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1967 DIGILAW 319 (ALL)

Raj Pal Singh v. State Of U. P

1967-09-07

SATISH CHANDRA

body1967
JUDGMENT Satish Chandra, J. - This petition under Article 226 of the Constitution relates to the affairs of the Aligarh District Co-operative Bank Limited. This Bank was a Central Co-operative Society registered under the Co-operative Societies Act, 1912. The petitioner represents a society, namely, the Large Size Society which was a share- holder of the Bank. The petitioner Raj Pal Singh was a delegate of the Large Size Society at the annual general meeting of the Bank which was scheduled to be held on 22nd May, 1967. On 19th May, 1967, the Deputy Registrar, Co-operative Societies, Agra, issued an order under rule 31 (a) of the U.P. Co-operative Societies Rules, 1936, suspending the Board of Directors of the Bank and appointing the Assistant Registrar, respondent No. 3, as Administrator of the Bank. The authority of this order is challenged in this petition. The very same order was challenged and sought to be quashed by some Directors of the Bank in Devendra Pal Singh and others v. Deputy Registrar and others, W.P. 2017 OF 1967 decided on 26 August, 1967.. At the hearing learned Counsel stated that since the validity of the order under rule 31 (u) has been challenged by the Directors of the Bank in the aforesaid writ petition, that point was not being pressed in the present writ petition Moreover, in Devendra Pal Singh's case' I. W.P. 2017 of 1967 decided on 26th August, 1967. rule 31 has been held by me as ultra vires. The order under rule 31 (a) impugned in the present case was set aside. Hence it is unnecessary to deal with the validity of that order in this case. 2. The Administrator after assuming charge of the Bank passed an order on 20th May, 1967, stating that in exercise of the powers vested in the Board of Directors, the annual general meeting of the Bank, which was scheduled to be held on 22nd May, 1967, was postponed. It will be held in future on a date to be announced. The validity of this order has been challenged. 3. For the petitioner it was urged that the bye-laws have conferred on the Board of Directors the power to convene a general meeting of the Bank, but the bye-laws have not given it the power to postpone a duly convened meeting. The validity of this order has been challenged. 3. For the petitioner it was urged that the bye-laws have conferred on the Board of Directors the power to convene a general meeting of the Bank, but the bye-laws have not given it the power to postpone a duly convened meeting. The Administrator, in whom the power and functions of the Board of Directors vested, also did not have the power to postpone the meeting since it had been duly convened by the Board of Directors for 22nd May, 1967. For this proposition reliance has been placed upon the following passage in The Law and Practice of Meetings by Shackleton, Fourth Edition, page 144 : "When once a general meeting has been convened it is questionable whether it can be cancelled. The correct procedure, where a postponement of a meeting is desired, is to hold the meeting as convened and adjourn it to the desired date. This procedure would not, of course, apply where the interests of only a few are concerned, and there is unanimity in the matter." 4. Shackleton has based this proposition on the solitary authority of Smith v. Paringa Mines Ltd., L.R. (1906) 2 Ch. D. 193. In this case it was held that in the absence of any express authority in the articles it is not competent for the Board of Directors of a Company to postpone a general meeting which had beer. duly convened. The case of Smith V. Paringa Mines Lid., L.R. (1906) 2 Ch. D. 193. has been noted by Halsbury's Laws of England, Third Edition., Volume 6, page 338, paragraph 663 only in the foot-note. This paragraph dealt with adjournment of meetings. In the body of the paragraph there is no mention whether the statement of law in Smith's case' was correct. It is difficult to say that the learned authors of the Halsbury's Laws of England have endorsed the correctness of the principle enunciated in Smith's case', that in the absence of special powers the Directors cannot postpone a meeting properly convened. In Ghosh's Company Laws (2nd Edition), Vol. 1, page 449, Article 772, this proposition. It has been mentioned on the basis of Smith's case'. In Maheshwar Datt Singh and others v. Sri R. N. Tewari and others W.P. No. 780 Of 1966, Decided On 2nd, March, 1967. after noticing the various authorities I reserved my opinion on this question. In Ghosh's Company Laws (2nd Edition), Vol. 1, page 449, Article 772, this proposition. It has been mentioned on the basis of Smith's case'. In Maheshwar Datt Singh and others v. Sri R. N. Tewari and others W.P. No. 780 Of 1966, Decided On 2nd, March, 1967. after noticing the various authorities I reserved my opinion on this question. 