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Baptist Church Trust Association and anr. Vs. Member, Company Law Board and ors. - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtKolkata High Court
Decided On
Case NumberCivil Rule No. 15142 (W) of 1983
Judge
Reported in[1986]60CompCas381(Cal)
ActsCompanies Act, 1956 - Section 186
AppellantBaptist Church Trust Association and anr.
RespondentMember, Company Law Board and ors.
Appellant AdvocateP.C. Sen and ;S.N. Chowdhury, Advs.
Respondent AdvocateS.B. Mukherjee, ;N.K. Poddar and ;A.P. Agarwala, Advs.
Cases Referred(c) Star Tile Works Ltd. v. N. Govindan
Excerpt:
- dipak kumar sen, j.1. the undisputed facts on record are, inter alia, that the baptist church trust association, petitioner no. 1, in this application (hereinafter referred to as 'the trust association ') was incorporated under the indian companies act, 1913, as a non-trading company on may 27, 1932.2. the relevant clauses of its memorandum and articles of association are as follows :memorandum of association 1. the name of the company is ' the baptist church trust association (hereinafter referred to as ' the association '). 2. the objects for which the association is intituled are :...... (b) to aid and further the work of the baptist missionary society, and the baptist churches in india including any native states in india (hereinafter called 'the said area ')....... (f) to accept.....
Judgment:

Dipak Kumar Sen, J.

1. The undisputed facts on record are, inter alia, that the Baptist Church Trust Association, petitioner No. 1, in this application (hereinafter referred to as 'the trust association ') was incorporated under the Indian Companies Act, 1913, as a non-trading company on May 27, 1932.

2. The relevant clauses of its memorandum and articles of association are as follows :

Memorandum of association

1. The name of the company is ' The Baptist Church Trust Association (hereinafter referred to as ' the association ').

2. The objects for which the Association is intituled are :......

(b) To aid and further the work of the Baptist Missionary Society, and the Baptist Churches in India including any native States in India (hereinafter called 'the said area ').......

(f) To accept property to be held by the association :

(1) for the general purpose of the association and the Baptist Churches, Baptist Unions, Church Unions, Church Councils and Baptist Missionary Society. Articles of association

1. For the purpose of registration, the number of members of the association is declared not to exceed fifty.

2. These articles shall be construed with reference to the provisions of the Companies Act, 1956 (hereinafter referred to as ' the Act '), and the terms used in these articles shall have the same respective meanings as they have when used in that Act.

4. The members of the association shall be the (1) subscribers to the memorandum of association ; (2) such persons not exceeding seven in number as may be nominated by the Baptist Missionary Society, and (3) such other persons, making a total membership including subscriber members and nominees of the Baptist Missionary Society not exceeding fifty in all, as may be nominated by the council of Baptist Churches in Northern India or by such other churches, church or union of churches as may be authorised by a general meeting of the association so as to nominate members, any necessary provisions as to the number of members to be nominated being determined by a general meeting of the association.

5. (a) Beginning from the annual general meeting of 1960, one-third of the members of the association shall retire annually, immediately before each annual general meeting of the association. The committee of management shall arrange the order in which members shall retire, and it shall be the responsibility of the bodies authorised to nominate members to see that nominations and acceptance of membership are duly made and intimated to the secretary of the association and members retiring in accordance with the provisions of the article shall be eligible for re-nomination......

6. The affairs of the association shall be administered by a committee of management referred to in Clause 4 of the memorandum of association. Such committee of management shall consist of the officers and three (3) members of the association.......

9. The officers of the association shall ordinarily be a president, vice-president, treasurer and secretary who together with the three members of the committee of management shall be elected by the association at its annual meeting. Any casual vacancy occurring among the officers of the committee shall be filled up by the remaining officers and committee from the members of the association, but any person so chosen shall retain his office only until the next annual meeting of the association when the vacancy shall be filled up by the association.......

16. (a) The association shall, in addition to any other meetings, hold a general meeting which shall be styled as its annual general meeting at intervals and in accordance with the provisions specified below.

(b) The first annual meeting shall be held by the association within eighteen months of its incorporation.

(c) The next annual meeting of the association shall be called by it within nine months after the expiry of the financial year in which the firstannual general meeting was held ; and thereafter an annual general meeting shall be held by the association within nine months after the expiry of each financial year but so that no more than fifteen months shall elapse between the date of one general meeting and that of the next except in a case where such general meeting is held within such extended time not exceeding six months as may be granted by the Registrar in terms of proviso to Section 166 of the Act.......

18. The officers of the association may, whenever they think fit, and they shall, if required in writing by such number of members as have, at the date of receipt of requisition, not less than one-tenth of the total voting power of all the members having at the date a right to vote in regard to the matter for consideration of which the meeting is to be called, convene an extraordinary meeting. Every such requisition shall express the object of the meeting proposed to be called and shall be left with the Secretary and thereupon an extraordinary meeting shall be convened by the said officers to be held within forty-five days from the date of the receipt of such requisition.......

