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2. The claim arises under the following circumstances. The 1st defendant company has been carrying on the business of Life Insurance from about the year 1906 and in 1926 adopted new Articles of Association which came into force from 1927. Under Article 62 the number of directors of the 1st defendant company is to be not less than four and not more than nine and of these not more than two directors may be elected by or appointed on behalf of the policy-holders of the company. The directors so elected or appointed are to be known as "Policy-holders' Directors". This provision is repeated in Article 70. Under Article 73 a meeting of the policy-holders for the purpose of electing not more than two Policy-holders' Directors from amongst themselves is to be convened by the directors in 1928 and each successive year. The date and the hour at which these meetings are to be held is to be determined by the directors and the meeting is to be held after the ordinary meeting (that is, the meeting of the share-holders) of the same year and within 15 days from the date of that meeting. Article 74 sets out the qualification of the Policy-holders' Director and Article 75 provides that candidates for election to the office of Policy-holders' Directors are to be proposed at least 7 days before the policyholders' meeting by a notice in writing. Article 76 requires a 14 days' notice at least of every policy-holders' meeting either by advertisement or by notice sent by post, messenger or otherwise to the registered address of every policy-holder qualified to be present and vote; but it is only in the case of policy-holders holding one or more policy or policies for not less than Rs. 3,000 in the aggregate who are entitled under this Article to a written notice; all other policy-holders are to receive notice by advertisement only; and the Article further provides that the accidental omission to give such individual notice to any such policyholders or the non-receipt of the same by any of them shall not, if the meeting shall have been duly advertised, invalidate the proceedings thereat. Only policy-holders holding one or more policy or policies for at least Rs. 3,000 in the aggregate are entitled to vote by proxy at the meeting and the instrument appointing a proxy has to be deposited at the office of the company not less than 48 hours before the time for holding the meeting and the form of proxy is set out in that Article. The Article further makes provision for the advertisement in one English and one Vernacular daily newspaper in Madras City of the names of the policy-holders nominated as candidates for the office of Policy-holders' Directors. The voting at the meeting is to be by ballot. Article 77 provides that, if at any policyholders' meeting the election of Policy-holders' Directors does not for any reason (whether by the policy-holders present not choosing to elect any person or by no eligible person being available for election at the meeting or by the meeting being dissolved for want of a quorum or otherwise) take place, it shall be deemed that no Policy-holders' Directors are elected by the policyholders for the year. And Article 79 enables the directors of the 1st defendant company to appoint Policy-holders' Directors themselves in the event of the policy-holders not electing a director or directors at their meeting. In accordance with the Articles of Association the directors of the 1st defendant company convened a meeting of the policy-holders for the purpose of electing. Policy-holders' Directors on the 21st April, 1928 at 4 P.M. at the 1st defendant company's premises. It is not disputed by the plaintiffs that the requisite notices and advertisement as to the date of the meeting and the names of the candidates for election were issued. The candidates were Messrs. C. Munusami Chetti, R. Rangachariar, the 2nd plaintiff in this suit, B. Sitarama Rao, Watrap S. Subramania Aiyar, the 1st plaintiff and Vydhianathan, Assistant Professor of Mathematics, Pachaiappa's College, Madras. Of these, the first named was a pleader and the others, with the exception of the last named, were then vakils of the High Court and are now advocates. The meeting on the 21st April started at the appointed time and there were some 97 policy-holders present including the 7th defendant. The meeting commenced at about 4 P.M. and Mr. A.R. Venkatarama Aiyar, a Bench Clerk of the High Court of Madras, was elected chairman of the meeting. After this those attending the meeting were welcomed by the 7th defendant in a speech of some duration. After the election of Mr. Venkatarama Aiyar as chairman the proceedings were interrupted by a speech made by a dismissed servant of the 1st defendant company who apparently desired to ventilate certain grievances. This speech lasted for about half-an-hour and the speaker seems to have been very difficult to suppress. But it was pointed eventually that he was not a policy-holder entitled to vote at the meeting and he was thereupon ejected from it. Then one of the policy-holders Mr. K. Narasimha Aiyangar raised a point of order that the meeting was not properly convened inasmuch as individual notices by post, messenger or otherwise to the registered address