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State of Kerala Vs. West Coast Planters' Agencies Ltd., CochIn and Anr. (02.09.1957 - KERHC) - Court Judgment

LegalCrystal Citation
SubjectCompany;Criminal
CourtKerala High Court
Decided On
Case NumberCriminal Appeal Nos. 67 and 68 of 1957
Judge
Reported inAIR1958Ker41; 1958CriLJ177
ActsCompanies Act, 1913 - Sections 31, 76, 76(1), 76(2) and 133(3); Companies (Amendment) Act, 1956 - Sections 147, 150, 162 and 166; Code of Criminal Procedure (CrPC) , 1898
AppellantState of Kerala
RespondentWest Coast Planters' Agencies Ltd., CochIn and Anr.
Appellant Advocate M.U. Issac, Public Prosecuter
Respondent Advocate Mani J. Meenattoor, Adv.
DispositionAppeals dismissed
Cases ReferredPeermade Tea Co. Ltd. v. Executive Authority
Excerpt:
.....the company in general meeting a balance-sheet and profit and loss account in the same year; the word 'meeting' is thus defined in the shorter oxford dictionary, an assembly of a number of people for entertainment, discussion, or the like',and in black's law dictionary, as 'a coming together of persons; 9. the first answer that occurs to us to this argument is that if sections 147 and 162(iv) of the act contemplate the case of a one-man company, they contemplate also a no-man company, for the reduction of membership below two or seven as the case may be, can as well be to zero as to one. 10. we do not profess to read the mind of the legislature apart from what appears from the words it has used, but it might well be that the legislature thought it unnecessary that the obligations under..........think that the common sense view taken by the learned magistrate is also the true view in law. the word 'meeting' is thus defined in the shorter oxford dictionary, 'an assembly of a number of people for entertainment, discussion, or the like', and in black's law dictionary, as 'a coming together of persons; an assembly. particularly in law, an assembling of a number of persons for the purpose of discussing and acting upon some matter or matters in which they have a common interest.'it would follow that, for a meeting, there must be at least two persons, and that this is the ordinary and natural meaning of the word is recognised in the only two reported cases that have been brought to our notice. in the first of these, sharp v. dawes, (1876) 2 qbd 26 (a), the validity of a call made at a.....
Judgment:

Raman Nayar, J.

1. These appeals by the State against the acquittal of the same accused persons in two different cases raise the question whether there can be a general meeting under Section 76(1) of the Indian Companies Act, 1913, of a Company consisting only of one member. The 1st accused in both the cases is the Company itself, a private company as it happens to be, and the 2nd accused is the managing-director of the Company who, at the relevant time, was its sole member.

In one case the prosecution was for an offence under Section 76(2) of the Companies Act for failure to hold a general meeting in the' year 1953 as required by Section 76(1); in the other, it wag for an offence under Section 133(3) read with Section 131 for failure to lay before the Company in general meeting a balance-sheet and profit and loss account in the same year; and in both the liability depends upon whether Section 76(1) enjoins such a meeting in the case of a one-man company or, perhaps, to put it more correctly, whether Section 76 (1) applies to such a company.

The learned Magistrate who tried the case took what seems to us the common sense view that for a meeting there must be at least two persons, that a man cannot meet himself, and that the general meeting required by Section 76(1) being an impossibility, no liability attached under Section 76(2) or Section 133(3) to either of the accused. In this view he acquitted the accused in both the cases, and hence these appeals.

2. We are inclined to think that the common sense view taken by the learned Magistrate is also the true view in law. The word 'meeting' is thus defined in the Shorter Oxford Dictionary, 'An assembly of a number of people for entertainment, discussion, or the like', and in Black's Law Dictionary, as 'A coming together of persons; an assembly. Particularly in law, an assembling of a number of persons for the purpose of discussing and acting upon some matter or matters in which they have a common interest.'

It would follow that, for a meeting, there must be at least two persons, and that this is the ordinary and natural meaning of the word is recognised in the only two reported cases that have been brought to our notice. In the first of these, Sharp v. Dawes, (1876) 2 QBD 26 (A), the validity of a call made at a meeting of a company purporting to have been held by one share-holder was in question.

The statute, viz., Section 10 of the Stannaries Act, 1869, required that the call should be made at a meeting of the company with special notice, and in pronouncing against the validity of the call on the ground that one man could not hold a meeting within the meaning of the Act, Lord Coleridge, C.J., said 'the word 'meeting' prima facie means a coming together of more than one person. It is, of course, possible to show that the word 'meeting' has a meaning different from the ordinary meaning, but there is nothing here to show this to be the case'.

