{"id":249661,"date":"2011-08-18T00:00:00","date_gmt":"2011-08-17T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/naina-d-kamani-vs-janson-engineering-trading-pvt-on-18-august-2011"},"modified":"2018-01-07T11:30:52","modified_gmt":"2018-01-07T06:00:52","slug":"naina-d-kamani-vs-janson-engineering-trading-pvt-on-18-august-2011","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/naina-d-kamani-vs-janson-engineering-trading-pvt-on-18-august-2011","title":{"rendered":"Naina D. Kamani vs Janson Engineering & Trading Pvt. … on 18 August, 2011"},"content":{"rendered":"
Bombay High Court<\/div>\n
Naina D. Kamani vs Janson Engineering & Trading Pvt. … on 18 August, 2011<\/div>\n
Bench: R. S. Dalvi<\/div>\n
            This Order is modified\/corrected by Speaking to Minutes Order\n\n                                              1           NM.3701.09-S.2429.97-ORDER.sxw\n\nmnm\n\n           IN THE HIGH COURT OF JUDICATURE AT BOMBAY\n\n\n\n\n                                                                                           \n               ORDINARY ORIGINAL CIVIL JURISDICTION\n\n\n\n\n                                                                   \n                  NOTICE OF MOTION NO. 3701 OF 2009\n                                  IN\n                        SUIT NO. 2429 OF 1997\n\n\n\n\n                                                                  \nNaina D. Kamani                                            ...Plaintiff\n     Vs.\n\n\n\n\n                                                    \nJanson Engineering & Trading Pvt. Ltd.                     ...Defendants\n     And                          \nMr. N. Srinivasan                                          ...Respondent\n\nMr. F.E. D'vitre, Sr. Advocate a\/w. Mr. M.S. Doctor\n                                 \na\/w. Mr. Nimay Dave i\/b. Bachubhai Munim & Co., for Plaintiff \nMr. M.P.S. Rao i\/b. A.A. Maniyar for Defendant No.1 \nMr. Rajesh Patil i\/b. Mahesh Jani & Co., for Defendant No.6 \nMr. Ashok Varma i\/b. Jagdish Kumar Gupta for Defendant No.7\n           \n\n\n                                      CORAM : SMT. ROSHAN DALVI, J.\n        \n\n\n\n                            Date of reserving the Order: 29th July, 2011\n                            Date of pronouncing the Order: 18th August, 2011\n\n\n\n\n\nORDER:\n<\/pre>\n
    1. The Plaintiff is one of the permanent Directors of Defendant No.1 <\/p>\n
      Company.     Defendant   Nos.   2   and   3   are   two   other   permanent
\n      Directors   of   Defendant   No.1.     The   Company  essentially  owns  one
\n      residential building.  The Plaintiff and Defendant No.2 reside in two
\n      flats of the building.   The building was purchased in an auction by
\n      Defendant the No.1 Company when the Plaintiff and Defendant No.2
\n      were its members and Directors.  The property came to be purchased
\n      on 19th  January 1989 under the certificate of such purchase in an <\/p>\n
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\n                This Order is modified\/corrected by Speaking to Minutes Order<\/p>\n
                                                 2           NM.3701.09-S.2429.97-ORDER.sxw<\/p>\n
       auction. One flat was thereafter purchased by Defendant No.3 and
\n       accordingly   the   Plaintiff   and   Defendants   2   and   3   came   to   be   the <\/p>\n
       three Directors of Defendant No.1 Company.\n<\/p>\n
    2. It   is   the   case   of   the   Plaintiff   that   in   order   to   give   the   Plaintiff
\n       sufficient representation in management it was specifically decided <\/p>\n
       that   all   the   three   Directors   would   equally   partake   in   the   Board
\n       Meetings so that the resolutions of the Board would be unanimous.
\n       The Articles of the Company came to be amended to make a specific <\/p>\n
       provision in that regard. Article 51(f)<\/a> of the Articles of Association of <\/p>\n
       the Company dealing with (Directors and proceedings of the Board)
\n       came to be incorporated in the Article to make a specific provision <\/p>\n
       for unanimous vote at the Board Meetings.   Similarly under Article
\n       51(e)<\/a> it was specifically shown that the Plaintiff and Defendant Nos.
