1. The plaintiffs are advocates of this High Court and the 1st defendant is an Insurance Company with its registered office in Madras and the 2nd, 3rd, 4th, 5th, 6th and 7th defendants are directors of the 1st defendant company, the 2nd defendant being its chairman. The 8th defendant is a firm of merchants, of which the 7th defendant is a member and is the managing agent of the 1st defendant Insurance Company. The plaintiffs bring this suit (1) for a declaration that they were validly elected “Policy-holders’ Directors” of the 1st defendant company for the year 1928, (2) for a declaration that the 1st defendant company has no power to nominate Policy-holders’ Directors for the year 1928, (3) for an injunction against all the defendants restraining them from excluding the plaintiffs or in any way restraining or interfering with the plaintiffs acting or attending as Directors of the 1st defendant company, and (4) for an injunction against all the defendants from making any further nomination or nominations as Policyholders’ Directors for the year 1928.
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.
3. The 7th defendant raised a point of order and the chairman ruled that the resolution was in order and according to the minutes the resolution was passed unanimously, although I think that in view of the 7th defendant’s objection he must really have voted against the resolution. The second resolution was as follows:
That no proxy be registered by this company in the name of this company’s employees or agents for the election of the Policy-holders’ Directors at the adjourned meeting as well as in future elections.
4. This resolution was carried by a large majority, only four voting against it. The third resolution was as follows:
That intimation of the adjourned meeting for the election of the Policy-holders’ Directors be given forthwith in The Hindu, The Swarajya, The Justice, The Andhra Patrika, The Matrubhumi and The Swadesamitran.
5. This resolution was carried unanimously. The fourth resolution was as follows:
That individual notices by post be given by this company forthwith to every policy-holder irrespective of the value of his policy or policies of the adjourned meeting for the election of the Policy-holders’ Directors.
6. This resolution was carried unanimously. The fifth and last resolution was one for adjourning the meeting and was as follows:
That this meeting for the election of the Policy-holders’ Directors do stand adjourned to 5th May, 1928 at 5-30 p.m. in this company’s premises.
7. This resolution was carried with one dissentient. The meeting accordingly adjourned until the 5th May. On the 1st May, 1928, however, the following notice appeared in the Hindu, It is headed ‘United India Life Assurance Company Limited: Policy-holders’ Directors’ and is as follows:
As at the meeting of the policy-holders of the company convened by the directors and held on the 21st April, 1928 for the specific purpose of electing from among the policy-holders of the company not more than two gentlemen as Policy-holders’ Directors for the current year no persons were elected as Policy-holders’ Directors, the Board of Directors of the company have by a resolution passed unanimously at their meeting held on the 29th April, 1928 appointed under the powers reserved to them the following two policy-holders of the company as Policy-holders’ Directors to hold office as such until the election of Policy-holders’ Directors in the year 1928.
8. Then follow the names of two persons (1) Dewan Bahadur. T. Raghaviah, C.S.I., and (2) Mr. B. Sitarama Rao, B.A., B.L., High Court Vakil. This announcement was made by order of the Board of Directors of the 1st defendant company. On the 2nd May Mr. Venkatarama Aiyar, the chairman of the meeting of the 21st April, and the two plaintiffs wrote to the 1st defendant company with reference to the notification which had appeared in the Hindu of the previous day. The writers stated that the appointment by the directors of Mr. Raghaviah and Mr. Sitarama Rao was illegal and that the policy-holders intended to hold the adjourned meeting on the 5th May at the company’s premises and at that meeting to elect their own representatives to the directorate. They requested the 1st defendant company to arrange for the adjourned meeting to be held at the company’s premises and to give the policy-holders all facilities for carrying out the election. To this letter the 1st defendant company replied through its Managers pointing out that the directors had acted in a correct and proper manner in making the two appointments and pointing out that in the view of the directors the adjourned meeting would not be in order and expressing their inability to arrange for the holding of the adjourned meeting at the company’s premises or providing the facilities asked for. On the same day the 1st plaintiff wrote to the 1st defendant company asking for a definite statement as to whether or not the company would allow the policy-holders to meet in the company’s premises on the 5th May and the 1st defendant company on the 3rd May wrote to say that it was unable to arrange for the holding of the