20. A quorum at a general meeting shall consist of one-fifth of the members of the association.

21. Twenty-one days' notice at least specifying the place and time of meeting, and (in case of special business) the general nature thereof, shall be sent to each member of the association, but non-receipt of any such notice by any member shall not invalidate the proceedings of any general meeting. With the consent in writing of all the members entitled to vote, a meeting may be convened at shorter notice and in any manner they think fit. All businesses to be transacted at the annual general meeting shall be deemed special except the consideration of :

(a) the accounts ;

(b) the annual report of the secretary of the association on behalf of the committee, and

(c) the election of members of committee, auditors and officers.

3. The bodies or organisations which have been authorised by the trust association to nominate members are the Bengal Baptist Union, the Baptist Union of Northern India, the Baptist Church of Mizoram and the Utkal Christian Central Church Council. It is a matter of record that the said bodies or organisations have been nominating members to the trust association without dispute till 1974.

4. The council of Baptist Churches in Northern India (incorporated as a registered society on or about January 28, 1962), though authorised under the articles of the trust association, have not so far nominated any members to the trust association.

5. Ajoy Kumar Sana, petitioner. No. 2, was nominated as a member of the trust association by the Bengal Baptist Union and was elected as the secretary-cum-treasurer of the trust association on November 8, 1974, at the annual general meeting of the trust association.

6. In 1974, disputes arose over the management of the Bengal Baptist Union and in May, 1975, a suit was instituted against petitioner No. 2 and others in the management of the Bengal Baptist Union, being Suit No. 43 of 1975 in the court of the Ninth Subordinate Judge, Alipore. In the said proceeding, an order was passed on December 9, 1975, by the Twelfth Additional District Judge, Alipore, in Miscellaneous Appeal No. 273 of 1975 restraining the defendants in the said suit from disposing of or leasing or letting out the properties of the Bengal Baptist Union without leave of court. From another order passed in Miscellaneous Appeal No. 407 of 1978 on January 25, 1980, by the learned Additional District Judge, proceeding in revision was initiated in this court and on June 12, 1980, an order was passed by this court recording an interim settlement between the parties. In the said order, it was recorded that a particular group will function as the Bengal Baptist Union (reformed). The said suit and the proceedings thereunder are still pending.

7. In the Baptist Union of Northern India, similar disputes arose over management and suits were filed in the courts of Delhi, Agra and Bhiwani. The said suits are pending.

8. So far as the Utkal Christian Church Central Council is concerned, some of the churches constituting the council left the Baptist faith and in or about 1970 joined ' Church Union ' under the Church of North India which does not follow the Baptist faith and is not authorised to nominate members to the trust association. Some of the churches of the said Utkal Christian Church Central Council did not join the Church of North India.

9. It is not in dispute that two rival groups in the Bengal Baptist Union and the Baptist Union of Northern India are running two parallel organisations and that the Utkal Central Church Council has ceased to exist since 1970.

10. The aforesaid disputes in the several nominating bodies were reflected in the management and functioning of the trust association. On February 10, 1976, at the annual general meeting of the trust association for the year 1975, no business could be transacted as there were allegations that petitioner No. 2 as the secretary had inducted a number of non-members at the said meeting. No office bearers were elected at the said meeting and the old committee of management and the office-bearers appointed earlier continued.

11. Petitioner No. 2 attempted to hold another annual general meeting of the trust association, not at the latter's registered office, but at his residence on March 29, 1976. There were allegations that notices of the said meeting had not been sent to bona fide members and that non-members had been invited again. No business could be transacted and there was no election of office bearers. The only decision taken at the meeting was that, in future, notices of meetings should be issued under the joint signatures of the president and the joint secretary of the trust association and that till the office-bearers were duly elected, the urgent and important business of the trust association would be carried on by an ad hoc committee consisting of the president of the trust association, the constituted attorney of the Baptist Missionary Society and petitioner No. 2.

12. The trust association has thereafter been sought to be constituted and represented by two different groups and since 1977, two annual general meetings of the trust association have been held every year, one at the registered office of the trust association and the other by petitioner No. 2 at his residence. Both the groups claim that they have been duly nominating office-bearers of the trust association.

13. The group headed by petitioner No. 2 has filed with the Registrar of Companies an application for change of the registered office of the trust association. Respondent No. 2 has also filed an intimation with the Registrar of Companies for removal of the registered office of the trust association from the residence of petitioner No. 2 to its original registered office.

14. Koshy George, respondent No. 2 in this proceeding, as the secretary and treasurer of the trust association has filed annual return of the trust association under Section 160 of the Companies Act, 1956, up to 1982. Such returns do not appear to have been filed by petitioner No. 2 through his parallel organisation.

15. It appears from record, that some time in 1978, an inspection report under Section 209A of the Companies Act was made by the Additional Registrar of Companies, West Bengal. The Additional Registrar has come to the conclusion that the annual general meetings of the trust association held at No. 44, Acharya Jagadish Chandra Bose Road, Calcutta, the original registered office, on and from February 19, 1977, were irregular as proper notices were not issued for the same and that there was no quorum. The Registrar also found that petitioner No. 2 has continued to be the secretary of the trust association since November, 1974, and meetings called by him at Elliot Road, Calcutta, in 1977, were in conformity with the articles of the trust association.

