1985 Supreme(Del) 77

High Court Of Delhi
MAHARAJA EXPORTS - Appellant
Versus
APPARELS EXPORT PROMOTION COUNCIL - Respondent
Suit 759 of 1984
Decided On : 02/13/1985

The jurisdiction of courts to entertain suits in matters relating to companies is defined in Section 10 of the Companies Act, 1956, and the provisions of the Act dealing with jurisdiction of courts, read together with Section 10 of the Act, enable the shareholders to decide as to which court they should approach for remedy in respect of a particular matter.

Headnote:

COMPANIES ACT - ELECTION OF EXECUTIVE COMMITTEE MEMBERS - NOTICE - SERVICE - DELAY - MALA FIDE - INJUNCTION - SUIT FOR DECLARATION - JURISDICTION - DELAY AND LACHES.

Fact of the Case:

The plaintiff, a member of the defendant council, filed a suit for declaration that the impugned notice dated 4-4-1984 issued by the defendant council regarding the holding of the 4th Annual General Meeting of the defendant on 14-5-1984 is illegal, invalid, and inoperative and that no Annual General Meeting can be held in pursuance thereof. The plaintiff also sought a declaration that all the 27 members of the existing Executive Committee are not entitled to hold the respective offices in view of the judgment of Hon'ble Mr. Justice S. S. Chadha referred to above; that the 18 members of the Executive Committee have retired by rotation and are not entitled to continue in office as members of the Executive Committee; that the 9 members of the Executive Council whose names are mentioned in the impugned notice have automatically ceased to be the members of the Executive Committee and are not entitled to function as such after 14, 15-5-1984; that all the proxy forms lodged with the council regarding the 4th Annual General Meeting to be invalid and illegal particularly those on the forms other than the official forms; and that the 4th Annual General Meeting purportedly held on 14 16-5-1984 insofar as it relates to election of 9 Executive Committee Members who have retired by rotation to be illegal and invalid.

Finding of the Court:

The court held that the plaintiff was duly served with 14 days clear notice of the holding of the 4th Annual General Meeting of the defendant council; that the defendant council was not bound to hold elections to all the 27 posts of Executive Committee members in view of the judgment of this court in Suit No. 873/1981, when the Articles of Association and Rules for election of the defendant Council were struck down; that the defendant council was not enjoined to hold election for at least 18 members of the Executive Committee as the Annual General Meeting was being held after two years; that the delay in the despatch of the notice did not show mala fides and oblique motives on the part of the defendant Council to secure re-election of the retiring members; that the list of members as circulated by the defendant Council did not contain the names of some members from whom certain sums were still payable to the defendant council and its effect; and that the suit of the plaintiff was bad for delay and laches and or otherwise the conduct of the plaintiff was such as to disentitle her to any relief in the suit as alleged in paras 13 and 14 of the written statement.

Issues: 1. Whether the defendant was enjoined in law to frame fresh rules for holding elections of the defendant council after they were struck down by a judgment of this court? 2. Whether this court has the jurisdiction to try this suit? 3. Whether fourteen days notice of the proposed 4th Annual General Meeting of the defendant Council was not served on the plaintiff in accordance with laws? 4. Whether the defendant was bound to hold elections to all the 27 posts of Executive Committee members in view of the judgment of this court in suit No. 873 81. when the Articles of Association and Rules for election of the defendant Council were struck down? In any case, was the defendant enjoined to hold election for atleast 18 members of the Executive Committee as the Annual General Meeting was being held after two years ? 5. Whether the delay in the despatch of the notice shows mala fides and oblique motives on the partof the defendant Council to secure re-election of the retiring members. If so, to what effect ? 6. Whether the list of members as circulated by the defendant Council contained the names of some members from whom certain sums were still payable to the defendant council and its effect ? 7. Whether the suit of the plaintiff is bad for delay - and laches and or otherwise the conduct of the plaintiff is such as to disentitle her to any relief in the suit as alleged in paras 13 and 14 of the written statement ?

Ratio Decidendi: The court held that the defendant council was not required to frame fresh rules for holding elections of the defendant council after they were struck down by a judgment of this court, as the provisions of the Companies Act, 1956, dealing with jurisdiction of courts, read together with Section 10 of the Act, enable the shareholders to decide as to which court they should approach for remedy in respect of a particular matter. The court also held that the defendant council was not bound to hold elections to all the 27 posts of Executive Committee members in view of the judgment of this court in Suit No. 873/1981, when the Articles of Association and Rules for election of the defendant Council were struck down, as the defendant council was not enjoined to hold election for at least 18 members of the Executive Committee as the Annual General Meeting was being held after two years.

Final Decision: The court dismissed the suit with costs.