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2001 DIGILAW 318 (KER)

Mathew v. Nadukkara Agro Processing Co. Ltd.

2001-06-22

G.SIVARAJAN

body2001
Judgment :- G. Sivaraj an, J. The petitioner is a shareholder of the first respondent company and he was also a candidate for election to the Director Board of the company. The Annual General Meeting (AGM) of the first respondent was fixed to 31.5.2001. Here it must be noted that 31.5.2001 is the last date for convening the Annual General Meeting of the first respondent company under the provisions of the Companies Act. The first respondent published a notice in Mathrubhoomi daily dated 30.5.2001 stating that "Due to unavoidable reasons, it has been decided to postpone the Annual General Meeting of the Company, to be held on 31.5.2001. The new date of holding the Annual General Meeting will be intimated to all the shareholders shortly". The petitioner challenges the said notice in this Original Petition. He also seeks for a direction to the respondents 1 to 3 to hold the Annual General Meeting of the first respondent on 31.5.2001 itself. Since the meeting was not convened on 31.5.2001, the petitioner filed application for amendment in which among other prayers, he sought the Annual General Meeting must be convened within a time frame based on the voters list on the date of publication of Ext. P2. Petitioners in O.P. No. 15321 of 2001 (Annexure A8 ) have filed C.M.P. No. 27206/2001 seeking for impleading them as additional respondents 6 to 11 in this O.P. 2. Counter affidavits are filed on behalf of the first respondent, fourth respondent and respondents 6 to 11. 3. I have heard Shri. V. Philip Mathews, the learned counsel appearing for the petitioner, Shri. V.M. Kurian, the learned counsel appearing for the first and second respondents, Smt. P.K. Santhamma, the learned Government Pleader appearing for third respondent, the learned counsel appearing for fourth respondent, Sri. K. Ramakumar, the learned senior Central Government Standing Counsel appearing for the 5th respondent and Shri. Johnson Manayani, the learned counsel appearing for respondents 6 to 11. The counsel for the petitioner submitted that the first respondent was under a legal obligation to conduct the first annual general meeting of the first respondent company on or before 31.5.2001 in view of the provisions of the S.166 of the Companies Act, and that the first respondent has failed to comply with the said direction without any valid justification. The counsel for the petitioner submitted that the first respondent was under a legal obligation to conduct the first annual general meeting of the first respondent company on or before 31.5.2001 in view of the provisions of the S.166 of the Companies Act, and that the first respondent has failed to comply with the said direction without any valid justification. The counsel for the first respondent on the other hand, submits that since this Court in O.P. No. 15321/2001 has directed the Government to consider the representations filed by respondents 6 to 11 and to pass appropriate orders thereon within 3 months from 15.5.2001, the first respondent was under the bonafide belief that the conduct of the Annual General Meeting for the purpose of election to the Director Board also will be contrary to the spirit of the said direction. The counsel further submits that there is no other reason for deferring the meeting fixed to 31.5.2001. The counsel for the respondents 6 to 11 submitted that though respondents 6 to 11 submitted application for issuance of shares and remitted share amounts in advance, the first respondent did not issue the shares to the said respondents. According to respondents 6 to 11 there was absolutely no justification for not issuing share certificates to them. He also submits that since this court has already directed disposal of their representation by the Government, the first respondent was fully justified in deferring the Annual General Meeting fixed to 31.5.2001 to another date. He also submits that the Government have posted the representation submitted by respondents 6 to 11 for hearing to 22.6.2001. The counsel for the fifth respondent points out that the fifth respondent has already issued a communication dated 17.5.2001 (Ext. R60)) stating that the complaint made by the respondent 6 to 11 has been taken up with the company for their reply in that matter and the same is awaited. It is further stated that in case they seek any urgent relief, they can move before appropriate court of law. 4. I have considered rival submissions. Admittedly the meeting which was proposed to be conducted on 31.5.2001 was the first annual general meeting of the first respondent company. It is further stated that in case they seek any urgent relief, they can move before appropriate court of law. 4. I have considered rival submissions. Admittedly the meeting which was proposed to be conducted on 31.5.2001 was the first annual general meeting of the first respondent company. As per the provisions of the S.166 of the Companies Act there is an obligation on the part of the company to convene the first annual general meeting at the latest by the end of 18 months. Admittedly 31.5.2001 was the last date for convening the first annual general meeting of the first respondent company as per the said section. The counsel for the first respondent could not bring to my notice any provisions in the Companies Act, which would enable the company to defer the convening of the said meeting to a date beyond the time specified in S.166 of the Companies Act. That apart the only reason stated by the first respondent in their counter is that the meeting was deferred in view of the judgment dated 15.5.2001 directing the Government to dispose of the representations submitted by the additional respondents 6 to 11 within a period of 3 months. There is no direction by this Court in the said judgment to defer the annual general meeting which has to be convened on or before 31.5.2001. In such circumstances, the first respondent was not justified in not complying with the statutory requirements under S.166 of the Companies Act. It may be that the first respondent has bonafide believed that convening of the said meeting before the disposal of the representations as directed by this Court in the judgment mentioned above will be against the spirit of the said decision. It must also be noted that the enquiry directed by this Court in the said judgment did not stand in the way of the annual general meeting being conducted in accordance with law. Now admittedly, the meeting was deferred. Failure to convene the annual general body meeting is a continuing default for which consequences are also provided under the Act. In such circumstances what is required to be done is to direct the first respondent company to convene the annual general meeting at the earliest. Hence I direct the first respondent company to convene the annual general meeting of the first respondent company within a period of one month from today. In such circumstances what is required to be done is to direct the first respondent company to convene the annual general meeting at the earliest. Hence I direct the first respondent company to convene the annual general meeting of the first respondent company within a period of one month from today. The annual general meeting as directed above must be held on the basis of the list of shareholders available as on 31.5.2001. No fresh nominations to the Director Board will be entertained. 5. Counsel for respondents 6 to 11 submitted that a direction may be issued to the Government to dispose of the representation filed by them within a time frame. No order in that regard is required in this judgment in view of the fact that time had already been specified in the judgment in O.P. No. 15321/2001. The Original Petition is disposed of as above.