\n       2   and   3   were   permanent   Directors   of   the   Company   and   further <\/p>\n
       appointment   of   any   Directors,   other   than   any   additional   Director, <\/p>\n
       would  be  by  the  person  nominated by the outgoing Director as  a
\n       permanent Director.\n<\/p>\n
    3. Articles   51(e)   and   (f)   are,   therefore,   peculiar   to   Defendant   No.1
\n       Company.\n<\/p>\n
    4. It   may   be   mentioned   that   the   Company   does   not   carry   on   any
\n       business except manage the building which is the only property   it
\n       owns.\n<\/p>\n
    5. Consequent upon the unanimity required in Board Meetings, which
\n       became impossible of actual performance, a deadloock came to be in <\/p>\n
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\n               This Order is modified\/corrected by Speaking to Minutes Order<\/p>\n
                                                3           NM.3701.09-S.2429.97-ORDER.sxw<\/p>\n
       the working of the Company.   The suit which came to be filed in
\n       1997 challenged essentially the proceedings in a Board Meeting held <\/p>\n
       on   5th  August   1993   as   being  false,   fabricated,   fraudulent   and   not
\n       binding on the Plaintiff.  The Board Meeting of 5th August 1993 was <\/p>\n
       convened     and   conducted   inter   alia     in   presence   of   the   Plaintiff.
\n       Unanimous resolutions are shown to have been passed. The material <\/p>\n
       resolution   which   dealt   with   the   asset   of   the   Company   was
\n       authorising Defendant No.6, the father of Defendant No.2, to obtain
\n       vacant   possession   of   a   flat   on   the   ground  floor  of   the   Company’s <\/p>\n
       building from one Pushpa Kadambande along with one garage and <\/p>\n
       servant’s room and upon obtaining such possession to let it out to
\n       Defendant No.6 after he carried out external repairs and renovations <\/p>\n
       to the entire building as per the offer made by him. The challenge to
\n       that meeting is essentially in respect of the said resolution.\n<\/p>\n
    6. The suit is, therefore, for a declaration that Defendant Nos.6 has no <\/p>\n
       right, title and interest in the suit flat, is a trespasser therein, for
\n       recovery of possession and for other incidental reliefs of damages, <\/p>\n
       mesne profits and injunction. The suit also claims declaration with
\n       regard to the validity of several other Board Meetings with which
\n       this Notice of Motion is not concerned.\n<\/p>\n
    7. Pending   the   suit   the   Article   51(f)<\/a>   and   (e)<\/a>   of   the   Articles   of
\n       Association   of   Defendant   No.1   Company,   which   were   actually
\n       instrumental in bringing out the deadlock between the Directors and
\n       Members of the Company, were sought to be amended to bring them
\n       in   conformity   with   the   usual   rule   of   majority   on   the   board   for
\n       resolutions to be passed at Board Meetings.  A Board Meeting came <\/p>\n
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\n              This Order is modified\/corrected by Speaking to Minutes Order<\/p>\n
                                               4           NM.3701.09-S.2429.97-ORDER.sxw<\/p>\n
      to   be   held   in   that   behalf   which   the   Plaintiff   attended.     Certain
\n      resolutions   came   to   be   passed   thereon.     Amongst   them   was   the <\/p>\n
      resolution to convene an Extraordinary General Meeting (EGM) to
\n      interalia to amend the Articles of Association for that purpose.\n<\/p>\n
    8. Thereafter there has been a further Board Meeting which came to be <\/p>\n
      held on 9th October 2009.   The Plaintiff has prayed for the relief of
\n      injunction   in   respect   of   steps   to   be   taken   by   Defendant   No.1
\n      Company pursuant to resolutions passed at the Board Meetings held <\/p>\n
      on 5th  August 1993, 6th  August 2009 and 9th  October 2009 and the <\/p>\n
      EGM  held   on   31st  August   2009   and  other   consequential   reliefs  of
\n      injunction restraining the Directors appointed at these meetings to <\/p>\n
      act as such.\n<\/p>\n
