Case: Arjun Prasad Vs. Shantilal Shankarlal Shah And Others(And Connected Appeal)

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 of rules having the force of law. 9. Nor can the appellant derive any assistance from the English case In re Kelantan Coco Nut Estate Limited and Reduced, 1920 WN 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 there- under 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 under this new provision the attendance of a person authorised in this manner 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 provisions. 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. Rule 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 Rule 150 lays down how a proxy is to be given where a creditor is a corporation. Admittedly, no proxy in accordance with Rule 150 was given by the two creditor companies, Bhandani Brothers and the Hindustan Coal 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 "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 therefore could not be disputed and was not disputed that an appeal did lie from the order made by the Company Judge on 6th October 1953The "Court" here cannot but mean the Court exercising original jurisdiction. When the Company Judge exercises the jurisdiction he does it under the provisions of S. 3 of the Companies Act, which says that the Court having jurisdiction under this Act shall be the High Court having jurisdiction in the place at which the registered office of the company is situate. The authority authorised to hear appeals from appealable decisions of a Single Judge of the Patna High Court when exercising original jurisdiction lie to the High Court and not to this Court. (Vide Clause 10 of the Letters Patent). It necessarily follows that the appeal from the order of the Company Judge lay to the High Court and not to this Court. There is, therefore, no substance in the first point raised on behalf of the appellantIt is undoubtedly true that the opposing creditor were guilty of negligence in not drawing the attention of the Chairman to what they considered to be a defect in the voting on behalf of the two creditor companies, viz., Bhandani Brothers and the Hindustan Coal Co. and no less negligent in not bringing this to the Courts notice at the earliest opportunity. Laches on the part of some creditors cannot however justify the Chairman or the Court in disobeying the requirements of the Act. If in law the two votes cast by Arjun Prasad for these two creditor companies were not validly cast the three-fourths majority requisite under S.153, sub-s. (2) would not be there and so no further action under S. l53 could be taken by the Court in the matter. How can the Court turn a blind eye to the fact, if proved, that on the basis of valid votes at the meeting the requisite majority was not obtained, merely because the Chairmans attention was not drawn to the defect or it was not brought to the Courts notice earlierIn our opinion, the learned Judges who heard the appeal were right in thinking that however deplorable the delay by opposing creditors in raising the objection might be, that would not be a sufficient reason for refusing to entertain the objectionIt 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 of rules having the force of lawIt is unnecessary for us to consider whether under this new provision the attendance of a person authorised in this manner 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 provisionsAdmittedly, no proxy in accordance with Rule 150 was given by the two creditor companies, Bhandani Brothers and the Hindustan Coal 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 "present in person" in law for that company at the meeting,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.