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Maharaja Exports and anr. Vs. Apparels Export Promotion Council - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtDelhi High Court
Decided On
Case NumberSuit No. 759 of 1984
Judge
Reported in[1986]60CompCas353(Delhi)
ActsCompanies Act, 1956 - Sections 2(11) and 53(2); Code of Civil Procedure (CPC), 1908 - Sections 9
AppellantMaharaja Exports and anr.
RespondentApparels Export Promotion Council
Advocates: Arun Kumar,; S.K. Kaul,; G.L. Rawal and;
Cases ReferredR. Prakasam v. Sree Narayana Dharma ParipalanaYogem
Excerpt:
(i) companies act, 1956 - sections 2(11) and 10 read with code of civil procedure, section 9--court of competent jurisdiction discussed and explained--suit for declaration against the company--where a wrong is done to an individual member he an approach civil court--companies act does not bar the jurisdiction of civil court in matters relating to election of director etc.;(ii) companies act, 1956 - sections 53(2), 171(1), 172(3), and 173 read with section 257--a general body meeting should be called giving 14 days clear notice--service of notice shall be deemed to have been effected 48 hours after the same is posted--however, accidental omission to give notice or non-receipt of notice shall not invalid the proceedings--court is not empowered to extent the period.;(iii) words and.....m.k. chawla, j.(1) the plaintiff mis. maharaja exports through its sole proprietor m/s. sushma gulati has claimed the following reliefs in her .suit for declaration : -.(a) decree for declaration declaring that the impugned notice dated 4-4-1984 issued by the defendant m/s. apparels export promotion council regarding the holding of the 4th annual general meeting of the defendant on 14-5-1984 is illegal, invalid, and inoperative and that no annual general meeting can be held. in pursuance thereof (b) declaring that all the 27 members of the existing executive committee are not entitled to hold the respective offices in view. of the judgment of hon'ble mr. justice s. s. chadha referred .to above; (c) declaring that the 18 members of the executive committee hayed retired by rotation and are.....
Judgment:

M.K. Chawla, J.

(1) The plaintiff Mis. Maharaja Exports through its sole proprietor M/s. Sushma Gulati has claimed the following reliefs in her .suit for declaration : -.

(A) decree for declaration declaring that the impugned notice dated 4-4-1984 issued by the defendant M/s. Apparels Export Promotion Council regarding the holding of the 4th Annual General Meeting of the defendant on 14-5-1984 is illegal, invalid, and inoperative and that no Annual General Meeting can be held. in pursuance thereof

(B) declaring that all the 27 members of the existing Executive Committee are not entitled to hold the respective offices in view. of the Judgment of Hon'ble Mr. Justice S. S. Chadha referred .to above;

(C) declaring that the 18 members of the Executive Committee hayed retired by rotation and are not entitled to continue in office as members of the Executive Committee;

(D) declaring that the 9 members of the Executive Council whose names are mentioned in the impugned notice have automatically ceased tote the members of the Executive Committee 'nd are not entitled to function as such after 14, 15-5-1984;

(E) declaring that all the proxy forms lodged with the council regarding the 4th Annual General Meeting to be invalid and illegal particularly those on the forms other than the official forms;

(F) declaring the 4th Annual General Meeting purportedly held on 14 16-5-1984 insofar as it relates to election of .9 Executive Committee Members who have retired by rotation to. be illegal and invalid.

(2) In order, to understand the true scope of the plaintiff's suit it will be relevant to keep in mind the salient features as given in the plaint. The plaintiff is carrying on the business as manufactures and exporters of ready-made garments of which M/s. Sushma Gulati is the sole proprietor;. that M/s. Apparel Exports Promotion council (hereinafter referred to as Council) is, a public limited company registered under the provisions of the Companies Act 1956' (hereinafter to be referred to as the Act), as per the certificate of incorporation issued by the Registrar of Companies. Delhi and Haryana; that the defendant is also licensed under Section 25 of the Act by the Central Government; that the objects for which the defendant company has been established are given in the memorandum of Association which amongst other things includes 'to promote. advance, increase, develop export of all types of readymade garments excluding woollen knitwear, garments of leather. jute and hemp, to undertake all export promotion measures including appointment of representatives, agents or correspondents in foreign markets to conduct propaganda and publicity'; that the plaintiff is a member of the defendant council as provided under Article 5(a) of the Articles of association; that the membership of the defendant is about 5000; that as per the Articles of Association of the defendant, the Executive Committee is to be elected to manage the affairs of the council; that the Executive Committee can have maximum 30 members besides four government nominated members; that the membership of the Executive committee is on regional basis since the council is an All India Body; that as per the provisions contained in the Articles of Association 3rd of the elected members of the Executive committee will retire by rotation every year and the vacancy so caused shall bellied up after the Annual General Meeting every year; that a member of the Council is entitled to be elected as a member of the Executive Committee; that the Articles of Association of the defendant authorise the defendant to frame rules and procedure for election to the Executive Council that the Council framed certain rules which were however, challenged by certain members through a suit filed in this court being Suit No. 873 of 1981 entitled Pramod Chopra and Others v. Apparel Exports Promotion 'Council (1): that the said suit was ultimately decreed on. 19-5-1983 and the impugn- ed rules were declared to be invalid; that the appeal against the said Single Judge Judgment filed by the council also faded; that as far as the plaintiff understands the Council has not framed any Rules for procedure for election so far, though they were required to do so under the amended Article 48 of the Articles of Association

(3) That on 30-4-1984 the plaintiff received a notice regarding the 4th Annual General meeting of the defendant to be held on Monday the l4th May 1984 at 11 A.M. at Ficci Auditorium, New Delhi to transact the business incorporated in the notice; that though the notice is purportedly dated 4-4-1984, the same is understood and reasonably believed by the plaintiff to have been posted only on 36-4-1984 by the defendant to the various members; that this notice is totally illegal, invalid and malafide for the grounds intentioned in the plaint; that in view of these grounds it is apparent that the 4th Annual General Meeting convened through the impugned notice is illegal, invalid and the defendant cannot be permitted to hold the same. Hence the present suit.

(4) Along with this suit the plaintiff also filed an application (I.A. No. 244811984) under Order 39 Rules 1 & 2 Civil Procedure Code praying for the issuance of an ad. interim restraint order against the defendant from giving effect to the notice dated 4-4-1984 which. is illegal and void and from holding the Annual General Meeting in pursuance thereof.

(5) After the suit was registered and after hearing the learned counsel for the plaintiff on the injunction application S. B, Wad, J. passed the following order cm 11-5-1984 : - 'I.A.. 244811984 It is stated by the counsel for the plaintiff that no Election Rules laying the procedure for the election are framed by the defendant Company. The notice for the Annual General Meeting purported to be issued on 4th April. 1984 is actually issued on 26th April, 1984. Counsel for the plaintiff states that it was received by the plaintiff on 30th 466 April, 1984. The notice was also published in the Economic Times, Bombay on 29th April, 1984 and Delhi on 25th April, 1984. Section 171 of the Companies Act requires that atleast 21 days notice, of the Annual General Meeting, should be given. Prima facie there is a ground for granting ad interim Older restraining the defendant firm from holding the Annual General Meeting on 14th May, 1984. I order accordingly. Notice for 16th May, 1984 dusty to be issued today.'

(6) The plaintiff preferred to serve the defendant with the restraint order only 15 minutes before the start of the Annual General Meeting. Immediately after the service of the restraint order the defendant rushed to the court, filed the reply to the plaintiff's application and obtained the following order on 15-5-1985: 'Having heard the counsel for the parties, I find that an order one way or the other will dispose of the suit itself. The complexity of the matter is as such that a full trial with evidence of both the parties is necessary for the proper disposal of the suit. However,. considering the ' urgency of the' matter, I order that the suit itself be disposed of expeditiously in the month of July, 1984. Since all the arrangements for the election are already made and lot of expenses have already been incurred, I direct that the election A.G.M. shall beheld on 16th May, 1984 at 2 P.M. However, the result of the election shall not be declared till the disposal of the suit'. On the same day the defendants were further directed to deposit with the Deputy Registrar (0) the ballot papers, the proxies and other relevant papers relating to the elections within 2 days after -theA.G.M. is held. The venue of the meeting was also shifted from Ficci Auditorium to Hotel Taj Palace, Sardar Patel Marg, New Delhi. In compliance with the directions of this court the 4th Annual General Meeting has since been held. Subsequently the defendant approached the Division Bench in appeal (F.A.O.(OS) 59 and 60 1984) for the vacation of the order restraining the defendants from declaring the result of the election of the members of the Executive Committee. This appeal was disposed of by the Division Bench Oh 25-5-1984 vide the following order : 'After hearing counsel for the parties we are of the opinion that the old arrangement should continue, but the result of the election shall be declared. The members declared to leave been elected as Directors shall not act till the decision is given by the learned single Judge. The I earned single Judge will hear and decide the matter on the date fixed by him. We are not expressing any opinion at this stage since he has not given any decision on the merits of the controversy. the F.A.O.s are disposed of'. Before the defendant could file the reply the plaintiff was allowed to amend the plaint.