of every qualified policy-holder had not been given. There was some discussion with regard to this point of order but eventually the chairman quite properly ruled that the meeting was properly constituted. There was then a discussion with regard to the adequacy of the notice of the meeting given to policy-holders and with regard to the date of the meeting and also with regard to the notice containing the names of the candidates for election at the meeting. In this discussion it was not contended that the 1st defendant company had not complied literally with the Articles of Association. The speakers complained that in fact the notices required by the Articles of Association were wholly insufficient and it was a fact that many policy-holders were quite unaware that the meeting was to be held that day. It was also pointed out that a large number of policy-holders live in places very remote from Madras and that the requirement of only 4 days' notice to the policy-holders of the names of the candidates for election was wholly insufficient since it was improbable that notices should reach policyholders living at a distance from Madras in sufficient time to be of any value to them. An example was given by Mr. Watrap S. Subramania Aiyar, the 1st plaintiff, with regard to policy- holders living in Tinnevelly and it was pointed out that notices containing the names of the candidates published in the newspapers of the 18th of April could not reach policy-holders in Tinnevelly in time for them to come to Madras to vote in person nor could they vote by proxy because the proxy form has under the Articles of Association to be registered in the company's books 48 hours before the date of the meeting. A good deal of the information as to what took place is to be found in a report in the columns of the Hindu of April 25. This report was put in by the defendants in the course of cross-examination and is an exhibit filed by the defendants and was put in as being an accurate report of what took place at the meeting and the witness was cross-examined upon it. There is, of course, also the evidence of the plaintiffs' witnesses which I think does not vary except possibly in certain trifling respects from the account given in the Hindu. The 1st plaintiff for the reasons already referred to suggested that there should be an adjournment of the meeting so that due notice might be given to the policy-holders of the company and sufficient time given for them to exercise their vote. At this point there was a discussion as to whether or not the result of an adjournment would be to cause the policy-holders to forfeit their right to elect directors, as certain speakers took the view that, if instead of electing directors at the meeting, the meeting were adjourned, the directors might be entitled to appoint directors themselves on the ground that the policy-holders had not chosen to elect directors at the meeting. After some discussion upon this matter, as the view seemed to be general that there should be an adjournment, the chairman took the sense of the meeting and found that it was in favour of an adjournment, but the actual resolution to adjourn was not put to the meeting at that stage because it was desired to discuss other matters and to pass resolutions with regard to those other matters. The resolution to adjourn was therefore left until the end. The policy-holders then proceeded to discuss those matters which subsequently were the subjects of resolutions and a discussion arose with regard to the proxies and the chairman was asked to obtain from the 7th defendant information with regard to the number of proxy forms registered by the company for purposes of this meeting. There was some difficulty in getting this information from the 7th defendant. But eventually he informed the meeting that 158 proxies were registered and further questions elicited from him the information that 78 of these proxies were in the name of one Mr. Sundaresa Aiyar, an agent of the company. From the minutes kept by the chairman it would appear that 120 proxy votes were in the hands of 8 of the agents and employees of the company and it was also stated by one speaker that an agent of the company had been going about in a motor-car on days previous to the meeting collecting proxies. The meeting then proceeded to pass its first resolution which was that Candidates for election to the places of the Policy-holders' Directors be given by this company within three days from this date a list of the policyholders with their present addresses together with an additional list as to which of them are entitled to vote by proxy or the candidates be allowed access to the books of the company to make out their own lists of policyholders with their present addresses as well as the list of such of them as are entitled to vote by proxy.

What is the consequence? It is that the right is in the assembly itself, for, if there be an assembly all consisting of equals and there is no custom, nor rule of law, to direct the adjournment, the right must be in the persons who constitute the assembly.

18. In the tenth edition of Buckley on the Companies Acts, on page 615, in the Notes to Article 55, it is stated:

There is a common law right of adjournment of a public meeting.

