R VENKATASWAMI NAIDU Vs. SOUTH INDIA VISCOSE LTD

JUDGEMENT

(1.) The plaintiff in O.S. No. 2017 of 1983, District Munsifs Court, Coimbatore, is the petitioner in this Civil Revision Petition. In the respondent-company, with which the petitioner appears to have been associated since its inception, he holds two shares. Prior to 29-9-1983, the petitioner was one of its Directors. The Twenty-fifth Annual General Meeting of the respondent-company was scheduled to be held on 29-9-1983 at 11.30 a.m. Item 2 in the agenda for that meeting related to the appointment of a Director in the place of the petitioner, who retired by rotation and was eligible to offer himself for re-appointment. The annual report of the company and the notice of the Twenty-fifth Annual General Meeting were sent to all the shareholders of the company well in advance. While matters stood thus, on 28-9-1983, one P. J. Joseph, who held two shares in the respondent-company instituted S.C. Suit No. 5658 of 1983 before the City Civil Court, Bombay, against the respondent-company, the petitioner herein as well as other Directors and obtained an ad interim injunction restraining the respondent-company and its Directors from holding the Twenty-fifth Annual General Meeting of the Company on 29-9-1983. It further appears that the plaintiff in S.C. Suit No. 5658 of 1983, City Civil Court, Bombay, reached Coimbatore in the morning of 29-9-1983 and served the order of ad interim injunction on the petitioner in his house at about 11 a.m. and thereafter proceeded to the place where the Twenty-fifth Annual General Meeting of the respondent-company was scheduled to be held and informed the Chairman and Secretary of the company at about 11.20 a.m. about the ad interim injunction order passed by the City Civil Court at Bombay and also served the order of ad interim injunction on the Secretary of the company and the Chairman for the meeting, Mr. Desai. Though it is claimed that thereafter there was some discussion as well as protests, the Twenty-fifth Annual General Meeting of the company went on as scheduled and certain resolutions were passed. In so far as the petitioner was concerned, his re-appointment as a director of the company was also considered and the resolution in that regard was declared as lost, as 2,90,732 votes were cast against the re-appointment of the petitioner, while 1,807 votes alone were cast in his favour. The result was, the petitioner ceased to be a Director of the respondent-company and was not re-appointed and the resolution of the company to that effect was also communicated to the petitioner. Subsequently, on 7-10-1983, the petitioner instituted O.S. No. 2017 of 1983, District Munsifs Court, Coimbatore, praying for a declaration that the Twenty-fifth Annual General Meeting of the respondent-company held on 29-9-1983 at 11.30 a.m. in contravention of the order of ad interim injunction passed by the City Civil Court at Bombay in S.C. Suit No. 5658 of 1983 is illegal and for a permanent injunction restraining the respondent-company from implementing the resolutions passed at that meeting and also from interfering with the rights of the petitioner from functioning as a Director of the respondent-company and other incidental reliefs. In I.A. No. 2487 of 1983 in O.S. No. 2017 of 1983, the petitioner prayed for an ad interim injunction restraining the respondent-company from implementing the resolutions passed at the Twenty-fifth Annual General Meeting held on 29-9-1983 and from holding any meeting of the Board of Directors without the participation of the petitioner therein. The main ground urged by the petitioner in that application was that the proceedings of the Twenty-fifth Annual General Meeting were held in violation of the order of ad interim injunction passed by a competent Court and all its proceedings were illegal and he was entitled to continue to be a Director in the respondent-company.

(2.) On 7-10-1983, the learned District Munsif, Coimbatore, granted an ad interim injunction and ordered notice on the injunction application returnable by 7-11-1983. Subsequently, it was realised that a caveat had already been lodged by the respondent-company, which was also in force and when that was brought to the notice of the Court, the order of ad interim injunction passed by it earlier was re-called and only notice was ordered on the injunction application returnable by 7-11-1983. Thereafter, the respondent-company filed its counter.

(3.) In the counter filed by the company, it raised an objection regarding the maintainability of the suit as well as the application for injunction on the ground that the reliefs prayed for therein could be claimed by the petitioner only in the suit instituted before the City Civil Court at Bombay. An objection was also taken that owing to the non-joinder of necessary parties, namely the Directors of the company, the suit is bad. Yet another objection that was raised was that the suit had not been instituted by the petitioner in a representative capacity and that there was no proper and valid service of the order of ad interim injunction passed by the City Civil Court at Bombay on the respondent-company. The proceedings of the Twenty-fifth Annual General Meeting held on 29-9-1983 were claimed to be quite in order, valid as well as legal. The illegality or otherwise of the Twenty-fifth Annual General Meeting of the respondent-company held on 29-9-1983 was a matter, according to the respondent, to be decided only by that Court which passed the order of ad interim injunction and which was by then, seized of an application alleging contempt also taken out by P. J. Joseph. It was the further case of the respondent that the propriety and the validity of the service of the order of ad interim injunction can also be decided only by the City Court, Bombay, and therefore, the suit as well as the application for injunction should be stayed under the provisions of the Civil P.C. inasmuch as the petitioner ceased to be a Director of the respondent-company with effect from 29-9-1983, the respondent questioned the locus standi of the petitioner to institute the suit as well as to file the application and stated that the balance of convenience was also only in favour of the respondent-company. The respondent-company, therefore, prayed for the dismissal of the application for injunction.