating a company with any persons, companies, or firms, and I confess that I am not prepared to put any sharp definition upon the word. I have no doubt that it includes the case put by Lord Hatherley in Higg's case (1865) 2 H. M. 657 and mora recently by Lord Davey in New Zealand Gold Extraction Company (Newberyvantin Process) v. Peacock [1894] 1 Q.B. 622. I do not think it involves the formation of a new company to carry on the business of an old company. I have no doubt it includes that; but I do not think it is confined, or understood to be confined, to that. I do not see how a company as a business transaction can practically amalgamate with persons or companies carrying on business unless the company in some way or other sells its assets as a whole--not for money, for that would be a simple sale-- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at, if it had given notice to the parties that it was intended to pass a resolution giving authority to the liquidators to carry out the arrangement. 25. In the present case we find the resolution both in substance and form fulfilling the requirements of Section 213. It is true that in terms there are no words authorising the liquidators to receive compensation and distribute it amongst the shareholders; but the fact is clear, and to my mind the point is without any substance. 26. The next set of points relate to the meeting of July 19. Four points have been urged with reference to the proceedings at this meeting. First, it is urged that the point of order, Exh. L, was wrongly ruled out of order; secondly, that the amendment moved by the appellant No. 1 (Exh. 0) was wrongly disallowed; thirdly, that the appellant No. 1 wanted to apeak on the resolution after his amendment was disallowed, but in fact he was prevented by a majority of the shareholders from speaking to this resolution, and that as his right of speech is denied to him, the resolution passed at the meeting is vitiated; and, lastly, that the point of order, which he had raised with reference to the validity of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der the English statute. In the absence of any decision to the contrary, I am not prepared to go so far as to say that no amendments could be allowed. It must necessarily depend upon the nature of the resolution and the nature of the amendment, whether it could be or should be allowed by the chairman. Therefore I proceed to consider the second objection with reference to this point. I have already referred to this amendment. It really asks the shareholders to consider that the proposed amalgamation may be modified so as to require the entire values of the properties and assets and capital and liabilities of this company as determined on June 30, 1923, by the Managers and Auditors of this company and the Central Bank of India for the purposes of amalgamation be credited to the capital of the Central ]Bank of India without any deduction whatsoever and with the further proviso that nothing out of the said values be allowed to be carried by way of premium or otherwise to the reserve fund of the Central Bank of India. This amendment goes beyond the proper scope of an amendment which could be considered with reference to the subject matter before the meeting. The subject matter for consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trial Judge has found that after the plaintiff No. 1 was disappointed in his attempt to speak on two occasions, first, as regards the point of order, and, secondly, on the amendment which he moved, he really elected not to speak on the resolution and therefore there was no denial of the right of speech. On this point it has been urged before us on behalf of the appellants that the finding that the appellant No. 1 elected not to speak on the resolution is not justified on the evidence in the case. It is urged that having regard to the temper disclosed at the meeting towards him, whether he was in fact prevented forcibly from speaking to the resolution though he attempted to do so, or whether under the circumstances he made a feeble and courteous attempt, which may be interpreted as an election not to speak, in substance he was prevented from speaking on the resolution. On the evidence bearing on this point, which it is not necessary to discuss in detail, I am satisfied that appellant No. 1 was practically prevented from speaking to the resolution. Even if we accept the evidence of the witness for the defendants on this point that plaintiff No. 1 just appealed to the shareholders ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, we have to consider on the circumstances of this case whether the fact that appellant No. 1 w as not allowed to speak to this resolution is sufficient to justify our setting aside the resolution. On that point after a consideration of the circumstances I have come to the conclusion that it is not sufficient to justify our setting aside the resolution, and I have been influenced by the following considerations. In the case of Parashuram v. The Tata Industrial Bank, Limited I.L.R. (1923) 47 Bom. 915, 25 Bom. L.K. 1083. 30. the question of the right of speech was considered and Mr. Justice Pratt, referring to the English case to which I have referred, held that a shareholder is not entitled to speak at a meeting as much as he pleases, but has a right to be heard in reasonable terms for a reasonable time. In that particular case that view apparently did not help the plaintiff, and the decision was against him. It is to be noted that the plaintiff No. 1 in this case is the same as the plaintiff in that case. It is material to remember that his general attitude with reference to this bank was known to the shareholders. They were entitled to form their own opinion about his attitude ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the chairman regarding the validity of the votes. That point of order was in these terms:-- Pursuant to Article 93 of the Articles of Association of the company I challenge the validity of all the votes tendered for the resolution declared by the chairman as having been carried and under the circumstances the chairman do appoint the day and the time for receiving objections as to the validity of every vote tendered. 