Judgment:
Prakash Tatia, J.
1. The present appeal is arising out of the order dated 5.2.2001 passed by the Additional District Judge No. 2, Udaipur in Civil Misc. Case No. 6/2001 (16/2001), by which application for injunction of the plaintiff-appellant was dismissed by the court below.
2. The facts of the present case are that the plaintiff-appellant filed a suit for declaration and injunction against the defendant-respondent Bank alleging therein that the defendant-Bank is working since last 50 years and having about 300 branches in main cities of entire India. Its registered office is situated at Udaipur in Rajasthan and the defendant-Bank is a company registered under the Companies Act.
3. The plaintiff submitted that the plaintiff is holding 100 shares of the defendant-Company. The defendant-Company decided to offer a right issue for which a letter of offer was issued on 20.3.1999 by which total 4,48,55,480 equity shares were to be issued having value of Rs. 10/- each share with a premium of Rs. 5/- per share. As per the decision of the defendant-Company, each right share to be issued with one detachable warrant which will entitle the holder thereof to apply and to be allotted one ordinary share of Rs. 10/- within 12 to 18 months at a discount of 25% of average market price of last 6 months.
4. As per the terms and conditions of the letter of offer, per share, the plaintiff since applied in the right issue, he was offered 250 shares and plaintiff applied for additional 50 shares which all were allotted to the plaintiff. Therefore, the plaintiff, at the time of filing the present suit, was having original 100 shares and 500 shares which were allotted to the plaintiff.
5. According to plaintiff, in accordance with the provisions of the Companies Act, for conversion of the share warrants into shares, a resolution was required to be passed by the share holders of the Company and the defendant-respondent issued a notice dated 6.1.2001, according to which extraordinary general meeting of the share-holders of the defendant-respondent Company was to be convened at Indian Merchants Chambers, Balchand Heerachand Hall, Fourth Floor, I.M.C. Road, Church Gate, Mumbai.
6. According to plaintiff, there are about 32000 shareholders of the defendant-Company, out of which about 22,000 shareholders are from the Rajasthan and in view of the above notice dated 6.1.2001 if the meeting of the Company will be convened at Mumbai, it will be illegal and will also cause great hardship to the plaintiff and other shareholders. The plaintiff, therefore, aggrieved against the holding of the above meeting at Mumbai in pursuance of the notice dated 6.1.2001, filed the present suit for declaration to the effect that it may be declared that the defendant-respondent has no right to convene extraordinary general meeting of the shareholders of the Company in pursuance of notice dated 6.1.2001 at Mumbai and it may also be declared that the defendant-respondent has no right to convene the meeting at a place other than the registered office of the defendant-Company or in the city town or village where the registered office of the company is situated. The plaintiff further sought relief of decree for injunction restraining the defendant-Company from convening meeting at Mumbai on 6.2.2001.
7. The grounds for challenge raised by the plaintiff in his plaint are mainly two folds. One is that as per Sub-section (2) of Section 166. of the Companies Act annual general meeting of the share-holders can be held only at the registered office of the Company or at some other place within the city, town or village in which the registered office of the company is situate. In addition to above, the plaintiff-appellant in para 10 of the plaint stated that, as per Section 166 of the Companies Act, any meeting of the share holders of the Company including extraordinary general meeting can be held at registered office of the Company or within the city or town where the registered office of the Company is situate. Second ground of objection in the plaint was that holding of the meeting at Mumbai will cause hardship to 32000 share-holders and since the meeting is important one, the hardship is much more grave. The plaintiff-appellant also submitted that the meeting is being convened at Mumbai to give benefit to one Shri P.K. Tayal Chairman of the Bank and his persons. The plaintiff further submitted that some of the shareholders of the Company are having even only 10 shares, 20 shares or 50 shares and they will have to go to Mumbai to attend the extraordinary general meeting. According to plaintiff, in last 50 years from incorporation of the defendant-Company, none of the annual general meeting or extraordinary general meeting was held outside of Udaipur.
8. The plaintiff also filed an application under Order 39 Rules 1 and 2 of the Code of Civil Procedure for seeking ad-interim injunction against the defendant from holding extraordinary general meeting on 6.2.2001 at Mumbai, outside from the city of Udaipur.
