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Kailash Chandra Datta Vs. Sardar Munsif, Silchar - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtKolkata
Decided On
Judge
Reported in(1925)ILR52Cal513
AppellantKailash Chandra Datta
RespondentSardar Munsif, Silchar
Excerpt:
company - meeting of company--shareholders--articles of association--injunction--contempt of court--notice--receiver. - .....under sections 188 and 143, indian penal code, cause to be shown on the 26th of may. on the 13th june the munsif purported to grant sanction to prosecute under sections 188 and 143, indian penal code. on the 23rd of june the petitioner got a certified copy of the order of the 13th june to which i have just referred with a view to prefer an appeal against that order. on the 27th june the munsif came to the conclusion that no order could be made under section 188 of the indian penal code and he accordingly cancelled his order of the 13th june and directed the parties to adduce any witnesses they wanted to call on the 12th july. by the 12th july the munsif seems to have awakened to the fact that this order was also wrong and that he could not on his own motion direct the parties to show.....
Judgment:

Greaves, J.

1. This is a rule seeking to set aside certain proceedings to which I shall presently refer. The facts are as follows: There is a certain insurance company called Arya Insurance Co., Ltd., which has its registered office at Silchar. Apparently disputes had arisen with regard to the management of the company and some time in the year 1922 one Jogesh Chandra Mazumdar, a shareholder in the company, instituted a suit in the Court of the Subordinate Judge for a declaration that certain persons were no longer directors of the company. In the course of the suit an application was made for the appointment of a Receiver to carry on the business of the company and an order was made appointing a Receiver who thereupon took charge of the business of the company. Then ultimately the suit was decreed and a declaration was made to the effect that the defendants had ceased to be directors of the company. On the 16th April 1924, the Subordinate Judge directed the Receiver to hold a meeting of the shareholders to pass accounts and deal with other matters. On the 28th April in the same year the Receiver issued a notice calling a meeting of the Company on Sunday the 18th May at 8-30 in the morning at the registered office. On the 16th May the same gentleman who had sued in the Court of the Subordinate Judge instituted a suit in the Court of the Sadar Munsif at Silchar for a declaration that the petitioner before us and certain other persons were not competent to act as shareholders of the Company and that their shares were invalid. No injunction was asked for in the plaint, but a petition was presented to the Munsif with the plaint asking for a temporary injunction restraining the petitioner and the other defendants from acting as shareholders of the Company. No notice was given to the petitioner. Bat one of the shareholders sought to be restrained happened to be a pleader in the Court of the Sadar Munsif of Silchar: and then and there he was asked verbally to show cause on the following day. On the following day, that is the 17th May this pleader shareholder apparently showed cause before the Munsif and the Munsif passed 'an injunction in a somewhat curious form not restraining the shareholders in question from voting at the meeting which would have been the natural order to make but restraining the Company who was defendant No. 22, from holding a meeting until further order. The Receiver appointed in the Court of the Subordinate Judge was not a party to the suit in the Munsif's Court, but notice was given to him for his guidance. The other defendants who did not appear on that day and who had not been served were directed to show cause on the 9th June. The order for injunction was not served upon the petitioner before us. The order apparently was hung up on the door of the registered office of the Company on Sunday morning. At 8-30 A.M., the hour fixed for the meeting, the door of the registered office of the Company was found closed by those shareholders who came there to attend the meeting. On the same day, the 18th of May, the petitioner and some other shareholders, who came to attend the meeting called for the morning of the 18th, proceeded to a private house near by and held a meeting whereby they purported to appoint directors and sent a copy of the resolution which they purported to pass to the Receiver and to the Subordinate Judge. On the 19th May the Receiver reported the matter to the Munsif. On the 21st May the Munsif issued orders on the persons present at the meeting held at the private house on the 18th May to show cause why they should not be prosecuted under Sections 188 and 143, Indian Penal Code, cause to be shown on the 26th of May. On the 13th June the Munsif purported to grant sanction to prosecute under Sections 188 and 143, Indian Penal Code. On the 23rd of June the petitioner got a certified copy of the order of the 13th June to which I have just referred with a view to prefer an appeal against that order. On the 27th June the Munsif came to the conclusion that no order could be made under Section 188 of the Indian Penal Code and he accordingly cancelled his order of the 13th June and directed the parties to adduce any witnesses they wanted to call on the 12th July. By the 12th July the Munsif seems to have awakened to the fact that this order was also wrong and that he could not on his own motion direct the parties to show cause on the 12th July and accordingly on that date a petition was presented by the plaintiff for leave to proceed against the present petitioner in contempt proceedings. Apparently leave was given on that petition. The order which is now sought to be set aside is the order of the 27th June 1924 to which I have just referred.

2. These are the facts and one has only got to state them to see that there has been error at every stage in these proceedings. It seems to me sufficient to say that the order of the 27th June 1924 cannot stand on the ground that the meeting that was held on the 18th of May was not a meeting of the Company and there was not therefore a breach of the injunction of the 17th, May even assuming that that order was properly passed and even assuming that it was not necessary to-serve it on or to give notice to the petitioner before proceedings against him in contempt could be taken. That I think is, really sufficient to dispose of the matter.

3. There are proper ways in which a meeting of a, company can be called either by the directors in accordance with the provisions of the Articles of Association or by the shareholders on requisition also in accordance with the provisions of the Articles of Association. There is only one other way of which I know, apart from any special Article of Association, that a meeting of a company can be called and that is by a direction of a Court to the Liquidator in winding up proceedings. The mere fact that certain persons who happened to be shareholders of the Company met together at a private house and purported to pass resolutions appointing directors and so on does not make that a meeting of the Company. For a meeting to be a meeting of the Company it must be a meeting convened in one of the ways to which I have referred and convened strictly in accordance with the Articles: of Association.

4. The result is that the order of the 27th June 1924 was wrong in toto and there was no breach of that order as no meeting of the Company was held on the 18th of May 1924 as the Munsif seems to have thought.

5. It is not necessary for the purposes of this Rule to go into the various irregularities that are disclosed on the facts that I have stated. But I must say that it is the first time that I have heard of a Court assuming jurisdiction to appoint a Receiver to conduct the business of a company unless the Receiver is appointed in a debenture-holders' action when the business and assets of the company have been charged with payment of the claims of the debenture-holders. Apart from that in my opinion there is no jurisdiction in a Court to appoint a Receiver of a Company. If it is necessary to protect the assets of a company other means must be sought which are provided by the provisions of the Companies Acts.

6. In the result we make the Rule absolute. The plaintiff opposite party must pay the costs of this Rule.

7. Chakravarti J. I agree.


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