Case: Nazir Hoosein  Vs. Darayus Bhathena

the minutes recorded by Mr. Satish Shah that before item No. 1 was taken up Mr. Bhiwandiwalla and Mr. Bhathena (respondent No. 1) stressed the need to hold an early Annual General Meeting. Another Director Mr. Swadi also suggested the same for electing a new Board which could finalise the accounts. Finally, Mr. Bhiwandiwalla suggested the following: (i) that the Accounts be finalised and approved as soon as possible. (ii) that all the members of the present Board should resign and an entirely new Board should be elected; and (iii) that in any event the Annual General Meeting should be convened as early as possible even if the Accounts were not ready. The other members were agreeable to this and it was resolved that the Annual General Meeting should if possible be held on 16th September, 1997. This also indicates that the Board desired holding an early Annual General Meeting and in favour of all members of this Board resigning. In this context presiding by respondent No. 1 as Chairman of the meeting held on 17th April, cannot be held to be proper. However, on the other hand a submission is, even where there is no Chairman or in case the Chairman not present or as in the present case it is in dispute, it is open for the Board of Directors to elect any one to function as such in any meeting. But this is neither the respondents case nor it is shown that he was elected as such on that date. His authority if at all was only through the resolution dated 8th November, 1995. Strong submission for the respondents was that appointment of respondent No. 1 as Chairman was held to be valid by a competent Court of law by order dated 18th March, 1997 in Notice of Motion No. 6337 of 1995. But this order was challenged by the appellants through A.O. No. 274 of 1997 in the High Court. It is in this extent that consent order was passed which obliterated various resolutions including of 8th November, 1995. So this submission of respondents has no force. 33. Lastly, we have considered the question of induction of 57 new life members. So far in their application no defect could be pointed out. It is true, these new life members are not parties before us. It will be in the best of interest that question of their induction as life members instead of rejecting, be placed for consideration, in the Annual General Meeting to be held by the Company. So we come to the conclusion, that meeting dated 17th April, 1997 was not only not conducted in the proper perspective but it also suffers from procedural irregularities. This was part of the tussle between the two groups to gain the majority over the other. However, it would not be proper to reject the life members application. So in order to keep the interest of the life members, we direct that their cases be placed before the next Annual General Meeting to be held for its consideration. 34. Since the dispute, as to who shall preside, is still not resolved, in spite of this long drawn litigation which can only come to an end by fresh election of the Board of Directors in the next Annual General Meeting, it is proper in the interest of the Company that neither appellant No. 1 nor respondent No. 1 presides in any board of Directors meeting. 35. Thus, so far the direction of the High Court to hold Annual General Meeting under the Chairmanship of Mr. A. P. Kothari, the Company Registrar seems to be proper, hence needs no Interference to that extent, The relevant portion of this is quoted hereunder: "However, it is clear that a meeting of the Board of Directors has been held pursuant to an order passed by this Court and it is common ground before me that the Board of Directors decided to hold the annual general meeting of the company immediately, in this view of the matter, therefore, in my opinion, it would be just and proper to direct that the Annual General Meeting of the Company should be held for holding elections to the Board of Directors of the Company. In my opinion, considering that the parties are fighting, it would be proper to direct that the Annual General Meeting should be held under the Chairmanship of Shri A. P. Kothari, the Company Registrar." 36. Hence for all the aforesaid reasons we allow the appeal of the appellants, set aside both the judgments of the High Court dated 10th February, 1999, except to the aforesaid extent, and the trial Court order dated 9th July, 1998, and further direct holding of Annual General Meeting at the earliest under the Chairmanship of Mr. A. P. Kothari, Registrar Company as aforesaid. Even if any prior meeting before Annual General Meeting is to be held of the Board of Directors, the same shall also be presided by the same Mr. A. P. Kothari, Registrar. In view of the aforesaid findings our conclusions are: (A) Neither appellant No. 1 nor respondent No. 1 shall preside in any of the meetings of the Board of Directors. (B) The appointment of 12 additional Directors cannot be sustained. Hence resolutions dated 8th November, 1997 and 29th March, 1997 and 17th April, 1997 stand obliterated in view of the consent order dated 30th June/2nd July, 1997. (C) So far resolution dated 17th April, 1997 for the induction of 57 life members, in view of our findings, they not be deemed to have been inducted on that date as member but their induction as such would be placed for consideration before the Annual General Meeting to be held later. (D) Annual General Meeting shall be held under the Chairmanship of Mr. A.P. Kothari, Registrar, Company who shall expedite the holding of Annual General Meeting at a very early date, possibly within three months of this order being communicated to him. 37. Accordingly, the aforesaid

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

Explanation:
1[ds]In our considered opinion, the culmination of the appeal, the suit, by its withdrawal as perorder, as a consequence of the consent order indicates one and the only inference that once the parties agreed to hold a fresh meeting under theof Mr. Satish Shah tosh the agenda of the meeting dated 8th November, 1995, then it implicitly voices, what was resolved in the said meeting earlier is wiped off and has become non-est. The very re-consideration of the earlier agenda clinchingly reveals that what was done then is wiped off. How can earlier resolution dated 8th November, 1995, would survive when it is to be considered afresh? Of course, itopen to the Board to pass the same, modify or pass entirely different resolution.company would be bound by the resolution passed in this later meeting. The High Court committed error of law by concluding to the contrary. The High Court misdirected itself and misconstrueder, it is clear that a meeting of the Board ofeld pursuant to an order passed by thisand it is common ground before me that the Board ofdecided to hold theannual general meetingof the companyimmediately, in this view of the matter, therefore, in my opinion, it would be just and proper to direct that theannual general meetingof the companyheld for holding elections to the Board ofdirectors of theIn my opinion, considering that the parties are fighting, it would be proper to direct that theannual general meetingshould be held under theof Shri A. P. Kothari, the Company Registrar."for all the aforesaid reasons we allow the appeal of the appellants, set aside both the judgments of the High Court dated 10th February, 1999, except to the aforesaid extent, and the trialorder dated 9th July, 1998, and further direct holding ofannual general meetingat the earliest under theof Mr. A. P. Kothari,as aforesaid. Even if any prior meeting beforeannual general meetingis to be held of the Board ofthe same shall also be presided by the same Mr. A. P. Kothari, Registrar.