9. The defendant-respondent submitted a detailed reply to the application moved under Order 39 Rules 1 and 2 of the Code of Civil Procedure by the plaintiff and submitted that the decision to convene the meeting was taken by the Board of Directors on 6.1.2001. Notice to that effect was issued on 9.1.2001 by U.P.C. whereas the suit was filed on 2.2.2001. Therefore, the application deserves to be dismissed only on the ground of delay and the plaintiff is not entitled for any equitable relief of injunction.
10. The defendant-respondent further submitted that as per Article 74 of the Articles of Association of the Company, the meeting can be convened at any place as decided by the Board of Directors and extraordinary general meeting of share-sholders of the Company is convened as per Section 169 of the Companies Act. The defendant further submitted that out of 32000 shares-holders, only 887 share-holders are from Udaipur City. According to reply of the defendant, out of total share-holders, 70.85% share are with the residents of Mumbai whereas only 0.634% shares are with the residents of Udaipur. Therefore, the decision was in the interest of the shareholders so that large number of shareholders may attend the extraordinary general meeting. It was also stated that as per the directions of the Reserve Bank of India which were issued under the Banking Registration Act, the Bank is required to bring capital reserve equity ratio, upto 9% which is 6% at present and, therefore, capital reserve is required to be raised by Rs. 45,00,00,000/- and it is stated that in case of any interim order, it will affect the right of 31,999 shares-holders and it will affect the realisation of Rs. 45,00,00,000/- to the Company.
11. It is also stated in the reply that the plaintiff earlier filed two suits No. 18/1999 and 20/1999 before the Company Law Board which were withdrawn by the plaintiff and the plaintiff, with some other purpose and to obstruct the working of the defendant-Company filed the present application for injunction. It is further stated that the plaintiff is not going to suffer any irreparable injury by convening meeting at Mumbai on 6.2.2001. According to defendant, by this decision, the share-holders will be benefited and financial position of the Company will be stronger.
12. In rejoinder filed by the appellant-plaintiff, it is submitted that Articles 73 and 74 of the Articles of Association of the defendant-Company, are in violation to Sections 166 and 169 of the Companies Act and therefore they are illegal null and void. In rejoinder it is further submitted by the plaintiff- appellant that Section 166 of the Companies Act is applicable whereas Section 169 of the Companies Act which is for extraordinary general meeting has no application.
13. After hearing the arguments, the trial court, by impugned order dated 5.2.2001, dismissed the injunction application of the plaintiff-appellant. It is relevant to mention here that the injunction application was dismissed on 5.2.2001, a day before the date of meeting to be held on 6.2.2001 at Mumbai. The present appeal was filed on 19.2.2001 and an ad-interim order was passed by this Court on 23.2.2001 restraining the defendant- Company from taking any step in furtherance to the decision taken in the meeting dated 6.2.2001. At the request of both the parties, on 19.3.2001 and subsequent dates, this appeal was heard finally.
14. The learned Counsel for the appellant vehemently submitted that the order passed by the court below dated 5.2.2001 is absolutely illegal, perverse and hence deserves to be set aside. The learned Counsel for the appellant also submitted that the trial court has not even dealt with the points which were raised by the appellant.
15. The learned Counsel for the appellant, in support of his arguments submitted that it is an admitted fact that the Company's registered office is situated at Udaipur in the Rajasthan and it is also an admitted fact that since last 50 years from the time of incorporation of the defendant-Company all the meetings were held at Udaipur City only, but, now to give benefit to one Shri P.K. Tayal Chairman of the respondent- Company and men of Shri Tayal, the meeting being convened at Mumbai so as to deprive the plaintiff to attend the meeting and also with an object to prevent the large number of share-holders from attending the meeting.
16. The learned Counsel for the appellant further submitted that, as per Sub-section (2) of Section 166 of the Companies Act, annual general meeting of the share-holders of the Company can be held at the registered office of the Company or at some other place within the City, town or village in which the registered office of the Company is statute and, therefore, there is a clear breach of statutory provisions by the defendant-Company.
17. According to the learned Counsel for the appellant, Articles 73 and 74 of the Articles of Association of the defendant-Company are void being in violation to Sections 166 and 169 of the Companies Act. The learned Counsel for the appellant further relies upon Section 9 of the above Act. Sub-Clause (b) of Section 9, according to the learned Counsel for the appellant, specifically provides that any provision contained in the memorandum, articles, agreement or resolution shall, to the extent to which it is repugnant to the provisions of this Act, is void and when there is a specific provision of holding meeting at registered office in view of Sub-section (2) of Section 166 of the Companies Act, Article 74 permitting discretion of the Board of Directors to decide the venue of the meeting is void.
