ORDER
K.K. Balu, Member
1. This is an application filed under Section 186 of the Companies Act, 1956 (hereinafter referred to as “the Act”), seeking directions of this Bench against A. K. M. N. Cylinders (P) Limited (hereinafter referred to as “the company”), to call for a general meeting of the company to transact the following business :
(a) Retirement and re-election of directors of the company ;
(b) Production of minutes book, members register, balance-sheet, profit and loss account and auditors’ report for the years ending March 31, 1995, and March 31, 1996, for inspection.
2. The brief facts of this case as stated in the application are that the applicant is one of the signatories to the memorandum of association and articles of association of the company holding 275 equity shares as revealed from the annual return for the year ended March, 1996. The applicant’s shareholding amounts to more than one-tenth of the paid-up shares in the company.
3. The applicant and one Shri Sampath on one part and Shri N. Ravindran, present managing director of the company on the other part entered into an unregistered agreement regarding transfer of shares of the company in favour of Shri N. Ravindran, which subsequently became infructuous on account of breach of the agreement as well as lapse of time.
4. On May 2, 1996, the applicant and 21 other shareholders of the company holding 1,261 fully paid equity shares made a written requisition to the company to convene an extraordinary general meeting to transact the business specified supra. The company did not accede to the request of the applicant on the plea that the applicant and other requisitionists have no locus standi to requisition an extraordinary general meeting. Meantime, on November 7, 1996, the applicant demanded duplicate share certificates, as he had lost or misplaced the original certificates. But the company did not issue the duplicate share certificates. Thereafter, the applicant sent on January 11, 1997, a valid requisition to the company calling for an extraordinary general meeting in accordance with the provisions of the Act. But the company failed to convene any meeting in terms of the requisition dated January 11, 1997. It has, therefore, become “impracticable” for the applicant to call for an extraordinary general meeting of the company. Hence, this application.
5. According to the company, the applicant is holding 275 shares in the company. But pursuant to a memorandum of understanding dated November 16, 1995, the applicant and Shri M. Sampath agreed to sell their entire holding in the company to Shri N. Ravindran and/or his nominees. Accordingly, the applicant received Rs. 2,50,000 towards a part
of sale consideration from Shri N. Ravindran. The balance consideration was left with the auditors of the company in terms of the agreement dated November 16, 1995. However, in breach of the memorandum of understanding, the applicant failed to deliver the duly executed instruments of transfer together with the share certificates in favour of Shri N. Ravindran. The applicant has, therefore, lost the beneficial interest held by him in respect of his shareholding in the company and this disentitles him to claim any relief. Nor is the applicant entitled for duplicate share certificates. An agreement does not become infructuous on account of breach committed by any party to the agreement.
6. The requisition (Doc. No. 1 annexed to the application) submitted by the applicant and 21 other shareholders for convening an extraordinary general meeting was invalid and did not comply with provisions of the Act. The applicant had signed the requisition for his nominees and not for himself. Moreover, the applicant group had agreed to sell their entire shareholding in favour of Shri N. Ravindran, which is sought to be enforced. Hence, the applicant has no locus standi to convene an extraordinary general meeting of the company. The requisition dated January 11, 1997 (Doc. No. 6 annexed to the application), submitted by the applicant was not valid. The subject for which the meeting was requisitioned was invalid, infructuous and incapable of being considered in an extraordinary general meeting. The directors of the company were elected at the annual general meeting held on September 3, 1996, and they are not liable for retirement until the next annual general meeting. The accounts for the years ended March 51, 1995, and March 31, 1996, were duly considered and adopted at the annual general meeting of the company held in the year 1995 and on September 30, 1995, respectively. The annual return made up to September 30, 1996, was filed with the Registrar of Companies, Chennai, on November 29, 1996. The general body cannot reconsider the accounts which had already been passed. No general meeting is contemplated under the Act for production of the minutes book, register of members, copies of accounts and other records of the company. Further, copies of these records can be secured by any shareholder upon payment of the prescribed fee. It would be impracticable to convene a meeting for consideration of infructuous subjects and no useful purpose would be served by calling an extraordinary general meeting. The issue regarding duplicate share certificates is irrelevant for the purpose of this application. The applicant can, however, exercise his right under Section 169(7) of the Act to convene an extraordinary general meeting, but not under Section 186 of the Act.
7. During the hearing, Shri A. P. Peter Gunasekaran, counsel for the applicant, while reiterating the submissions made in the pleadings has submitted that the memorandum of understanding dated November 16,
1995 (annexure R-1), became infructuous on account of breach of the agreement and lapse of time. Moreover, the applicant had neither transferred his shares nor delivered the instruments of transfer together with share certificates to Shri N. Ravindran. The applicant continues to be a member of the company and entitled to invoke the provisions of Section 186 of the Act. He has further submitted that the letter of requisition (Doc. No. 1 annexed to the application) was duly signed by the applicant and Shri Sampath for themselves and on behalf of other requisitionists. It satisfied the requirements of Section 169 of the Act. The company had also ignored the letter of requisition dated January 11, 1997 (Doc. No. 6 annexed to the application). Both the letters of requisition though valid were not considered by the company making it impracticable to convene the meeting. It is in these circumstances, counsel for the applicant has urged that the company may be ordered to call for a general meeting.
8. Shri R. Vidya Sankar, counsel for the company, while making submissions, has conceded that the applicant is a shareholder in the company. According to him, the letter of requisition (Doc. No. 1 annexed to the application) does not comply with requirements of Section 169(2) of the Act. The applicant had signed the requisition as a nominee for other members but not for himself. The other letter of requisition dated January 11, 1997 (Doc. No. 6 annexed to the application), became infructuous. Moreover, the purpose for which the meeting was requisitioned was accomplished as borne out by annexures R-5 to R-7. He has further submitted relying upon the decision in Siri Ram v. Edward Ganj Public Welfare Association Ltd. [1977] 47 Comp Cas 283 (P & H) that the application would be incompetent, for want of any allegation in the application that it was for any reason impracticable for the company to call, hold or conduct a meeting. He has also elaborated the following principles to be applied in any application under Section 186, as reinforced in the case of Shrimati Jain v. Delhi Flour Mills Company Limited [1974] 44 Comp Cas 228 (Delhi) (page 242) :
“(a) the court would not ordinarily interfere with the domestic management of a company which should be conducted in accordance with the articles ;
(b) the discretion granted under Section 186 should be used sparingly and with caution so that the court does not become either a shareholder or a director of the company ; in other words, the court will ordinarily keep itself aloof and not participate in quarrels of rival groups of directors or companies ;
(c) the word ‘impracticable’ has to be construed from a practical point of view ;
(d) but where the meeting can be called only by the directors and there are serious doubts and controversies as to who are directors or there is a possibility that one or two or both the meetings called by rival groups have been invalid, the court ought not to expose the shareholders to uncertainty and should hold that a position has arisen which makes it ‘impracticable’ to convene a meeting in any manner in which the meeting may be called ;
(e) the court should exercise its powers under Section 186 when on considering all the facts and circumstances of a case it can with reasonable approach to certainty and even prima facie say that the manner in which meetings are previously called under the Act and/or under the articles would be invalid ;
(f) before exercising discretion under Section 186, the court must be satisfied that a director or a member moved an application bona fide in the larger interests of the company for removing a deadlock which is otherwise irremovable.”
9. In the above circumstances, counsel for the company has submitted that the application is liable to be dismissed.
10. I have considered the pleadings and arguments of both the counsel. The question for consideration is whether the application meets the requirements of Section 186 of the Act or not.
11. Section 186 provides that if for any reason it is “impracticable” to call a statutory meeting or an extraordinary general meeting according to the provisions of the Act or the articles, the Company Law Board may, either on its own motion or on the application of any director of the company, or any member thereof who would be entitled to vote at the meeting, direct the calling of a meeting and give necessary directions therefor. It is, therefore, clear that either a director or a member of the company entitled to vote at the meeting can file an application under Section 186. Secondly, it should be “impracticable” to call an extraordinary general meeting of the company. Unless these two conditions are satisfied, no application will lie under Section 186 of the Act.
12. There is no dispute as to whether the applicant is a shareholder of the company or not in view of the fact that counsel for the company has conceded in the course of his oral submissions that the applicant is a shareholder of the company. Therefore, this question does not arise for consideration by this Bench.
13. With regard to the second issue whether it was “impracticable” to call an extraordinary general meeting of the company, a careful scrutiny of the requisitions (Doc. Nos. 1 and 6 annexed to the application) reveal that the company was requested in pursuance of Section 169 of the Act to convene an extraordinary general meeting to transact the following business:
(a) Retirement and re-election of directors of the company ;
(b) Production of minutes book, members’ register, balance-sheet, profit and loss account and auditors’ report for the years ending March 31, 1995, and March 31, 1996, for inspection.
14. Both the requisitions are made under Section 169 to call an extraordinary general meeting of the company. By virtue of Doc. Nos. 1 and 6 (annexed to the application), the requisitionists invoked the provisions of Section 169, according to which the directors must convene an extraordinary general meeting on the requisition of members holding not less than one-tenth of the total voting rights in the matter of requisition. The requisition must state the matters for consideration of which the meeting is to be called. It must be signed by the requisitionists and deposited at the registered office of the company. The directors should, within 21 days from the date of the deposit of valid requisition, move to call a meeting and should give 21 days notice to members for calling such a meeting and the meeting should actually be held within 45 days from the date of the requisition. If the directors fail to call the meeting within the above mentioned time limits, the requisitionists representing not less than one-tenth of the total voting rights of all the members, may themselves convene a meeting within three months of depositing the requisition. It is beyond doubt that the applicant possessing the requisite shareholding has a right to convene a meeting in the light of Sub-section (6) of Section 169 of the Act. I am not, therefore, inclined to appreciate the applicant’s contention that it was “impracticable” to call an extraordinary general meeting. As it was practicable on the part of the applicant to convene an extraordinary general meeting in exercise of his right under Sub-section (6) of Section 169, this application under Section 186 must fail.
15. In view of the foregoing, without going into the merits of the other contentions of the applicant, the application is dismissed. There is, therefore, no need to go into the case law cited by counsel for the company.