S SUPPIAH Vs. CENTURY FLOUR MILLS LIMITED

JUDGEMENT

(1.) THIS appeal by the petitioners is from an order of sethuraman J. The petition was made under section 186 of the Companies Act, 1956, for appointment of an advocate-chairman to preside over the requisitioned general meeting of Century Flour Mills Ltd. , the respondent, to be held on september 14, 1974, and for certain other consequential or incidental reliefs.

(2.) THE company has been managed by two managing directors, P. Govindaswami and S. P. Sithambaram. THE general body appointed them as such at its meeting held on april 12, 1972, and the appointment was duly approved under the Companies Act. In May, 1974, or thereabouts differences arose between the managing directors about the affairs of the company. Govindaswami took up the stand that the other managing director had vacated office both as director and managing director, by reason of the contravention of the provisions of section 295 of the Companies act. Consequent to the stand taken by him he pressed that the entire expenditure incurred by the company on the car allotted to Sithambaram should be debited to his account, as he would not, in the circumstances, be entitled to the car and car allowance. It was stated that as a matter of fact a resolution to that effect had been passed at the board meeting of the company on May 4, 1974. In this background, Sithambaram in O. S. No. 3778 of 1974 on the file of the City Civil Court, Madras, instituted by him, asked for a declaration that he continued to be a managing director and director and that the resolution of the board dated May 4, 1974, was void and illegal. He also prayed for an injunction restraining the company and its directors from interfering with the discharge of his functions as one of the managing directors of the company. An interim injunction granted was in operation, but it was vacated later on. THE appellants, who are the shareholders of the company, asserted that they had lost confidence in Govindaswami as managing director, in view of certain facts within their knowledge. THEy averred that govindaswami had been indirectly obtaining loans from the company by advancing the company's funds to other persons and taking loans from them.

(3.) BUT the question is whether this court has power to make such an appointment. We have no doubt that this court has the power under section 186 of the Companies Act, 1956. That section reads : "186 (1) If for any reason it is impracticable to call a meeting of a company, other than an annual general meeting, in any manner in which meetings of the company may be called, or to hold or conduct the meeting of the company in the manner prescribed by this Act or the articles, the court may, either of its own motion or on the application of any director of the company, or of any member of the company who would be entitled to vote at the meeting, -- (a) order a meeting of the company to be called, held and conducted in such manner as the court thinks fit ; and (b) give such ancillary or consequential directions as the court thinks expedient, including directions modifying or supplementing in relation to the calling, holding and conducting of the meeting, the operation of the provisions of this Act and of the company's articles. Explanation.--The directions that may be given under this sub-section may include a direction that one member of the company present in person or by proxy shall be deemed to constitute a meeting. (2) Any meeting called, held and conducted in accordance with any such order shall, for all purposes, be deemed to be a meeting of the company duly called, held and conducted."