5. For the petitioner reliance was also placid upon the decision of Oak, J. (as he then was) in Chandrika Prasad and others v. President, Municipal Board, Ballia, W.P. NO. 2484 OF 1961 decided on 16t October, 1962 That decision is not to 11e point. There the question was whether the Chairman of a meeting had power to adjourn a meeting after its comment cement. The question whether the authority, which had power to convene a meeting, has power to postpone it, was neither raised nor decided in that case. 6. The various authorities relied upon for the petitioner base themselves on the solitary case of Smith v. Paringa Mines Ltd., L.R. (1906) 2 Ch. D. 193 In that case a general meeting was called, but after the institution of a suit it was postponed to a subsequent date. The shareholders met at the appointed time and place and conducted some of the business for which the meeting had been convened, notwithstanding the notice of postponement. The question was whether the business transacted at the meeting was valid. Kekewich, J., he I that the election of Directors at the meeting was valid. He observed : "I entirely agree with the opinion given by Counsel that it was not competent for the board to postpone the meeting. The articles provide for the adjournment of a general meeting in certain events, but they contain no provision for postponement. It is said that the directors must to able to postpone the meeting because they may fix the time and place at which the meeting is to to held; but in my opinion that is not so. On the other hand, if the directors bad power to postpone. and a meeting adverse to the directors was called,they might postpone it for a wick or a month, of perhaps sine die. 1 cannot see that there is any doubt upon the point." 7. On the other hand, if the directors bad power to postpone. and a meeting adverse to the directors was called,they might postpone it for a wick or a month, of perhaps sine die. 1 cannot see that there is any doubt upon the point." 7. According to the learned Judge the power to fix time and place for a meeting will not include the power to postpone the meeting, because, the power may be abused. 8. The observations were made in a situation where the meeting, which was attempted to be postponed, was nonetheless held and the validity of the proceedings was challenged. Obviously the majority of the shareholders had assembled and participated in the meeting and had no grievance at the proceedings. The ultimate decision in that case may be justified on the ground that Courts are generally loathe to interfere with the internal management of a Corporation. This case is not of much help in a case where the postponement has been successfully achieved in as much as the proposed meeting was not actually held, and the majority of shareholders have not come to Court with a grievance that the postponement was not proper. In the instant case the delegate of a single shareholder is aggrieved at the postponement. In the petition it has been stated that the Bark has about 1,100 shareholders. None of them have joined the petitioner in this Court. In such a situation the decision in Smith's case' is not helpful. 9. The rigour of the decision in Smith's case', has been considerably mellowed down by Shackleton himself. According to this book, the correct procedure where a postponement of a meeting is desired is to hold the meeting as convened and adjourn it to the desired dale. The learned author proceeds to observe that "this procedure would not, of course, apply where the interests of only a few are concerned, and there is unanimity in the matter." So, where there is unanimity in the matter and the interests of only few are concerned, the procedure of cancelling a convened meeting would also be a correct procedure. This is the position in the present case. Only one shareholder, or rather the delegate of a single shareholder, has expressed a grievance at the cancellation of the meeting. None of the other shareholders have come forward. This is the position in the present case. Only one shareholder, or rather the delegate of a single shareholder, has expressed a grievance at the cancellation of the meeting. None of the other shareholders have come forward. In the petition it has been staled (paragraph 13) that out of about 1,100 delegates more than 600 delegates came to attend the annual general meeting of the Bank on 22nd May, 1967, but all of them had to go back dis- appointed. In the counter-affidavit filed by the Administrator this allegation has been denied and it has been stated that about 50 to 60 delegates came and met him on 22nd May, 1967. In any event it is manifest that a substantial majority of the shareholders, have not come forward to express grievance at the postponement of the meeting. The exception propounded by Shack let on would be applicable in the instant case. The procedure adopted by the Administrator to cancel the meeting could not, under the circumstances, be held to be illegal. Kekewich, J., it may be noticed, did not say that the principle enunciated