BAL KRISHNA MAHESHWARI Vs. UMA SHANKER MEHROTRA AND ANOTHER
HIGH COURT OF ALLAHABAD
Bal Krishna Maheshwari
Uma Shanker Mehrotra And Another
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(1.) This reference to a Full Bench arises out of a petition in revision under Section 115 of the Civil Procedure Code presented by one Bal Krishna Maheshwari, a member of the Merchant's Chamber of U.P. which is a company limited by guarantee duly incorporated and registered under Section 26 of the Indian Companies Act (VII of 1913). The petitioner challenged the validity of an order passed by the learned District Judge of Cawnpore on 26th April, 1946, confirming a previous ex parte order passed by him on 28th March, 1946, directing the calling of the annual general meeting of the Company on 27th April, 1946. The challenge was made on the ground that the said order of the learned District Judge of Cawnpore was beyond his jurisdiction and on that basis the petitioner claimed the relief that the said order and the annual general meeting of the company held in pursuance thereof should be declared to be null and void. The matter came up for consideration before a Bench of this Court and from the argument addressed by the parties two questions having an important bearing on the administration of the company law arose for determination. In view of the importance of those questions, and the fact that they were not covered by any precedent of this Court or of any other High Court the Bench seized of the matter made the present reference with the object of having those questions fully considered and finally decided by an authoritative pronouncement of this Court.
(2.) The material facts of the case and the points raised in the course of the argument have been set out at great length in the order of reference made by the Bench and we think it would be an obvious waste of time and labour to cover the whole ground again in the present judgment. As already stated, there are but two points of law which arise for consideration and we consider it necessary to state a few facts in order to bring out those points. Article 46 of the Articles of Association of the company provides that an annual general meeting of the company shall be held in every calendar year before 31st of March. The dispute in the present case relates to the annual general meeting of the company for the year 1946. It is an admitted fact that the last preceding annual general meeting of the company had taken place on 3rd February, 1945. According to the Articles of Association of the company referred to above, the annual general meeting of the company for the year 1946 had to be called on some date before 31st March, in that year. The management of the affairs of the company lies in the hands of a Council of twenty-one members, including a President and a Vice-President, and the duty of calling the annual general meeting of the company in every calendar year falls upon that Council. On behalf of the petitioner it is alleged that in accordance with the Articles of Association of the company a clear fourteen days' notice for the annual general meeting in 1946 was issued and posted in due course on 13th March, 1946, fixing 28th March, 1946, as the date of the meeting. It is contended on the other side that though a notice was directed to be issued fixing that date, yet in fact no notice was issued and posted to any member of the company until 15th March, 1946, so that there could be no clear fourteen days' notice of the meeting as required by Article 49 of the company's Articles of Association. It is further alleged that a member of the company, who received a notice of the meeting to be held on 28th March, 1946, actually raised an objection that the notice was invalid and sent a written communication to that effect to the President of the Council who thereupon proceeded to cancel the meeting on 25th March, 1946, and on 28th March, made an application to the learned District Judge, Cawnpore, invoking his jurisdiction under Section 79(3) of the Indian Companies Act to call the annual general meeting. The two points of law which have to be determined in the present case turn upon the true interpretation of Section 79(3) of the Indian Companies Act and it is, therefore, necessary to set out its terms in extenso The section runs 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."
(3.) For the purposes of appreciating the points raised before us in the argument on behalf of the petitioner it is necessary also to set out here the terms of Section 76 of the Indian Companies Act which runs as follows:-
"76. (1) A general meeting of every company shall be held within eighteen months from the date of its incorporation and thereafter once at least in every calendar year and not more than fifteen months after the holding of the last preceding general meeting.
(2) If default is made in holding a meeting in accordance with the provisions of this section, the company and every director or manager of the company who is knowingly and wilfully a party to the default shall be liable to a fine not exceeding five hundred rupees.
(3) If default is made as aforesaid, the Court may, on the application of any member of the company, call or direct the calling of a general meeting of the company.";
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