16. In such background, that trust association some time in June, 1982, made an application before the Company Law Board under Section 186 of the Companies Act, 1956, for, inter alia, the following orders :

(a) An enquiry into the affairs of the trust association to determine, inter alia, the persons who are entitled to its membership as well as those who are entitled to hold office, as members of its committee of management.

(b) To order a meeting of the trust association to be called, held and conducted in such manner as the Company Law Board thinks fit.

17. Petitioner No. 2 opposed the application of the trust association and affirmed an affidavit on or about April 16, 1983, which was filed before the Company Law Board. It was contended, inter alia, by petitioner No. 2 that no order could be passed under Section 186 of the Act inasmuch as it had not been established that it was impracticable to call an extraordinary general meeting of the company. It was further contended that no attempt had been made to convene a meeting of the trust association on requisition by the members in the usual course.

18. It was next contended that the membership of the trust association was admittedly uncertain and in such a case powers under Section 186 of the Act could not be invoked or exercised. The application before the Company Law Board had been made on the basis that there were disputes as regards membership of the trust association. Such disputes could be resolved only in a court of law but not under Section 186 of the Companies Act.

19. It was next contended that the application was wholly mala fide and belated and a dispute which arose in 1976 was being sought to be resolved through Section 186 of the Act.

20. It was next contended that the real dispute was in respect of the annual general meeting convened by petitioner No. 2 in 1976 and that the agenda which was suggested in the application to the Company Law Board were matters to be considered and decided in an annual general meeting and not in an extraordinary general meeting. The Company Law Board had no power or jurisdiction to call an annual general meeting.

21. It was next contended that as suits were pending in different courts, the Company Law Board should not invoke or exercise its jurisdiction under Section 186 of the Act as the reliefs sought for were in issue in the pending suits.

22. It was contended last that there were disputes over the constitution of the different bodies which had the power to nominate members to the trust association. The Bengal Baptist Union and the Baptist Union of Northern India were being run by parallel organisations. It was not opento the Company Law Board to decide which particular organisation of the nominating bodies had the right to nominate members to the trust association.

23. Respondent No. 2 affirmed an affidavit on May 6, 1983, which was filed before the Company Law Board in reply to the aforesaid affidavit of petitioner No. 2.

24. By an order dated December 1, 1983, A.R. Khare, Member, Company Law Board, Eastern Regional Branch, Calcutta, disposed of the application under Section 186 of the Act and gave the following directions :

(a) A general meeting of the trust association will be called.

(b) The said meeting will be conducted by an independent chairman.

(c) Shri Sukumar Bhattacharya, advocate, was appointed the chairman of the meeting.

(d) Notices of the said meeting will be issued to the seven members nominated by the Baptist Missionary Society and the four members nominated by the Church of Mizoram at addresses to be furnished to the chairman by respondent No. 2 in accordance with the procedure as provided in the Companies Act, 1956, and the articles of the trust association.

(e) Respondent No. 2 will submit to the chairman a copy of the memorandum and articles of the trust association well in advance so that the notices can be given to shareholders for the requisite period.

(f) The quorum for the meeting be five persons to be personally present.

(g) The chairman will decide the venue and time of the meeting.

(h) Respondent No. 2 will meet the expenses of holding the meeting and the remuneration of the chairman fixed at Rs. 1,100.

(i) The chairman will submit a report to the Company Law Board within two weeks from the date of the meeting.

(j) The meeting will consider, inter alia,--

(i) The location of the registered office of the trust association.

(ii) Determination of the churches or union of churches empowered to nominate members of the trust association under its articles.

(iii) Determination of the persons entitled to hold the offices of the president, the vice-president, the secretary, the treasurer and members of the committee of management of the trust association and/or persons vested or to be vested with the right to administer and manage the properties of the trust association in accordance with law and the articles.

25. In its said order, the Company Law Board found and recorded, inter alia, as follows :--

(a) The trust association was promoted by the Baptist Missionary Society of London to aid and further the work of the said Society in India.

(b) The trust association held properties of the Baptist Missionary Society of India on trust.

(c) The trust association functioned normally till 1974 and its last audited balance-sheet was filed on June 30, 1974. At the annual general meeting of the trust association held on November 18, 1974, petitioner No. 2 was elected the secretary and treasurer.

(d) In 1974, the trust association had twenty-five members of whom two had been nominated by the Baptist Missionary Association, eight had been nominated by the Bengal Baptist Union, seven had been nominated by the Baptist Union of Northern India, six had been nominated by the Churches of Orissa and two had been nominated by the Churches of Mizoram.

(e) No annual general meeting of the trust association were held for the years 1975 and 1976. In 1976, the annual general meeting which was called could not transact any business.

(f) Thereafter, the trust association started functioning as a divided entity in two groups and on and from 1977, two separate general meetings were held every year. Two rival groups were claiming to represent the trust association and to manage or administer its properties and affairs. Each group contended that the meetings held by the other group were illegal.

(g) There were serious disputes as to where the registered office of the trust association was located and it was not certain as to which was the lawful registered office.