Mellish. L.J., was more forthright and It would appear that he refused to contemplate a meeting of one person, 'It is clear', he observed, 'that, according to the ordinary use of the English language, a meeting could no more be constituted by one person than a meeting could have been constituted if no shareholder at all had attended.'

3. In the second case, East v. Bennett Brothers Ltd., (1911) 1 Ch 163 (B), Warrington, J., following Sharp v. Dawes (A), and also the decision of Jessel, M.K., in In re, Sanitary Carbon Co., (1877) WN 223 (C), observed that in an ordinary case it was quite clear that a meeting must consist of more than one person.

The learned Judge, however, went on to hold that the word 'meeting' was used in the memorandum of association he was construing in a special sense, and that having regard to the purpose of the particular clause, namely, that the formal consent of the preference share-holders should be obtained before anything was done affecting their rights, the framers of the document, who must have contemplated the possibility of all the preference shares being held by one person, must have used the word 'meeting' in a sense different from the ordinary sense and as including the record, in a formal manner, of the assent of a single person when he happens to be the sole preference share-holder.

He thought that that was one of the cases referred to by Lord Coleridge, C.J., as one in which it may be possible to show that the word 'meeting' had a meaning different from the ordinary meaning. The learned Judge also seems to have thought that the circumstance that in the two cases referred to by him there were several share-holders whose proxies were held by the single share-holder who held the meeting, whereas in the case he was deciding there was only one preference share-holder, made a difference. We agree; but with due respect we think the difference makes the case of a one-man company an a fortiori case.

4. It is to be observed that both Lord Coleridge, C.J., and Warrington, J., were dealing only with civil obligations and that neither was construing a penal statute. Warring-ton, J., in particular, was construing only a memorandum of association of a company, and the degree of latitude he allowed himself is apparent from the question he posed himself, namely, 'whether what the company did was in effect, although not perhaps in terms, within the provisions of the memorandum and articles of association, and, if it was in effect though not in terms, whether there was a sufficient compliance with the memorandum and articles to render the proceedings valid,' although he straightway put it in the different form, namely whether, upon the true construction of the memorandum and articles, the proceedings were not really' and in terms a compliance with them.

5. One thing is clear from both these decisions as also on the high authority of Jessel, M.R., in In re, Sanitary Carbon Co. (C) (the report of which has however not been placed before us) and that is that, according to the ordinary use of the English language, a meeting can no more be held by one person than it can be by none.

6. It is hardly necessary to repeat what has been so often said that the golden rule of construction is that the grammatical and ordinary sense of the words used in a statute should be adhered to unless that would lead to some absurdity or repugnancy or inconsistency with the rest of the statute. Words have to be given their plain, fair and natural meaning where it is not apparent from the scope and intendment of the statute that such a meaning would be inconsistent or would lead to manifold injustice.

It is no more necessary to say that the provisions of a penal statute must be strictly construed, that a man cannot be punished for breach of an obligation of which the words imposing that obligation do not give him clear notice, or to put it somewhat differently, that a man cannot be punished for failing to do, not what the statute on the face of it requires him to do according to the ordinary and natural meaning of the words employed, but according to some meaning that can be read into them by an involved process of reasoning.

No doubt as Maxwell observes (Ch. X, 9th edn.) the rule of strict construction in the case of penal statutes was more rigorously applied in former times, and the tendency of modern decisions, upon the whole, is to narrow materially the difference between what is called a strict and a beneficial construction. The rule of strict construction must yield to the paramount rule that every statute is to be expounded according to its express or manifest intention. Nevertheless the intention to use words in a sense different from their natural and ordinary sense must first be established, and this more strictly in a criminal case.

7. We are told that Section 76 of the Companies Act, in fact the Act as a whole, uses the word 'meeting' in a very special sense as including the case of a single member going to the appointed place and passing resolutions. The argument advanced in support of this view is that in law, there can be a company with only one member although under Section 5 of the Companies Act at least two persons are necessary for forming a private company and seven for a public company, Sections 147 and 162 (iv) contemplate the reduction of the membership to below two.

Therefore, since there can be a company with only one member, all the provisions of the Act, including Section 76, must apply to such a company. The Legislature could not have intended otherwise. There are so many provisions in the Companies Act as, for example, Sections 32 and 131 that depend on the holding of the annual general meeting and many more that depend on statutory or extraordinary general meetings, and having regard to the scope and intendment of the statute, it cannot be that these provisions, with the obligations that they carry, were not intended to apply to the case of a one-man company.