32. The initial difficulty about this point in the story of the appellants is that it does not appear on the record as to when it was handed in. The minutes of the meeting, which must be taken as prima facie evidence of what happened at the meeting, contain the following statement -- After the close of the poll the business) of the meeting was resumed and the chairman, before declaring the result of the poll read out to the meeting a, further point of order handed to him by Mr. P.D. Shamdasani challenging the validity of all the votes tendered for the resolution etc., and ruled. it out of order. 33. Though I concede in favour of the appellants that this objection was sufficiently referred to in the plaint, I do not think there is any evidence to show that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inutes of this meeting are marked Exh. Q in the case. The resolution which was adopted at the meeting of July 19 was confirmed and there is no objection so far as this confirmation is concerned. But it is urged that the appointment of the liquidators at the meeting is not valid, because there was an irregularity in accepting the final amendment to the proposal. I have already stated that the proposal to appoint two liquidators was subject to two amendments, which were duly proposed and seconded. The second amendment was lost on a show of hands. A poll was demanded. The poll was taken, but before the result of the poll was declared a new amendment was allowed to be proposed, the demand for poll and the other amendments being withdrawn. It seems to me that it was perfectly open to the meeting to adopt that course; and I doubt whether there has been any irregularity in doing so. Even if there was any irregularity it was a matter for the meeting or the chairman to control and that irregularity has not the slightest effect, in my opinion, upon the validity of the appointment of the liquidators named at that meeting. 36. It is further urged that even if the appointment of the liquidat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsider the question of appointing liquidators. It seems to me that that is quite a correct change to make because, as is pointed out by the Court of Appeal in In re Trench Tubeless Tyre Company, [1900] 1 Ch. 408. the proposed liquidators may be changed at the confirmatory meeting. That is because the appointment of liquidators is not required to be by special resolution, the latter being necessary only in regard to the proposed voluntary winding up of the company and amalgamation under Section 213. 39. I next come to the chairman's ruling as to the amendment proposed by the appellant No. 1. I think that amendment was rightly ruled out of order, because in effect it merely negatived the proposal before the meeting, viz., that the conditional agreement submitted to the meeting should be approved. It is a well recognised rule that an amendment should be affirmative in form, and not merely negative of something already proposed, and be in such a form that a definite decision can be arrived at: of. Crew's Procedure at Meetings, 3rd Edn., p. 111. Thus in the rules laid down for the conduct of business of the Bombay Legislative Council, Rule 37(2), says: An amendment may not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oposed was inadmissible in view of that particular object. I think that at the most all that could be moved was to adjourn the meeting in order to enable the directors to enter into further negotiations with a view to the suggested alteration of the conditional arrangement between the two companies. No doubt in Palmer's Company Precedents, Part I, at pp. 668-9 a reference is made to Wright's case. 1871 L.R. 12 Eq. 331, 341. These remarks at first sight seem to support the propriety of an amendment of this kind, suggesting modifications in the conditional agreement, provided such modifications were not more onerous on the company; but if the report of this particular case be referred to, it will be clearly seen from pages 338, 339 and 340 that the modifications there referred to were not modifications of the actual agreement that was put to the meeting, but modifications, connected with the agreement but in regard to matters which were entirely independent of the consent of the other party to the agreement, for they referred to the second and third resolutions mentioned in that report, which dealt with certain arrangements dependent merely on the approval of the shareholders ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not bona fide find that he would thereby waste their time in bringing reckless charges against the directors and arguing in support of the views contained in his point of order. I think these facts should be taken into consideration in determining whether we should or should not interfere with the resolution on this particular ground. Another point to be borne in india is that appellant No. 1 might have persisted in trying to speak, and if he had done so might possibly have succeeded. Such a result is not unknown in political meetings. Finally we have the fact that he had a further opportunity of putting forward his objections to this agreement at the confirmatory meeting held in August, but he did not attempt to avail himself of that opportunity. I, therefore, agree with my learned brother that this is not a case where we should hold the resolution invalid because the appellant was prevented from speaking. AS regards the objections to the appointment of the liquidators at the meeting in August, the learned Judge below has held that there was an irregularity on the reasoning of the judgment in The Queen v. Roberts (1863) 3 B. S. 495. but, if that case is looked at, it will be s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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