adjourned meeting at the premises of the company. It was then arranged with Mr. Venkatarama Aiyar, the chairman of the meeting, that as the 1st defendant company had declined to allow the policy-holders to meet in its premises on the 5th May the meeting should be held instead at the Mahajana Sabha Hall, Mount Road, and this change of venue was on the same day and on the next advertised in the press and hand-bills to the same effect were distributed and on the day of the adjourned meeting persons were stationed at the office of the 1st defendant company to re-direct any policyholders to the Mahajana Sabha Hall in case they should have failed to have notice of the change of venue. The meeting of the policy-holders was duly held on the 5th May and the plaintiffs were elected by ballot. There were present 62 policyholders and the same formalities were gone through as at the previous meeting with regard to the attendance of policy-holders, namely each policy-holder was required to sign his name in the attendance book and did so. I do not think it necessary to refer to the correspondence on matters of a later date. I will content myself with stating that the directors of the 1st defendant company refused to recognise the election of the plaintiffs as Policy-holders’ Directors. There is one matter which in passing I should mention and it is this, that the two gentlemen who were appointed by the directors themselves, namely Messrs. Raghaviah and Sitarama Rao, refused to accept those positions. The position therefore is that no Policy-holders’ Directors have been appointed by the directors of the 1st defendant company and, if their contention is right, no directors have been validly elected by the policy-holders themselves. The plaintiffs have therefore filed this suit claiming that they were validly elected Policy-holders’ Directors and for injunctions against all the defendants.
9. The defences put forward by the defendants at the trial were (1) that the plaintiffs were not entitled to sue, the defendants’ contention being that individually they had no cause of action and that the suit should have been filed by the policyholders as a body and the point was also taken that the directors themselves could not be sued personally, (2) that the meeting of the 21st April had no power to adjourn itself, and if it had, it was not adjourned for a bona fide purpose, and (3) that the adjourned meeting was irregular because it was not held in the office of the 1st defendant company as is provided for in the Articles of Association.
10. I shall now proceed to deal with the defendants’ contentions. Mr. S. Doraiswami Aiyar on behalf of the defendants did not seriously press the defence that the plaintiffs were not entitled to sue in view of the decision of Sir George Jessel, M.R., in Pulbrook v. Richmond Consolidated Mining Co. (1878) 9 Ch. D. 610 which seems to me to be authority both for the statement that a director who has been excluded from acting as a director by the directors of a company can sustain an action in his own name on the ground of individual injury to himself and for the statement that such an action can be sustained against the other directors. On page 612 Sir George Jessel, M.R., says:
The first question is, whether a director who is improperly and without cause excluded by his brother directors from the board from which they claim the right to exclude him is entitled to an order restraining his brother directors from so excluding him.
In this case a man is necessarily a share-holder in order to be a director, and as a director he is entitled to fees and remuneration for his services, and it might be a question whether he would be entitled to the fees if he did not attend meetings of the board. He has been excluded. Now, it appears to me that this is an individual wrong, or a wrong that has been done to an individual. It is a deprivation of his legal rights for which the directors are personally and individually liable. He has a right by the constitution of the company to take a part in its management, to be present, and to vote at the meetings of the board of directors. He has a perfect right to know what is going on at these meetings.
11. And on page 613 the contention of the defendants upon this point is completely negatived by the following statement:
But in a case of an individual wrong, another share-holder cannot on behalf of himself and others, not being the individuals to whom the wrong is done, maintain an action for that wrong.
12. If further authority is needed it is to be found in the 10th edition of Buckley on the Companies Acts at page 621 where it is stated:
A single share-holder may sue the company to enforce any individual right of his own, for example, his right to have his vote recorded or his right as a director to restrain his co-directors from excluding him from the board.
13. I think it is perfectly clear that the plaintiffs are not only entitled to maintain this suit but that no other policy-holders could on their behalf have maintained it, and further that the several defendants, the directors of the 1st defendant company, have properly been impleaded as defendants.