(7) In the written statement the defendant took up a number of preliminary objections inter alias alleging that the present suit of the plaintiff is false, frivolous and vexatious and otherwise the same is the misuse of the process of law; that the alleged disputes fall within the purview of .the Company Court jurisdiction and as such the suit for declaration is not maintainable; that no suit without consequential relief is maintainable; that no suit can be brought in the name of trading name when the same the sole proprietorship firm: that the suit is bad for delay and laches. On merits the defendant admitted the correctness of the various provisions of the Articles of Association under which I [3rd of the elected members of the Executive Committee were to retire at the conclusion of each Annual General Meeting and the vacancies so caused were to be. filled in. The defendant also admitted the filing of the suit by one of the members of the council and the issuance of directions -to the defendant for framing of the rules. In compliance with the directions of the Company Law Board and also the observations made in the judgment of this court in Suit No. 87311981 necessary amendments were carried out, which ultimately resulted in the dismissal of their appeal. The defendant also admitted the issuance of a notice for holding the 4th Annual General Meeting on 14-5-1984 at Ficci Auditorium but denied the fact that the plaintiff received the notice on 30-4-1984. The notice which was posted on 26-4-1984 was strictly in accordance with the provisions of Section 53(2) of the Act and its service must be deemed to have been effected immediately of the expiry of 48 hours from the time of posting, In these circumstances, in law, service Oh the plaintiff has been effected on 28-4-1984 which gave full 16 days notice to the plaintiff whereas she was entitled to 14 days notice. The defendant also denied each and every ground mentioned in paragraph 14 of the plaint which were made the basis for the issuance of notice and holding of the 4th Annual General Meeting as illegal. The 4th Annual General Meeting has already been held. The defendant also took up the objection that not only the suit is mala fide but is also bad for delay and Inches. The plaintiff has been taking active interest in the election of the members of the Executive Committee and has been a party to sign number of pamphlets in this behalf. Even though the notice was allegedly served on the plaintiff on 30-4-1984 the plaintiff intentionally filed the present suit on 11-5-1984 when 12th and 13th May, 1984 were holidays being Second Saturday and Sunday. Even after the ex parte injunction the plaintiff intentionally did not serve the notice on the defendant or. on any of its officers either on 11th, 12th or 13th May, 1984 even though the office of the defendant was open for making the arrangements for the holding of the Annual General Meeting on 14-5-1984. The plaintiff got the service of the notice effected only at about 10.45 A.M on 14-5-1984 when all the arrangements for the holding of the meeting were complete. Under these circumstances the plaintiff has not come to the court with clean hands and is not entitled to the discretionary relief of this account also. It was prayed that the suit which is a mala fide one and has been filed with the only motive of stalling the elections deserves dismissal with special costs.

(8) In the replication the plaintiff controverter the pleas raised by the defendant in the written statement and reiterated the facts as stated in the plaint.

(9) Oh the pleadings of the parties the following issues were faraway:

1. Whether the defendant was enjoined in law to frame fresh rules for holding elections of the defendant council after they were struck down by a judgment of this court?

2. Whether this court has the jurisdiction to try this suit?

3. Whether fourteen days' notice of the proposed 4th Annual General Meeting of the defendant Council was not served oil the plaintiff in accordance with laws?

4. Whether the defendant was bound to hold elections to all the 27 posts of Executive Committee members in view of the judgment of this court in suit No. 873 81. when the Articles of Association and Rules for election of the defendant Council were struck down? In any case, was the defendant enjoined to hold election for atleast 18 members of the Executive Committee as the Annual General Meeting was being held after two years?

5. Whether the delay in the dispatch of the notice shows mala fides and oblique motives on the part of the defendant Council to secure re-election of the retiring members. If so, to what effect?

(6) Whether the list of members as circulated by the defendant Council contained the names of some members from whom certain sums were still payable to the defendant council and its effect

(7) Whether the suit of the plaintiff is bad for delay - and laches and or otherwise the conduct of the plaintiff is such as to disentitle her to any relief in the suit as alleged in paras 13 and 14 of the written statement

(8) RELIEF. Learned counsel for the parties agreed that the evidence in the case be allowed to be led by filing affidavits and the documents. The plaintiff filed her own affidavit while the defendants relied upon the affidavit of Shri S. K. C. Mathur, Secretary of the defendant Council. Later on the learned counsel for the plaintiff agreed to produce the proprietor of the plaintiff for her cross-examination by the learned counsel for the defendant. She was cross-examined on 20-9-1984.

(10) I have heard the arguments of the learned counsel for the parties and with their help gone through the record carefully. My findings on the above issues are as follows : Issue NO. 1: II. The onus of this issue has rightly been placed on the plaintiff. During the course of the arguments the learned counsel for the plaintiff did not press this issue nor did he address any arguments nor referred to the various provisions of the memorandum and articles of association of the defendant firm indicating that the defendants were enjoined in law to frame fresh rules for holding the elections to the- defendant council after the previous rules were struck down by the judgment dated 19-5-1983 of this court in Suit No. 873 1981 titled as Pramod Chopra and others v. Apparel Exports Promotion Council. This issue is, thereforee, decided against the plaintiff.