18. According to the learned Counsel for the appellant, the meeting which is convened on 6.2.2001 is not convened Under Section 169 of the Companies Act because of the fact that the meeting Under Section 169 of the above Act can be convened only when there is a requisition from the share-sholders of the Company which will not be less than l/10th of share-holding with the persons requisitioning the meeting and it is submitted by the learned Counsel for the appellant that there is no requisition of the share-holders of the Company to convene the extraordinary general meeting of the Company.
19. The learned Counsel for the appellant to substantiate his arguments, referred Sub-section (2) of Section 166 of the Companies Act, which reads as under:
Section 166. Annual general meeting: -
(1)...
(2) Every annual general meeting shall be called for a time during business hours, on a day that is not a public holiday, and shall be held either at the registered office of the company or at some other place within the city, town or village in which the registered office of the company is situate:
Provided that the Central Government may exempt any class of companies from the provisions of this sub-section subject to such conditions as it may impose:
Provided further that-
(a) a public company or a private company which is a subsidiary of a public company, may by its articles fix the time for its annual general meeting and may also by a resolution passed in one annual general meeting fix the time for its subsequent annual general meetings; and
(b) a private company which is not a subsidiary of a public company may in like manner and also by a resolution agreed to by all the members thereof, fix the times as well as the place for its annual general meeting.
20. It is further relevant to refer relevant sub-sections of Section 169 which read:
169. Calling of extraordinary general meeting on requisition.--(1) The Board of Directors of a Company shall, on the requisition of such number of members of the company as is specified in Sub-section (4), forthwith proceed duly to call an extraordinary general meeting of the company.
(2) The requisition shall set out the matters for the consideration of which the meeting is to be called, shall be signed by the requisitionists and shall be deposited at the registered office of the company.
(3) The requisition may consist of several documents in like form, each signed by one or more requisitionists.
(4) The number of members entitled to requisition a meeting in regard to any matter shall
(a) in the case of a company having a share capital, such number of them as hold at the date of the deposit of the requisition, not less than one-tenth of such of the paid-up capital of the company as at that date carries the right of voting in regard to that matter;
(b) in the case of a company not having a share capital, such number of them as have at the date of deposit of the requisition not less than one-tenth of the total voting power of all the members having at the said date a right to vote in regard to that matter..
21. On the basis of above submissions, the learned Counsel for the appellant submitted that there is a clear violation of the statutory provisions, namely, Sub-section (2) of Section 166 of the above Act, by the defendant-respondent-Company in convening the meeting at Mumbai and the meeting can be held only at Udaipur. Therefore, according to the appellant, there is a strong prima facie case in his favour.
22. I may now refer to Section 9 of the Companies Act which reads as under:
Section 9 Act to override memorandum, articles, etc.--Save as otherwise expressly provided in the
(a) the provisions of this Act shall have effect notwithstanding anything to the contrary contained in the memorandum or articles of a company, or in any agreement executed by it, or in any resolution passed by the company in general meeting or by its Board of Directors, whether the same be registered, executed or passed, as the case may be, before or after the commencement of this Act; and
(b) any provision, contained in the memorandum, articles, agreement or resolution aforesaid shall, to the extent to which it is repugnant to the provisions of this Act, become or be void, as the case may be.
23. According to the appellant, the Act has its overriding effect over all the provisions contained in the memorandum, articles, agreement or resolution to the extent to which it is repugnant to the provisions of this Act and it was further submitted by the learned Counsel that part is void. Article 74 of the Article of Association reads: Act which reads:
74. The Directors may, whenever they think fit and they shall, on the requisition of the holders of not less than one- tenth of the issued share capital of the Company upon which all calls or other sums then due have been paid forthwith proceed to convene an Extraordinary General Meeting of the Company and in the case of such requisition the provisions Of Section 78 of the Act shall apply. The provisions of Clause (a) of Sub-section (2) of Section 79 of the Act for the calling of a meeting by two or more members holding not less than one-tenth of the total share capital paid up, shall not apply.
