Case: Gharda Chemicals Limited &amp; Others Vs. Jer Rutton Kavasmaneck &amp; Others

2. The appellants are the original respondent Nos.1, 2 and 4. The respondent Nos.1 to 7 are the original applicants and the other respondents are original respondent Nos.8 to 13. The appellant No.1 ("the company" for short) was incorporated on 6/3/1967 as a private limited company by shares and with effect from 17/8/1988 it is a deemed public company limited by shares by virtue of sectionof the Companies Act, 1956 ("Act" for short). The respondent Nos.1 to 7 ("the applicants" for short) at the relevant time held approximately 28% of the total share holdings and the respondent Nos.2 to 13 held the remaining 72% of the shares of the company.3. The applicants had filed Company Petition No.77 of 1990 in this Court under section 397 and 398 of the Act seeking appropriate reliefs under sections 402 and 403 of the Act. In view of certain allegations regarding the conduct ofgeneral meeting of the company held in 1990, the parties approached this Court seeking appointment of a person as Chairman for conducting the Annual General Meeting of the company. Accordingly, Justice Rege, former Judge of this Court was appointed as Chairman from time to time and he has conducted the 24th, 25th26th Annual General Meeting of the company.4. The 28th Annual General Meeting of the company was held on 30th November, 1994 as per the notice dated 2/11/1994. Justice Rege presided over the said meeting as Chairman as per the order passed by this Court. In the said Annual General Meeting, one of the scrutineers appointed by the Chairman objected to the votes cast by Mrs.Hirji as power of attorney holder of applicant Nos.45. The first objection was that both the power of attorneys have been executed in favour of Mrs.Hirji by the first holder only and not by both the joint shareholders, i.e. in respect of shares held jointly by applicant Nos.4 and 5 the power of attorney dated 27/3/1990 is executed by applicant No.4 only and in respect of shares held jointly by applicant Nos.5 and 4 the power of attorney dated 27/3/1990 has been executed by the applicant No.5 only. The second objection raised was that the power of attorney holder had voted in excess of the number of shares authorized under the respective power of attorneys. Mrs.Hirji voted in respect of 4301 shares even though she was empowered under the two power of attorneys to vote in respect of 4208 (3208 + 1000) shares.The Chairman, after considering the objection as well as the reply filed by applicants gave his ruling which reads asChairman: Heard the scrutineers The objection by Shri Dayal and reply thereto by Shri.D.Kavasmaneck taken on record. Power of attorney for 3208 shares by Percy Kavasmaneck in favour of Mrs.Hirji held invalid as admittedly out of the said 3208 sharesa lot of 2299 shares are held jointly by PercyAban Kavasmaneck when the P/A is only by Percy in respect of 3208 shares. However, although the P/A is only for 3208 shares Mrs.Hirji voted 3280 shares. The P/A and the voting by Mrs. Hirji on 3280 is invalid. Another P/A by Percy in favour of Mrs.Hirji for 1000 shares is in respect of 1000 shares held jointly by AbanPercy. However, the P/A is only by Aban only. Further voting by Mrs.Hirji under the P/A is in respect of 1021 shares. I hold therefore that P/A so also voting by Mrs. Hirji under the said P.A. in respect of 1021 shares is invalid."We may note that the votes cast by Mrs.Hirji in the said 28th Annual General Meeting were against Special Resolution Nos.6,78. In view of the ruling of the Chairman that the 4301 votes cast by Mrs.Hirji are invalid, the special resolutions No.6,7 and 8 put to vote at the 28th Annual General Meeting were declared as carried and passed by a margin of 86 votes.6. Challenging the above ruling of the Chairman, the applicants filed Company Application No.127 of 1995 in the pending Company Petition No.77 of 1990 inter alia on the ground that the ruling of the Chairman is erroenous on a point of law. The applicants prayed that the ruling of the Chairman in rejecting the 4301 votes cast by the power of attorney holder be set aside and consequently, the ruling given on special resolution Item Nos.6, 78 be reversed and it be declared