14. I now go to the question as to whether or not the meeting had power to adjourn itself. Mr. Doraiswami Aiyar’s contention is that it had no such power. He has in great detail referred to the Articles of Association and in particular to that Article which refers to the ordinary general meeting of the sharei holders of the 1st defendant company which expressly authorises an adjournment of that general meeting, that is Article 46. He also refers to the form of proxy which is to be used at that ordinary general meeting and in particular draws my attention to the fact that on the instrument of proxy it is stated to be available at the general meeting of the company and “any adjournment thereof.” I am then asked to contrast those Articles with the Articles which relate to the policy-holders’ meeting. There is no Article which gives power to the policy-holders’ meeting to adjourn. There is no mention of any adjournment at all. Then the instrument of proxy authorises its use at the meeting of the policy-holders to be held on the day and does not, like the proxy to be used at the ordinary general meeting, state that it is to be used or may be used at any adjournment thereof. Mr. Doraiswami Aiyar, therefore, contends that I am bound to infer from the absence of any provision in the Articles of Association for any adjournment of the policy-holders’ meeting, and from the statement in it in the instrument of proxy of its exercise on the day of the meeting, with no reference to its use at any adjourned meeting, that an adjournment of the policy-holders’ meeting is prohibited. I do not in the least agree with this contention. The mere absence of any provisions with regard to an adjournment does not give rise to an inference that a power to adjourn is prohibited. I am satisfied that the reasonable view to take is that it never occurred to the company when the Articles of Association were framed that it would be necessary to adjourn the policy-holders’ meeting which is merely for the purpose of transacting the business of electing Policy-holders’ Directors and no provision was therefore made for such a contingency. Whereas when the company had to consider the Articles with regard to the ordinary general meeting it had clearly to provide for a very obvious contingency, namely, the adjournment of such a meeting at which a great deal of business must necessarily be disposed of and which it would be likely on some occasions could not be disposed of at one meeting. The fact that no reference is made in the Articles of Association to an adjournment of the policy-holders’ meeting is in my view clearly due to the failure to realise that such a contingency might arise. Nor can I see any reason why there should be any distinction intentionally drawn between the ordinary general meeting and the meeting of the policyholders or why it should be argued that it was intended that the one could be adjourned and not the other. For these reasons, in my view, Mr. Doraiswami Aiyar’s contention that an adjournment of the policy-holders’ meeting is prohibited by the Articles of Association is not well founded.
15. I have now got to consider whether the meeting had any power to adjourn itself and with regard to this I think it is beyond all question that there is a common law right in every meeting to adjourn itself – it must be so – and that every meeting is entitled to adjourn unless it is prohibited by express enactment. To say otherwise would be to prevent in a certain number of cases the proper business of a meeting being completed. It would also enable evilly-disposed persons to obstruct and prolong the meeting to such an hour as to make it impossible to continue it further. In such a case as this there must be power to adjourn the meeting so that the discussion of the business before the meeting can be continued and completed. Quite apart from the example I have given, a meeting might quite easily be necessarily and honestly prolonged to an hour when an adjournment would be inevitable. Let me take for example the case of a policy-holders’ meeting for the purpose of electing Policy-holders’ Directors. Suppose there should be 24 candidates for election which is by no means an impossible supposition. There might be a long discussion with regard to each of the candidates, some speakers being in favour of some of the candidates, others being opposed. This discussion would take a considerable time and, it is quite conceivable, might last many hours. According to the contention of the defendants, the discussion would have to go on notwithstanding the late hour to which the meeting had necessarily been prolonged. I think that that is an impossible view to take of the matter and I am satisfied that, quite apart from common sense, the law also gives the right to every meeting to adjourn itself unless there is an express prohibition to the contrary. There are some English cases upon the point, which, I think, clearly establish this. The first of those to which I propose to refer is The King v. The Mayor, Burgesses and Commonalty of Carmarthen (1813) 105 E.R. 260. I do not propose to refer to the facts of the case except to say that the question to be decided in that case was whether a meeting which had been adjourned from unavoidable necessity could be so adjourned and it was held that it could. I propose only to refer quite briefly to the passages in the judgments in that case. Le Blanc, J., said:
Common sense shows that the charter must have meant that the corporate body should have power to adjourn in order to conclude such business as they had regularly begun, otherwise it would be in the power of any person by contrivance to protract the business and prevent the claims being effectual. Upon these grounds it strikes me that a peremptory mandamus ought to go.
16. Bayley, J., said:
I have no difficulty in saying that the Corporation must of necessity have the power of adjournment, in order to conclude such business as they began, and had not time to finish on the charter-day. The business to be done is to fill up vacancies in the Corporation, and to receive the claims and hear the proofs of such persons as claim. That is the general business of the day; which I take it, constitutes one entire business, as much as the election of a mayor.
17. Dampier, J., said:
It seems to me, from the very nature of this case, to be absolutely necessary that the corporate body should have the power of adjournment, in order to give effect to the inchoate rights of the claimants, and to guard against the possibility of their claims being frustrated by any contrivance.
The next case is Stoughton v. Reynolds (1736) 95 E.R. 176 : L 2 Str. 1045 in which it was held that the adjournment of a vestry meeting is of commonright vested in the parishioners at large and not in the vicar. The facts of that case quite shortly were that there were two churchwardens of the parish, one of whom was elected by the vicar and the other by the parishioners. At the meeting in question, the vicar nominated his churchwarden and two candidates were put up by the parishioners, one of whom was the plaintiff in that case. Some of the parishioners polled for the plaintiff and others for the other candidates. But before all the parishioners had polled, the vicar, who was in the chair, adjourned the meeting until the next day. This adjournment was opposed on behalf of the plaintiff and by some of the parishioners, but nevertheless the meeting was adjourned but several parishioners who remained at the meeting, although it had been adjourned, continued to poll and at the close of the poll that day the plaintiff had obtained a majority of the votes. At the adjourned meeting, however, the rival candidate to the plaintiff obtained a majority. It was held by the Court that the plaintiff had been duly elected because the vicar had no right to adjourn the meeting, which was a right which was in the persons who constituted the assembly and not in the vicar. Lord Hardwicke, C.J., said after stating that it must be shown that by law or by some custom the vicar himself has power to adjourn a meeting of the vestry and finds no authority to the contrary:
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:
That which the law has stamped with the character of legal corruption may exist where the motives are perfectly pure, as no one can doubt was the case here,
and in Adams v. The Great North of Scotland Railway Co. Court Sess. Cas. 3rd Series (Macph.) 492 at 498, 503 it was attempted to apply that ruling, i.e., the theory of “constructive corruption” or “constructive dishonesty”. On page 46 dealing with that argument Lord Watson said as follows:
I feel bound to protest against the view expressed by some of the Scotch Judges in the cases to which we have been (referred at the Bar, with regard to what they call ‘constructive corruption.’ I suppose that as well as ‘constructive corruption’ you may have ‘constructive bribery’ and ‘constructive falsehood.’ The meaning of it appears to be this that in order to satisfy the ends of justice in dealing with the validity of an award, it is necessary to invoke this constructive principle of which I have under all circumstances the greatest distrust; and that for the purpose of doing justice it is necessary to call a man ‘corrupt’ who is not corrupt but honest, to call a man ‘ bribed’ who never listened to an improper suggestion from any quarter, to call a man ‘false’ who never uttered a falsehood. I do not doubt that corruption might be inferred from the terms of an award; and it is clear that, if Lord Thurlow used the expression ‘constructive corruption’ in Colquhoun v. Corbet (1784) 2 Paton’s App. 626, he must have used it in that sense. Even in that case the term is inappropriate, because such corruption is actual and not constructive.
20. Lord Bramwell at page 47 said:
My Lords, I am entirely of the same opinion, and I desire to express my hearty concurrence in what has been said by my noble and learned friend opposite (Lord Watson) about ‘constructive corruption.’ I think that that and similar expressions are only used by persons who have a desire to bring about a certain result, and do not know how to do so by the use of ordinary and intelligible expressions.
21. I think that the observations of those two eminent Law Lords are quite sufficient to dispose of Mr. Doraiswami Aiyar’s theory of constructive dishonesty and constructive mala fides. These observations dispose of the question as to whether the meeting had the power to adjourn itself and whether it did so for a bona fide purpose. The answer is, the meeting had the right to adjourn itself and did so for a perfectly bona fide purpose.