24. In reply to above submissions, the learned Counsel for the respondents submitted that the plaintiff cannot be permitted to travel beyond the pleadings which he has raised in his pleadings in the plaint. The learned Counsel for the respondents, for Which, invited my attention to the pleadings in the plaint and submitted that a bare perusal of the reading of the plaint it is clear that the plaintiff was fully aware that there can be an annual general meeting and there can be an extraordinary general meeting. The plaintiff, in his plaint, specifically at a number of places, admitted that the meeting which was sought to be convened in pursuance of the notice dated 6.1.2001 was extraordinary general meeting and shown his consciousness about the annual general meeting and extraordinary general meeting referred in various paras of the plaint including para 10 wherein the plaintiff submitted that as per Section 166 whatever meeting is convened including annual general meeting can be held only at registered office or any place in the city, town or village where the registered office of the Company is situated. In para 11 of the plaint, the plaintiff further mentioned that despite the clear provisions of Section 166 of the Companies Act, the defendant- Company is convening the extraordinary general meeting in pursuance of the notice dated 6.1.2001.
25. The learned Counsel for the respondent further pointed out that the total relief claimed by the plaintiff in the plaint is with respect to the extraordinary general meeting and sought relief of declaration with respect to the extraordinary general meeting in pursuance of notice dated 6.1.2001 and there is no pleading to the effect that the meeting which was going to be held on 6.2.2001 was annual general meeting. Faced with this situation, the learned Counsel for the appellant submitted that the objection was raised in the rejoinder in this respect.
26. The learned Counsel for the respondent further submitted that Articles 73 and 74 are not under challenge in the suit and Section 166 of the Companies Act applies only to the annual general meeting and not to the extraordinary general meeting. According to the learned Counsel for the respondent, annual general meeting is required to be held within 15 months of preceding annual general meeting of the Company. It is also provided that the Company may hold its first annual general meeting within a period of not more than 18 months from the date of its incorporation and if such meeting is held within that period, it shall not be necessary for the Company to hold any annual general meeting in the year of its incorporation or in the following year.
27. The learned Counsel for the respondent vehemently submitted that Section 291 of the Companies Act empowers the Board of Directors to exercise all powers and to do all such acts and things as the Company is authorised to exercise and to do and it is also submitted by the learned Counsel for the respondent that Section 166 and Section 169 are the source of powers of the Board of Directors to convene the extraordinary general meeting. The annual general meeting is an obligatory meeting which is required to be held within the specified period as provided Under Section 166 and meeting Under Section 169 is also an obligatory meeting which can be convened only on requisition if made by the share-holders having share-holding of l/10th of paid- up capital of the Company and in case the Board does not convene the meeting as provided under Sub-sections of Section 169, the meeting may be called even by the requisitionists themselves as provided in Sub-section (2) Section 169 of the Companies Act. Therefore, the above provision of Section 169 is only a provision to safeguard the interest of the minority share-holders and it is not the only provision in which extraordinary general meeting can be requisitioned.
28. The learned Counsel for the respondent gave few instances to substantiate his submission that extraordinary general meeting can be called by the Board of Directors and this power vests in the Board of Directors as recognised by Section 291 of the Companies Act and, in case such power is held to be not available to the Board of Directors, then no Company can work. The Company is required to take decision and, therefore, Section 291 specifically says that the Board of Directors of Company shall be entitled to exercise all such powers and to do all such acts and things as the Company is authorised to exercise and do.
29. Article 47 says that all general meetings other than annual general meetings shall be extraordinary general meetings.
30. It was further submitted by the learned Counsel for the respondent that While enacting Article 48 the legislation was fully aware of Sections 166 and 169 of the aforesaid Act and gave powers to the Board of Directors to convene the meeting by enacting Article 48(1) which reads as under:
48(1) The Board may, whenever it things fit, call an extraordinary general meeting
31. There is no restriction of place for convening extraordinary general meeting if it is convened by the Board and there is no restriction of place as provided in Section 166 of the Act and this is a statutory recognition of the power of the Board of Directors. It was also submitted that to convene extraordinary general meeting is also not dependent upon the statutory provisions but it is also a common law right.
32. Though both the sides initially refer some orders passed in the proceedings by various courts but ultimately both the Counsel agreed that none of the court has passed any order restraining the defendant-Company from holding meeting at Mumbai. In view of the above fact, I do not think it fit to refer all those proceedings because of the reason that the relief claimed by the plaintiff in the suit has not been granted in any of the courts by restraining the defendant-Company from holding the meeting on 6.2.2001.