    9. The Notice of Motion came to be amended to add a further prayer <\/p>\n
      restraining Defendants 2, 3 and 6 from convening or holding any <\/p>\n
      meetings   of   Defendant   No.1   Company   or   acting   in   pursuance   of
\n      resolutions passed at the aforesaid meetings.\n<\/p>\n
    10.In short the Plaintiff, who is a Director of Defendant No.1, seeks to
\n      stop all businesses of Defendant No.1.   Defendant No.1, therefore, <\/p>\n
      cannot be a company which can transact any business as a going
\n      concern.  If the prayers of the Plaintiff must be granted, there would
\n      be a complete deadlock in business, if any, of Defendant No.1.\n<\/p>\n
    11.Upon the premise that the Plaintiff would be entitled as a Director
\n      and member of the Company having a 33% stake in the Company to
\n      such   reliefs,   the   Plaintiff’s  case   making  out   the   reasons  why  such <\/p>\n
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\n              This Order is modified\/corrected by Speaking to Minutes Order<\/p>\n
                                               5           NM.3701.09-S.2429.97-ORDER.sxw<\/p>\n
       extreme relief should be granted is required to be seen.\n<\/p>\n
    12.The injunction in respect of the Board Meeting held on 5th  August
\n       1993 cannot be claimed in a Notice of Motion taken out in 2009.\n<\/p>\n
       The suit itself has been filed in 1997 to challenge the proceedings at
\n       the   meeting   held   on   5th  August   1993   which   the   Plaintiff   had <\/p>\n
       attended.\n<\/p>\n
    13.The Plaintiff has pressed the reliefs in respect of the meetings held in <\/p>\n
       2009.   The Board Meeting held on 6th  August 2009 has sought to <\/p>\n
       transact a number of businesses.   The Plaintiff admittedly attended
\n       the meeting along with Defendant No.3 and Defendant No.12 who <\/p>\n
       was   the   alternate   Director   to   Defendant   No.2.   The   Plaintiff
\n       admittedly   left   the   meeting   soon   thereafter   and   before   the
\n       resolutions   of   the   Board   could   be   passed.     She   submitted   an <\/p>\n
       objection letter and refused to sign the attendance register.  It is her <\/p>\n
       case   that   she   was   ridiculed   and   jeered   on   in   the   meeting   which
\n       constrained   her   to   leave   the   meeting   before   the   business   was <\/p>\n
       transacted.\n<\/p>\n
    14.The Minutes of the Meeting show that due to the non-cooperative <\/p>\n
       attitude of the Plaintiff and her regular objections for all activities at
\n       every Board Meeting the Company could not comply with statutory
\n       requirements of filing the statutory documents with the Registrar of
\n       Companies (ROC) or holding AGMs. Surprisingly the Plaintiff herself
\n       has taken exception to the Board passing resolutions for filing the
\n       statutory   documents   required   to   be   filed   by   the   Company,   but
\n       remaining unfiled for as many as 9 years – a circumstance which <\/p>\n
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\n               This Order is modified\/corrected by Speaking to Minutes Order<\/p>\n
                                                6           NM.3701.09-S.2429.97-ORDER.sxw<\/p>\n
       would itself result in winding up the company under Section 433(g)<\/a>
\n       of the Companies Act.   The Board, in fact sought to make amends <\/p>\n
       and bring the stalemate to an end in that behalf.  Several businesses
\n       came to be transacted at that meeting including the approval of the <\/p>\n
       notice in the EGM which was to be convened on 31st August 2009 at
\n       5 p.m at the registered office of the Company interalia for alteration <\/p>\n
       of the Articles of Association of the Company.\n<\/p>\n
    15.Defendant   No.6   came   to   be   appointed   as   Director   nominated   by <\/p>\n
       Defendant No.2 who sought to resign under the specific provision of <\/p>\n
       Article   51(e)<\/a>   of   the   Articles   of   Association   of   the   Company.     The
\n       Respondent No.1 to the Notice of Motion came to be appointed as an <\/p>\n
       alternate Director to Defendant No.3 and Respondent No.2 came to
