Case: Arjun Prasad (dead) through his legal representatives smt. Madhukabhasini Devi &amp; Others Vs. Shantilal Shankarlal Sha &amp; Others

or arrangement shall, if sanctioned by the Court, be binding on all the creditors or the class of creditors, or on all members or class of members, as the case may be, and also on the company, or in the case of a company in the course of being wound up, on the liquidator and contributories of the Company." 8. The agreement has to be of a majority in number representing three-fourths in value of those who are present either in person or by proxy at the meeting. The agreement of those who are not present at the meeting either in person or by proxy cannot be taken into consideration. Any creditor, whether a corporation or a natural person can be present at a meeting by proxy. A natural person can of course be present at a meeting "in person". Can a corporation be present at a meeting "in person"? It appears to us that unless there is some special provision by a law, a company which is not a physical person cannot "be present" at any place "in person". It is true that under the General Clauses Act, 1897, a company is a "person" so that whenever the word "person" is used in any statute a company would be included thereunder. The definition in the General Clauses Act can however be of no assistance in interpreting the words "to be present in person", and the difficulty in the way of a company being present in person can be obviated only by statutory provisions or rules having the force of law. 9. Nor can the appellant derive any assistance from the English Case In re Kelantan Coco, Limited and Reduced (1920 Weekly Notes, Part I, p. 274) cited by the learned counsel. In that case, the Court was dealing with a petition for reduction of capital. In deciding whether the special resolution to reduce the capital of the company had been duly passed, the Court had to consider whether there was a quorum at the confirmatory meeting, at which one member of the company and one representative appointed under S.68 of the Companies (Consolidation) Act, 1908 to represent a shareholder of the company, the Eastern Development Corporation, Limited, were present. The Articles of Association provided: "two members personally present shall be a quorum." It was held that a representative appointed under S.68 should be taken into account in considering whether there was a quorum. The provisions of S.68 were similar to those of S.80 of the Indian Companies Act, 1913 and thereunder a company which is a member of another company may, by resolution of the directors authorise any of its officials or any other person to act as its representative at any meeting of that other company. The presence of such a representative was taken in the above case to amount to personal presence of a member of the company. The case does not deal with the question of a creditor Company. 10. In the Indian Companies Act, 1956 a provision has been introduced under which a company which is a creditor of another company may by resolution of its directors, authorise such person as it thinks fit to act as its representative at any meeting of any creditors of the company held in pursuance of the Act and a person authorised in this manner shall be entitled to exercise the same rights and powers (including the right to vote by proxy) on behalf of the company. (S.187(1)(b) and 2). No such provision however is to be found in the Indian Companies Act, 1913. It is unnecessary for us to consider whether tinder this new provision the attendance of a person authorised in this mannar at a meeting of the creditors will amount to attendance of the creditor company "in person". For, the present case is governed by the provisions of the Indian Companies Act, 1913 and not by this new provision. 11. When the Companies Act was amended in 1936, an addition was made in S.246 which empowers the High Court to make rules, concerning the mode of proceedings inter alia "for the holding of meetings of creditors and members in connection with proceedings under S.153 of this Act." Accordingly, a number of Rules were framed by the Patna High Court in exercise of this additional power. R.144 of the Rules states that a creditor or contributor may vote either in person or by proxy. Rules 145 to 153 deal with various questions as regards proxies. Of these R.150 lays down how a proxy is to be given where a creditor is a corporation. Admittedly, no proxy in accordance with R.150 was given by the two creditor companies, Bhandani Brothers and the Hindustan Goal Company, in the present case. There is nothing in these rules which can assist Mr. Sastris argument that a resolution by the directors of the company authorising a director or some other person to represent the company at the creditors meeting makes him a "present in person" in law for that company at the meeting. 12. Mr. Sastris last argument was that as the business of the company has to be managed by the directors and the directors can delegate any of their powers to any one of themselves, the attendance of Arjun Prasad at the meeting should reasonably be construed as the attendance of all the directors and so the attendance of the company "in person". As we have already indicated it does not appear to us that in the Act of 1913 there is any provision for attendance of the company in person", but apart from that we wish to point out that the resolution made by the two companies do not appear to us to delegate the powers of the directors to Arjun Prasad. 