that at the 28th Annual General Meeting, the Special Resolution Nos.6, 7,8 were defeated. The said company application was opposed by the appellants inter alia on the ground that in the absence of any allegation of malafides or fraud on the part of the Chairman, the ruling of the Chairman could not be challenged. It was further stated that the application has been filed with malafide intentions to harass the shareholders and the company. It was stated that the ruling of the Chairman in the Annual General Meeting could never be the subject matter of the proceedings under section 397 and 398 of the Companies Act. It was further stated that a power of attorney is not a proxy and a power of attorney unlike a proxy has to be signed by all the joint shareholders and, therefore, the votes cast on the basis of a power of attorney executed by the first holder only were liable to be rejected as invalid.7. In the impugned Judgment and order dated 7/4/1995, the learned company Judge noted that the right of a power of attorney holder to vote was neither objected to at the Annual General Meeting nor the votes were rejected on the ground that the power of attorney is not entitled to vote. The votes were rejected by the Chairman because the power of attorneys were signed by the first holder only and not by all the joint share holders.8. The learned company Judge referred to Article 101 of the Articles of Association framed by the company which reads as underWhere there are joint registered holders of any share, any one of such persons may vote at any meeting either personally or by proxy in respect of such share as if he were solely entitled thereto; and if more than one of suchbe present at any meeting personally or by proxy then one of the said persons so present whose name stands first on the Register in respect of such share shall alone be entitled to vote in respect thereof. Several executors or administrators of a deceased member in whose sole name any share stands shall for the purposes of this Article be deemedthereof and their seniority determined by the order in which their names are entered in the Companys records." In the light of the aforesaid Article 101, the learned company Judge held that, since the first holder is empowered to vote in respect of shares held jointly, it was open to the first holder to execute a power of attorney and confer that power to a specified person. Therefore, the power of attorney executed by the first holder only is valid and consequently the votes cast by such power of attorney holder would be valid.9. The learned company Judge further held that the power of attorney is a proxy because neither under the Act nor under the Articles of Association of the company the proxy is required to be executed in any prescribed form. The learned Judge noted that Article 109 of the Articles of Association of the company merely provides that the proxy should be as near as practicable to the form set out in Schedule IX of the Act. The Articles of Association of the company nowhere provides that a document of proxy would be invalid if that document confers not only the power to vote but some other powers also and, therefore, the power of attorney executed by the applicant Nos.4 and 5 clearly amounts to proxies within the meaning of the articles of association framed by the company. Accordingly, the learned Judge held that the proxy votes cast by Mrs.Hirji could not be rejected as invalid.10. Even assuming that the votes cast in respect of shares held jointly were invalid, the learned company Judge observed that the applicant No.4 held 960 shares in his individual name and, therefore, the 960 votes cast by the power of attorney holder under the power of attorney executed by the applicant No.4 against special resolution No.6,78 would be valid. If these 960 votes cast against the special resolution No.6,7 and 8 are taken into account, then the special resolution Nos.6,78 declared to have carried by a margin of 86 votes would have to be declared as defeated. Accordingly, the learned Judge held that the Company may convey a special general meeting to consider Special Resolution No.6, 7 and 8 which were wrongly declared to have been passed in the 28th Annual General Meeting of the Company.