(12) The objection of the defendants is that as the disputes raised in the suit fall within the purview of the Company Court jurisdiction the present suit for declaration is not maintainable. This objection appears to have been raised only for the sake of raising an objection. Section 10 of the Companies Act defines the jurisdiction 'of the court to entertain the suits in such like matters. The definition of the 'court' in clause (II) of Section 2 and Section 10 of the Companies Act, 1956, dealing with jurisdiction of courts, read together enables the shareholders to decide as to which court they should approach for remedy in respect of a particular matter. Tin's provision does not purport to invest the Company Court with the jurisdiction over every matter arising under the Act. In view of the elaborate provisions contained in the 1956 Act in regard to management and conduct of a company's affairs, including even important internal matters of administration, the scope for interference by the civil court may have become more limited, but the power has not at all been taken' away. It has been rightly observed in a case reported as R. Prakasam v. Sree Narayana Dharma ParipalanaYogem; 1980 Company cases page 611(2) that except in cases where the Companies Act 1956 confers jurisdiction on the Company Court or some other authority like the Central Government or the Company Law Board, either expressly or by implication, all other disputes pertaining to a company are to be resolved through a forum of Civil Court when the dispute are kept on being resolved by them. Where wrong is done to an individual member, he can insist by recourse to a civil suit, on 'strict observance of the legal rules, statutory provisions and provisions in ; the memorandum and articles of association which cannot be waived by a bare majority of share holders'. Similar view was taken in a judgment reported as Panipat Woollen and General Mills Company Ltd. and another v. P. L. Kaushik and others; 1969 Com Cas 349 While interpreting the provisions of Section 9 of the Code of Civil Procedure viz.-a-viz the Companies Act, during the course of the Judgment it was observed as under : 'under Section 9 of the Code of Civil Procedure 1908, Civil Courts have jurisdiction to try all suits of a civil nature excepting suits of which their cognizance is expressly or impliedly barred. Unlike some statutes, the Companies Act does not contain 'any express provision barring the jurisdiction of the ordinary civil courts in matters covered by the provisions of the Act. In certain cases like winding up of companies the jurisdiction of Civil Courts is impliedly barred. Where a person objects to the election of Director and claims a decree for declaration that he was one of the directors, there is no provision which bars the Civil Courts either expressly or by implication from trying such a suit.' In the present suit also besides other reliefs the plaintiff has sought the declaration that all the 27 members of the existing executive committee are not entitled to hold the respective offices in view of the judgment of this court and further that the 18 members of the executive committee which have retired by rotation are not entitled to continue in office as members of the executive committee. The judgment referred to above fairly and squarely applies to the facts of the present case and there is no reason to cast the jurisdiction of this court to entertain the present suit. Under these circumstances this issue is decided m favor of the plaintiff and against the defendants.

(13) This is the most material issue, the decision of which will decide the fate of the parties. Before the relevant facts. are taken into consideration as to whether the plaintiff was duly served with a clear 14 days' notice of the proposed 4th Annual General Meeting of the defendant Council, the relevant provisions of the Companies Act have to be kept in view. Section 171(1) of 1956 Act reads as follows : 'Section 171(1) A General Body Meeting of the Company may be called by giving not less than 21 days notice in writing; (2)....... Admittedly the defendant council fall within the categories specified in clause (6) of Section 25 of the Companies Act. In exercise of powers conferred by this provision the Central Government notified that under Section 171(1) the General Body meeting may be called by giving a notice in writing of not less than 14 days instead of 21 days. The next relevant provision is Section 53(2), It reads as under : 'Section 53(2) Where a document is sent by post

(A) service thereof shall be deemed to be effected by properly addressing, pre-paying and posting a letter containing the document....-...........

(B) such service shall be deemed to have been effected

In the case of a notice of a meeting, at the expiration of 48 hours after the letter containing the same is posted; and

In any other case at the time at which the letter would be delivered in the ordinary course of post;

(14) Section 172(3) lays down that the accidental omission to give notice to or the non-receipt of notice by, any member o other person, to whom it should be given shall not invalidate to the proceedings at the meeting.

(15) Secion 173 requires the company to annex Along with the notice the explanatory statements sought to be considered during the meeting.

(16) It is not disputed that the date of service of notice of the General Meeting and the date of the meeting have to be excluded while counting 14 days, the period of notice prescribed under Section 171 of the Companies Act I he expression 'not less than 14 days' used in Section 171 (as amended by virtue of the Central Government Notification) normally implies notice of 14 whole or clear days, part of the day, after the hour at which the notice is deemed to have been served, cannot be combined with the part of the day before the time. of the meeting on the date of the meeting, to form one day. Each of the 14 days must be a full or a calendar day, so that then notice can be said to be 'not less than 14 days notice'.

