Document Fragment View

Matching Fragments

27. There is no substance in the first objection.

Re: Counting of Votes:

28. On the question as to manner in which the votes were counted, it would at the outset be necessary to appreciate that under the provisions of Section 391(2) of the Companies Act, 1956, the requirement is that the compromise or arrangement must be agreed upon by "a majority in number representing three-fourths in value of the creditors, or class of creditors, or members, or class of members, as the case may be, present and voting either in person or, where proxies are allowed, by proxy at the meeting". The contention of the Appellant is that Section 391(2) postulates two requirements. The first is that there must be a majority of creditors or members, as the case may be, present and voting and the second that this majority must reflect three-fourths in value of the creditors or members. Now, there is no dispute about the fact that the requirement that the compromise or arrangement be agreed upon by three-fourths in value of the members of the Company has been duly fulfilled. The dispute centres around whether a majority in number of the members present and voting either in person or by proxies had agreed to the compromise or arrangement.

Article 102 applies to a general meeting, a meeting of a class of shareholders or upon a poll, these being specified in the previous article, Article 101. Article 102 makes it abundantly clear that every member who is not disqualified, is entitled to be present and to speak and vote at the meeting. On a show of hands, every member present has one vote. Upon a poll, the voting right of every member present in person or by proxy has to be in proportion of his share of the paid-up equity share capital of the Company. When a meeting of the members or creditors of a Company is convened in pursuance of the directions of the Court under Section 391 of the Companies Act, 1956, the result of the meeting is to be decided by a poll. The Companies Court Rules, 1959, provide so expressly in Rule 77 in which it is stipulated that the decision of the meeting or meetings held in pursuance of the order of the Court made under Rule 69 on all resolutions' shall be ascertained only by taking a poll; Therefore, on a poll taken to determine the outcome of a meeting convened in pursuance of the directions of the Court on a proposed scheme of arrangement or compromise under Section 391, every member present in person or by proxy is entitled to voting rights in proportion to his share of the paid-up equity share capital.

32. On a poll being taken, a member is not bound to use all his votes or cast all the votes which he used in the same way. Article 103 of the Articles of Association provides as follows:

"On a poll taken at a meeting of the Company a member entitled to more than one vote, or his proxy or other person entitled to vote for him, as the case may be, need not, if he votes, use all his votes or cast in the same way all the votes he uses."

Article 105 provides for the manner in which the votes of joint members are to be cast and is as follows:

When there are joint registered holders of shares, any one of such persons can vote at the meeting or appoint another person whether a member or not as his proxy. If more than one joint-holder is present at the meeting, then the person whose name stands higher on the register is alone entitled to speak and vote at the meeting. The name of an individual may appear in different folios with different joint names or in a different order of names. Article 105 provides for such eventualities.

33. At a meeting convened on the directions of the Court under Section 391 to consider a compromise or arrangement, a poll has to be taken to determine the outcome of the meeting. The outcome of the poll is not determined by a head count of the shareholders who vote. Contrary to what the Appellant asserts, Section 391(2) does not adopt the principle of one person, one vote nor does it warrant a recourse to a head count for determining whether a majority as mandated exists. It obviously does not, in so far as the requirement relating to three-fourths in value of the members or creditors is concerned. Similarly, in so far as the question of majority in number is concerned, it is not possible to accept the submission of the appellant that the words "present and voting either in person or .. by proxy" incorporate the principle that for computing the majority in number of the creditors or members present and voting, a head count of the members or creditors must be the basis of computing the majority. That is not the principle adopted by the Companies Act. There is also intrinsic material in the regulations specified in Table-A to hold that this is not so. The articles of association of the Company place the matter beyond doubt.