33. I have considered the rival submissions made by the learned Counsel for the parties and have perused the record which was made available by the parties and also perused the plaint, application, reply and rejoinder along with documents.
34. It is clear from the facts narrated above and from the pleadings of the parties that initially the suit was filed on the ground that the respondent-Company has no right to convene extraordinary general meeting in pursuance of the notice dated 6.1.2001 at Mumbai. The submission of the learned Counsel for the appellant that reference of extraordinary general meeting was made in the plaint only because of the fact that this was the notice issued by the defendant wherein it is slated that the meeting convened is extraordinary general meeting and because of this reason only the plaint contained the averment of extraordinary general meeting. Otherwise the meeting when not convened as provided Under Section 169 of the Companies Act on the requisition of the share-holders then the meeting can be only Under Section 166 of the Companies Act. The submission made by the learned Counsel for the appellant cannot be accepted in view of the fact that the appellant was conscious and aware of the fact that the meeting may be annual general meeting or extraordinary general meeting. The appellant himself specifically in his plaint mentioned that whatever meeting is convened including annual general meeting can be held at the registered office of the Company or in the City where the registered office is situated. Not only this, there is no pleading of the plaintiff-appellant that though the meeting has been described as extraordinary general meeting but in fact it is annual general meeting. It is also clear from the various provisions of the Companies Act that the meeting convened is not an annual general meeting of the Company. Even in relief, the appellant has sought relief against holding of extraordinary general meeting at Mumbai in pursuance of notice dated 6.1.2001. The contention of the learned Counsel for the appellant that in rejoinder the plaintiff has averred that extraordinary general meeting can be convened only as provided Under Section 169 of the Companies Act and, therefore, when the meeting is not convened on the requisition of the share-holders of the Company as provided Under Section 169 of the Companies Act, therefore, there is pleading to the effect that the present meeting is not an extraordinary general meeting. Above submission of the learned Counsel for the appellant is also devoid of force on various grounds; firstly, the parties cannot be permitted to give entirely a new case that too contrary to their own pleadings by way of filing rejoinder and secondly, the learned Counsel for the appellant could not point out any fact or law by which it can be held that the present meeting sought to be convened is an annual general meeting. When the present meeting held on 6.2.2001 cannot be held as annual general meeting then there arises no question for application of Sub-section (2) of Section 166 of the Companies Act.
35. The learned Counsel for the appellant submitted that the only procedure prescribed for convening the extraordinary general meeting is provided Under Section 169 of the Companies Act and when there is a procedure prescribed by statute then it can be held that all other modes are excluded for convening the extraordinary general meeting. From a bare perusal of Section 169, it is clear that Section 169 provides procedure for calling of extraordinary general meeting on requisition. Admittedly, here in this case, this is not the case of the plaintiff that any requisition was made by the shares-holders having one-tenth of share-holding as provided Under Section 169 of the Companies Act. Section 169 nowhere deals with the contingency of calling an extraordinary general meeting by the Board of Directors suo motu without there being any requisition of the share-holders. Therefore the present meeting cannot be said to be an extraordinary general meeting of the Company Under Section 169 of the Companies Act.
36. The submission of the learned Counsel for the appellant that since the defendant-respondent has admitted in their reply that the present meeting which was at that time sought to be convened was convened as per the provisions of Section 169 of the Companies Act, for which the learned Counsel for the appellant referred para 2 of the reply of the injunction application. In para 2 of the reply to the injunction application, the defendant Company said that extraordinary general meeting can be convened as per Section 169 of the Companies Act but it nowhere says that the present meeting is convened Under Section 169 of the Companies Act upon requisition of the share-holders. It appears that in reply reference of Section 169 is there but it was only a reference of provision of law which also deals with the calling of an extraordinary general meeting and this was referred only in the context to substantiate objection of jurisdiction of civil court to be barred Under Section 10 of the Companies Act. In the subsequent paras itself the defendant relied upon Article 74 of the Articles of Association of the Company and it is clearly stated by the defendant that there is a provisions for calling extraordinary general meeting under Article 74 and in this Article itself it is clearly mentioned that meeting can be called at any place. I may now quote relevant part of Article 74 which is as under:
The Directors may, whenever they think fit, and they shall on the requisition of the holders of not less than one- tenth of the issued share capital of the Company... convene an extraordinary general meeting of the Company....
37. In Article 74 of the Articles of Association, the Board of Directors has been given power to convene meeting; (i) whenever they think fit, (ii) and on requisition.