(h) Each of the rival groups contended that it had nominated the office-bearers and members of the committee of management and it was not known as to which set had been duly elected to the committee.

(i) It was also not clear as to who could requisition a future meeting and to whom such requisition should be served and it was doubtful if any meeting convened or held on the requisition of either group would be lawful.

(j) There was no dispute that respondent No. 2 was a member of the trust association.

(k) The application under Section 186 of the Act was held to be maintainable as having been filed by a member of the trust association. There was no delay in submitting this application. Section 186 of the Companies Act did not prescribe any time limit and there could be no question of limitation.

(l) It was not possible nor practicable in fact for respondent No. 2 to submit any requisition to the domestic forum for calling an extraordinary general meeting of the trust association under Section 169 of the Companies Act.

(m) Respondent No. 2 had submitted a list of persons stated to be the lawful members of the trust association with corroborative evidence as also the register of members of the trust association and the letters of acceptance by such members. The Council of Baptist Churches of Northern India through its affidavit affirmed by its secretary on June 8, 1983, had confirmed that the list submitted by respondent No. 2 was the correct list of members.

(n) The separate list filed by petitioner No. 2 without any corroborative evidence on August 27, 1983, after the time prescribed by the Board and after the arguments were concluded could not be entertained.

(o) The application was bona fide and made in the interests of justice as the activities of the trust association were suffering immensely because of the disputes between the two rival groups.

(p) The agenda suggested in the application were of matters to be discussed in a general meeting and not in an annual general meeting.

(q) In the list of members submitted by respondent No. 2, seven had been nominated by the Baptist Union of Northern India, eight had been nominated by the Orissa Churches and four had been nominated by the Churches of Mizoram. The nomination of the said seven members was confirmed by a letter dated April 28,1983, from the Baptist Missionary Society to the Company Law Board. The said letter also confirmed that respondent No. 2 was a constituted attorney of the Baptist Missionary Society of India authorised to nominate members to the trust association on their behalf.

(r) There was no dispute in the Churches of Orissa and Mizorara and affidavits had been filed on behalf of the said Churches confirming their nominations. The chairman of the Baptist Trust of Mizoram, by his letter dated May 16, 1983, had further confirmed their nominations.

(s) The Baptist Missionary Society had an unqualified right to nominate members of the trust association. There were disputes over the nominations by the Bengal Baptist Union and the Baptist Union of Northern India as nominations had been made by rival bodies. It would be for the general members of the trust association to decide as to which particular church or Union of Churches would be authorised to nominate members.

(t) In view of the challenge thrown to the nomination of members by the Orissa Churches, though petitioner No. 2 was unable to prove thatthere were rival bodies in the Orissa Churches, as a matter of abundant caution members nominated by the Orissa Churches should be excluded from the meeting and the eleven persons nominated respectively by the Baptist Missionary Society and the Churches of Mizoram would be entitled to attend the meeting as directed.

26. The present petition was moved by the Baptist Church Trust Association and Ajay Kumar Saha on December 28, 1983, when a rule nisi was issued calling upon the respondents, namely, the Member, Company Law Board, Koshy George, six other members nominated by the Baptist Mission Society, four members nominated by the Mizoram Union of Churches, the Regional Director, Company Law Board ; the Registrar of Companies, West Bengal, and the Union of India, to show cause why appropriate writs should not be issued directing the Member, Company Law Board, to cancel, withdraw or rescind his order dated December 1, 1983, restraining the respondents from giving any further effect or from taking any steps pursuant thereto and also for quashing the said order. An interim order was passed on the same date restraining the respondents from giving effect to or acting in terms of or taking any steps or passing any resolution in the meeting of the trust association proposed to be held on December 29, 1983, on the basis of the impugned order dated December J, 1983.

27. It is contended in the petition, inter alia, that respondent No. 2 had no cause of action for invoking the jurisdiction of the Company Law Board under Section 186 of the Companies Act and that the allegations made against petitioner No. 2 could at best be grounds for proceeding under Sections 397 and 398 of the said Act.

28. It is contended that as the object of the application before the Company Law Board was to resolve the alleged disputes between members and to hand over the management of the trust association to some of the members, the same could not have been the subject-matter of the application under Section 186 of the Act. The deadlock in the trust association, as framed, could not be resolved by the said meeting.

29. In the petition before the Company Law Board, there was no allegation that it was otherwise impracticable to hold a meeting in the domestic forum and no reasons were given as to what prevented respondent No. 2 to requisition a meeting in the usual course.

30. The petition before the Company Law Board of respondent No. 2 as the secretary of the trust association should have been dismissed in limine.

31. No agenda of the proposed meeting was annexed nor any explanatory statement to such agenda included in the said application and, as such, the same was defective.

32. It is contended that the Member, Company Law Board, in passing the impugned order proceeded on the basis that the trust association was promoted by the Baptist Missionary Society and held that the latter had an overriding power of nominating not more than seven members. The said finding and the conclusion were erroneous and not borne out by the memorandum or the articles of the trust association. The power of nomination by the Baptist Missionary Society up to seven members of the trust association could only be exercised when the total strength of membership would be 50.

