A.R. LAKSHMANAN, J.

The applicants in O. A. No. 708 of 1994 are the plaintiffs in the suit. The prayer in the suit is as follows : (a) For a declaration that the notice dated June 29, 1994, issued by the first respondent for the proposed annual general body meeting of the first respondent to be held on August 4, 1994, in so far as it relates to items Nos. 7 and 8 of the said notice is illegal and void.

(b) For a permanent injunction restraining the respondents in any manner considering the said subjects, viz., items Nos. 7 and 8 of the notice dated June 29, 1994, issued for the proposed annual general body meeting of the first respondent to be held on August 4, 1994, or on any other day.

The first respondent is a company and is also a nidhi. The second respondent is a person who was proposed for election as a director of the first respondent in the annual general body meeting to be fixed on August 4, 1994. Items Nos. 7 and 8 in the notice have been proposed as "special business".

Along with the suit, the applicants have filed O. A. No. 708 of 1994, for the grant of interim injunction restraining the respondents in any manner considering the subjects, viz., items Nos. 7 and 8 of the notice dated June 29, 1994, issued by the first respondent. On August 3, 1994, the injunction application was moved before me. The first respondent's counsel took notice and submitted that the meeting as proposed could go on including the special business, viz., items Nos. 7 and 8 of the agenda but the first respondent would not give effect to the same until further orders if carried on in the said annual general meeting. On the same day, I passed an order. Instead of granting injunction, I allowed the first respondent to proceed with the annual general meeting with the agenda already printed and circulated to all the shareholders. I made it clear that any decision taken regarding items Nos. 7 and 8, if carried on, will not be given effect to until further orders of this court. I also permitted all the applicants to attend the annual general meeting and participate in the discussions. The first respondent has now filed application No. 5055 of 1994, for vacating the order passed on August 3, 1994, in O. A. No. 708 of 1994. In support of the said application, the first respondent relied upon the counter-affidavit filed in O. A. No. 708 of 1994. The first respondent contended that the two subjects, viz., items Nos. 7 and 8, were passed with huge majority in the annual general meeting held on August 4, 1994.The first respondent was incorporated in the year 1922. It is a nidhi which could have transactions only with its members. According to the applicants, on August 7, 1988, a director by name Giripal Mudaliar died and the second respondent N. G. Manavalan, who is the son of the said Giripal Mudaliar, was appointed by the board of directors of the first respondent as a director on August 11, 1988, in the casual vacancy caused by the death of Giripal Mudaliar. The second respondent could hold office only up to the period to which Giripal Mudaliar would have held the office of director. In the annual general meeting held on September 4, 1990, the second respondent was treated as a retiring director and he was re-elected. There was no nomination for his election as a director of the first respondent and a sum of Rs. 500 was not paid under the provisions of section 257 of the Companies Act, 1956.

It is contended that one Gopalratnam, a director of the first respondent, resigned his post and in his place Mohanakrishnan was appointed in the casual vacancy. In the annual general meeting for 1990-91, he was proposed as a retiring director and controversy arose on that account. Subsequently, before the meeting could take place, the first respondent refused to treat him as a retiring director and controversy arose on that account. The first respondent sought legal opinion and its counsel gave an opinion on September 5, 1991, stating that since Mohanakrishn