19. It is not disputed by Mr. Alladi Krishnaswami Aiyar and Mr. Narasimha Aiyar on behalf of the plaintiffs that, although there is an inherent right in a meeting to adjourn itself, the adjournment must be for a bona fide purpose. I think that is quite clear as it can never be the law that a meeting can adjourn itself for the purpose of frustrating the business which it was called to transact. Mr. Doraiswami Aiyar, however, contends that this was not a bona fide adjournment of the meeting. He frankly concedes that the plaintiffs and those policy-holders who voted in favour of the adjournment were moved to do so from the purest and most honest of motives. He stated at the end of the plaintiffs' case that he did not propose to call any evidence for the purpose of contradicting any statement which any of the witnesses for the plaintiffs, and the first plaintiff himself, had made in the witness-box. He accepted the whole of the evidence of these persons and did not in any way desire to challenge it. That admission of Mr. Doraiswami Aiyar is a very frank one indeed and it is one which, in my view, goes the full length of establishing the plaintiffs' case that the meeting was adjourned for the purpose of getting a better representation of policy-holders at the adjournment meeting and that only. That is what all the witnesses for the plaintiffs have said. Attempts were made in cross-examination to show that the object of the adjournment was to defeat the proxies and to secure the election of persons who would otherwise not have been elected had the policy-holders proceeded to an election on that day. But one fact stands out clearly and it is this, that there was no discussion with regard to proxies at all until the sense of the meeting had been taken by Mr. Venkatarama Aiyar, the Chairman, and it had been ascertained that the meeting was entirely in favour of adjourning until another date, the reason for the adjournment being that those present thought that although the Articles of Association had been strictly complied with, nevertheless there were numbers of policy-holders who not only had no notice of the meeting but could not have had any notice of the names of the candidates and that is what all the witnesses for the plaintiffs have said. Their evidence is accepted by Mr. Doraiswami Aiyar and is uncontradicted by any evidence called on behalf of the defendants and he also concedes that there must be many policy-holders who do not in fact get to know of the meeting. In my view it is obvious that the meeting was adjourned for a bona fide purpose, namely, to enable better representation of policy-holders at the election of Policy-holders' Directors; and I find as a fact on the evidence that it was that reason which brought about the adjournment. The discussion and the passing of the other resolutions do not in my view affect the question in the least bit. It is, of course, obvious that the policy-holders could not pass those other resolutions to the effect that they did which could in any way bind the 1st defendant company for one reason alone, namely, that to carry out those resolutions would have meant an alteration in the Articles of Association. The defendants have stressed the discussion and the passing of these resolutions which, it is contended, were entirely outside the business for which the meeting was called and it is pointed out that the 7th defendant produced a letter of instruction to the meeting in which it was pointed out that the sole business to be transacted at the meeting was that of electing Policy-holders' Directors. I think myself that the Chairman was wrong in allowing those resolutions to be put as all the Articles of Association had been complied with regard to the calling of the meeting. If they had not, then it would have been the duty of those present to have pointed that out. But I am bound to say that though these resolutions were out of order the policy-holders were not unreasonable in regarding the procedure with regard to calling the meeting and also with regard to the proxies as most imperfect and with regard to the proxies undesirable as well. Mr. Doraiswami Aiyar admitted that, even if the Articles of Association were strictly complied with, there must still be a large number of policy-holders in the mofussal and outside the presidency itself who did not get notice of the meeting of policy-holders. This, I think, must be obvious, because it is only those policy-holders who hold policies aggregating to Rs. 3,000 who are entitled even to a written notice. The other policy-holders who are a very large majority have to depend on the advertisement in certain newspapers in the Madras City and it may be only by mere chance that they come to know of any notice with regard to the meeting, and it was in order to remedy this that the resolution to that effect was passed by the meeting. As I say it was entirely out of order. With regard to the proxies I think that the policy-holders were perfectly justified in the criticisms which they made and which resulted in the resolution being passed although that was out of order. The position is this, that the company alone has access to the list of policy-holders. It is therefore in the position of being able to collect proxies in the hands of its agents which it can use for whatever purpose it desires at a meeting. The policy-holders have no means of ascertaining who are the policyholders entitled to vote at a meeting. In the immediate circle of their friends policy-holders may know of other policy-holders, but it is impossible for them to know to any useful extent who the policy-holders