33. The Member, Company Law Board, while directing the calling of a meeting under Section 186 of the Act, had no authority or jurisdiction to decide as to which of the members would attend such meeting.

34. Without deciding or intending to decide which group legally represented the trust association, respondent No. 1, it is contended, wrongfully restricted the number of members who could attend the meeting.

35. It is contended that the disputes, as to who were the office-bearers of the committee of management or the members of the trust association, could not be settled by calling a meeting under Section 186 of the Companies Act. It is contended that the Company Law Board held wrongly that the annual general meetings of the trust association subsequent to 1974 were all under challenge.

36. The Company. Law Board, it is contended, did not have any authority or jurisdiction to decide as to the correctness or otherwise of the list of members of the trust association submitted by respondent No. 2.

37. The Company Law Board further erred in holding that the Limitation Act did not apply or that there was any delay in making the said application under Section 186.

38. In directing the dispute about the registered office of the trust association to be considered in the said meeting, another error was committed as the same could not be the subject-matter of an extraordinary general meeting except in cases where the registered office was shifted from one district to another or from one State to another.

39. By the impugned order, the control of the trust association, it is contended, has been made over to the Baptist Missionary Society, London, who were a minority.

40. It is contended that the impugned order is illegal, invalid, without jurisdiction and bad on the grounds aforesaid.

41. Respondent No. 2 has affirmed an affidavit on February 9, 1984, which has been filed in opposition to the petition.

42. It is alleged in this affidavit, inter alia, that by reason of the disputes between the two groups who were functioning separately in the name of the trust association since 1977, there has been confusion and in the premises it has not been possible for the trust association to hold any undisputed general or annual general meeting after November 8, 1974.

43. It is not practicable to hold any meeting of the members which can be deemed to be legal in view of the aforesaid. The Member, Company Law Board, it is contended, has recorded the deadlock in the trust association and the impracticability of calling a general meeting.

44. It is alleged that the Utkal Christian Church Council which joined the Church Union in or about 1969 or 1970 ceased to exist thereafter. Presently, there are two Dioceses in Orissa being the Diocese of Cuttack and the Diocese of Sambalpur which have been nominating members of the trust association. Such nominations were received and accepted by petitioner No. 2 for the years 1974 to 1976.

45. It is contended that explanatory statements to the proposed agenda were not required to be placed separately before the Company Law Board.

46. The writ application, it is contended, is bad on account of misjoinder and also for non-joinder of necessary parties and that petitioner No. 2 has no jurisdiction nor authority to implead the trust association as a petitioner. The Company Law Board, it is alleged, has not been impleaded as a respondent.

47. Petitioner No. 2 has affirmed an affidavit on February 28, 1984, which has been filed in reply to the aforesaid affidavit of respondent No. 2.

48. At the hearing, learned counsel for the petitioners reiterated the contentions in the petition. He submitted that the impugned order of the Company Law Board was ex facie erroneous and was liable to be quashed or set aside. He also submitted that the Company Law Board had no jurisdiction to dictate the agenda of the extraordinary general meeting. The decision to allow all the nominees of the Baptist Missionary Society to attend the meeting was without authority or jurisdiction and in any event violated the principles of natural justice inasmuch as the petitioners did not have opportunity to make representation against the alleged nomination confirmed at the very last stage of hearing. The Company Law Board by accepting such nomination had made over the control of the trust association to a minority group.

49. Learned counsel for respondents Nos. 2, 3, 4, 5, 6, 7, 8, 9, 10 and 11 reiterated the contentions raised in the affidavit of respondent No. 2 affirmed on February 9, 1984. He also submitted that on the undisputed facts on record, it was established that it was not practicable to hold any meeting of the members of the trust association lawfully and that theCompany Law Board came to the correct conclusion and has directed an extraordinary general meeting to be called.

50. Learned counsel submitted further that under Section 186 of the Companies Act, while directing a general meeting to be called, the Company Law Board had ample jurisdiction and authority to give all consequential and ancillary directions for the holding of such a meeting. Under the powers conferred, it was open to the Company Law Board to decide as to which of the members would attend the meeting and also what business the meeting would conduct. He submitted that the meeting directed to be called by the Company Law Board was valid and lawful and the decision of the Company Law Board should be sustained.

51. In support of the respective contentions of the parties, decisions were cited at the Bar which are considered hereafter.

(a) Lothian Jute Mitts Co. Ltd., In re [1951] 21 Comp Cas 290. Here, a learned judge of this court considered and construed Section 79(3) of the Indian Companies Act, 1913, which is in pari materia with Section 186 of the later Act, and held that the power conferred on the court under the said section to call a meeting of a company should be exercised with caution and only when it was not practicable to call a valid meeting under the constitution of the company. It was held, in the facts, that where there were serious doubts and controversy as to who were the directors and there was a possibility that a meeting called by any particular group of directors might be invalid, a situation would be held to have arisen where it has become impracticable to call a meeting of the company. The power under the section should be exercised when it cannot be stated with reasonable approach to certainty, or even prima facie, that a meeting called in exercise of the powers contained in its regulations could be valid.

