Case: Nazir Hoosein  Vs. Darayus Bhathena

The present appeal is directed against the order dated 10th February, 1999 passed by the Bombay High Court inNo. 1058 of 1998 in N/M No. 6325 of 1997 in Suit No. 6559 of 1997 dismissing appellants appeal from Bombay City Civil Court order dated 9th September, 1998 dismissing aforesaid appellants notice of motion in the aforesaid suit. In the suit following interim injunctions wereRespondents 1 to 3 from acting on the resolution datedb) Respondents from enrolling newRespondents 4 to 8 from acting as directors of the suitand restraining respondents 1 to 8 and life members enrolled after95 from casting their votes at the1 to 8 from holding Board ofmeeting dated 19th) for an order appointing Mr. Satish Shah,of the meetings of thee appellants are thedirectors of theIndian Automotive Racing Club (hereinafter referred to as. As per the appellants, appellant No. 1 is thechairman of thers of the saidRespondent Nos. 1 to 3 are theand respondent Nos. 4 to 8 ares allegedly appointed along with 7 others under the challenged resolution dated 29th March, 1997. The appellants challenged this resolution to be illegal and void, as it stood obliterated by the agreed and consent order dated 30th June, 1997/2nd July, 1997 inAO No. 274 of 1997 before the Highorder to appreciate the controversy it is necessary to shortly dwell upon certain antecedents and essential short matrix of facts. At theannual general meeting of the companyheld on 29th December, 1993 the appellants and respondent Nos. 1 to 3 were elected asand the first appellant as thechairman of thes. The case of the appellants ison the 8th November, 1995 respondent Nos. 1 to 3 with under current designs, purportedly held a meeting, without serving any notice upon appellant No. 1 and other 4supporting him and passed the followingto shift theoffice of theto respondent No. 1sto remove appellant No. 1 asappoint respondent No. 1 as) appoint 12 additionalon the Board ofr on the 13th November, 1995, another meeting was held by the same group, viz., respondent Nos. 1 to 3, to approve the minutes of the meeting held on 8th November, 1995. On the 16th November, 1995, the appellants and two otherfiled the first Suit No. 7179 of 1995challenging the said resolutions passed at the behest of respondent Nos. 1 to 3and 4 out of the 12 newly appointedOn the 18th March, 1997, thert by means of an order did not interfere with the resolution, so far the shifting of the office and removal of appellant No. 1 as abut injuncted the 12 additionalwhich included defendant Nos. 4 to 8, from acting asAggrieved by one part of the order, viz., non-interference with shifting of the office and removal ofNo. 1, the appellants filedNo. 274 of 1997 before the High Court.On the other hand, respondent Nos. 1 to 3 and 5 additionalbeing aggrieved by the other part of the order, viz., injuncting 12s from functioning filed a crosson 21st March,a notice was issued for a meeting of the Board offor the 29th March, 1997 for the co-option of another set of additional 12in place of the injunctedwhich included respondent Nos. 4 to 8. This led to the appellantsto file another application on the 27th March, 1997for injunction to restrain these respondents from holding the said meeting. Theby an order dated27th March, 1997,however, did not injunct the said meeting, but directed that any resolution passed at the meeting shall not be implemented for twowhich was subsequently extended. As scheduled the said meeting was held, in which again 12 newly additionalwere appointed, including respondentNos. 4 to 8,till such time as the injunction against the first set of twelve additionalremained in operation. Next on 11th April, 1997 notices were issued and served uponincluding those covered by the aforesaid order dated27th March, 1997,proposing a meeting for the 17th April, 1997. This, according to the appellants, was in breach of the order dated27th March, 1997,not to implement the resolution appointing them asOn an application thereafter made by the appellants, theby an order dated17th April, 1997 recorded respondents statement that co-optedwill not be permitted to participate in the said meeting. That meeting was held on the 17th April, 1997, under theof respondent No. 1. The appellants though attended the meeting but did so under protest and without prejudice, which was recorded in the minutes of the meeting. It is relevant to record, in this meeting, question of the induction of more new life members came up for consideration. Relevant portion of the discussion as recorded in the minutes is quotednt No. 1) raised the topic of new applicant and whether the old practice would be adopted in deciding membership of newthe interview the life member category applicant Mr. Bhathena (respondent No. 1) pointed out that in the pastr applicant was not physically called for theMr. Bhathena proposed and Mr. G. L. Goenka seconded and it was resolved that allmembers applications, as well as any other 3 category, be invited and become members in their respective categories."this series of on-going resolutions was going on at the behest of respondent No. 1 and the appellants were protesting repeatedly through various applications inas aforesaid, then reached some understanding between thethe 30th June/2ndJuly, 1997, theappellants appeal from order, as aforesaid, came up for admission in the High Court. On this date, a consent order was passed that a fresh meeting of the Board ofbe held with only those who wereon the Board ofon the 8th November, 1995 under theof Mr. Satish Shah,to consider the earlier agenda of the 8th November, 1995. Hence, the High Court passed the following order on the 2nd July,view of this, appeal stands disposed of. Civil application also does not survive. Same also stands disposed of. In view of the fact that appeal has been disposed of, nothing survives in the suit. Parties to withdraw the suit."is how proceedings in the first Suit No. 6559 of 1997 is said to havece to theaforesaid consent order, a meeting of the Board ofwas held on 4th July, 1997 under theof Mr. Satish Shah. Two major decisions were taken therein.16th September, 1997 was fixed as the next date for holding theg, and secondly, it turned down the proposal to appoint 12 additionalby the group of respondent No. 1 by the majority of 4 to 2. When parties are at

Court's reasoning:
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.