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74. In support of the above contention, Mr.C.Harikrishnan, learned Senior Counsel for the applicant, relied upon a decision of the Division Bench of this Court in S.RM.S.T.Narayanan Chettiar vs. Kaleeswarar Mills Ltd {1951 Companies Act 351}. In that case, one of the questions that arose for consideration was as to whether the Chairman of the meeting was justified in rejecting the revocation of proxies. It was held by the Division Bench, on the said issue, as follows:-

"Until recently, both in England and in India, a member had no right to vote by proxy unless the articles provided for such a right as common law did not recognise voting by proxy. The articles, however, generally conferred such a right subject to such conditions and limitations as are prescribed thereunder. This right has now been recognised by statute both in England from 1947, now enacted as Section 136 of the Act of 1948; and by Section 79 of the Indian Companies Act, as amended in 1936. As the articles generally recognised a right to vote by proxy, it is a contractual right as the articles of association undoubtedly constituted a contract between the company on the one side and the members on the other. Independently of the contract, therefore, until the statute altered it there was no right of voting by proxy. The reason why the right to vote by proxy was not recognised seems to be that "when persons agreed", as pointed out by Bowen, L.J., in Harben vs. Phillips, "to act together in the conduct of a business, the way in which that business is to be carried on must depend on each case on the contract, express or implied, which exists between them as to the way of carrying it on". The decision on every question relating to the business of an incorporated company should essentially be that of the shareholders, having regard to their interest in the company. Unless, therefore, there was a contract between the company and the shareholders, they could not delegate this power of expressing their opinion at a meeting of the company to another. These propositions are so well established as not to require citation of a number of authorities in support of them. It is summarised in Palmer's Company Law, 19th Edition, at page 153. A proxy is defined by Lord Hanworth, M.R., in Cousins vs. International Brick Co. as "a person representative of the shareholder who may be described as his agent to carry out a course which the shareholder himself has decided upon" and the Lord justice in the same case defined a proxy as an agent of the shareholder who, as between himself and the principal, was not entitled to act contrary to his instructions in the matter. It cannot therefore be seriously disputed that the relationship brought about between the shareholder and his proxy is that of a principal and agent. The argument of the respondents is that unless the power revocation is expressly conferred by the articles under which a right of voting by proxy is recognised, the power of revocation does not exist and that the contract creating the agency is exhaustive of the rights and duties of the proxy. This contention proceeds upon a wrong view of the incidents of a contract of agency. When once the relationship of principal and agent is created by contract, the incidents of that contract of agency are governed and have to be determined by applying the law of contracts. In India such law is to be found in the Contract Act. The argument on behalf of the respondents amounts to this that all the rights and liabilities which flow from a contract by reason of the application of the general law of contracts do not attach themselves to a contract unless they are enumerated in the contract itself. In other words, if there is a contract of sale of goods unless all the rights and liabilities of the seller and buyer which are to be found in the Sale of Goods Act are specifically enumerated in the contract itself, they have no application. When once there is a contract all the legal incidents of such a contract are governed by the law of contracts whether it is in the form of a statute as in India or is ascertainable from judicial decisions as in England. It will be an intolerable state of affairs if one is obliged to embody in every contract the provisions of the Contract Act or the Sale of Goods Act, as the case may be, relevant to such a contract. When once the relationship enters the region of contract, the law of contract alone must determine its incidents. On the argument of the respondents, the relationship of agent and principal brought about by the execution of the proxies cannot be terminated even by death though they are forced to concede that such a termination follows and that even when the principal is present in person at the meeting, the right of the proxy to exercise his vote on behalf of the principal must yield to the right of the principal to exercise the vote personally. If so much is conceded, it is difficult to see why the principal should be denied his right to revoke a contract which brought about the relationship of principal and agent. The articles might make the proxy irrevocable or impose restrictions or circumscribe the limitations within which the power of revocation should be exercised. But all these are matters within the region of contract between the parties and in the absence of anything to the contrary, there is no reason to exclude the right of revocation which is recognised under Section 203 of the Contract Act. There are other limitations imposed by the Contract Act on the exercise of the power of revocation, e.g., if the revocation is made after the authority had been partly exercised, Section 204 of the Act preserves the validity of such acts and obligations and makes the revocation effective only in respect of future acts. If the agency is limited to a period of time and without sufficient cause it is revoked before the expiry of the period, under Section 205 the agent is entitled to compensation. The principal is bound to give reasonable notice of revocation as otherwise he would be liable to pay damages to the agent which result from such act of his. As regards third persons, under Section 208 the termination of authority of the agent does not take effect before it becomes known to them so that if third persons are sought to be affected by revocation of the authority of the agent, the principal must give due notice of the same. Termination of the authority by death of the principal is recognised under Section 209. On an examination of the authorities cited at the Bar, it will be seen that the same principles have been applied for the revocation of proxy by a shareholder."

75. The following principles emerge out of the above decision:-

(i) Common law did not recognise voting by proxy. But when the Articles of Association conferred a right to vote by proxy, the same became a contractual right. This right was first recognised by statute, under Section 79 of the Indian Companies Act, 1913, as amended in 1936. It is now recognised by Section 176 of the present Act, viz., The Companies Act, 1956.
(ii) The relationship between the shareholder and his proxy is that of a principal and agent. Since the said relationship is contractual in nature, the rights and obligations that govern the relationship, can be traced to the law of contracts. Consequently, (i) the right of revocation recognised by Section 203 of the Contract Act, (ii) the limitations imposed under Section 204 of the Contract Act, on the exercise of such a power, (iii) the entitlement of the agent to compensation under Section 205, (iv) the effect of revocation under Section 208 upon third parties and (v) the termination of authority by the death of the principal, by virtue of Section 209, are all applicable to the revocation of proxy by a shareholder.
(iii) Since the right of the shareholder to vote in person is paramount to the right of the proxy, the shareholder will still be entitled to attend and vote at the meeting, despite the presence of the proxy holder, provided he votes before the proxy holder could vote. The exercise of a personal vote by the shareholder, after he had adopted the proxy system, does not revoke the proxy, but prevents the exercise of the vote by the proxy.

76. The decision of the Division Bench in Narayanan Chettiar, from which the above principles are elicited, arose before the advent of the Companies Act, 1956. As stated earlier, the provision relating to proxies was found in Section 79 of the Indian Companies Act, 1913, as amended in 1936. But the Company Law Committee while recommending a new provision for proxies in the 1956 Act, observed that the provisions relating to proxies in the 1913 Act, constituted one of the least satisfactory features of the 1913 Act. Therefore, the decision in Narayanan Chettiar has to be seen in the backdrop of Section 176 of the Companies Act, 1956.

(b) a member of a private company shall not be entitled to appoint more than one proxy to attend on the same occasion; and
(c) a proxy shall not be entitled to vote except on a poll.
(2) In every notice calling a meeting of a company which has a share capital, or the articles of which provide for voting by proxy at the meeting, there shall appear with reasonable prominence a statement that a member entitled to attend and vote is entitled to appoint a proxy, or where that is allowed, one or more proxies, to attend and vote instead of himself, and that a proxy need not be a member.