(b) Indian Spinning Mills Ltd. v. Lt. General Madan Shumshere Jung Bahadur Rana, : AIR1953Cal355 . In this case, a Division Bench of this court construed Section 79(3) of the Indian Companies Act, 1913, and observed, inter alia, as follows (at p. 167 of 22 Comp Cas) :

' The meaning of the word ' impracticable ' as used in this section has been considered by my learned brother in the case of Malhati Tea Syndicate Ltd., In re [1951] 21 Comp Cas 323 ; 55 CWN 653. He, following some observations in a decision of the Privy Council, held that the term implies that it is impracticable from a reasonable point of view. The court must take a common sense view of the matter and must act as a prudent person of business. Where the calling of a meeting by requisitionists would lead to endless litigation and where matters might arise for debate and decision which were already the subject-matter of suits, it appears to me that theholding of a meeting would be impracticable. It would be most unlikely to lead to any result and would inevitably cause more litigation and confusion and further embitter the feelings between the parties.' (c) Star Tile Works Ltd. v. N. Govindan, : AIR1959Ker254 . Here, a Division Bench of the Kerala High Court construed Section 167 of the Companies Act, 1956, and held that only in a restricted contingency, where there was a default in holding an annual general meeting in accordance with Section 166 of the statute, power was given under Section 167 to the Central Government to intervene on the application of any member and call for a general meeting of the company to be deemed to be an annual general meeting.

(d) Clive Mitts Co. Ltd., In re [1964] 34 Comp Cas 731 (Cal). Here, it was held by a learned judge of this court that the power of the court under Section 186 of the Companies Act, 1956, to direct a general meeting of the company was wide and extraordinary in nature and should be used sparingly and with great caution. If, for any reason, it was impracticable to hold or conduct a meeting of the company as prescribed by the Act or the articles of the company, the court would exercise its power under the section and order a general meeting to be called.

In the facts of the case, it was held that the articles of the company provided that holders of not less than 1/10th of the paid-up share capital of the company could convene an extraordinary general meeting and it was not shown why it was impracticable to requisition such a general meeting. The court in that case did not interfere under Section 186 of the Act.

(d) Rohtas Industries Ltd, v. S.D. Agarwal [1969] 39 Comp Cas 781. In this case, the Central Government had directed investigation of the affairs of a company under Section 237(b) of the Companies Act. The Supreme Court held that the existence of circumstances on which opinion had to be formed by the Central Government before an investigation would be directed was open to judicial review. In forming its opinion, the Central Government should proceed on the basis of relevant facts and circumstances and not on suspicion nor on extraneous facts.

(e) Ruttonjee and Co. Ltd., In re [1970] 40 Comp Cas 491. In this case, a learned judge of this court considered and construed Section 186 of the Companies Act, 1956, and held as follows (p. 518) : The court would not ordinarily interfere with the domestic management of a company which should be conducted in accordance with its articles.

52. The discretion granted under Section 186 should be used sparingly and with caution so that the court is not made to participate in the internecine squabbles of the company.

53. The expression ' impracticable.' meant impracticable from a reasonable point of view and the court should take a common sense view of the matter and must act as a prudent man of business.

54. Where the meeting can be called only by the directors and there were serious doubts and controversy as to who were the directors or where there was a possibility that one or other of the meetings called by the rival groups of directors might be invalid, the court ought not to expose the shareholders to uncertainties and should hold that a position has arisen which makes it ' impracticable ' to convene a meeting.

55. The court should exercise its powers under Section 186 when, on the facts and circumstances, it can say with a reasonable approach to certainty or even prima facie that a meeting called in the manner in which meetings are ordinarily called under the Act or under the articles would be invalid.

56. The court must be satisfied when a director or a member moves an application under Section 186 that it has been made bona fide in the larger interests of the company for removing a deadlock otherwise irremovable.

57. It is convenient to note here the relevant statutory provisions. Section 79(3) of the Indian Companies Act, 1913, which conferred power on courts to call a general meeting of companies. The said section reads as follows :

' If for any reason it is impracticable to call a meeting of a company in any manner in which meetings of that company may be called or to conduct the meeting of the company in manner prescribed by the articles or this Act, the court may, either of its own motion or on the application of any director of the company or of any member of the company who would be entitled to vote at the meeting, order a meeting of the company to be called, held and conducted in such manner as the court thinks fit, and where any such order is given, may give such ancillary or consequential directions as it thinks expedient and any meeting called, held and conducted in accordance with any such order shall for all purposes be deemed to be a meeting of the company duly called, held and conducted.'

58. The Companies Act, 1956, when promulgated, conferred similar powers on the court under Section 186 thereof. The said section has since been amended and such power was given to the Company Law Board. The section reads as follows :

' Power of Company Law Board to order meeting to be called.--(1) If, for any reason, it is impracticable to call a meeting of a company, other than an annual general meeting, in any manner in which meetings of the company may be called, or to hold or conduct the meeting of the company in the manner prescribed by this Act or the articles, the Company LawBoard may, either of its own motion or on the application of any director of the company, or of any member of the company who would be entitled to vote at the meeting-

(a) order a meeting of the company to be called, held and conducted in such manner as the Company Law Board thinks fit ; and

(b) give such ancillary or consequential directions as the Company Law Board thinks expedient, including directions modifying or supplementing in relation to the calling, holding and conducting of the meeting, the operation of the provisions of the Act and of the company's articles.

Explanation.--The directions that may be given under this sub-section may include a direction that one member of the company present in person or by proxy shall be deemed to constitute a meeting.

(2) Any meeting called, held and conducted in accordance with any such order shall, for all purposes, be deemed to be a meeting of the company duly called, held and conducted.'

59. I proceed to consider the several points of controvery under separate heads.

Locus standi of respondent No. 2 to move the Company Law Board :

The contention of the petitioners has been that respondent No. 2 in his capacity as the secretary of the trust association was not entitled to apply to the Company Law Board and, as such, the application under Section 186 was not maintainable and should have been dismissed in limine.

It has been found by the Company Law Board that there was no dispute that respondent No. 2 was at the relevant time a member of the trust association. The membership of respondent No. 2 was not challenged by the petitioner before the Company Law Board nor has been challenged in the petition before this court. In any event, the Company Law Board is empowered under Section 186 to order a general meeting of a company even on its own motion. In the premises, the contention that the application should have been dismissed in limine by the Company Law Board cannot be accepted.

Delay :

The petitioners have contended that the disputes in the trust association arose in 1974. Long thereafter, in 1982 the application was made before the Company Law Board. The application should not have been entertained on the ground of delay.

The condition precedent for ordering a meeting of a company under Section 186 is the impracticability of calling such a meeting in the usual course for any reason. If such a condition exists, then the Company Law Board can exercise its power and direct the calling of such a meeting. Itis the case of the petitioners that the disputes in the trust association have continued 'since 1974. It is not the case that such disputes came to an end in 1982 and there was no impediment in calling a meeting of the company in the usual course. Therefore, the fact that there have been disputes in the trust association for a long time is of little consequence. The cause of action of the applicant before the Company Law Board would be deemed to Have continued and there can be no question of limitation. The contentions of the petitioner as to delay are, therefore, rejected.

Impracticability :

It has been held by the Company Law Board that it is not practicable to call a meeting of the trust association in the usual course. The grounds on which the conclusion has been arrived at have been found to be, inter alia, that the trust association had become a divided entity and was being sought to be run by two rival groups each of which was seeking to carry on management through its own committee and its own set of office bearers. There was also a dispute as to where the registered office of the trust association was lawfully situated.

It appears to me that there was sufficient material before the Company Law Board to come to a conclusion that calling of a meeting of the trust association through the domestic forum would be impracticable and that any meeting called in the usual course through the domestic forum would be a matter of controversy and confusion and would lead to further litigation and, in any event, would be of doubtful validity.

In cannot be said that such finding and conclusion of the Company Law Board is perverse or not based on any evidence. It also cannot be said that no reasonable man could come to such a conclusion on the evidence on record. The Company Law Board has arrived at its conclusion on cogent grounds which have been laid down in the several decisions of this court cited and noted above and cannot be said to be erroneous. In any event, in proceedings where the petitioners claim writs in the nature of certiorari, this court cannot sit in appeal over the decision of the Company Law Board, review and reappreciate the evidence on record and come to a different conclusion.

The determination of members eligible to attend the meeting called :

The contention of the petitioners is that the Company Law Board wrongfully determined and nominated the members who could attend the meeting which has been directed to be called. It was not within its jurisdiction to decide which of the members had been lawfully nominated and could be present at the meeting. It was also erroneously held by the Company Law Board that the Baptist Missionary Society had an overriding power to nominate seven members.

From the impugned order, it appears that the Company Law Board has sought primarily to ascertain if there were any internal disputes in the nominating bodies who were entitled to nominate members of the trust association. It has been found that in several bodies authorised to nominate members, there were internal disputes resulting in litigation. It was found that the said nominating bodies were sought to be represented by two parallel and contesting groups. The Company Law Board came to the conclusion that any ^nomination of members by such bodies would be a matter of controversy and dispute. Therefore, the Company Law Board accepted the members whose nomination came from bodies which were functioning without dispute and permitted them to take part in the meeting.

The above approach and decision of the Company Law Board, in my view, cannot be held to be erroneous. It was not open to the Company Law Board to go into the internal dispute of the other nominating bodies or resolve the same. The only practical and feasible solution has been prescribed.

The finding that under the articles of the trust association, the Baptist Missionary Society is empowered to nominate up to seven members cannot also be held to be erroneous. The contention of the petitioners that the number of members to be nominated by the Baptist Missionary Society would vary with the total strength of the membership is without substance. On a plain reading of the articles of the trust association, it is quite clear that the Baptist Missionary Society has the unfettered option to nominate up to seven members and this option is not dependent on the number of members to be nominated by the other bodies.

The contention of the petitioners that the Company Law Board has wrongfully exercised authority, assumed jurisdiction and went into the question of correctness or otherwise of the list of members of the trust association submitted by respondent No. 2 is also misconceived. The list submitted by respondent No. 2 is supported by evidence and establishes the nominations. The Company Law Board has only decided as to which of the nominations are undisputed and have permitted the undisputed nominees to attend the said meeting.

The above decision of the Company Law Board, in my view, conies within the four corners of Section

The petitioners have contended that the disputes in the trust association arose in 1974. Long thereafter, in 1982 the application was made before the Company Law Board. The application should not have been entertained on the ground of delay.

of the Act. The said section empowers the Company Law Board to give ancillary and consequential directions in relation to the meeting as considered expedient. The Company Law Board is further empowered to override the operation of the provisions of the Act and the articles of the association of the corporate body if necessary. The decision to allow undisputed nominees to attendthe meeting has obviously been given so that an effective meeting can be held. To allow the disputed nominees to attend the meeting would defeat the meeting.

The contention of the petitioner that by allowing a few members to attend the meeting, control of the trust association has been conferred on a minority group is of little relevance. The trust association is constituted by members to be nominated by different bodies. If some of the nominating bodies cannot function with certainty and make valid nomination because of their internal disputes, they cannot be heard to complain that the other bodies which are free from dispute should be prevented from nominating members who will constitute the trust association.

Agenda of the meeting :

The petitioners' contention is that in the application before the Company Law Board, no agenda of the proposed meeting was annexed nor was there any explanatory statement about the resolution proposed to be passed in the meeting, in spite of which an agenda has been dictated by the Company Law Board in which the meeting has been directed to consider, inter alia, the valid location of the registered office of the association. It is contended that the Company Law Board had no power or jurisdiction to dictate the agenda and in any event a general meeting of the trust association was not entitled to resolve the dispute over the location of its registered office.

In view of the wide language of Section

The petitioners have contended that the disputes in the trust association arose in 1974. Long thereafter, in 1982 the application was made before the Company Law Board. The application should not have been entertained on the ground of delay.

, it appears that the Company Law Board can give all ancillary and consequential directions in relation to the holding of a meeting. Under such powers, in my view, the Company Law Board has the power to direct the corporate body to consider matters as suggested. It does not appear from the impugned order that any agenda has been dictated. It has been left to the chairman to issue notices of the meeting which will no doubt contain suitable agenda.

It also appears that the power under Section

The petitioners have contended that the disputes in the trust association arose in 1974. Long thereafter, in 1982 the application was made before the Company Law Board. The application should not have been entertained on the ground of delay.

of the Act is invoked where a company is not functioning normally and it is not practicable for the company to call a meeting. When the Company Law Board exercises its extraordinary power under the section and directs the calling of a meeting, it necessarily follows that the agenda of such meeting has to be determined by the Company Law Board because such an agenda cannot be decided or finalised through the usual machinery.

It has not been established that the subjects which have been directed to be considered in the proposed meeting are beyond the purview or jurisdiction of such meeting.

Natural justice :

The petitioners have invoked the principles of natural justice to impugn the nominations made by the Baptist Missionary Society and the Churches of Mizoram. Petitioner No. 2, admittedly, has no connection whatsoever either with Baptist Missionary Society or the Churches of Mizoram., The nominations of the Baptist Missionary Society were conveyed through respondent No. 2 who is the constituted attorney in India of the Baptist Missionary Society of London. Such nominations were confirmed by the letter written by the Baptist Missionary Society of London to the Company Law Board.

It is not understood what representations were intended to or could have been made by petitioner No. 2 on such nomination. In any event, no light has been thrown in the present petition as to what was left unsaid. Such contentions of the petitioners are of no substance and are rejected.

For the reasons as above, this application fails. The rule is discharged and all interim orders are vacated. Let the meeting be held as directed by the Company Law Board. There will be no order as to costs.

60. Learned advocate for the petitioners has applied orally for stay of the operation of judgment which has been signed today. I am unable to grant a total stay as prayed for, for the following reasons :

(a) The affairs of the trust association are being conducted by two parallel groups in opposition to each other from two different places. It is not in the interest of the trust association that such state of affairs should be allowed to be continued indefinitely ;

(b) The trust association holds valuable properties in trust which might be in jeopardy if the administration of the trust association is not put in order expeditiously.

(c) There is no personal allegation against any of the members permitted to attend the meeting except, possibly, respondent No. 2.

61. On the above grounds, I grant a limited stay of the operation of the judgment and order as follows :

The meeting will be held as directed by the Company Law Board, the notice whereof will be served on the advocate on record of the petitioners. In the event a new committee of management is appointed in the meeting, the same will function subject to the supervision of the chairman, acting as special officer for twelve weeks. Notice of all meetings of the committee of management will be served on the special officer who will be entitled to attend the said meetings or any of them as he thinks fit. In any event, no decision of the committee of management will be given effect to till it is approved by the special officer. It is made clear that the supervision expected from the special officer will be in respect of finance, properties and assets of the trust association and the special officer will ensure that the same are protected during the interim period. 62. The initial remuneration of the special officer is fixed at 150 gms.

63. Let all parties and the special officer act on a plain copy of this order duly countersigned by an officer of this court.


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