Gujarat High Court
Sureshchadra V. Parekh vs H.D.F.C. Ltd. on 13 March, 2002
Equivalent citations: (2003)4GLR3625
JUDGMENT K.M. Mehta, J.
1. Sureshchandra V. Parekh the appellant - herein original plaintiff - Party in person has filed this First Appeal against the judgment and decree dated 30-8-2000 in Civil Suit No. 3225 of 1998. In this case, the grievance of the plaintiff is against passing of the Resolution No. 11 in the Annual General Meeting fixed to be held on 10-7-1998. After considering the reply filed by the H.D.F.C. the respondent herein, the trial Court held that the plaintiff has claimed a relief that the Resolution in question shall not be passed in the Annual General Meeting to be held on 10-7-1998. The date 10-7-1998 has already gone, and therefore, even if the plaintiff proves the allegations made in the suit, no effective relief can be granted. In view of the same the suit was dismissed.
Facts
2. The plaintiff has filed the suit in the year 1998 in his capacity as a shareholder. In the suit the plaintiff has claimed the following relief:
(A) The Hon'ble Court will be pleased to grant an injunction against the defendant company from passing Resolution No. 11 on pages 5 and 6 (Produced at 3(1)) in meeting of A.G.M. to be held on 10-7-1998.
3. It may be noted that the Resolution was to the effect to consider the notice under Section 284 of the Companies Act, 1956 received from Mr. Sureshchandra V. Parekh a shareholder for removal of Managing Director of the Corporation.
4. For claiming the relief, it is alleged that the plaintiff is a shareholder and according to him the defendant H.D.F.C. has tried to mislead all the investors at the Annual General Meeting (A.G.M.) without giving the plaintiff an opportunity to present his case and the defendant is misusing its powers.
5. The defendant-H.D.F.C. filed affidavit-in-reply dated 24-7-1998. The affidavit has been filed by Irfan Koreishi, Area Manager (Gujarat). In the said affidavit, it has been stated that it is at the behest of the plaintiff that the proposed Resolution No. 11 was included on the agenda of Annual General Meeting which was held in 10-7-1998 during the proceeding of the said meeting, about 21 speakers condemned the proposed Resolution at Item No. 11 of the notice and with reference to the same, the Vice-Chairman called upon the plaintiff to identify himself and in response to the said call of the Vice-Chairman, the plaintiff, who was very much present in the meeting stood up and made some utterances from his seat itself and when he was advised to come to the microphone, he said that he had nothing to say in the meeting and sat down. As such the Resolution at Item No. 11 was neither proposed nor seconded, and hence, the same came to be dropped. Under the circumstances, nothing remains so far as the injunction application of the plaintiff is concerned more particularly because the plaintiff has asked for a temporary injunction against the defendant restraining the defendant from passing the Resolution No. 11 printed on page Nos. 5 and 6 in the meeting of Annual General Meeting to be held on 10-7-1998. In view of the fact that the said proposed Resolution has already been dropped for the reasons stated more particularly hereinbefore, as nothing survives so far as the suit and the injunction application are concerned. In that view of the matter, it was submitted that now nothing survives in the Civil Suit or the notice of motion and as no cause of action survives the suit and the notice of motion have become infructuous in this behalf.
5A. The learned Judge by his judgment and order dated 30-8-2000 passed below Exh. 1 has considered the grievances of the petitioner. The learned Judge has been pleased to observe that the plaintiff has not disputed the fact that in the said meeting he was present. Under any case, the relief is that the Resolution in question shall not be passed in the Annual General Meeting to be held on 10-7-1998. The date 10-7-1998 has already gone, and therefore, even if the plaintiff proves the allegations made in the suit, no effective relief can be granted. In view of the same, the suit has become infructuous, and therefore, it does not survive. Hence, the suit was dismissed as having become infructuous.
6. The appellant Party-in-person has appeared in this Court and vehemently urged the contentions which he has raised before the trial Court in this behalf. The appellant Party-in-person appeared and vehemently contended that he has raised various contentions in the plaint. He has given details of the shares. He has also referred to earlier correspondence in this behalf. He has further submitted that the defendant has illegally misused the power as Chairman and directed to include such wrong mala fides and misleading inappropriate and incomplete information in the said Agenda. It may be noted that the plaintiff has also filed a case before the Consumer Disputes Redressal Commission which was also disposed of in this behalf. He has also relied upon the rejoinder filed by him wherein he has denied the contentions raised by the defendant-Company in this behalf.
7. Ms. Kanan Lakhia learned Advocate who is appearing for Mr. Sanjay Mehta on behalf of the defendant has submitted that in view of the affidavit-in-reply filed by the H.D.F.C. before the trial Court now nothing survives. She has also supported the order of the learned trial Judge in this behalf. She has further submitted that in any view of the matter this being in the realm of Company Law, the Civil Court has no jurisdiction to try and hear this Appeal. She has also relied upon the provision of Section 189 of the Companies Act (hereinafter referred to as 'the Act') which provides regarding ordinary and special resolutions. She has also invited my attention to Section 190 of the Act which provides for Resolutions requiring special notice and Section 191 of the Act provides for Resolutions passed at adjourned meetings and Section 192 of the Act provides for Registration of certain resolutions and agreements. According to her, all these aspects are to be considered in the realm of Company Law and the Civil Court has no jurisdiction to consider these aspects in this First Appeal. The learned Advocate for the respondent has pointed out that a Resolution to be passed by the company in the Company meeting by giving special notice, ordinary Civil Court ought not to have considered the validity and legality of this Resolution. In support of the same, she has also relied upon the judgment reported in the case of Mafatlal Industries Ltd. v. Gujarat Gas Company Ltd. this Court has considered the jurisdiction conferred on the Company Court under Section 155 of the Companies Act which now inheres in the Company Law Board under the provisions of Secs. III and IIIA of the Act is not jurisdiction of merely a summary nature as the jurisdiction of the Company Law Board includes within its compass power to hold a full-fledged enquiry in respect of the title to shares and to decide any question which it considers necessary or expedient to decide in connection with the application for rectification.
7A. The learned Advocate for the respondent has also relied upon Section 284 of the Companies Act which provides for removal of Directors. Sections 284(1), (2), (3) and (4) read as under:
Section 284. (1) A company may, by ordinary resolution remove a Director (not being a Director appointed by the Central Government in pursuance of Section 408) before the expiry of his period of office.
(2) Special notice shall be required of any resolution to remove a Director under this Section or to appoint somebody instead of a Director so removed at the meeting at which he is removed.
(3) On receipt of notice of a resolution to remove a Director under this Section, the company shall forthwith send a copy thereof to the Director concerned, and the Director (whether or not he is a member of the company) shall be entitled to be heard on the resolution at the meeting.
(4) Where notice is given of a resolution to remove a Director under this Section and the Director concerned makes with respect thereto representations in writing to the company (not exceeding a reasonable length) and requests their notification to members of the company, the company shall unless the representations are received by it too late for it to do so -
(a) in any notice of the resolution given to members of the company state the fact of the representations having been made; and
(b) send a copy of the representations to every member of the company to whom notice of the meeting is sent (whether before or after receipt of the representations by the company);
and if a copy of the representations is not sent as aforesaid because they were received too late or because of the company's default, the Director may (without prejudice to his right to be heard orally) require that the representations shall be read out at the meeting.
7B. Learned Advocate for the respondents stated that Section 284 provides the procedure for removal of Directors and admittedly in the said meeting the plaintiff did not come to the microphone and he stated that he had nothing to say in the meeting and sat down, and therefore, the Resolution at item No. 11 regarding removal of the Directors was neither proposed nor seconded, and hence, the same came to be dropped because nobody supported the same in the meeting.
Conclusions
8. I have considered the contentions raised by the plaintiff-Party-in-person, the learned Advocate for the respondent and also I have considered the provisions of the Companies Act in this behalf. It is no doubt true that the plaintiff-Party-in-person has alleged mala fides but no particulars of mala fides have been shown by him, and therefore, in absence of any particulars no mala fides can be presumed in this behalf. In this case, when the plaintiff himself did not support the resolution; when he did not come to the microphone and he had not uttered the word in the meeting and sat down. Thus, the appellant-plaintiff did not support the Resolution, and therefore, the resolution was dropped. In view of the aforesaid situation, the suit filed by the plaintiff is liable to be dismissed. In any view of the matter, the order of the learned Judge, City Civil Court is also right on question when it has held that the relief which has been claimed by the plaintiff qua the meeting and that period has already over and the suit has become infructuous, and therefore, in any view of the matter, the suit is dismissed on that ground.
9. When such a resolution is proposed by the shareholders, said procedure ought to have been followed in this behalf. In this case, the Resolution was not properly proposed and put in motion, and therefore, the plaintiff cannot succeed in the suit when he himself did not adhere to and supported the Resolution in the meeting.
10. In my view, under Section 284 of the Companies Act, a statutory right is given to the company to remove, by ordinary resolution, any Director in whatsoever manner or on whatsoever terms appointed. This Section, no doubt, provides procedure for removal of a Director of a company by ordinary resolution at a meeting of the shareholders of the company. He may be removed by the Board of Directors or shareholders at the meeting of the Company. Section 284 merely provides for removal of a Director by shareholders and prescribe procedure for the same. In this case, the procedure prescribed under the Section has not been fulfilled because of the omission on the part of the plaintiff, and therefore, now the plaintiff cannot challenge the same before the Civil Court in this behalf. Section 284 in terms prescribes for removal of a Director by shareholders and prescribe procedure for the same, it does not prohibit removal of a Director otherwise than in accordance with this Section. Sub-section (2) requires a special notice of the proposed resolution to appoint or to remove a Director. When such a resolution is proposed by a shareholder, the requirements for the circulation of a member's resolution must be satisfied at the same time in this behalf. As the said procedure is not followed, the plaintiff cannot succeed in the suit. I have already quoted Section 284 of the Companies Act which provides for procedure for removal of Directors. In this case, the procedure prescribed under Section 284 has not been fulfilled, and therefore, the plaintiff cannot succeed in any view of the matter.
In view of the aforesaid circumstances, the First Appeal deserves to be dismissed and accordingly the same is dismissed. No order as to costs.