WATRAP S SUBRAMANIA AIYAR, HIGH COURT VAKIL Vs. UNITED INDIA LIFE INSURANCE COMPANY LIMITED , A COMPANY CARRYING ON BUSSINESS OF LIFE INSURANCE

JUDGEMENT

(1.) The plaintiffs are advocates of this High Court and the 1 defendant is an Insurance Company with its registered office in Madras and the 2nd, 3rd, 4th, 5th, 6 and 7th defendants are directors of the 1 defendant company, the 2nd defendant being its chairman. The 8 defendant is a firm of merchants, of which the 7 defendant is a member and is the managing agent of the 1 defendant Insurance Company. The plaintiffs bring this suit (1) for a declaration that they were validly elected "Policy-holders Directors" of the 1 defendant company for the year 1928, (2) for a declaration that the 1 defendant company has no power to nominate Policy-holders Directors for the year 1928, (3) for an injunction against all the defendants restraining them from excluding the plaintiffs or in any way restraining or interfering with the plaintiffs acting or attending as Directors of the 1 defendant company, and (4) for an injunction against all the defendants from making any further nomination or nominations as Policyholders Directors for the year 1928.

(2.) The claim arises under the following circumstances. The 1 defendant company has been carrying on the business of Life Insurance from about the year 1906 and in 1926 adopted new Articles of Association which came into force from 1927. Under Art. 62 the number of directors of the 1 defendant company is to be not less than four and not more than nine and of these not more than two directors may be elected by or appointed on behalf of the policy- holders of the company. The directors so elected or appointed are to be known as "Policy- holders Directors". This provision is repeated in Art. 70. Under Art. 73 a meeting of the policy-holders for the purpose of electing not more than two Policy-holders Directors from amongst themselves is to be convened by the directors in 1928 and each successive year. The date and the hour at which these meetings are to be held is to be determined by the directors and the meeting is to be held after the ordinary meeting (that is, the meeting of the share- holders) of the same year and within 15 days from the date of that meeting. Art. 74 sets out the qualification of the Policy-holders Director and Art. 75 provides that candidates for election to the office of Policy-holders Directors are to be proposed at least 7 days before the policyholders meeting by a notice in writing. Art. 76 requires a 14 days notice at least of every policy-holders meeting either by advertisement or by notice sent by post, messenger or otherwise to the registered address of every policy-holder qualified to be present and vote; but it is only in the case of policy-holders holding one or more policy or policies for not less than Rs. 3,000 in the aggregate who are entitled under this Art. to a written notice; all other policy-holders are to receive notice by advertisement only; and the Art. further provides that the accidental omission to give such individual notice to any such policyholders or the non-receipt of the same by any of them shall not, if the meeting shall have been duly advertised, invalidate the proceedings thereat. Only policy-holders holding one or more policy or policies for at least Rs. 3,000 in the aggregate are entitled to vote by proxy at the meeting and the instrument appointing a proxy has to be deposited at the office of the company not less than 48 hours before the time for holding the meeting and the form of proxy is set out in that Article. The Art. further makes provision for the advertisement in one English and one Vernacular daily newspaper in Madras City of the names of the policy-holders nominated as candidates for the office of Policy-holders Directors. The voting at the meeting is to be by ballot. Art. 77 provides that, if at any policyholders meeting the election of Policy-holders Directors does not for any reason (whether by the policy-holders present not choosing to elect any person or by no eligible person being available for election at the meeting or by the meeting being dissolved for want of a quorum or otherwise) take place, it shall be deemed that no Policy-holders Directors are elected by the policyholders for the year. And Art. 79 enables the directors of the 1 defendant company to appoint Policy-holders Directors themselves in the event of the policy-holders not electing a director or directors at their meeting. In accordance with the Articles of Association the directors of the 1 defendant company convened a meeting of the policy-holders for the purpose of electing. Policy-holders Directors on the 21 April, 1928 at 4 P.M. at the 1 defendant company's premises. It is not disputed by the plaintiffs that the requisite notices and advertisement as to the date of the meeting and the names of the candidates for election were issued. The candidates were Messrs. C. Munusami Chetti, R. Rangachariar, the 2nd plaintiff in this suit, B. Sitarama Rao, Watrap S. Subramania Aiyar, the 1 plaintiff and Vydhianathan, Assistant Professor of Mathematics, Pachaiappa's College, Madras. Of these, the first named was a pleader and the others, with the exception of the last named, were then vakils of the High Court and are now advocates. The meeting on the 21 April started at the appointed time and there were some 97 policy-holders present including the 7 defendant. The meeting commenced at about 4 P.M. and Mr. A.R. Venkatarama Aiyar, a Bench Clerk of the High Court of Madras, was elected chairman of the meeting. After this those attending the meeting were welcomed by the 7th defendant in a speech of some duration. After the election of Mr. Venkatarama Aiyar as chairman the proceedings were interrupted by a speech made by a dismissed servant of the 1 defendant company who apparently desired to ventilate certain grievances. This speech lasted for about half-an-hour and the speaker seems to have been very difficult to suppress. But it was pointed eventually that he was not a policy-holder entitled to vote at the meeting and he was thereupon ejected from it. Then one of the policy-holders Mr. K. Narasimha Aiyangar raised a point of order that the meeting was not properly convened inasmuch as individual notices by post, messenger or otherwise to the registered address of every qualified policy-holder had not been given. There was some discussion with regard to this point of order but eventually the chairman quite properly ruled that the meeting was properly constituted. There was then a discussion with regard to the adequacy of the notice of the meeting given to policy-holders and with regard to the date of the meeting and also with regard to the notice containing the names of the candidates for election at the meeting. In this discussion it was not contended that the 1 defendant company had not complied literally with the Articles of Association. The speakers complained that in fact the notices required by the Articles of Association were wholly insufficient and it was a fact that many policy-holders were quite unaware that the meeting was to be held that day. It was also pointed out that a large number of policy-holders live in places very remote from Madras and that the requirement of only 4 days notice to the policy-holders of the names of the candidates for election was wholly insufficient since it was improbable that notices should reach policyholders living at a distance from Madras in sufficient time to be of any value to them. An example was given by Mr. Watrap S. Subramania Aiyar, the 1 plaintiff, with regard to policy- holders living in Tinnevelly and it was pointed out that notices containing the names of the candidates published in the newspapers of the 18 of April could not reach policy-holders in Tinnevelly in time for them to come to Madras to vote in person nor could they vote by proxy because the proxy form has under the Articles of Association to be registered in the company's books 48 hours before the date of the meeting. A good deal of the information as to what took place is to be found in a report in the columns of the Hindu of April 25. This report was put in by the defendants in the course of cross-examination and is an exhibit filed by the defendants and was put in as being an accurate report of what took place at the meeting and the witness was cross-examined upon it. There is, of course, also the evidence of the plaintiffs witnesses which I think does not vary except possibly in certain trifling respects from the account given in the Hindu. The 1 plaintiff for the reasons already referred to suggested that there should be an adjournment of the meeting so that due notice might be given to the policy-holders of the company and sufficient time given for them to exercise their vote. At this point there was a discussion as to whether or not the result of an adjournment would be to cause the policy- holders to forfeit their right to elect directors, as certain speakers took the view that, if instead of electing directors at the meeting, the meeting were adjourned, the directors might be entitled to appoint directors themselves on the ground that the policy-holders had not chosen to elect directors at the meeting. After some discussion upon this matter, as the view seemed to be general that there should be an adjournment, the chairman took the sense of the meeting and found that it was in favour of an adjournment, but the actual resolution to adjourn was not put to the meeting at that stage because it was desired to discuss other matters and to pass resolutions with regard to those other matters. The resolution to adjourn was therefore left until the end. The policy-holders then proceeded to discuss those matters which subsequently were the subjects of resolutions and a discussion arose with regard to the proxies and the chairman was asked to obtain from the 7 defendant information with regard to the number of proxy forms registered by the company for purposes of this meeting. There was some difficulty in getting this information from the 7 defendant. But eventually he informed the meeting that 158 proxies were registered and further questions elicited from him the information that 78 of these proxies were in the name of one Mr. Sundaresa Aiyar, an agent of the company. From the minutes kept by the chairman it would appear that 120 proxy votes were in the hands of 8 of the agents and employees of the company and it was also stated by one speaker that an agent of the company had been going about in a motor-car on days previous to the meeting collecting proxies. The meeting then proceeded to pass its first resolution which was that Candidates for election to the places of the Policy-holders Directors be given by this company within three days from this date a list of the policyholders with their present addresses together with an additional list as to which of them are entitled to vote by proxy or the candidates be allowed access to the books of the company to make out their own lists of policyholders with their present addresses as well as the list of such of them as are entitled to vote by proxy.

(3.) The 7 defendant raised a point of order and the chairman ruled that the resolution was in order and according to the minutes the resolution was passed unanimously, although I think that in view of the 7 defendant's objection he must really have voted against the resolution. The second resolution was as follows: That no proxy be registered by this company in the name of this company's employees or agents for the election of the Policy-holders Directors at the adjourned meeting as well as in future elections.