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HIGH COURT OF CALCUTTA
P. B. Mukharji
BENGAL AND ASSAM INVESTORS LTD. - Appellant
Versus
J. K. EASTERN INDUSTRIES PRIVATE LTD. - Respondent
Matter 264 Of 1956
Decided On : JULY 09, 1956
COMPANIES ACT, 1956 - SECTION 186 - CALLING, HOLDING AND CONDUCTING COMPANY MEETINGS - CONDITIONS FOR COURT'S INTERVENTION - INTERPRETATION OF 'IMPRACTICABLE' - COURT'S DISCRETIONARY POWER.
Fact of the Case:
Bengal and Assam Investors Ltd. filed an application under Section 186 of the Companies Act, 1956, seeking an order to call and hold an extraordinary general meeting of J. K. Eastern Industries Private Ltd. The applicant alleged that the Jatia group, which held a minority of shares, had maneuvered themselves into a position of control over the Singhania group, which held a majority of shares. The applicant also sought directions for the conduct of the meeting, including the appointment of an independent Chairman and the deposit of proxies with such Chairman.
Finding of the Court:
The Court held that the conditions for intervention under Section 186 of the Companies Act, 1956, were not satisfied. It found that it was not impracticable to call or hold a meeting of the company, and that the Chairman of the board of directors, K. L. Jatia, would not be acting as a judge in his own cause by presiding over the meeting. The Court also held that the applicant's apprehension that K. L. Jatia would act illegally at the meeting was not a sufficient ground for the Court to intervene.
Issues: 1. Whether it was impracticable to call or hold a meeting of the company within the meaning of Section 186 of the Companies Act, 1956? 2. Whether the Chairman of the board of directors, K. L. Jatia, would be acting as a judge in his own cause by presiding over the meeting? 3. Whether the applicant's apprehension that K. L. Jatia would act illegally at the meeting was a sufficient ground for the Court to intervene.
Ratio Decidendi: 1. The Court interpreted the term 'impracticable' in Section 186 of the Companies Act, 1956, to mean 'impracticable from the business point of view'. It held that the mere fact that the directors could not agree was not sufficient to make it impracticable to hold a meeting. 2. The Court held that the Chairman of the board of directors would not be acting as a judge in his own cause by presiding over the meeting, as he would not be deciding on the validity of his own nomination. The decision on the resolutions would be made by the shareholders through voting. 3. The Court held that the applicant's apprehension that K. L. Jatia would act illegally at the meeting was not a sufficient ground for the Court to intervene. It noted that the Companies Act provided ample remedies to the applicant if the Chairman acted illegally.
Final Decision: The Court dismissed the application with costs.
( 1 ) THIS is an application by Bengal and Assam Investors Ltd. under Section 186, Companies Act of 1956. It seeks an order that the extra-ordinary general meeting of the respondent company J. K. Eastern Industries Private Ltd. required of the petitioner to be called in pursuance of requisition dated 5-6-1956 be called and held and conducted in such manner as this Court thinks fit and proper and that for the purpose of the same such ancillary and consequential directions be given as this Court may think necessary or expedient including directions regarding the date, time and place of the meeting to be held, appointment of an independent Chairman for the meeting, deposit of proxies with such Chairman and all such other directions modifying or supplementing the operation of the provisions of the Companies Act and of the Companies rticles relating to the calling, holding or conducting of the meeting. The applicant also seeks for an order that at the meeting the resolutions mentioned in the re-quistion notice annexed to the petition marked "b" be considered and if thought fit be passed with or without modifications. The further order sought by the applicant is that! the respondent company must be directed to comply with the provisions of Sub-sections (3) and (4) of Section 284, Companies Act, 1956.
( 2 ) BEFORE I discuss the implications of an application under Section 186, Companies Act, 1956, it would be necessary to state a few facts for the better appreciation of the actual point involved. The dispute is fundamentally between two rival groups of share-holders one called the Jatia group and the other called the Singhania group. In 1954 the Jatia directors appointed K. L. Jatia as Chairman of the board of directors. On 25-5-1954 there was a requisition for an extra-ordinary general meeting by the present applicant. On 25-8-1954 an extra-ordinary general meeting was held at which K. L. Jatia acted as Chairman and refused to permit the resolutions to be moved on the ground that they should be moved as special resolutions under the articles of association of the company and under the Companies Act then prevailing. Upon that the present applicant applied on 30-8-1954 for holding a meeting of the company under the supervision of the Court under the then Companies Act. Thereafter on 16-12-1954 a suit was filed being suit No. 3603 of 1954 for setting aside the alteration of articles alleged to have been done on 2-8-1954. There was also another suit on 16-12-1954 being suit No. 3604 of 1954.
( 3 ) THE point of dispute is that although the Jatia groun is in minority so far as the share holding is concerned, they with only about 45 per cent. of the total shares, have manoeuvred themselves into a position of control over the Singhania group who have a majority of share holding of about 55 per cent. This, therefore, is not the usual case where the minority is oppressed by the majority but a case where the majority alleges to be oppressed by the minority.
( 4 ) NOW the two suits that I have mentioned are still pending. The allegation that the present applicant makes in the petition is that the Jatias are attempting to delay the hearing of suit No. 3603 of 1954 as long as possible. The applicant is a share-holder holding 400 ordinary shares in J. K. Eastern Industries (Private) Ltd.
( 5 ) THE resolutions that are intended to be passed at the meeting demanded by the requisitionists are set out in the notice itself. The resolutions that the applicant wants to be passed are to the following effect: (1) That K. L. Jatia be removed from the office of the director and that Lakshmipat Singhania be appointed in his place. (2) That G. D. Jatia be removed from the office of the director and Hari Shankar Singhania be appointed in his place. (3) That M. P. Jatia, director of the company, be removed from the "office of director and Krishna Prasad Khaitan be appointed in his place. (4) That D. N. Jatia be removed from the office of
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