38. In view of the above facts it cannot be said that the meeting sought to be convened by notice dated 6.1.2001 is a meeting convened Under Section 169 of the Companies Act.
39. The question arises whether the Board of Directors have no jurisdiction to convene a meeting of the shares-holders except as provided Under Sections 166 and 169 of the Companies Act, for which, the learned Counsel for the appellant submitted, as stated above, that when there is a procedure prescribed by the statute, all other procedures are excluded. The learned Counsel for the respondent submitted that the procedure has been provided for convening meeting in the given circumstances in Section 169 of the Companies Act and Section 291 empowers the Board of Directors to exercise all powers of the Company. Therefore the Company through its Board of Directors can convene its meeting wherein the share-holders may participate accordance with the law.
40. The learned Counsel for the appellant, pointed out that Section 291 of the Companies Act also contained a proviso which restricts the power of the Board. Section 291 is as under:
Section 291. General powers of Board.--(1) Subject to the provisions of this Act, the Board of Directors of a company shall be entitled to exercise all such powers, and to do all such acts and things, as the company is authorised to exercise and do:
Provided that the Board shall not exercise any power or to do any act or thing which is directed or required, whether by this or any other Act or by the memorandum or articles of the company or otherwise, to be exercised or done by the Company in general meeting:
Provided further that in exercising any such power or doing any such act or thing, the Board shall be subject to the provisions contained in that behalf in this or any other Act, or in the memorandum or articles of the company, or in any regulations not inconsistent therewith and duly made thereunder, including regulations made by the company in general meeting.
(2) No regulation made by the company in general meeting shall invalidate any prior act of the Board which would have been valid if that regulation had not been made.
41. From a bare perusal of Section 291, it is clear that the Board of Directors of the Company are entitled to exercise all such powers and to do all such acts and things as the Company is authorised to exercise and to do. Therefore the statutory provision authorities the Board of Directors to exercise all the powers. So far as proviso to Section 291 is concerned, it also, in fact, further recognises the power of the Board of Directors to do the things and excludes only limited fields. The proviso merely says that the Board shall not exercise any power or do any act or thing which is directed or required to be done by the Company in general meeting if it is provided by the Companies Act or by the memorandum of Articles of the Company or otherwise. The learned Counsel for the appellant could not point out whether the power of calling of extraordinary general meeting has been given the Companies Act or by memorandum of Articles of Company to the annual general meeting of the Company.
42. The learned Counsel for the respondent submitted that neither Section 169 nor Section 291 are the sole power of source of calling meeting by the Board. According to the learned Counsel for the appellant statutory power of calling of extraordinary general meeting vests in the Board of Directors as per Section 291 of the Companies Act but it is also a common law right of the Board of the Directors, for which, the learned Counsel referred the commentary on Company law by Pennington. At page 618 of the above commentary (Sixth Edition) says that:
The articles of a company usually expressly empower the Board of Directors to convene general meetings and class meetings, and the board has this power at common law even if it is not expressly conferred on them.
43. In Shackleton on the Law and Practice of Meetings (Seventh Edition) by Ian Shearman dealt with the powers of the Directors to convene the extraordinary general meeting. At page 120, it is mentioned that:
The directors usually have power to convene an extraordinary meeting either on their own motion or on the requisition of members. Table A provides that:...
44. In Company Meetings Law and Procedure by B.K. Sen Gupta (1985) at page 221, the power of Directors for calling extraordinary general meeting has been dealt with and it is said that:
The directors have power to call general meeting which include extraordinary general meeting.
45. Again I may refer Article 48 of the Schedule-I Table A of the Companies Act which clearly gives power to the Board to call extraordinary general meeting whenever it things fit.
46. In view of the above provisions of law, namely, Section 291 of the Companies Act, Articles 47 and 48 of the Schedule-I Table A of the Companies Act and, in view of the above commentaries, I am of the opinion that the Board of Directors have powers to call extraordinary general meeting and looking to the entirety of the facts which also suggest that the Board of Directors if will not have power to call extraordinary general meeting it may not be workable for the Company and when there is statutory provisions of recognition of the power of the Board of Directors to call extraordinary general meeting, it cannot be said that the Board has no power to call extraordinary general meeting simply because Section 169 provides for calling extraordinary general meeting in particular situation only.
