R RANGACHARI Vs. S SUPPIAH

JUDGEMENT

(1.) The question which falls for our determination in this appeal by special leave is as to what is the meaning and scope of Section 186 of the Companies Act. 1956 hereinafter called the Act. For the determination of the said question it will suffice to state only a few facts from the judgments of the Madras High Court. There were two Managing Directors of Century Flour Mills Ltd.-respondent No.3 Their names are Shri P. S. Govindswamy and S.P. Sithambaram. Both of them had been duly appointed as such in the year 1972. They subsequently fell out. In August, 1974 certain shareholders of the company including respondents 1 and 2 lodged a requisition under Section 169 of the Act for the calling of an extraordinary general meeting of the company for removal of Govindaswamy. Certain other shareholders lodged a similar requisition for removal of Sithambaram from the post of Managing Director. Both the requisitions were considered by the Board of Directors in their meeting held on 19-8-1974. As per the requisitions, they called an extraordinary general meeting of the company to be held on 14-9-1974. The meeting was directed to be held at the residence of one of the shareholders of the company instead of its registered office. The shareholders were divided into two factions belonging to the two groups of the Managing Directors. Apprehending very many difficulties and troubles in the holding and the conduct of the meeting on 14-9-1974, respondents 1 and 2 filed an application under Section 186 of the Act, Company Petition No. 85/1974, in the Madras High Court. They prayed to the Court to appoint an Advocate- Commissioner as Chairman of the meeting to be held on 14-9-1974 so that the proceedings may be conducted in a regular manner. The only respondent impleaded in the said petition was the company which filed a counter-affidavit to resist the prayer of respondents 1 and 2. A learned single Judge of the High Court took the view that power under Section 186 of the Act could be exercised even where a meeting had already been called, but it was impracticable to hold or conduct the meeting. In other words, the learned Judge was of the opinion that the Court even without ordering a meeting of the company to be called could appoint a person to be the Chairman of the meeting. But on appreciation of the facts of the case in the light of certain decisions of the High Courts, he came to the conclusion that it was not impracticable to hold or conduct the meeting and hence dismissed the application filed by respondents 1 and 2.

(2.) O.S. Appeal No. 64/1974 was filed in the High Court under clause 15 of the Letters Patent against the order dated 11-9-1974 of the learned single Judge. By an order made on September 12, 1974 a Bench of the High Court stayed the convening of the meeting called to be held on 14-9-1974. It appears that in spite of the service of the order dated 12-9-1974 on September 13, the meeting was held on 14-9-1974. CMP No. 10935/1974 was taken out in the form of a Judges' summons under Rule 9 of the Company Code Rules, 1959 to declare the meeting held on 14-9-1974 as void and the resolutions passed therein as illegal and inoperative. The said appeal and the CMP along with other CMPs which are not necessary to be referred to in this judgment were heard by a Bench of the High Court presided over by the learned Chief Justice. The Bench allowed CMP No. 10935/1974, put back the parties in the same position as they stood immediately prior to the service of the order dated 12-9-1974 and declared that the meeting held on September 14, 1974 and the resolutions passed thereunder would have no effect whatsoever. By a separate judgment, Appeal No. 54/1974 was also allowed by the Division Bench. It agreed with the single Judge as regards the meaning and scope of Section 186 of the Act but differed from him on the merits of the case. They appointed an Advocate of the Court as the Advocate-Chairman to hold and conduct the meeting and directed that the meeting would take place at the premises of the registered office of the Company.

(3.) The sole appellant in this appeal is a shareholder of the company. Feeling aggrieved by the orders of the Division Bench of the High Court in CMP No. 10935/74 and in OS Appeal No. 64/1974 he filed special leave applications in this Court seeking leave to file appeals in both the matters. By order dated 29-8-1975 a Bench of this Court dismissed as withdrawn SLP No. 1156/1975 arising from judgment and order D/-11-3-1975 of the High Court in CMP No. 10935/1974. Special leave was granted from the judgement and order D/- 17-3-1975 of the High Court passed in OS Appeal No. 64/1974.