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1983 Supreme(Cal) 304
High Court Of Calcutta
T. K. BASU, S. C. SEN
CALCUTTA CHEMICAL COMPANY LIMITED - Appellant
Versus
DHIRESH CHANDRA ROY - Respondent
Appeal . Of 1983
Decided On : 11/28/1983
R.C.NAGARAJ, S.B.MOOKERJEE
The provisions of section 171 of the Companies Act, 1956, requiring a minimum of 21 days' notice for an Annual General Meeting, are not mandatory, and the accidental omission to give notice to, or the non-receipt of notice by, any member does not invalidate the proceedings at the meeting under section 172 (3) of the Act.
Headnote:
COMPANIES ACT, 1956 - SECTION 171 - ANNUAL GENERAL MEETING - NOTICE - VALIDITY - SHORT NOTICE - EFFECT - SECTION 172 (3) - INTERPRETATION - INJUNCTION - DISCRETION OF COURT - INTERFERENCE BY APPELLATE COURT.
Fact of the Case:
The dispute arose from the holding of the 60th and 61st Annual General Meetings of the Calcutta Chemical Company Limited (the company). Due to various disputes and litigations, the meetings could not be held for two consecutive financial years. Multiple petitions were filed in the High Court, which were eventually disposed of on August 11, 1983. The company then scheduled the meetings for October 7, 1983, with proper notice given to all shareholders, including the respondent, Dhiresh Chandra Roy. However, Roy received the notices on September 22, 1983, less than 21 days before the scheduled meetings. He filed a suit seeking a declaration that the notices and the meetings were illegal and void. The court granted an interim order restraining the implementation of the resolutions passed at the meetings. The company appealed the order.
Finding of the Court:
The High Court held that the interim order restraining the implementation of the resolutions passed at the Annual General Meetings should be vacated. The court found that the provisions of section 171 of the Companies Act, 1956, which require a minimum of 21 days' notice for an Annual General Meeting, are not mandatory. The court relied on section 172 (3) of the Act, which provides that the accidental omission to give notice to, or the non-receipt of notice by, any member shall not invalidate the proceedings at the meeting. The court also considered the practicalities of the situation, noting that the company had been struggling to hold its Annual General Meetings due to protracted litigations. The court found that the respondent had not suffered any prejudice from the short notice and that the balance of convenience did not require an injunction.
Issues: 1. Whether the provisions of section 171 of the Companies Act, 1956, requiring a minimum of 21 days' notice for an Annual General Meeting, are mandatory. 2. Whether the accidental omission to give notice to, or the non-receipt of notice by, any member invalidates the proceedings at the meeting under section 172 (3) of the Act. 3. Whether the court should grant an injunction to restrain the implementation of resolutions passed at an Annual General Meeting where the notice period was shorter than 21 days.
Ratio Decidendi: 1. The provisions of section 171 of the Companies Act, 1956, requiring a minimum of 21 days' notice for an Annual General Meeting, are not mandatory. 2. The accidental omission to give notice to, or the non-receipt of notice by, any member does not invalidate the proceedings at the meeting under section 172 (3) of the Act. 3. The court should not grant an injunction to restrain the implementation of resolutions passed at an Annual General Meeting where the notice period was shorter than 21 days, unless the plaintiff can show that he has suffered prejudice or that the balance of convenience requires an injunction.
Final Decision: The High Court allowed the appeal and vacated the interim order restraining the implementation of the resolutions passed at the Annual General Meetings.
( 1 ) THE dispute in this case relates to the holding of the 60th Annual General meetings of the Calcutta Chemical Company Limited, hereinafter described as the company. Because of various disputes and litigations, the 60th and 61st Annual General Meetings of the company for the financial years 1980-81 and 1981-82 respectively could not be held. Ultimately various petitions filed in this Court were disposed of by several orders passed on 11th August, 1983.
( 2 ) ON the 9th September, 1983 a meeting of the Board of Directors of the company was held and at that meeting it was resolved that the 60th and 61st Annual General Meetings of the company would be held on 7th October, 1983 at different times. A notice was published in the Business Standard on 12th September 1983 informing all concerned that the Annual General Meetings were to be held on 7th October 1983 at the place and the times specified therein. It the case of the appellant that on 12th September 1983 the appellant posted under certificates of posting proper notices together with the Annual Reports to all the registered shareholders of the company including the respondent, Dhiresh Chandra Roy. The Appellant has produced the certificates of Posting in support of his contention in Court.
( 3 ) IT has been stated on behalf of the respondent that the notices was posted on 16th September, 1983 as would appear from the postal endorsement on the envelope received by the respondent. The case of respondent is that the respondent received the said two notices both dated September 9, 1983 on the 22nd September 1983. The respondent was not given clear 21 days notice for the meetings scheduled to be held on October 7, 1983 as enjoined by section 171 of the Companies Act, 1956. It has been contended that the two Annual General Meetings that were held on October 7, 1983 were held disregarding the mandatory provisions of law and the proceedings of the two meetings were clearly illegal and invalid. A suit was filed by the plaintiff for a declaration that the two notices both dated 9th September, 1983 and the purported convening of the 60th and 61st Annual General Meetings of the company were wrongful, illegal, null and void, invalid and of on legal effect.
( 4 ) ON 5th October, 1983 Mr. Dhiresh Chandra Roy, the respondent herein made an application in that suit on which an interim order was passed by R. N. Pyne, J. to the effect that the Annual General Meetings due to be held on 7th October, 1983 could be held but no effect was to be given to the resolutions that might be passed in such meetings until further order of the Court. The operation of that order, however, was stayed till 7th October 1983. On 7th October, 1983 on a further application moved on behalf of Mr. Roy before the vacation Bench, J. N. Chaudhuri, J. , inter alia, ordered that "the Annual General Meeting or Meetings due to be held this day, i. e. , 7. 10. 1983 may be held but no effect should be given to the resolution or resolutions that might be passed at such meeting or meetings until further order of this Court". On 17th November 1983 the matter appeared in the list of R. N. Pyne, J. as new motion. After hearing both the parties R. N. Pyne, J. gave directions for filing of affidavits. The interim order that was passed earlier was continued until further orders of Court.
( 5 ) IN the meantime, the two Annual General Meetings of the company were duly held on 7th October 1983 and certain resolutions were passed at those meetings. The allegation of the appellant is that Mr. Roy, the respondent herein, took part in those two meetings.
( 6 ) IN this appeal, the contention of Mr. Mukherjee, appearing on behalf of the company, is that the two Annual General Meetings of the company have been held after protracted litigations. The notices for the Annual General Meetings had been duly issued. Advertisements were given in the press. According to the Certificates of Posting, the notice was issued