13. The conclusion of the High Court that the votes cast by Arjun Prasad on behalf of the two companies, viz., Bhandani Brothers and the Hindustan Coal Company, were not valid votes is, in our opinion, correct.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]It is true that under the General Clauses Act, 1897, a company is a "person" so that whenever the word "person" is used in any statute a company would be included thereunder. The definition in the General Clauses Act can however be of no assistance in interpreting the words "to be present in person", and the difficulty in the way of a company being present in person can be obviated only by statutory provisions or rules having the force of law9. Nor can the appellant derive any assistance from the English Case In re Kelantan Coco, Limited and Reduced (1920 Weekly Notes, Part I, p. 274) cited by the learned counsel. In that case, the Court was dealing with a petition for reduction of capital. In deciding whether the special resolution to reduce the capital of the company had been duly passed, the Court had to consider whether there was a quorum at the confirmatory meeting, at which one member of the company and one representative appointed under S.68 of the Companies (Consolidation) Act, 1908 to represent a shareholder of the company, the Eastern Development Corporation, Limited, were present. The Articles of Association provided: "two members personally present shall be a quorum." It was held that a representative appointed under S.68 should be taken into account in considering whether there was a quorum. The provisions of S.68 were similar to those of S.80 of the Indian Companies Act, 1913 and thereunder a company which is a member of another company may, by resolution of the directors authorise any of its officials or any other person to act as its representative at any meeting of that other company. The presence of such a representative was taken in the above case to amount to personal presence of a member of the company. The case does not deal with the question of a creditor Company10. In the Indian Companies Act, 1956 a provision has been introduced under which a company which is a creditor of another company may by resolution of its directors, authorise such person as it thinks fit to act as its representative at any meeting of any creditors of the company held in pursuance of the Act and a person authorised in this manner shall be entitled to exercise the same rights and powers (including the right to vote by proxy) on behalf of the company. (S.187(1)(b) and 2). No such provision however is to be found in the Indian Companies Act, 1913. It is unnecessary for us to consider whether tinder this new provision the attendance of a person authorised in this mannar at a meeting of the creditors will amount to attendance of the creditor company "in person". For, the present case is governed by the provisions of the Indian Companies Act, 1913 and not by this new provision11. When the Companies Act was amended in 1936, an addition was made in S.246 which empowers the High Court to make rules, concerning the mode of proceedings inter alia "for the holding of meetings of creditors and members in connection with proceedings under S.153 of this Act." Accordingly, a number of Rules were framed by the Patna High Court in exercise of this additional power. R.144 of the Rules states that a creditor or contributor may vote either in person or by proxy. Rules 145 to 153 deal with various questions as regards proxies. Of these R.150 lays down how a proxy is to be given where a creditor is a corporation. Admittedly, no proxy in accordance with R.150 was given by the two creditor companies, Bhandani Brothers and the Hindustan Goal Company, in the present case. There is nothing in these rules which can assist Mr. Sastris argument that a resolution by the directors of the company authorising a director or some other person to represent the company at the creditors meeting makes him a "present in person" in law for that company at the meeting12. Mr. Sastris last argument was that as the business of the company has to be managed by the directors and the directors can delegate any of their powers to any one of themselves, the attendance of Arjun Prasad at the meeting should reasonably be construed as the attendance of all the directors and so the attendance of the company "in person". As we have already indicated it does not appear to us that in the Act of 1913 there is any provision for attendance of the company in person", but apart from that we wish to point out that the resolution made by the two companies do not appear to us to delegate the powers of the directors to Arjun Prasad13. The conclusion of the High Court that the votes cast by Arjun Prasad on behalf of the two companies, viz., Bhandani Brothers and the Hindustan Coal Company, were not valid votes is, in our opinion, correct.