by him was prevalent in England as a rule of Common Law. The doctrine of ultra vires and the rules relating to its application as settled in England, were not considered by him. It is settled that juristic bodies possess implied powers. That is the necessary concomitant of the doctrine of ultra vires. In Anand Prakash and another v. Assistant Registrar, Co-operative Societies and others, (1967) All. L.J. 454 I indicated the nature and character of the doctrine of ultra wires and the scope and extent of implied powers. The proper canon of construction of the doctrine of ultra vires was put by Lord Selborne in Attorney-General v. G. E. Rail- way Co. In Anand Prakash and another v. Assistant Registrar, Co-operative Societies and others, (1967) All. L.J. 454 I indicated the nature and character of the doctrine of ultra wires and the scope and extent of implied powers. The proper canon of construction of the doctrine of ultra vires was put by Lord Selborne in Attorney-General v. G. E. Rail- way Co. (1879) L.R. 5 A.C. 473 at page 478 thus : " I agree with Lord Justice James that this doctrine ought to be reasonably, and not unreasonably understood and applied, and that whatever may fairly be regarded as incidental to, or consequential upon those thing., which the Legislature has authorised, ought not (unless expressly prohibited) to be held by judicial construction, to be ultra vires." Jagannath Das, J., in Bishnu Charan v. State of Orissa, A.I.R. 1952 Orissa 11 AT 16 made the following significant observations in regard to the above quoted passage of Lord Selborn : "There can, therefore, be no doubt that where the intention of an Act in conferring an express power is frustrated by not construing it as necessarily implying another incidental power of however substantial nature, the same must be implied in order not to bring about frustration of the express intention." 10. The doctrine of ultra vires does not permit frustration of the intent ion in confer- ring a power. Under the bye-laws of the Bank the Board of Directors have been conferred the power of fixing the date, time and place for holding general meetings as they deem proper. The intention of this provision obviously was that the Board of Directors are the best judge s to convene the meetings on a date which is convenient and in the interest of the Society. After a dale has been fixed by the Board, a variety of equations may arise on account of which a postponement may be considered desirable or inevitable. The holding of a meeting on the fixed date may become useless. To avoid the involved expenditure and inconvenience in holding the m, cling on the fixed dale and then postponing it to a future date, the Board may consider it desirable to postpone it is advance, in the interests of the Society. The holding of a meeting on the fixed date may become useless. To avoid the involved expenditure and inconvenience in holding the m, cling on the fixed dale and then postponing it to a future date, the Board may consider it desirable to postpone it is advance, in the interests of the Society. If the Board is denied the power to come to a decision on this aspect, the conferment of the rower to fix the date in its discretion, may become illusory ; and the intention, that the Board of Directors are the best judges in that be half, may well be frustrated. The Board of Directors hence would have the ancillary or implied power of postponing a meeting after it ha; been convened, but before it is held, in exercise of the powers of convening meetings, conferred on it. 11. The fears expressed by Kekewich, J., that the power of postponement may be abused, by itself is no justification for denying such an incidental or implied power. An abuse can be remedied by the general body, which has-a controlling jurisdiction over the Board of Directors. An abuse of power can also under certain circumstances, for instance when it may amount to a fraud on powers or oppression of the minority etc., be set right by Courts. The abuse or misuse is not without remedies. It hence should not be the cause of a total denial of the power. I would respectfully record my dissent.... from the broad proposition enunciated by Kekcwieh, J., in Smith's case. In the instant case it was attempted to be shown that the Administrator abused the power. It has been alleged that the Administrator postponed the meeting with a view to manipulate the matter in such a way that the Jan Sangh Party acquired a majority in future in the elections of the Bank. The Administrator in his counter affidavit has denied this. He has stated that he decided to postpone the meeting so that the facts of mismanagement of t he Board of Director; may be brought to the notice of the member and they may have an opportunity to know the charges levelled against the management in the meeting On the materials in this petition, it cannot be held that the postponement was in abuse of powers. 12. In the result, the petition fails and is dismissed with costs.