47. The learned Counsel for the appellant submitted that the commentaries are dealing with the provisions of the companies matters as in England and not in India. I am unable to subscribe this view, in view of the law discussed above, which empowers the Board of Directors to called extraordinary general meeting.
48. The learned Counsel for the appellant further submitted that even if it is an extraordinary general meeting, then the meeting cannot be held outside the place of registered office. The learned Counsel for the appellant submitted that in view of Section 166 of the Companies Act when the legislature itself has thought fit to permit the companies to hold annual general meeting at the place of registered office then it can be presumed that that is a reasonable restriction on the power of the Board and it was also submitted by the learned Counsel for the appellant that it has its own reason for holding the meeting at the place where the registered office is situated. According to the learned Counsel for the appellant in the extraordinary general meeting, a shareholder of the company, if wants to refer the record of the company which is kept at the registered office, he will be deprived of his valuable right and this will result into some wrong decision. It is also submitted that when the company itself has decided to have its registered office at a particular place, then the company cannot and should not be permitted to say that holding of meeting at place of registered office may cause inconvenience to shareholders or it will be more beneficial to the share-holders to hold meeting at other place.
49. Above submissions of the learned Counsel for the appellant appears to be on the basis of the hardship which he apprehends in convening meeting at place other than the place of registered office. The submission made by the learned Counsel for the appellant, though at its face value, may be attractive but is devoid of any force. The Company may have their own registered office at a particular place at the time of incorporation of the Company. With the passage of time and expansion, the shares-holders may be in large number residing outside the place of registered office of the Company. In this case also, it is stated that more than 70% of the share-holders of the Company are from Mumbai and only 0.634% of the shares-holders are residing at Udaipur in Rajasthan. The discretion of the Board of Directors in holding meeting at a particular place is expected to be reasonable and in case if it is found that the decision given by the Board of Directors is malafide with intention to deprive the share-holders from attending the meeting or any other reason, the same can be challenged before appropriate forum. Here in this case, when there is no pleading to the effect that the Board of Directors have malafidely or with some ulterior motive decided to hold meeting at Mumbai, I need not to go into this matter particularly because of the fact that the allegation levelled by the plaintiff is only to the effect that the meeting is being held to give benefit to one Shri P.K. Tayal. Chairman of the defendant-Company and his near persons. There is no pleading of the plaintiff how Shri P.K. Tayal will be benefited by holding meeting at Mumbai and who are the near persons of Shri P.K. Tayal who will be getting benefit. What is their share-holding and whether simply because of holding meeting at Udaipur, Shri P.K. Tayal and his persons will not be able to cast their votes. It is not the case of the plaintiff and it should not have been that simply because of holding meeting at Udaipur he will be in a position to get the decision as he wished or Shri P.K. Tayal and his persons will not be in a position to carry the resolution. In my opinion, the plaintiff has failed to even plead how the result will be affected by holding meeting at Udaipur or at Mumbai because of the fact that it is not the case of the plaintiff that Shri P.K. Tayal and his persons will not be able to participate in the meeting at Udaipur nor this can be a ground for granting any interim relief in favour of the appellant. It is also relevant to mention here that the plaintiff has not said a single word how much loss he is going to suffer by acceptance of resolution of the Company and so far as the contention raised regarding hardship due to going to Mumbai by the plaintiff is concerned, the same deserves to be rejected on the face of it. If the appellant thinks that hardship will be caused to him by going to Mumbai from the place of his residence then certainly he is fully aware that the share-holders who are not residing in Udaipur will have to come from their residence to Udaipur and those shares-holders of the Mumbai who are large in number will have to come to Udaipur and that will cause great hardship to large number of persons as compared to the plaintiff alone.
50. It is further relevant to mention here that the suit filed by the plaintiff is in his individual capacity, pleading his own hardship. The suit is not in representative capacity nor the share-holders whose rights will be affected, are parties in the suit so as to plead their hardships. Therefore, the self-claimed representative litigation cannot be permitted without complying with the formalities for protecting other's right or formalities provided for representing others. Therefore, there is no substance in the contention of the learned Counsel for the appellant with respect to the hardship due to the calling of meeting at Mumbai.
