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1 - 10 of 13 (0.35 seconds)Section 398 in The Companies Act, 1956 [Entire Act]
Section 397 in The Companies Act, 1956 [Entire Act]
Article 10 in Constitution of India [Constitution]
Section 91 in The Indian Evidence Act, 1872 [Entire Act]
J.P. Srivastava & Sons Pvt. Ltd. & Ors vs M/S Gwalior Sugar Co. Ltd. & Ors on 26 October, 2004
The Supreme Court in J.P. Srivastava & Sons Private Limited v. Gwalior Sugar Co. Limited (Supra) while confirming the directory nature of requirement of letters of consent given by supporting shareholders, at the time of making the application under Section 397 & 398 as contemplated in Section 399(3), categorically held thus: "The object of prescribing a qualifying percentage of shares in petitioners and their supporters to file petitions under Sections 397 and 398 is clearly to ensure that frivolous litigation is not indulged in by persons who have no real stake in the company. However, it is of interest that the English Companies Act contains no such limitation. What is required in these matters is a broad commonsense approach. If the Court is satisfied mat the petitioners represent a body of shareholders holding the requisite percentage, it can assume that the involvement of the company in litigation is not lightly done and that it should pass orders to bring to an end the matters complained of and not reject it on a technical requirement." The Supreme Court while making abundantly clear that the shareholders holding the requisite percentage can maintain an action under Section 397/398 in order to bring to an end the matters complained of held that the requirement of tiling consent letters of members as well as documents required, to be annexed to petitions relating to the exercise of powers in connection with prevention of oppression or mismanagement is not mandatory, but merely directory. Thus, a right to apply under Section 397/398 arises to the petitioners, only if the consent of not less than one-fifth of the total number of members, as contemplated in Section 399, is obtained. Therefore the decision of the Supreme Court will be of little assistance to the petitioners.
Makhan Lal Jain And Anr. vs The Amrit Banaspati Co. Ltd. And Ors. on 19 November, 1952
The signatories have not written anything at the top of the sheets on which their signatures are found. It could not either be ascertained, looking at those sheets, why the signatures were, affixed, especially when none of the sheets traces the root to the first sheet containing the consent of two of the members. No endorsement is found at the top of any of the subsequent 35 sheets to the effect that the members are expressing their approval of the petition filed by the petitioners in the CLB. By virtue of Section 399(3) "consent in writing" would imply that the writing itself should indicate that the persons who have affixed their signatures have applied their minds to the issue before them and have given their consent to the action being taken, as reiterated in Makhan Lal Jain v. Amrit Banuspati Co. Ltd (Supra). None of the subsequent 35 pieces of sheets would indicate whether the signatories had the knowledge of the action to be taken, the reliefs to be claimed and the grounds to be urged in support of the reliefs claimed, etc. It is also unknown whether those signatories applied their minds on the relief sought to be prayed and the ground on which such relief is sought to be prayed.
M.C. Duraiswami vs Sakthi Sugars Ltd. on 14 June, 1978
In the absence of any particulars such as the nature of allegations or complaint to be made in the petition and the nature of relief sought to be claimed in the petition cannot be the result of an application of the mind to the question before them and therefore such consent cannot a valid consent as re-enforced in M.C. Duraiswami v. Sakthi Sugars Limited (Supra). All the subsequent 35 pieces of sheets would give an impression that the signatories have simply subscribed their signatures, without applying their minds and knowing the purposes for subscription of their signatures, to those sheets. The consent as envisaged under Section 399(3) must be an intelligent consent, which must be given for the purpose of making particular-allegations and for the purposes of claiming appropriate reliefs therein, which are found missing in the present case. In view of this, mere signatures contained in the blank pieces of paper cannot amount to "consent in wilting", since the sheets on which the signatures are found do not by themselves, indicate the purpose of signatures affixed therein. Section 399(3) stipulates that the consent should be in writing, namely, in the form of a document and, therefore, in the present case, pieces of sheets, should indicate why the signatures were affixed. In view of Section 91 of the Indian Evidence Act 1872 no evidence shall be given in proof of the terms of such contract, except the document itself. By merely obtaining the signatures of a number of members on as many as 35 pieces of sheets, the petitioners did not secure any valid consent in writing of those members, satisfying the requirements of Section 399(3). This would ultimately result in a situation where there is a valid consent only from two of the members whose names are appearing in the first sheet of the consent letter and consequently, the main petition with three petitioners and two consentors alone is not maintainable.
Section 403 in The Companies Act, 1956 [Entire Act]
Naranjan Singh vs Edward Ganj Public Welfare Association ... on 29 October, 1981
In view of the consensus reached between the parties, the number of consents produced before the Bench has come down from 318 to 286 (318 - 32). The petitioners have produced copies of the letters addressed by as many as 51 members in favour of the President of the Chamber, subsequent to filing of the company petition reporting that they have not signed any consent letter to file a petition before the CLB, in response to which the petitioners in turn, however, produced letters from 28 members out of the aforesaid 51 members to the effect that they will stand by the statement contained in the said petition. The affirmation of 23 members that they have not given consent in favour of the petitioners to invoke the equitable jurisdiction of the CLB has neither been explained nor contraverted by the petitioners. If the consent letters are obtained by misrepresentation, they would no longer be valid in law as held in Naranjan Singh v. Edward Ganj Public Welfare Association (Supra). The net outcome of this controversy results in reduction of the consent by 23 members. The yet another serious dispute is in relation to variance of the signatures of 21 members with the specimen signatures of those members maintained by the Chamber. By virtue of Clause 10 of the articles of association, either the member or his representative can represent the Chamber. Accordingly, it is contended on behalf of the petitioners that 21 persons, have signed the consent letters as authorised by the respective members, in support 'of which those members have produced letters subsequent to filing of the company petition reporting that the consent letters have been signed as authorised by them and further reiterated their consent for filing the company petition. It is, therefore, clear that in the case of consent by 21 persons they were not signed by the concerned member themselves, but by their representatives, reportedly authorised by those members. The subsequent letters of the members mentioned hereabove, unequivocally indicate that their representatives were not available on the day of giving the consent letters and therefore the consent letters came to be signed by the signatories, appearing in the consent letters as per the authority given by the members. There is no material whatsoever to establish that the respective members duly authorised the signatories appearing in the consent letter to sign the same. Thus, the consent of 44 members (23 + 21) discussed hereabove cannot be construed as valid. Consequently, the consent given by 76 members (32 + 44) is found to be invalid out of the 318 consents produced by the petitioners, thereby not meeting the requirement of Section 399, in terms of which there must be valid consent from 281 members, apart from the three petitioners (1/5th of 1421 = 284) But there only 242 valid consents (318 - 76 = 242) on account of the discrepancies already discussed, which are summarised hereunder: