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(d) Ballot Paper No. 285 - Proxies in favour of SICOM - 5,24,280 shares :

The report of Shri Mehta reads :
"In respect of ballot paper 285 under which votes to the extent of 5,24,280 shares have been casted by the proxy holder given in favour of SICOM Ltd./J.S.Pal/H.M. Patki. According to Shri RJ. Joshi, this ballot paper is purported to be executed by SICOM Ltd. Since there is no separate authorization in favour of the person who cast the vote given by the SICOM Ltd., the subject ballot paper be treated as invalid and be rejected. According to the other three scrutinizers the proxies for aforesaid votes have been given in favour of SICOM Ltd. or Shri J.S. Pal or Shri H.M. Patki. Further according to them the board of directors of SICOM Ltd. vide their resolution dated2-8-2001 have also authorized the aforesaid two officials to exercise voting rights on behalf of SICOM Ltd. Thus, according to them Shri J.S. Pal who exercised the voting rights in respect of the aforesaid proxies through the ballot paper in question is valid one and be taken into consideration. During the scrutiny of the proxies attached with the aforesaid Ballot Paper, it was found that there were signatures differences in case of proxies representing 1,18,150 shares, signatures were not found for proxies representing 1,82,050 shares. Only proxies representing 1,66,559 shares were tallied with the signatures available on the banks records."

Shri Datar submitted: No member can appoint a company to be his proxy as according to Section 176 of the Act, a member is entitled to appoint another person as his proxy to attend and vote instead of himself. The term 'person' signifies a natural person meaning thereby an individual since a company cannot attend a meeting. In construing a term which is not defined in an Act, the purpose and object of the whole Section should be considered as held by the Full Bench of the Kerala High Court in Kamalakshi Vasantha Kumari v. Sankaran Sadasivan AIR 1979 Ker. 116. Therefore, on this ground alone, the proxies given in favour of SICOM which is a company should be rejected. Alternatively, if a company could be appointed as a proxy, then, by a separate resolution of the Board of that company, someone should be authorized to attend and vote in respect of the proxies held by the company. In the present case, Shri Pal has voted on behalf of the proxies held in the name of SICOM without any authority of the Board. The resolution under Section 187 pertains only to the shares held by SICOM in the bank and not the proxies held by it. Therefore, on this score also the votes cast by Shri Pal on the proxies in the name of SICOM should be declared as invalid.

Shri Choudhary submitted : A company could be appointed as a proxy. Since the Companies Act does not define the term 'person', the definition given in the General Clauses Act, 1897 should be adopted. In that Act, a 'person' includes a company. Further, the proxies which were in the name of SICOM were not exclusively in the name of SICOM only. These proxies had three alternative names, namely, SICOM or Shri J.S. Pal or Shri H.K. Patki. These two persons had been authorized by the Board by a resolution dated 2-8-2001 to represent SICOM and vote in respect of shares held by it in the bank. Therefore, even in case of proxies in the name of SICOM, either of these two could exercise the right to attend and vote. Further, Shri Pal being an alternate proxy, could himself exercise the right to attend and vote as a proxy in respect of all these shares. Further, out of 5,34,280 shares for which proxies were given in favour of SICOM/J.S. Pal/H.K. Patki, votes cast only in respect of 1,66,559 shares were considered valid. Since, Shri Pal was also an alternate proxy, the votes cast by him cannot be invalidated.

10. Ballot No. 285 - Proxies in favour of SICOM Ltd.: This has raised an interesting question as to whether a company could be appointed as a proxy. For this purpose, it is appropriate to extract Section 176(1) which reads: "Any member of a company entitled to attend and vote at a meeting of the company shall be entitled to appoint another person (whether a member or not) as his proxy to attend and vote instead of himself: but a proxy so appointed shall not have any right to speak at the meeting." According to Shri Datar, the term 'person' means a natural person or an individual while according to Shri Choudhary, it could be a company also inasmuch as the term 'person' includes a company as per the General Clauses Act. He also submitted that wherever the Legislature intended a natural person, it has also used the term 'individual' in various Sections of the Act. We find that neither the term 'person' nor 'proxy' has been defined in the Act and, therefore, we have to construe this term 'person' with reference to the object with which the same has been used in section 176(1). This section authorizes a member, who is unable to attend a general meeting of a company, to appoint another through an authorisation known as a proxy to attend and vote instead of the shareholder himself. Further, the section also says that the proxy shall not have any right to speak. As a rule, a proxy can demand a poll. No company, being an artificial entity can be present, vote and speak or demand a poll. Only a natural person/individual could do all the above. Therefore, the term 'person' used in the section means only a natural person/individual and the definition of the General Clauses Act cannot be applied in respect of the term 'person' as is used in Section 176. In this connection, we may also refer to Schedule IX of the Act wherein two forms of proxy in terms of Section 176(6) are exhibited. In both the forms, for appointing an alternate proxy, the words used are 'failing him'. The word 'him' would indicate that the proxy has to be an individual. Another reason as to why a company cannot be a proxy is that a proxy is a personal representative of the shareholder and the relation between them is that of a principal and an agent. Since a company cannot attend and vote in a meeting, it has to authorize some individual to represent it in its capacity as a proxy holder in that meeting. It would mean an agent appointing another to act on behalf of the principal. Since a proxy holder is a personal representative of a shareholder, the principle of delegatus non potest delegare will apply. Thus, from the object and purport of Section 176, it is very clear that a proxy has to be an individual and cannot be a company. In other words, a company cannot be appointed as a proxy. In this connection, we may beneficially refer to the English Insolvency Rules which lays down that a proxy has to be an individual of aged 18 years or over. (Rule No. 8.1). Even though Shri Choudhary argued that since under Section 187 the company has passed a resolution regarding its own shares in the company authorizing Shri Pal to represent SICOM and vote on its behalf, the same authority should extend to the proxies given in favour of SICOM. Since we have already held that a company could not have been appointed as a proxy, its authorizing someone else to vote in respect of the said proxy does not arise. Even otherwise, the authority given under Section 187 is only in respect of shares held by a company in another company and not in respect of shares which it does not hold in the other company. A separate authorization by the Board would be necessary in respect of the proxies held by it, which is not in the present case. Shri Choudhary made another submission that since Shri Pal was an alternate proxy along with SICOM, all the votes cast by him could be treated as votes cast by him in his capacity as a proxy. For considering this submission we have to examine as to in which capacity he cast the votes - whether as a representative of SICOM or in his individual capacity as the proxy. The details have not been furnished to us. Therefore, our direction would be that the Chairman should, with the assistance of the scrutinizes, examine the ballot paper 285 and find out whether Shri Pal has voted on these shares in his capacity as a representative of SICOM or in his capacity as a proxy. In case, he has voted as a representative of SICOM, the votes cast will be rejected and where he has voted in his capacity as a proxy, the same be taken as valid.