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1989 Supreme(Cal) 126

High Court Of Calcutta
PADMA KHASTGIR, MAHITOSH MAJUMDAR
GOPAL VYAS - Appellant
Versus
SINCLAIR HOTELS AND TRANSPORTATION LTD - Respondent
Appeal Nil  Of  1986
Decided On : 03/16/1989

Advocates Appeared:
DIPANKAR GHOSH, S.B.MOOKERJEE

The provisions of Section 257 and Section 188 of the Companies Act cover two different fields and have different requirements. Section 257 provides a specific right to an individual member to give notice of candidature for directorship, while Section 188 deals with the circulation of members' resolutions and statements.

Headnote:

COMPANY LAW - Section 257 and Section 188 of the Companies Act, 1956 - Distinction and Applicability - Right of a Member to Propose Candidature for Directorship - Notice Requirements.

Fact of the Case:

The petitioner, Gopal Vyas, a shareholder of Sinclair Hotels and Transportation Ltd., proposed the candidature of Navin Chand Suchanti for the office of a director at the company's upcoming annual general meeting. The company refused to circulate the notice given by the petitioner under Section 257 of the Companies Act, claiming that such proposal was not made by 100 shareholder members or by 1/10th strength of the members as required under Section 188 of the Act.

Finding of the Court:

The court held that the provisions of Section 257 and Section 188 of the Companies Act cover two different fields and have different requirements. Section 257 provides a specific right to an individual member to give notice of candidature for directorship, while Section 188 deals with the circulation of members' resolutions and statements. The court found that the petitioner had complied with the requirements of Section 257 and that the company was not justified in refusing to circulate the notice.

Issues: 1. Whether Section 257 of the Companies Act is subject to the provisions of Section 188? 2. Whether the petitioner had the right to propose the candidature of a director under Section 257? 3. Whether the company was justified in refusing to circulate the notice given by the petitioner?

Ratio Decidendi: 1. Section 257 of the Companies Act is an independent section and is not subject to the provisions of Section 188. 2. Section 257 gives a specific right to an individual member to give notice of candidature for directorship, subject to certain conditions. 3. The petitioner had complied with the requirements of Section 257 and the company was not justified in refusing to circulate the notice.

Final Decision: The court directed the company to consider the notice given by the petitioner in accordance with law at its fourteenth annual general meeting.

PADMA KHASTGIR, J.

( 1 ) THE only point which calls for consideration in this application arises under the following facts and circumstances.

( 2 ) THE petitioner Gopal Vyas filed a suit under O. 1, R. 8 of the C. P. C. In the said suit thepetitioner moved an application before Mr. Justice R. N. Pyne (as his Lordship then was) whereupon the learned Judge directed that the annual general meeting of the company Sinclair Hotels and Transportation Ltd. be held under the chairmanship of a member of the Bar but for adjournments of the same until further orders. The petitioner being aggrieved thereby preferred this appeal apart from the usual prayers the petitioner prayed for an order directing the company to hold the 14th Annual General Meeting and at such meeting to consider the notices and the proposal made by the petitioner under S. 257 of the Companies Act.

( 3 ) THE petitioner Gopal Vyas proposed the candidature of one Navin Chand Suchanti for the office of a director of the respondent No. 1 at such annual general meeting. The petitioner had given, a notice under S. 257 of the Companies Act, 1956. The petitioner contended that the company was under an obligation to inform its members of such proposal made by the petitioner at such annual general meeting due to be held on 29th December, 1986. But the company being the respondent No. 1 herein according tothe petitioner wrongfully refused to comply with the said proposal on the alleged ground of non-compliance of the provisions of S. 188 of the Companies Act.

( 4 ) THERE has been many proceedings so far this company is concerned, for various reliefs. After protracted litigations the matter went before the Supreme Court of India and ultimately the learned Judges of the Supreme Court directed that all pending matters before the High Court should go on but no effect be given to any of such orders till the matter is finally decided by the learned Judges of the Supreme Court. 4a. Section 257 of the Companies Act, 1956 provides as follows :"257. Right of persons other than retiring directors to directors to stand for directorship.- (1) A person who is not a retiring director shall, subject to the provisions of this Act, be eligible for appointment to the office of director at any general meeting, if he or some member intending to propose him has, not less than fourteen days before the meeting, left at the office of the company a notice in writing under his hand signifying his candidature for the office of director or the intention of such member to propose him as a candidate for that office, as the case may be. (1-A) The company shall inform its members of the candidature of a person for the office of director or the intention of a member to propose such person as a candidate for that office, by serving individual notices on the members not less than seven days before the meeting: provided that it shall not be necessary for the company to serve individual notices upon the members as aforesaid if the company advertises such candidature of intention not less than seven days before the meeting in at least two newspapers circulating in the place where the registered office of the company is located, of which one is published in the English language and the other in the regional language of that place. (2) Sub-sec. (1) shall not apply to a private company, unless it is a subsidiary of a public company. "

( 5 ) UNDER this section a person, other than a retiring director, if he desires to be appointed as a Director, a notice of his candidature may be given to the company. Such notice may be given by the candidate himself or by any member intending to propose him as a candidate. This candidate may be an outsider or a member of the company. He need not be a shareholder even but such notice has to be given fourteen clear days before the meeting. On receipt of such notice the company shall inform the members at least seven days before the meeting either by individual notice or by advertisement












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