are and to obtain proxies from them which they the policy-holders can use at a meeting. This is, of course, absolutely one-sided. It means that the company can control the voting at the policy-holders' meeting and secure the election of whichever candidate or candidates the company desires and can bring about the defeat of the candidate the company does not desire to have upon its board. A great deal was said by Mr. Doraiswami Aiyar about this great and new privilege which had been granted under the new Articles of Association to the policy-holders. On the face of it does appear to be a privilege. In fact in the hands of a company which does not choose to act in a bona fide manner the privilege is no privilege at all. The company can itself nominate any candidate it desires either by one of its directors who is a policy-holder or any of its servants or agents who are policy-holders because every policy-holder is entitled to nominate candidates for election. In this way the company can elect from its policy-holders any person or persons whom it may choose to be elected to its board; in other words, it can, if it chooses, select mere puppets in the hands of the other directors of the board and by means of proxies secure the election of them. And it is of importance to refer to certain facts which came out at the meeting of the 21st April. It appeared that one Mr. T.K. Sundaresa Aiyar was the holder of about 80 proxies in his own name, Mr. Sundaresa Aiyar is an agent of the 1st defendant company and it was stated at the meeting that this gentleman had gone round in a motor-car collecting proxies previous to the meeting. Some other proxies were also held by other servants of the 1st defendant company. It is quite clear that the proxies in the hands of Mr. Sundaresa Aiyar were nearly sufficient to defeat the unanimous vote of the policy-holders present. But it does not need much common sense or effort of imagination to suppose that the 1st defendant company had collected these proxies for the purpose of using them in a certain way. The 1st defendant company was not through its agents collecting proxies merely as curios; the intention to do something with those proxies must be attributed to the 1st defendant company. I think it is beyond question that the intention of the 1st defendant company was to secure the election of two candidates of their own selection and certainly to bring about the defeat of the 1st plaintiff Mr. Watrap Subramania Aiyar. I say that for the following reasons. During the trial the nomination papers with regard to the candidates nominated for election were put in and I find this, that one of the candidates, Mr. B. Sitarama Rao, who was one of those subsequently appointed as a Policy-holders' Director by the directors themselves, was proposed as a candidate by Mr. T.K. Sundaresa Aiyar, an agent of the 1st defendant company, who was the holder of all these proxies at the policy-holders' meeting. It does not seem to me to be a violent inference to draw that Mr. Sundaresa Aiyar would have used the proxies he had in his hands for the purpose of securing the election of Mr. Sitarama Rao. I also notice that Mr. Vydianathan was proposed as a candidate by Mr. Sundaresa Aiyar. Mr. Sitarama Rao was proposed by another policy-holder as well, Mr. K.S. Rajagopala Aiyangar, who is one of the advocates at this trial for the defendants and is, I believe, one of the 1st defendant company's legal advisers, so that two of the candidates for election were proposed by an agent of the company in whose hands the bulk of the proxies were and by one of its legal advisers. I have no hesitation in describing Mr. Sitarama Rao as the 1st defendant company's candidate at the election. Mr. Sitarama Rao is a gentleman of repute and standing at the bar and no doubt would have made an excellent Policy-holders' Director, but the privilege of electing a Policy-holders' Director is supposed to be that of the policy-holders themselves and not of the 1st defendant company. But there is more than this. During the cross-examination of the plaintiffs' witnesses and of Mr. Watrap Subramania Aiyar himself they were asked questions which at first I had some difficulty in seeing had any bearing upon this case. The questions put sought to establish the fact that there was at the time of the policy-holders' meeting a body called the Policy-holders' Protection Association and Mr. Watrap Subramania Aiyar was asked whether he was not or had not been an office-bearer in that association. Those questions were founded on wrong premises because the evidence is that although there had been such an association before the policyholders' meeting it was defunct at the time of the meeting and had been so for some months, but that since the meeting that association had been revived. The suggestion of the defendants was that Mr. Watrap Subramania Aiyar was the candidate put forward by this association that was in fact incorrect. But supposing he had been, what was there wrong in a Policy-holders' Protection Association putting forward a candidate who in the opinion of that association was a person who was likely to usefully represent them on the board of directors and who would look after their interests? The questions were put to the witnesses almost as if the formation of such a body was something very wrong. Why should it be?. Why should not policy-holders form an association for their own protection? There are in this Insurance Company as in others a very large number of policy-holders, a great many of whom have no doubt paid their premia for very many years and have done so with