51. The learned Counsel for the appellant vehemently submitted that when there is a breach of statutory provision then the plaintiff need not to prove his other irreparable injury as no party has right to breach the statutory provision and in case of violation of statutory provision of law, the hardship will be required to be proved then it will result into lawlessness. The arguments advanced by the learned Counsel for the appellant is attractive but cannot be applied in the present case. It is clear that there is no violation of any statutory provision, as held above, because of the fact that the present meeting is extraordinary general meeting and not annual general meeting, Sub-section (2) of Section 166 of the Companies Act has no application. Article 48 of the Companies Act nowhere restricts holding of meeting at particular place. Therefore, the contention of the learned Counsel for the appellant deserves to be rejected.
52. The learned Counsel for the appellant submitted that Article 74 of the Articles of Association of the Company is contrary to the provisions of Sections 166 and 169 of the Companies Act. Section 169 nowhere given any discretion to the Board of Directors to call extraordinary general meeting whereas Article 74 of the Articles of Association of the Company empowers the Board of Directors to call extraordinary general meeting at their own instances without there being any requistion.
53. The learned Counsel for the appellant relied upon Section 9 of the Act which is having overriding effect over the memorandum of Articles of the Company. The contention of the learned Counsel for the appellant is further devoid of force because it has already been held that for calling extraordinary general meeting source of power is not Section 169 of the Companies Act and there is no other provision which is being offended by Article 74 of Articles of Association of the Company and the Board of Directors has power to call meeting as per Article 48 of the Companies Act, as mentioned above and all meetings except annual general meeting are extraordinary general meeting as per Article 47 of the Companies Act.
54. The learned Counsel for the appellant cited judgments reported in: M.R.S. Rathnavelusami Chettiar v. M.R.S. Manickavelu Chettiar and Ors. : AIR1951Mad542 and Bloom Dekor Limited v. Subhash Himatlal Desai : (1994)6SCC322 but they are not applicable to the facts of the present case.
55. In view of the above facts and the law discussed above, I do not find any prima facie case in favour of the plaintiff for grant of injunction and the plaintiff also failed to prove any irreparable injury. The balance of convenience is also not in favour of the plaintiff as the plaintiffs total stake in the present controversy is negligible and no other share-holder has joined with the plaintiff in this suit.
56. Before parting with, I may deal with request of the learned Counsel for the respondent for initiation of proceedings for criminal contempt against the plaintiff-appellant. The learned Counsel for the respondent submitted that the present litigation is absolutely an abuse of process of the court and in view of the events referred by the respondent in their reply dated 26.2.2001 it is clear that the present litigation is at the behest of some other persons also and the defendant-Company was forced to contest the matter at Rohtak. Chadigarh, Calcutta, Udaipur, Jaipur and Jodhpur. The learned Counsel for the respondent tried to submit that the appellant has sought relief in this appeal much more than the relief which has been claimed by the appellant in even injunction application.
57. In my opinion, who initiated the litigation against the respondent-Company and whether they are litigating jointly and malafidely, can be a subject matter in the suit when both the parties have opportunities of leading evidence but, at present, there is no sufficient material to hold that the plaintiff has committed any wrong in filing the appeal before this Court or seeking any injunction against the respondent. I do not find any force in the submission of the learned Counsel for the respondent for initiation of criminal contempt against the appellant.
58. The learned Counsel for the respondent further submitted that looking to the frivolous litigation and because of the fact that the appellant obtained injunction order on 23.2.2001 though the injunction application was decided on 5.2.2001 clearly shows that he deliberately obtained the stay order to harm the respondent-Company. Therefore, exemplarly costs be awarded to the respondent-Bank. The appellant filed the injunction suit. The application was dismissed by the trial court and the appellant has filed the present appeal. During this period, just a day after the dismissal of the injunction application, the meeting of the share-holders was convened and, therefore, the appellant might have chosen to ask appropriate relief in appeal on the basis of the subsequent events. That cannot be said to be malafide at this stage. Hence there is no force in this argument for awarding exemplary costs or even costs.
59. The learned Counsel for the appellant may be right in submitting that the order passed by the court below has not specifically dealt with the points raised by the appellant but I am unable to accept that the ultimate decision given by the court below is wrong or can be set aside.
60. The learned Counsel for the appellant submitted that in case the injunction application is dismissed, the share-holders may be given further time to avail the benefit of the resolution. The relief cannot be granted in view of the fact that none of the share-holders came forward with any such relief and so far as the plaintiff is concerned, he was fully aware of the litigation and no ground is made out for any relief.
61. Therefore, the appeal of the appellant has no force and the same is hereby dismissed. No order as to costs.