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:
It is perfectly plain that under these Articles for a very large number of purposes a meeting which has been interrupted by an adjournment, or by more than one adjournment, is nevertheless to be treated as a single and continuous meeting – one meeting.
23. In other cases it has been held that an adjourned meeting is merely the same meeting but a continuation of it. The first is the well-known case of Scadding v. Lorant (1851) 3 H.L.C. 418. In that case it was held that where notice of the purpose of a vestry meeting has been duly given, and that meeting has begun but not completed a certain business, and the meeting is regularly adjourned, such business may lawfully be completed at the adjourned meeting though the notice for summoning such adjourned meeting does not state the purpose for which it is summoned. In this case the House of Lords called for the opinion of the Judges upon this question and the opinion of the Judges was unanimous, namely, that it was sufficient to give notice on the Church door of the purpose to which the first meeting was to assemble and that that notice extended to all adjourned meetings, such adjourned meetings being for the purpose of completing unfinished business of the previous meetings and all being in continuation of the first meeting. During the course of the argument the Lord Chancellor asked the following question:
Docs not the same authority continue from day to day after the business is declared not to be concluded as from hour to hour in the same day? Suppose we were to adjourn now for a quarter of an hour, would it not be the same meeting when the House resumed its sittings?
24. This case was followed in the case of Kerr v. Wtlkie (1860) 6 Jur. N.S. 383 : 119 R.R. 1019 in which it was held that where notice of a meeting had been properly given there was no necessity for notice of its bona fide adjournment. At page 1021 Lord Campbell, L.C., stated:
But it seems to me quite clear, that this meeting having the power of adjournment, and having exercised that power bona fide when the adjournment took place, it was part of that meeting just as much as if it had been a meeting held on the same day. Supposing there had been a debate, as was suggested during the argument, and that during that debate the clock had struck 12 at night. Could ‘there not have been an adjournment till the following day at 9 o’clock, and would not the meeting which was then resumed have been part of the meeting which had taken place the day before? I cannot doubt it for a moment; and whether the adjournment be only for three hours or for three days, if the proceeding be bona fide, can make no difference.
25. On page 1023 Lord Chelmsford made observations which are useful upon the points raised in this case both as regards the regularity of ran adjourned meeting and the power of a meeting to adjourn itself. He said as follows:
I should have thought, that when a meeting is to be held, and business to be transacted, and where it is possible that at the original meeting the whole of the business may not be got through, there must be power to adjourn that meeting, and that the adjourned meeting must be considered as part of the original meeting.
26. The cases to which I have referred make it quite clear that the meeting of the 5th May was a part of the meeting of the 21st April and that the meeting was therefore a perfectly regular one.
27. But the defendants who seem to me to have raised every possible contention in the course of what I can only describe as very bitter litigation raise the further point that the meeting was invalid because instead of taking place in the company’s office as is provided for in the Articles of Association and which was the place at which the meeting of the 21st April was called, the meeting took place in the Mahajana Sabha Hall. Before dealing with this contention I propose to state that the meeting of the 5th May was in other respects perfectly regular. No one appears to have voted at that meeting who was not entitled to vote and the voting was by ballot. I particularly asked the question of the defendants as to whether they could show that any person who voted on that occasion was not qualified to vote. This is a matter which could easily be ascertained because the book in which the signatures of all those who were present at the meeting were taken was handed to the defendants during the trial for the purpose of being examined and Mr. Doraiswami Aiyar is unable to point out a single instance of any person unqualified to vote who did so. Therefore no unqualified person voted at that meeting, nor can it be suggested that persons who desired to vote were prevented from doing so by the change of venue. The change was advertised in the press, hand-bills were distributed and the extra-precaution was taken of stationing people at the office of the 1st defendant company in order to re-direct policy-holders to the Mahajana Sabha Hall. No evidence has been called by the defendants to show that any single policyholder was through this change of venue prevented from voting and Mr. Doraiswami Aiyar does not suggest that such was the case. But nevertheless it is said that the meeting was irregular and the election at it of the plaintiffs invalid because of this change of venue. The first question to be asked is why was the venue changed? At the meeting of the 21st April it was decided that the adjourned meeting was to take place at the office of the 1st defendant company, and I think upon the evidence given in this case that the 7th defendant did say verbally that the company would give all facilities for that meeting. As a matter of fact the company proceeded to appoint its own directors in haste. Having done so it is clear that it refused to give the facilities for the meeting being held in its office and the other facilities which the policy-holders desired; in fact, it clearly and definitely declined to allow the office to be used for the purpose of the adjourned meeting. The policy holders therefore selected the Mahajana Sabha Hall. It was the deliberate act of the defendants that caused this change of venue and Mr. Alladi Krishnaswami Aiyar has argued with great force that it does not lie in the mouth of any one who has by his own act prevented something taking place afterwards to take exception to that state of affairs and to use that state of affairs for his own benefit. I think that that argument is a perfectly sound one. It seems to me that it would be a travesty of the law if a person who has deliberately brought about a state of affairs should be allowed to take exception to that state of affairs and use that changed state for his own advantage. Two cases were referred to, which are cases arising out of contract, where the principle of law that a party shall not take advantage of his own wrong or of an event brought about by his own act or omission was discussed. The first case is New Zealand Shipping Co. v. Societe des Ateliers et Chantiers de France (1919) A.C. 1 (H.L.). In that case the respondents contracted to construct a steamer for the appellants and the contract contained a stipulation that if the builders should be unable to deliver the steamer within, in the event of France becoming engaged in a European War, eighteen months from the date agreed by the contract for completion ‘thereupon this contract shall become void and all money paid by the purchasers shall be repaid to them.’ In this case it was held that the contract was void and not merely voidable because its non-fulfilment had not been brought about by any wrongful act or default on the part of the builders and it was said that a stipulation in a contract that it shall be void in a certain event is to be construed according to its natural meaning, subject to the principle of law that a party shall not take advantage of his own wrong or of an event brought about by his own act or omission. On page 6 Lord Finlay in discussing this principle states:
It is a principle of law that no one can in such case take advantage of the existence of a state of things which he himself produced. This is illustrated by the case of Roberts v. Wyatt (1810) 2 Taunt 268 at 276. There the plaintiff had purchased an estate, and it was provided in the contract that the vendors should make out a good title, and on or before the 21st December, 1808, on receiving from the plaintiff the purchase money, execute a legal conveyance of the fee-simple. There was a proviso that ‘in case the vendors could not deduce a good and marketable title, such as the purchaser or his counsel should approve, or if the purchaser should not pay the purchase money on the appointed day, the agreement should be utterly void’.
28. The defendant refused to make a good title and this principle was applied against him. Continuing, Lord Finlay says:
Lord Ellenborough applied the same principle to a case in which it was alleged that a lease became void by the failure of the lessee to pay the rent. I may quote the following sentences from his judgment: ‘In this case, as to this proviso, it would be contrary to an universal principle of law, that a party shall never take advantage of his own wrong, if we were to hold that a lease, which in terms is a lease for 12 years, should be a. lease determinable at the will and pleasure of the lessee; and that a lessee by not paying his rent should be at liberty to say that the lease is void.
29. In Quesnel Forks Gold Mining Co. Limited v. Ward and ten Ors. (1920) A.C. 222 (P.C.) this principle was also dealt with. I think that the defendants cannot be heard to say that the change of venue was an irregularity such as to make the meeting of the 5th May invalid. Quite apart from this I think that this is an objection which the defendants themselves are not entitled to make. It is true that the Articles of Association provide for the meeting being held in the 1st defendant’s office, but in what way have the defendants been injured? They have not shown that they suffered any injury whatever by the change of venue. The only persons who might complain – and they have not – are the policy-holders. And, moreover, I cannot see that the provision in the Articles of Association that the meeting is to be held at the company’s office is an essential one. So long as the meeting was properly convened and regularly conducted, it does not seem to me to matter very much where the meeting is held. But in any case the first meeting was in fact held in the company’s office strictly in compliance with the Articles of Association and I think that it would have been permissible at that meeting when it passed the resolution for an adjournment if it had then been thought to be more convenient to have adjourned the meeting to a place other than the 1st defendant’s office. For the reasons I have given, in my view there is nothing in this last contention of Mr. Doraiswami Aiyar.