(17) With this background let us now revert to the facts as have been brought out in the pleadings and the documents, to determine if the plaintiffs have been served with 14 days clear notice of the annual general meeting of defendant company or not. According to the leared counsel for the plaintiff on 4-4-1984 the meeting of the Executive Committee of he defendant company was called to fix the date of the 4th Annual General Meeting. Before the convening of this meeting all the formalities of carrying out the amendments as directed by the Company Law Board had been complied with. The Executive Committee decided to hold the annual general meeting on 14-5-1984 at 11,00 A.M. in the Ficci, Golden .Jubilee Auditorium. New Delhi. The office of the defendant company was required to send Along with the notice, the business relating to (i) the consideration of accounts, the balance sheets (which in this case was for a period of 2 year) and the reports of the Board of Directors and Auditors; (ii) the declaration of dividend; (iii) the appointment of directors in the place of those retiring and (iv) the appointment of and the; fixation of the remuneration of the auditors. This requirement has admittedly been complied with by the defendant company.

(18) According to the plaintiff the impugned notice even though dated 4-4-1984 was posted to the plaintiff and many other members on 27-4-1984, it was received by the plaintiff on 30-4-1984 as is clear from the postal stamp affixed on the envelop Ex. P-8, which was an officially declared holiday in the ' area where the plaintiff carried on business. It is also alleged that 29-4-1984 was Sunday while 1-5-1984 was again a public holiday, thereforee, it came to the plaintiff notice only on 2-5-1984. This notice did not allow clear 14 days time before the Annual General Meeting and as such is bad and invalid and the annual general meeting cannot be held in pursuance thereof. It is also alleged that even if 48 hours are computed from the date of.' the dispatch of the notice then 29-4-1984 being Sunday has to be excluded and the plaintiff must be deemed to have been served with a notice on the next date. The service of the notice according to the learned counsel is not a mere formality and appears to have been posted on 27-4-1984 with a view to avoid the presence of large number of persons and deprive them of their right of vote and to contest the election for the membership of the. Executive Committee. It is also contended that when a Statute enacts that something shall be deemed to have been done, which in fact and' in truth was not done, the court is entitled and rather bound to ascertain for what purposes and between what persons the statutory fiction is to be resorted to and full effect must be given to the statutory fiction 'and it should be carried to its logical conclusion. If the purpose of the statutory fiction mentioned above is kept in view then, according to the learned counsel it follows, that the purpose of that fiction would be completely defeated if the defendant company intentionally and willfully defaulted in sending the .notices on the date which will deprive most of its members from exercising their statutory duty.

(19) After giving careful consideration to each and every point urged by the learned counsel for the plaintiff during the course of the arguments I do not find any substance in the same. At the outset it may be mentioned that in the prayer clause the plaintiff has not raised any grievance that she was not given 14 days clear notice .of the holding of the meeting. In sub-para (a) of paragraph 20 of the prayer clause a declaration has been sought that the impugned notice dated 4-4-1984 issued by the defendants regarding the holding of the 4th Annual General Meeting of the defendants on 14-5-1984 is illegal, invalid and inoperative and that no Annual General Meeting can be called in pursuance thereof. Ex. P-2 is the notice of the holding of the 4th Annual General Meeting on the 14th May 1984 at 11A.M. at Ficci, Golden Jubilee Auditorium, New Delhi to transact the following ordinary business:

(1) To consider and adopt the audited balance sheets and the Income and Expenditure Accounts of the Council for the years ended 31st December, 1981 'and 1982, Along with reports of the Auditors and the Executive Committee of the Council.

(2) To appoint Auditors of the Council to hold the office from the conclusion of this meeting until the conclusion of the next Annual General Meeting and to fix their remuneration.

(3) To appoint members to the (a) Executive Committee in place of Shri - who retire by rotation and is eligible for reappointment. Admittedly this notice complies with all the requirements of Section 173 of the Companies Act. Prima-facie this notice cannot be said to be illegal.

