Validity of restriction on the right of voting.

The question that arises for determination in this appeal is the validity of the election of the respondents as directors of a company called “Tiffin’s Barytes, Asbestos and Paints, Limited”, at a meeting of the general body held on 26th Feruary, 1951. The facts are not in dispute. The company was incorporated in 1945 and its first directors were five persons named in Article 49. One Veeramani was co-opted as a director and the strength of the directorate was thus raised to six. At the first annual meeting which was held on 24th June, 1946, all the directors retired as provided in Article 53 and were re-elected. Before the next general body meeting which was held on 27th August, 1947, three of the directors had resigned and a fourth resigned at that meeting with the result that the strength of the directorate became reduced to two. The next general body meeting was held on 30th December, 1948 and thereafter no annual meeting was called. It was in this state of affairs that one of the shareholders Mrs. Ananthalakshmi Ammal filed Application No. 3898 of 1950 under section 79 (3) of the Indian Companies Act for a direction that a general body meeting might be convened by a Commissioner and that an independent chairman might be appointed to preside over the meeting. On 27th November, 1950, Krishna-swami Nayudu, J., passed an order that the annual general body meeting be held on 28th January, 1951, in accordance with the articles of association of the company, Ex. P-1. He, however, refused the prayer for the appointment of an independent chairman to preside over the meeting and against this portion of the order Mrs. Ananthalakshmi Ammal preferred O.S.A.No. 118 of 1950. By the order which was passed in the said appeal on 11th January, 1951, an advocate Mr. Sanjeevi Naidu was appointed as chairman of the meeting with power to scrutinise the proxies. The company then took out an application, Application No. 139 of 1951, for postponing the meeting which had been fixed for 28th January, 1951, to a later date on the ground that the accounts were not ready. On 16th January, 1951, Krishnaswami Nayudu, J., passed an order directing the meeting to be held on 18th February, 1951. On that date the Commissioner proceeded to the premises of the company for the purpose of holding the meeting. The 1st plaintiff moved that the meeting be adjourned. The register of members, the share transfer books of the company and the proxies were in the possession of Veeramani who had been functioning as a director and he refused to hand them over to the chairman with the result that it became impossible for the chairman to proceed with the meeting. He accordingly adjourned it to 26th February, 1951, and applied to the Court for directions in the matter. On 22nd February, 1951, Mack, J., passed an order directing the company to produce all the books at the meeting on 26th February, 1951. On that date the books of the company were produced; the meeting was actually held and at that meeting defendants 2 to 7 were elected as directors. The plaintiffs then filed Application No. 1135 of 1951 for setting aside the election on various grounds. . On 27th March, 1951, Krishnaswami Nayudu, J., dismissed this application and referred the petitioners to a suit. The present suit has accordingly been filed by the plaintiffs who are two shareholders of the company on behalf of themselves and other shareholders of the company for a declaration that the election of defendants 2 to 7 as directors at the meeting held on 26th February, 1951, was void on the several grounds set out in the plaint. Balakrishna Ayyar, J., who heard the suit disagreed with the contentions put forward on behalf of the plaintiffs and dismissed the suit with costs. Against that decision the plaintiffs have preferred this appeal.

Several contentions were urged by Mr. K. Rajah Ayyar in support of this appeal. It was firstly argued that the power which the general body has under the artic