Reasoning: 26. On perusal of the aforesaid provisions of Companies Act and the articles of association of the company, it is seen that at the meeting of the company not only the shareholder and the proxy holder but some other duly authorised person is also entitled to vote. In other words, at the meeting of the company the vote can be cast by the shareholder and in his absence his proxy or other person entitled to vote for him. As rightly contended by the learned counsel for the applicants, it is not the nomenclature but it is a substance of the document which is relevant. In the absence of the member, a person seeking to attend and vote at the meeting of the company must be duly authorised to do so by a valid document. Such a document may not be in the proxy form set out in Schedule IX of the Act, but shall meet the requirement of the company law i.e. the document contains all necessary particulars set out in form in Schedule IX of the Act. In the present case, both the power of attorneys have been found to be substantially complying with the requirement and contain necessary details and particulars and the appellant No.1 company after duly registering the said power of attorneys has issued voting slips to the power of attorney holder. In fact, the voting slips issued by the company specifically provides that the power of attorney holder is entitled to vote at the 28th Annual General Meeting of the company. Even at the meeting all the parties proceeded on the footing that the power of attorney holder is entitled to vote at the meeting and the dispute raised was regarding the validity of the power of attorneys executed by the first holder instead of all the joint holders. Therefore, the question to be considered is, whether the first holder alone could execute a power of attorney in respect of shares held jointly 27. Article 101 of the articles of association framed by the company provides that where the shares are held jointly and more than one of such joint holders remain present at any meeting personally or by proxy, then, the person whose name stands first on the register ("first holder" for short) shall alone be entitled to vote in respect of the shares held jointly. The words "personally or by proxy" used in Article 101 cannot be construed to mean that the right to vote at the meeting of the company is restricted to shareholder or to the proxy holder only. Article 109 framed by the company clearly provides that apart from shareholder and proxy holder, some other person can also be empowered to vote by executing a valid document. In other words, the first holder can himself vote or validly execute a power of attorney authorising some third person to vote for and on his behalf. As the first holder is entitled to vote in respect of the shares held jointly, the power of attorney executed by the first holder in respect of the shares held jointly would be valid and in that event it would not be necessary for all the joint holders to sign the power of attorney. In other words, a power of attorney executed by the first holder authorising a specified person to vote for and on his behalf in respect of shares held jointly is valid. To be more specific, the power of attorney executed by the first holder in respect of the shares held jointly need not be signed by all the joint holders and it would suffice if the deed is signed by the first holder only. In this view of the matter, the Chairman of the company was clearly in error in ruling that the votes cast by the power of attorney holder are invalid on the ground that the power of attorneys were signed by the first holder only and the learned company Judge was justified in reversing the said ruling of the Chairman. 28. The second ground on which the votes were rejected by the Chairman was that the votes cast by the power of attorney holder were in excess of the number of shares mentioned in the power of attorneys. From the records it is seen that after the execution of the power of attorneys, the applicant Nos.45 individually and jointly had acquired additional shares which were recorded in the register maintained by the company. When the said power of attorneys were submitted for registration, the company found the same to be in order and after registering the power of attorneys issued the voting slips to the power of attorney holder. In the voting slips issued by the company, the power of attorney was authorised to vote in respect of 4301 shares as per the register maintained by the company and not in respect of 4208 shares authorised under the power of attorneys. Accordingly, Mrs.Hirji cast her votes in respect of 4301 shares as per the voting slip. Thus, the votes cast by the power of attorney holder were in excess of the number of shares mentioned in the power of attorneys. The Chairman, instead of declaring the excess votes as invalid declared all the votes cast by the power of attorney to be invalid. In our opinion, the learned company Judge has rightly held that the Chairman of the company was in error in rejecting all the votes cast by the power of attorney holder. Since the votes cast by the power of attorney holder were otherwise valid, the Chairman ought to have held that the votes cast to the extent of the shares mentioned in the power of attorneys were valid. The learned company Judge was justified in holding that even if the 960 votes cast by the power of attorney holder in respect of the shares held individually by applicant No.4 were taken into consideration, the special resolution Nos.6,78 were liable to be declared as defeated. 