(20) On the second aspect the facts mentioned in the plaint are to be taken on its face value. In paragraph 14of the unamended plaint the plaintiff alleged that the. impugned notice dated 4-4-1984 was posted only on 26-4-1984 by the defendant to the various members. However, in the amended plaint the plaintiff advanced the date of posting of the notice as on 27-4-1984 which was received by her on 30-4-1984. Even assuming that the impugned notice was issued by the-defendant company on 27-4-1984, even then in my opinion the company has complied with the provisions of Section 171 of the Companies Act. In this case 48 hours will expire on 29-4-1984. Even if we exclude the date of the posting of the notice and the date of the receipt of the notice as per the provisions of clause (b) of sub-section (2) of Section 53 of the Companies Act, even then notice must be presumed to have been served on the plaintiff 14 days prior to the holding of the meeting. In the corresponding provision in 1913 Act the word implied was 'time' at which the notice would be deemed to be delivered in the ordinary course of post. 'Ordinary course of post' in a vast country like ours with many far flung and at places inaccessible distance, where the time taken for delivery of letters varied from place to place induced an element of uncertainty. In order to do away with this state of affairs and to import certainty to such an important matter, as to the length of notice of general. meetings of companies, legal fiction was pressed into service, by indicating in the 1950 Act, that the notice shall be deemed to have been served 48 hours after posting. The words '48 hours' are meant to make the service certain, and to fix the date of service as the date on which the said 48 hours expired. Under these circumstances as already observed earlier the notice issued on 27-4-1984 will expire on 29-4-1984 which is well within the phrase '14 days clear notice'.

(21) This aspect can also be looked into from another angle. Sub-section(3) of Section 172 of the Companies Act lays down that even the accidental omission to give notice to, or the non- receipt of the notice by, any member shall not invalidate the proceedings at the meeting. The 'accidental omission' means that the omission must be not only not designed but also not deliberate. This expression implies absence of intention or deliberate design. The word 'or' appearing in this sub-clause is of great significance. The company has only to prove on record that they have sent the notice to its members on the addresses furnished by them. The non-receipt of the notice under no circumstances shall invalidate the holding of the meeting or the proceedings thereof. In this case it is an admitted case of the parties that the defendant company did send the notice and it in fact was received by the plaintiff. Even the non- receipt as observed earlier would not have made any difference.

(22) At this stage it will be relevant to mention that the learned counsel for the plaintiff is mixing up the service of the notice of the holding of the meeting with the filing of the nomination for the 'membership of the Executive Committee of the defendant company. By virtue of Section 257 of the Companies Act a person who is not a retiring Director shall be eligible for appointment to the office of Director at any General Meeting, if he or some other member intending to propose him has, not less than 14 days before the meeting, left at the office of the company a notice in writing under his hand signifying his candidature for the office of Director or the intention of such member to propose him as a candidate for that office. Mere knowledge of the holding of the meeting is sufficient. The plaintiff has nowhere alleged in the plaint or in her affidavit that she was not aware of the holding of the 4thA.G.M. on 14-5-1984. It is also not alleged that the notice of the meeting was served on her on the night of 30-4-1984 or that she made efforts in securing the signatures of a proposer and that she was not able to contact them. On the other hand the defendants have .placed on 'record the numerous advertisements which has been appearing from time 'to time, in the various Newspapers and in different parts of the country, intimating; the members, to intimate the change in address, if any, latest by 12th April, 1984 and to clear the annual subscription so that they may be' eligible to vote at the forthcoming annual general meeting of the council. Such notices were issued from 5-4-1984 till 15-4-1984. The notices 'for the holding of the annual general meeting on 14-5-1984 were also advertised in the various newspapers from 14-4-1984. The defendant council also cared to publish the list of the nomination which had been received from the members signifying their candidature for the appointment to the office of the defendants in the 4th Annual General Meeting. Further more the plaintiff has been taking active part in the affairs of the defendant council, inasmuch as, is a party to the issuance of posters pamphlets apposing the candidature of Shri Mohanjit Singh and his associates as they are alleged to have committed some mal-practices etc. All these facts go to show that the plaintiff was fully aware of the holding of the 4th Agm on 14-5-1984 and was well within time to have filed her nomination, if she was desirous of contesting the election. It has nothing to do with the notice of the holding of the meeting which too has been held to have been properly served on the plaintiff.

(23) In view of these circumstances, is it open to the court to extend the period of 48 hours in order to give more time to the members enabling them to file the nominations. The simple answer to this query raised by the learned counsel for. the plaintiff is in the negative. The legislature in its wisdom redirect the period of 21 days to 14 days by virtue of sub-section C6) of Section 25 of the Companies Act. The Legislature was also aware of the 14 days notice as contemplated in Section 257 of the Companies Act. It is not desirable for the Courts to say that the period of service of the notice should be reasonable. By doing this the court will be -extending the period which has purposely been limited to minimize the scope of the mischief which used to be created in the holding of the annual general meetings in view of the fact that the plaintiff was fully aware of the date of the meeting prior to the receipt of the notice, the plaintiff cannot come forward and throw the blame on the defendant company. Taking an overall view of the circumstances brought out on record and discussed earlier there is no hesitation for this court to hold that the plaintiff was duly served with 14 days clear notice of the. holding of the 4th Annual General Meeting of the defendant council. This issue, thereforee, decided against the plaintiff. issue No. 4

(24) In order to appreciate the scope of this issue one has only to refer to the various dates admitted by the parties. On 29-10-1981 the third Annual General Meeting was held. On 12-6-1982 notice was issued to the members for the correction of the address etc. so that the 4th Annual General Meeting is held within the stipulated period. One of the members filed an application and obtained the stay of the holding of the Annual General Meeting and for taking steps in this direction, from this court on 28-6-1982. This ad-interim stay dated 25-8-82 was confirmed till the disposal of the suit. The plaintiff ultimately succeeded in the suit and a decree was passed by S. S. Chadha, J. on 19-5-1983. The respondent company preferred to file an appeal before the Division Bench. This appeal was admitted on 8-8-1983 hurt they refused to vacate the injunction. Being not satisfied with the dismissal of their miscellaneous application, the defendant company filed a Special Leave Petition. The order dated 19-5-1983 was stayed by Hon'ble Supreme Court but the court made it clear that it would not have any effect onthe Central Government (Company Law Board) if they proposed to take any steps for the amendment of the Rules. Finally the Company Law Board directed the defendant company to amend their rules in order to bring them in conformity with the Judgment of S. S. Chadha, J. dated 19-5-1983. On 5-1-1984 the defendant company held an extraordinary general meeting and approved the amended rules and immediately thereafter sought the approval of the Central Government. Within thirty days of the Central Government's approval, the Rules were submitted before the Registrar of Companies at Kanpur and got the same approved. After having completed the formalities the respondent company held the Executive Committee meeting on 4-4-1984 and fixed the holding of the 4th Annual General Meeting for 14-5-1984. During this process a period of 2 years has expired inasmuch as the AGMs have not taken place for the year 1982 to 1984.

(25) The contention of the learned counsel for the plaintiff is that the election be not held for all the 27 posts who were to retire after the holding of the third Annual General Meeting in the year 1981, in case the convening of the 4th Annual General Meeting is held to be in order. It is not disputed that the defendant council has on its Board 27 elected members and four Government officials, l/3rd of such Directors have to retire every year by virtue of the provisions of Section 356 of the Companies Act. The plaintiff is not one of the retiring directors. It may be that by virtue of the Judgment of S. S. Chadha,' J. the Rules of the defendant company were held invalid and they were directed to amend the same. At this stage I do not propose to interpret the judgment of S. S. Chadha, J., but the fact remains that it will have prospective effect. The defendant company cannot be held negligent or blamed for not holding the annual general meetings. In fact they 'were helpless in .view of the circumstances created by the filing of the various suits. As per the order sheet dated 15-5-1984, during the pendency of the suit the defendant council was directed to hold the election of the Executive Committee members on 16-5-1984 at 2 P.M. but the result of the election was not to be declared. This order was modified by the Division Bench of this Court wherein the Council was directed to declare the result of the election but the members declared elected were required not to act till the decision of the present suit. It comes to that the 9 members of the executive committee have already been declared elected. It is not denied that the 5th Annual General Meeting has already been held except the election of the Executive Committee members because of the order of the Division Bench. Learned counsel for the defendant states at the bar that immediately after the decision of this case they propose to hold the election of the 9 members for the 5th Annual General Meeting and in the month of February 1985 and they will hold the next Annual General Meeting and. in this way all the 27 members will be declared elected. For the reasons explained above, I am not inclined to issue any directions to the defendant Council for holding the election of atleast 13 members as urged by the learned counsel for the plaintiff because this direction will not only be a harsh one, but will also create lot of complications. The law must take its own course. Under no circumstances the defendant council can be blamed for not holding the Annual General Meeting or electing I/3rd members. At this stage I am not inclined to grant this discretionary relief in favor of the plaintiff. Ordered accordingly.

(26) Learned counsel for the plaintiff in .support of this issue contended that the defendant council acted mala fide and with oblique motive to dispatch the notices for the holding of the 4th Annual General Meeting on a day which will deprive the members for contesting the election for the membership of the executive committee of the. council. According to him if the executive committee of the council had held meeting on 4-4-1984 and decided to hold the 4th Annual General Meeting on 15th May 1984, there was no occasion for them to have dispatched the notices at such a late stage: Their intention obviously is to keep the people in dark about holding of Agm land deprive the eligible members to contest the election.

(27) PRIMA-FACIE none of these arguments has any substance. To start with the plaintiff unfortunately has not named the officer of the defendant company or the office bearers, who could be said to be in league for not dispatching the notices within reasonable time. Mala fides have to be alleged against some person. The defendant in this case is the council. The particulars about-the fraud mala fide or motive are missing. I The general allegations of mala fides motive, however, strong the words in which they are stated may, be, if unaccompanied by particulars are insufficient to amount to an averment of the fraud, mala fide or motive to which any court can fake notice. Even otherwise as observed earlier Section 53(2) of the Companies Act gives the right to the defendant council to serve' the members with the notice of the meeting at the expiration of 48 hours after the letter containing the same is posted. This legal obligation has been duly complied with, by the defendant council. Furthermore as already discussed earlier the council started issuing notices by citations in the various newspapers, throughout India intimating the date of the meeting, requiring the members to furnish their correct addresses and to send their nominations within the statutory period. These publications continued appearing from 5th April 1984 to 15th April 1984. The defendant also started dispatching the letters to individual members supplying information about the holding of the 4th Annual General Meeting. In compliance of the service of the individual notice as well as the publication in the various newspapers, the defendant council was able to correct the list of the. members by 20-4-1984. By this time they also started receiving the nominations for the post of Executive Committee members, the lists of which were published from time to time. While in the witness box even the plaintiff has not led any evidence showing the mala fide motive on the part of the defendant council to secure the re-election of the retiring members, by not sending notices. Unfortunately she also did not mention the name of any person office bearer or the member of the executive committee alleging mala fide intention. The plaintiff having failed ' to furnish the better particulars either in the plaint or in the form of evidence, this 'issue has to be decided against the plaintiff.

(28) Learned counsel for the plaintiff has not pressed this issue and the same is hereby decided against the plaintiff. Issue NO. 7

(29) It is the case of the defendant that the plaintiff even after. having been duly served with the notice giving her clear 14 days, preferred -to file the present suit on 1-1-5-1984 when 12th' and 13th of May 1984 were the holidays of the courts being Second Saturday and Sunday. After having obtained the ad-interim injunction on 11-5-1984 the same was not got served intentionally immediately thereafter. The defendants made all arrangement for the holding of the Annual General Meeting on 14-5-1984. Many members have reached Delhi from distant parts of the country to attend the meeting. The plaintiff intentionally served the notice of the ad-interim injunction at 11 A.M. on 14-5-1984 whereas the meeting was fixed for 11.30 A.M. According to the learned counsel the plaintiff was fully aware of the fact that the office of the defendant council was functioning on 12th and 13th of May 1984, as they were expected to receive proxies, 48 hours before the time of commencement of the Annual General Meeting, as well as were also required to give the inspection of the proxies as per the provisions of the Companies Act, before the closing hours on 13-5-1984. This fact was known to the plaintiff and she was also aware of the name of the counsel for the defendant. The conduct of the plaintiff according to the learned counsel for the defendant, disentitled her to any relief in the suit.

(30) Learned counsel for the plaintiff on. the other hand submits that 11th May, 1984 was a Friday and 12th and 13th being holidays the plaintiff had no other option but to serve the defendant with the ad-interim order on 14-5-1984 which she did in the early hours of the next working day. The defendant cannot impute motive or hold the plaintiff responsible for the delay or laches in the filing of the present suit

(31) On consideration of the material on record in my opinion the defendant has something to say on this aspect, as already observed the plaintiff, not only was served with a notice of the holding of the Agm but she was also aware of the Agm From other sources, including that of publication in various newspapers. In her cross-examination she also admitted that by writing the letter Ex. D-l that Shri Mohanjit Singh had betrayed heir Association (GEA) she meant to say that Mohanjit Singh had .betrayed the Association by his entering into an agreement with another Association of garment exporters, other than the defendant Council. She has also been participating in the affairs of defendant No. I Council by issuing pamphlets and taking up the cause of the members of the Council. If she had any gnevance, the cause of action had arisen immediately after the service of the notice of the holding of the Annual General Meeting. There was no reason for her to have delayed the action and disturb the Annual General Meeting at the last moments thereby causing inconvenience not only to the defendant council but also to the various members who had reached Delhi from distant parts of the country. Even if she had been successful in obtaining the ex parte ad-interim injunction on 11-5-1984, it was her bounden duty to have served the officers of the defendant council on that very day or atleast on the next day, so that the Council may have taken steps either for the vacation of the ex parte ad-interim order or informing its members for not attending the meeting. She was also fully aware of the fact that Shri G. L. Rawal, Advocate is the Retainer ofthe defendant Council and even if she was under a wrong impression that the office of the defendant Council will remain closed on 12th arid 13th May, 1984, an attempt should have been made to serve the Advocate at his residence office. No Explanationn is forthcoming as to why she did not care to take steps in this direction. The only inference that can be gathered is that she had the intention to disturb the annual general meeting and as such she can be held responsible for the delay and. laches for the filing of the present suit which disentitles her to the relief claimed in the present suit. This issue is, thereforee, decided against the plaintiff.

(32) As a result of the above discussion I sec no force in the suit' and the same is hereby dismissed with costs.


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