8. So runs the argument, and our attention has also been drawn to Regulations 51 and 52 of the Regulations in Table A of the first schedule to the Act (now embodied in Section 174 of the Companies Act, 1956) which read together imply that a meeting can be held with less than two members.

For Regulation 51 lays down that two members personally present shall be a quorum in the case of a private company and Regulation 52 says that if at an adjourned meeting a quorum is not present, the members present (which covers the case of one member, the plural including the singular, and which, in the case of a private company can be only one) shall be a quorum.

9. The first answer that occurs to us to this argument is that if Sections 147 and 162(iv) of the Act contemplate the case of a one-man company, they contemplate also a no-man company, for the reduction of membership below two or seven as the case may be, can as well be to zero as to one. (Similarly in the case of the regulations, the absence of a quorum of two includes a case where none is present).

That this is in accord with strict legal theory, and that a company does not cease to exist merely because it has ceased to have any members would appear from the following observation in Salmond on Jurisprudence (p. 339, 10th edn.).

'There is no reason why a corporation should not continue to live, although the last of its members is dead.'

By a parity of reasoning a company should be obliged to hold an annual general meeting of its members although it has no member.

10. We do not profess to read the mind of the Legislature apart from what appears from the words it has used, but it might well be that the Legislature thought it unnecessary that the obligations under Section 76 of the Act and under the other sections depending on it, should be imposed on a one-man company. AH these provisions, it. will be noticed, are primarily designed for the protection of the members of a company against those in actual management of its affairs.

They do not appear to be designed so much for the protection of the general public, and that is why a private company, all the members whereof would ordinarily have a hand in the actual management, is exempt from some of the provisions -- see for example Section 77(11) which exempts a private company from the provisions of that section. Where a company consists of only one member he would naturally be in conduct of its affairs, and the Legislature might well have thought it unnecessary to protect him against himself. For the general public dealing with such a company, it was probably thought that provisions like Section 147 and Section 162(iv) would afford sufficient protection.

11. It is also possible that, in framing Section 76, the Legislature lost sight of the fact that there could be a one-man company and proceed on the basis that there would always be two or more members. In any case, the notion of one man calling a meeting of himself, going to that meeting to meet himself, electing himself to the chair, presiding over himself, laying before himself the matters to be considered, and, after having discussed these matters with himself, passing resolutions with regard to them, and, perhaps, as was the case in Sharp v. Dawes (A), proposing a vote of thanks to himself, sounds so Gilbertian that we should think that, unless the words used expressly, or by necessary implication, point to it, the Legislature could not have contemplated such a thing.

12. Such words are, in fact, to be found in the explanation to Section 186(1) (as also in the explanation to Section 167(1) of the Companies Act, 1956) which states that the directions given by the Court under that sub-section may include a direction that one member of the company shall be deemed to constitute a meeting. This we are told, is only declaratory of the law under Section 79(3) of the Act of 1913 as that provision was judicially interpreted.

That might well be so; but even so it clearly implies that in the sense in which the word 'meeting' is used in the Act of 1956 (which cannot be less comprehensive than the sense in which it is used in the Act of 1913, the provisions of the later Act being more far-reaching) there cannot be a meeting of one member of a company. It requires a direction of the Court (or of the Central Government as the case may be) before one member can be deemed to constitute a meeting. This, we should imagine is conclusive against the argument advanced on behalf of the State.

13. We have been referred to the decision of a Bench of this Court in the Peermade Tea Co. Ltd. v. Executive Authority, 1957 Ker LJ 649 (D) as authority for the proposition, with which we have no quarrel, that, if the context requires it, a word must be given a meaning wider than its ordinary or primary meaning.

But that decision which concerns itself with the interpretation of the word 'house' as used in a local administration statute, an ambiguous word which has long outgrown its primary meaning of a building for human habitation and has, especially in the context of rates and taxes, come to include all manner of buildings, has no direct bearing on the present case-

Our attention is, however, invited to the following aphorism of Judge Learned Hand which is quoted in that case, 'It is one of the surest indexes of a mature and developed jurisprudence not to make a fortress out of the dictionary'. We can only observe that it is certainly not the index of such a jurisprudence to make a flood-gate of the dictionary through which can enter any extravagance of the mind.

14. It is said that it was the duty of the company and of the sole surviving member to bring on the register the legal representatives of the deceased members, and that the accused cannot be allowed to take advantage of their own remissness. But we have not been shown any provision of the Act which imposes such a duty; nor are we aware that a legal representative can be compelled to come on the register.

15. The appeals fail and are dismissed.


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