MUKKATTUKARA CATHOLIC CO LTD Vs. THOMAS

JUDGEMENT

(1.) Defendants 1 to 5 in O. S. No. 952 of 1994, who are also respondents 1 to 5 in I. A. No. 4552 of 1994 of the Sub Court, Trissur, are the appellants. The first appellant is a Public Ltd. Co., the second appellant is the Chairman and the others are members of the Board of Directors. The respondents/plaintiffs filed the suit (a) to declare that the meetings of the Board of Directors of the first defendant Company held on 9.6.1994, 26.6.1994 and subsequently till 26.7.1994 are illegal and invalid and the decisions taken at those meetings are ultra vires, void and non est in the eye of law and (b) to declare that the appellants 2 to 4 have vacated their office as Directors by force of S.283 of the Companies Act, for short the Act, and to injunct them and the 5th appellant from taking any measures for the implementation of the decisions taken at the above meetings and for other consequential reliefs. By the above I. A. they sought to restrain the appellants from taking steps on the basis of the proceedings and in pursuance of the decisions taken at the Board meetings held on 9.6.94 and 26.6.1994, including the convening of the general body meeting of the Company stated to be held on 27.8.1994. It was alleged that at the meeting of the Board of Directors held on 9.6.94, only 4 out of 7 members attended, which did not constitute the required quorum and therefore the decisions taken at the meetings are invalid. In particular, it was alleged that in the notice relating to the Board meeting for 9.6.1994 no reference to the subject of allotment of shares to the close relations of the Chairman and two other Directors was made, that they had also not disclosed their interest in the matter, which was clandestinely arranged with ulterior motives and against the larger interest of the Company. In the notice for the meeting held on 26.7.94 no reference was also made to the subject of holding the annual general meeting, about which they came to know only from the advertisement that appeared in the "Deepika". It was urged that appellants 2 to 4 had automatically vacated their office in view of the provisions under S.283 read with S.299 and 300 of the Act for nondisclosure of their interest in the share transactions and by participating in the proceedings held on 9.6.1994.

(2.) The allegations were denied in the counter affidavit filed on behalf of the first defendant, where it was contended that the meeting held on 9.6.1994 was attended by all the 7 members, that the respondents, who are members of the Board declined to sign the minutes and the same had been recorded, that the decisions taken were of usual nature that pertained to registration of transfer of shares, which is a statutory obligation of the Company under S.111 of the Act. No contract or arrangement had been entered into by or on behalf of the Company It was further stated that the Directors are not interested in the transfer of shares and no disqualification as alleged had been incurred. It was submitted that the suit and the petition are misconceived. But then the court below overruled the contentions and passed the impugned order by which the appellants have been restrained from taking steps to implement the decisions taken at the board meeting held on 9.6.1994 and 26.6.1994 and were also further interdicted from convening the annual general meeting pending disposal of the suit. It was submitted that the order is illegal and deserves to be set aside.

(3.) Heard.