\n       be appointed as an alternate Director to Defendant No.6 who was
\n       appointed Director in the same Board Meeting.\n<\/p>\n
    16.The Plaintiff has challenged the proceedings at the Board Meeting
\n       on two specific grounds.  The Plaintiff has contended that there was <\/p>\n
       no quorum upon she having left the Board Meeting and hence no
\n       business could be transacted. She has also challenged the attendance
\n       of Defendant No.12 as the alternate Director to Defendant No.2 in <\/p>\n
       that   meeting   on   the   ground   that   the   Defendant   No.2   who   had
\n       appointed Defendant No.12 as  his alternate whilst  he was abroad
\n       had returned to the State of Maharashtra after the appointment of
\n       Defendant   No.12   and   consequently   on   and   from   such   date
\n       Defendant No.12 could no longer be a Director of Defendant No.1
\n       and his attendance as a Director was bad in law.\n<\/p>\n
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               This Order is modified\/corrected by Speaking to Minutes Order<\/p>\n
                                                7           NM.3701.09-S.2429.97-ORDER.sxw<\/p>\n
    17.These   two   contentions   of   the   Plaintiff   have   to   be   separately
\n       considered.\n<\/p>\n
    18.Defendant No.2 appointed Defendant No.12 as his alternate Director <\/p>\n
       under the provisions of Section 313<\/a> of the Companies Act, 1956. The
\n       validity   of   the   attendance   of   the   Defendant   No.12   shall   be <\/p>\n
       considered presently.\n<\/p>\n
    19.The quorum at the Board Meeting would be the three permanent <\/p>\n
       Directors   under   Article   51(f)<\/a>   of   the   Articles   of   Association   of   the <\/p>\n
       Company since the powers exercised by the Board of Directors were
\n       to be by an unanimous vote.     Three Directors admittedly attended <\/p>\n
       the Board Meeting dated 6th  August 2009.   It is only because the
\n       Plaintiff left the meeting after attending the meeting setting out her
\n       grievances   in   an   objection   letter   dated   4th  August   2009   that   the <\/p>\n
       Plaintiff claims that there was no quorum at that Board Meeting.\n<\/p>\n
    20.Quorum is the minimum number of Directors required to transact <\/p>\n
       the business at any Board Meeting.  It would have to be seen when
\n       the quorum is required to be present.   Sections 285<\/a> to 290<\/a> of the
\n       Companies   Act,   1956   which   deal   with   meetings   of   Board   do   not <\/p>\n
       make any provisions in that regard.   Section 287(2)<\/a> only requires
\n       1\/3 of the total strength of the Board or two Directors whichever is
\n       higher to be the quorum.  However the provisions of the Companies
\n       Act<\/a>, 1956 being subject to the Articles of Association of the Company
\n       and in the case of Defendant No.1 Company there having been the
\n       aforesaid peculiar Article requiring the full strength of the Board to
\n       pass   resolutions   would   necessitate     the   full   strength   to   be   the <\/p>\n
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\n              This Order is modified\/corrected by Speaking to Minutes Order<\/p>\n
                                               8           NM.3701.09-S.2429.97-ORDER.sxw<\/p>\n
      quorum.\n<\/p>\n
    21.Section 174<\/a> of the Companies Act, 1956 sets out the quorum for
\n      General   Meetings   which   are   members’   meetings.     Under   Section <\/p>\n
      174(4)<\/a> a meeting would stand adjourned for want of quorum to the
\n      next week at the same time and place or as the Board may determine <\/p>\n
      when if the quorum was not present within \u00bd an hour the members
\n      present would constitute the quorum.  Such a provision is absent for
\n      Board Meetings.   Board meetings being meetings of Directors who <\/p>\n
      act on behalf of the Company as their Agents are required to take <\/p>\n
      place   essentially   every   quarter   for   transacting   various   businesses.
\n      Hence   understandably   the   provisions   applying   to   the   General <\/p>\n
      Meetings for want of quorum would not apply to Board Meetings.