the object that at their deaths the policy money should go to their representatives, or, if they had insured for a term of years that they themselves should get the policy money. Why should they not form an association to protect their interests when they have invested a very large amount of money in the company in the shape of premia? But the fact that Mr. Watrap Subramania Aiyar was supposed to be the candidate of this supposed association, that is the Policy-holders' Protection Association, clearly shows one thing, namely, that he was on account of that association a person whom the directors did not desire to have elected to the board as a Policy-holders' Director. Mr. Watrap Subramania Aiyar, from what I have seen of him in the witness-box, is what can be described as a live wire and the fact that the 1st defendant company regard the formation of an association for the protection of policy-holders as being an association hostile to themselves, as they obviously do, leads to the not un-reasonable inference that the business of the 1st defendant company is being carried on in a way which is likely to cause dissatisfaction to the policy-holders. I think that it is quite clear that the proxies in the hands of the company's servants at the meeting of the 21st April would have been used for the purpose of securing the election of those candidates who had been proposed by the company's agents and would most certainly have been used to bring about the defeat of Mr. Watrap Subramania Aiyar. Anything more likely to create feelings of distrust and suspicion in the minds of the policy-holders present at that meeting than this it is impossible to imagine. But it is because of these resolutions which were passed that Mr. Doraiswami Aiyar contends that the meeting had no right to adjourn itself. He admits that the meeting did so, as I have already said, for the purpose of securing better representation of policy-holders at the next meeting. He does not challenge the bona fides of the policy-holders. He admits that they were perfectly honest but he seeks to distinguish between bona fide in fact and bona fide in law. His argument is based upon a sort of theory of constructive mala fides; that is, however honest and high-minded a person may be in fact, in law he is dishonest and mala fide. That proposition strikes me as being an astounding one on the face of it. How can these persons who have been awarded by Mr. Doraiswami Aiyar the highest testimonials as to their bona fides and honesty be said in law to have been dishonest and mala fide? I confess that I cannot follow Mr. Doraiswami Aiyar's argument. Either they were bona fide or they were not. Elsewhere apparently an attempt to establish this strange proposition was made but was most ruthlessly dealt with by Lord Watson in Adams v. The Great North of Scotland Railway Co (1891) A.C. 31. In another case, namely Alexandar v. Bridge Allan Water Co. 7. Court Sess. Cas. 3rd Series (Macph.) 492 at 498, 503, a Scotch case, one of the Judges had said:

22. The next question which I have got to consider is whether the adjourned meeting was a valid one or not, not in the sense that the meeting had no right to adjourn itself but whether that adjourned meeting was a regular one. A great deal of time was occupied in argument on behalf of the defendants and some in cross-examination, in order to show that the effect of adjourning the meeting was to make the proxies valueless; in other words, that the proxies were only good for the first meeting and not for the second and that therefore the very fact of the adjournment was to disenfranchise all those policy-holders who had chosen to appoint proxies instead of themselves voting and it seems to have been the view of some of the policy-holders present at the meeting of the 21st April that such might be the case. But I am satisfied, as I have already stated, that it was not for the purpose of defeating proxies that the adjournment was resolved upon but for the purpose of getting better representation of the policy-holders at the next meeting. There is, however, no substance in the defendants' arguments. Proxies which were registered for the meeting of the 21st April were good for the adjourned meeting or any other adjourned meetings and but for the fact that the defendants had acted so precipitately in hastening to appoint their own nominees before the adjourned meeting Mr. Sundaresa Aiyar could have appeared at the adjourned meeting and used all the proxies in his name for whatever purpose he desired. It is perfectly clear that an adjourned meeting is the same meeting and merely a continuation of the meeting. This question of the availability of proxies at an adjourned meeting has been dealt with in the English Courts. In Maclaren v. Thompson (1917) 2 Ch. D. 261 it was held that where the articles of a company provided that the instrument appointing a proxy shall be deposited at the registered office of the company not less than two clear days before the day for holding the meeting at which the person named in such instrument proposes to vote, proxies lodged after the date of an original meeting, but more than two days before the day fixed for an adjournment thereof, cannot be used for the purpose of voting at the adjourned meeting. The reason for so deciding was that the adjourned meeting is merely a continuation of the first meeting; in other words, the adjourned meeting is to be considered as the original meeting. Warrington, L.J., on page 266 after dealing with the Articles of Association in which it is quite clear that the question of adjournments was provided for, said: