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Sorabji Cursetji Vs. the Scinde and Punjab Cotton Press Co. Ltd. - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtMumbai
Decided On
Case NumberO.C.J. Suit No. 177 of 1906 O.S.
Judge
Reported in(1906)8BOMLR478
AppellantSorabji Cursetji
RespondentThe Scinde and Punjab Cotton Press Co. Ltd.
Excerpt:
.....leaving only one in charge of the affairs of the company. the accounts of the company having been prepared, the question arose as to how and who should pass the accounts. on the director applying to the court for directions.; that three courses were open to the director-;(1) the director can get five members of the company to summon a meeting under section 78 of the indian company's act, 1882.;(2) the director himself can call an extraordinary general meeting : and his act in doing so would be valid under article 71.;(3) the director can move the court to call a general meeting. - - certain shareholders of the company as well as the registrar of the joint stock companies have been threatening proceedings against the directors of the company with respect to the proper..........has doubts as to whether he can sign those accounts and present them to the company or call a general meeting of the company or fill up the vacancies in the board. certain shareholders of the company as well as the registrar of the joint stock companies have been threatening proceedings against the directors of the company with respect to the proper balance-sheet not having been filed.2. the plaintiff, being in this difficult position, has filed this plaint and has taken out the originating summons, which raises the following questions:-1. whether the plaintiff has power to convene an ordinary general meeting of the above named company and to lay before it the annual accounts for the year ending on the 31st of august 1905.2. whether the plaintiff has power to appoint other directors.....
Judgment:

Russell, J.

1. This is a very unusual case. It appears that Sorabji, the plaintiff, is at present the sole Director of the defendant Company, two former Direct ors, namely Bhagwandas Walji and Lakhmidas Walji, having resigned after the month of February 1905. The plaint says that by a Resolution of the Directors of the Company passed several years ago, it was resolved that three members should form a quorum, but that the plaintiff has not been able to find any record of such Resolution, that the accounts of the Company down to 31st August 1905 have been prepared by the persons managing the affairs of the Company arid should have been passed in due course some time ago, but that the plaintiff has doubts as to whether he can sign those accounts and present them to the Company or call a general meeting of the Company or fill up the vacancies in the Board. Certain shareholders of the Company as well as the Registrar of the Joint Stock Companies have been threatening proceedings against the Directors of the Company with respect to the proper balance-sheet not having been filed.

2. The plaintiff, being in this difficult position, has filed this plaint and has taken out the originating summons, which raises the following questions:-

1. Whether the plaintiff has power to convene an ordinary General meeting of the above named Company and to lay before it the annual accounts for the year ending on the 31st of August 1905.

2. Whether the plaintiff has power to appoint other Directors to fill up the vacancies which have occurred in the Board.

3. Whether the plaintiff has power to convened general meeting of the said Company for the purpose of appointing new Directors.

4. If the plaintiff has no power either to appoint new Directors or to convene a general meeting of the Company whether the Court can either appoint such Directors or convene such meeting.

5. What course the plaintiff should adopt under the circumstances set out in the plaint.

3. Besides the Company, the second and third defendants are joined as shareholders defendants on behalf of themselves and all other shareholders of the Company.

4. I have been unable to find any entirely direct authority on the point, but have come to the conclusion that there are three courses open to the plaintiff. The first is under Section 78 of the Indian Company's Act to get five members of the Company to summon a meeting. That section runs as follows :-' In default of any regulations as to voting, every member shall have one vote, and, in default of any regulations as to summoning general meetings, a meeting shall be held to be duly summoned, of which seven days' notice in writing has been served on every member in manner in which notices are required to be served by the Table marked A in the first schedule hereto.

In default of any regulations as to the persons to summon meetings, five members shall be competent to summon the same, and, in default of any regulations as to who is to be chairman of such meeting, it shall be competent for any person elected by the members present to preside.

5. It has been held that the words ' in default of regulations' include not only no regulations at all but also where the regulations are imperative: In re Brick and Stone Company (1878) W.N. 140. See also Boschowe Proprietary Company Limited v. Fuke [1906] 1 Ch. 148.

6. The second course, it seems to me, is that the plaintiff himself can call an Extraordinary General meeting, and his act in so doing would be valid. That course is open to him under Article 71 which says: 'All acts done by any meeting of the directors, or of a committee of directors, or by any person acting as a director, shall, notwithstanding that it be afterwards discovered that there was some defect in the appointment of any such directors or persons acting as aforesaid, or that they or any of them were disqualified, be as valid as if every such person had been duly appointed and was qualified to be a director.'

7. And it seems to me that the case which was cited by Mr. Lowndes, viz. Newhaven Local Board v. Newhaven School Board (1885)30Ch.D.350, is an authority in favour of this course.

8. The third course is that this Court should call a general meeting as is suggested by Mellish L.J. in Macdougall v. Gardiner (1875) l0 Ch. App. 606.

9.The plaintiff must be paid all his costs by the Company. Counsel certified.

10.When the plaintiffs advisers have decided which of the above three courses they will adopt, I shall, if necessary, and on application to me in Chambers, be happy to settle the form in which notice of the proposed meeting should be drawn up;

11. I defer answering the questions till the plaintiff's advisers have decided as above.

12. Questions answered by me on the 20th April 1906, on the summons.

Q. 1. The same answer to Q. 3.

Q. 2. No.

Q, 3. Yes.

Q. 4. Not necessary.

Q. 5. In answer to Q. 3. Directors having been appointed under 3, they will proceed to do the ordinary business.


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