30. The result is that the defendants have failed upon all points, and the plaintiffs are entitled to all the reliefs they claim in this suit. In these circumstances, it is hardly necessary for me to deal with one of the contentions of the plaintiffs, namely, that in any event the appointment made by the directors was invalid. Since I have held that the meeting of the 21st April was properly adjourned and that the adjourned meeting was a valid one, it follows that no appointment made by the directors of other persons to be Policy-holders’ Directors could be valid. But I wish to say something more and it is this, that even supposing there had been some irregularity which would have made the adjourned meeting of the policy-holders invalid, in my view the directors were not entitled when they did to make the two appointments they made. They purported to act under Article 77 of the Articles of Association. I have already referred to this Article, but I repeat it again. It provides that “if at any policy-holders’ 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 policy-holders for the year.” The, directors decided that no Policy-holders’ Directors had been elected by the policy-holders and proceeded to appoint their own two nominees to fill up the two vacancies; but although the Policy-holders’ Directors had not at that date been elected there was no warrant for the directors acting in this way. It follows that if an adjourned meeting is merely a continuation of the first meeting, and is in fact the meeting, until that meeting is over and until the policy-holders have definitely and unequivocally expressed their intention not to elect Policy-holders’ Directors or shown clearly that they are not inclined to do so, Article 77 cannot apply at all. The only part of that Article which it is suggested by the defendants can possibly apply is that part which relates to the policy-holders present not choosing to elect any person. It is true that at the first meeting no directors were elected, but it is perfectly manifest that so far from not choosing to elect Policy-holders’ Directors the whole of the efforts of the policy-holders was directed to obtaining a better representation amongst the policy-holders at the election with a view to the candidate who would be the real choice of the policy-holders being elected; and it is clear the directors cannot take advantage of Article 77 and that the appointment of the two directors by the defendants was invalid.
31. There is only one other thing that I desire to say and it is this. I trunk that it is a most deplorable thing that this case was not settled and that it should have been fought out to the bitter end by the defendants. Efforts were made by disinterested persons to bring about a settlement and at one time it did appear that a settlement reasonable and honourable to both parties would result, but nothing came of those efforts. However during the course of Mr. Doraiswami Aiyar’s argument at my suggestion an offer was again made by the defendants and it was that there should be another election held by the policyholders, that every facility should be given for it and that the defendants would undertake not to interfere in that election. This offer seemed to me to be a very reasonable one. However Mr. Alladi Krishnaswami Aiyar and Mr. Narasimha Aiyar and those associated with them and the plaintiffs carefully considered the matter and Mr. Narasimha Aiyar asked that the Court might be cleared in order that he might state to me the reasons why his clients viewed that offer of the defendants with the gravest misgivings and questioned its bona fides. The Court was cleared and I listened to his statement and also to what Mr. Doraiswami Aiyar had to say in answer to it. I do not think it right or necessary to say anything of what was stated to me. I merely content myself with saying that I am satisfied that the defendants’ offer was declined by the plaintiffs in their honest belief that it was not bona fide. More than that I do not think it necessary for me to say.
32. The result must be that the plaintiffs are declared validly elected “Policy-holders’ Directors” of the 1st defendant company for the year 1928 and until the election of such directors for 1929 and that it must be declared that the 1st defendant company had and has no power to nominate Policy-holders’ Directors for the year 1928, that there must be an injunction against all the defendants restraining them from excluding the plaintiffs or in any way restraining or interfering with the plaintiffs acting or attending as directors of the 1st defendant company and also an injunction against all the defendants from making any further nomination or nominations as Policyholders’ Directors. The plaintiffs must have the taxed costs of this suit. This case was a long fought out one and a difficult one and in my view justifies me in awarding the plaintiffs’ costs on higher scale and seeing the acts complained of were here done by the directors for which they are individually and personally liable, I order the costs to be borne by them and not by the 1st defendant company. I certify for two counsel.