29. It is true that the issue as to whether the power of attorney can be treated as a proxy was not considered by the Chairman of the company while deciding the validity of the votes cast by the power of attorney holder. That issue was raised by the applicants for the first time before the learned company Judge. As we have held that the votes cast under both the power of attorneys are valid, it is not necessary to consider the issue as to whether the power of attorney is a proxy or not. However, the above issue being raised and decided by the company Judge and the counsel on both sides have also canvassed respective arguments before us, we deem it proper to deal with the said issue as well. 30. In our opinion, a shareholder may execute an instrument of power of attorney or an instrument of proxy empowering a specified person to vote on his behalf at the meeting of the company. If the instrument is in conformity with the proxy form set out in the schedule IX of the Act, then the company would register it and issue voting slip to such authorized person. Thus, a person authorised to vote under a validly executed power of attorney under The Powers of Attorney Act, 1882 may not be entitled to vote if the instrument of power of attorney is not in conformity with the proxy form set out in Schedule IX of the Act. In other words, only such an instrument of power of attorney which is in conformity with the proxy form set out in Schedule IX of the Act will entitle the authorised person to vote. 31. Section 176 of the Companies Act provides that any member of a company entitled to attend and vote at a meeting of the company shall be entitled to appoint any person (where a member of not) as his proxy to attend and vote instead of himself. Although, Schedule IX of the Companies Act sets out the general form of proxy, Article 62 of the Schedule I to the Companies Act provides as followsAn instrument appointing a proxy shall be in either of the forms in Schedule IX to the Act or a form as near thereto as circumstances admit." Similarly, Article 109 of the Articles of Association of the applicant No.1 company reads as underThe instrument of proxy shall be as near as practicable in the form set out in the schedule ix of the Act. Therefore, even though Schedule IX of the Act sets out the form of proxy, it may be varied if the circumstances so require. In other words, the proxy form as set out in Schedule IX is not mandatory. So long as any instrument contains all the requisite particulars set out in the form in Schedule IX it can be treated as a proxy. If an instrument like power of attorney contains all the requisite particulars, such as the name of the company, the name of the person executing the instrument, the name of the person empowered to vote as a proxy, etc. as set out in the form in Schedule IX to the Companies Act then such an instrument can be treated as a proxy. As stated earlier, the instrument of proxy is executed to empower a third person to vote at the meeting of the company for and on behalf of the person executing the instrument of proxy. Proxy is one acting for another. It is an authority or power to do a certain thing. A proxy is a lawfully constituted agent. A power of attorney is an authority given by a formal instrument whereby one person, who is called the donor or principal, authorises another person, who is called the donee, attorney or agent, to act on his behalf. In the absence of any specific bar, a power of attorney that substantially complies with the requirement of Schedule IX can be considered as proxy. In the present case, it is not dispute that the power of attorney executed by the applicant Nos.45 contains all the particulars set out in the form in Schedule IX and on being satisfied, the company has issued the voting slips in favour of the power of attorney holder. The fact that clause 2 of the power of attorney empowers the power of attorney holder to vote himself or appoint a proxy, it does not mean that the power of attorney holder cannot vote without executing a deed of proxy in his own favour. Where the power of attorney holder himself decides to vote, then he has to forward the deed of power to attorney to the company and if the same is in conformity with the proxy form set out in Schedule IX, then the company would register it and issue voting slip to the power of attorney holder. In the present case, on registration of power of attorney, voting slips have been issued by the company to the power of attorney holder. Therefore, in the facts of the present case, the learned company Judge was justified in holding that the power of attorney constituted a proxy.32. The contention of the appellants that the words "power of attorney" and "proxy" being different, the power of attorney cannot be considered as proxy is without any merit because, as stated earlier, the object of both the instrument of power of attorney as well as the instrument of proxy is to empower a third person to act for and on behalf of the person executing such instrument. So long as a document is in conformity with the form in Schedule IX of the Act, there is no impediment to consider that document as proxy. Similarly, the fact that the instrument itself does not purport to be a proxy and the same is not registered as proxy makes no difference because, admittedly the voting slips issued by the company empowers both the power of attorney holder as well as the proxy holder to vote at the meeting of the company. In this view of the matter, we are of the opinion that in the facts of the present case, no fault can be found with the findings of the learned company Judge that the power of attorney is a proxy.