\n      The quorum at the Board Meetings were Directors of the Company
\n      would meet to transact the business would, therefore, require the <\/p>\n
      minimum   number   of   Directors   required   by   the   Company   to   be <\/p>\n
      present  to transact  those  businesses.    Essentially,  therefore,  at  the
\n      time   of   transacting   the   various   businesses   on   the   agenda   of   such <\/p>\n
      Board Meeting the quorum would require to be present.\n<\/p>\n
    22.Consequently, it is argued on behalf of the Plaintiff that unlike in a <\/p>\n
      General Meeting of members where the quorum is required to be
\n      seen   at   the   beginning   of   the   meeting   only,   in   the   case   of   Board
\n      Meetings   the   quorum   must   be   present   when   every   resolution   is
\n      passed.  This would indeed be for the benefit of all the Directors to
\n      take part in the proceedings of the meeting and to transact business
\n      on the agenda.\n<\/p>\n
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              This Order is modified\/corrected by Speaking to Minutes Order<\/p>\n
                                               9           NM.3701.09-S.2429.97-ORDER.sxw<\/p>\n
    23.This is a case where the Plaintiff has challenged the proceedings at
\n      various   meetings   of   the   Board.     In   fact   these   are   enumerated   in <\/p>\n
      prayer (i) to the plaint. The Plaintiff attended the Board Meeting on
\n      6th August 2009, stated that she had sent her objection letter dated <\/p>\n
      4th August 2009, refused to sign the attendance register and left the
\n      meeting.     This   would   disable   the   other   Directors   present   for <\/p>\n
      transacting   any   business.     The   main   aim   of   the   Plaintiff   was,
\n      therefore,   only   to   disable   her   Co-Directors   from   transacting   any
\n      business.   Upon such a case the Plaintiff has claimed the relief of <\/p>\n
      injunction restraining the Directors from taking steps in furtherance <\/p>\n
      of the decision taken at that Board Meeting by way of the resolution
\n      passed   therein.   Therefore,   a   party   who   has   herself   derailed   the <\/p>\n
      proceedings has come to Court to obtain its stamp of approval upon
\n      her act.   The excuse of the Plaintiff is that she was ridiculed and
\n      jeered at.   From the conduct of the Plaintiff in challenging almost <\/p>\n
      everything which the Company does, as is evidenced in prayer (i) <\/p>\n
      itself it could be seen that the Plaintiff has brought about a total and
\n      complete deadlock in the Company.  It would otherwise be a case for <\/p>\n
      winding up of the 1st  Defendant Company as it would be just and
\n      equitable to wind it up under Section 433(f)<\/a> of the Companies Act.
\n      However, the Plaintiff did attend the Board Meeting on 6th  August, <\/p>\n
      2009.     Having   attended   the   Board   Meeting,   it   was   the   Plaintiff’s
\n      bounden   duty   as   a   Director   and   consequently   an   agent   of   the
\n      Company   to   go   through   the   businesses   which   were   sought   to   be
\n      transacted thereat.   The Plaintiff would have then been entitled to
\n      vote against the resolution sought to be passed and the resolution
\n      could not have been passed by a unanimous vote as required by the
\n      Articles   of   Association   of   the   Company.     The   Plaintiff     has   called <\/p>\n
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\n             This Order is modified\/corrected by Speaking to Minutes Order<\/p>\n
                                              10          NM.3701.09-S.2429.97-ORDER.sxw<\/p>\n
      upon the Court to do what she could have done but failed to do.
\n      The Plaintiff has seen that despite her attendance there would be no <\/p>\n
      quorum.\n<\/p>\n
    24.In the case of  In re Hartley Baird Ld. 1955 Ch.D. 143  a similar
\n      case was considered.  The argument that such a conduct would bring <\/p>\n
      about an absurd situation, because that would enable a person to
\n      wreck a meeting where a quorum was present at the beginning of
\n      the   meeting   by   leaving   before   the   business   of   the   meeting   was <\/p>\n
      transacted and thereby reducing the meeting to a number below a <\/p>\n
      quorum   required   was   considered   and   accepted   in   that   case.   The
\n      article relating to the transaction of business in a general meeting <\/p>\n
      with   regard   to   quorum   was   considered.     A   member   who   was
\n      opposed to the resolution left the meeting before the vote was taken.
\n      It was held that Article 52<\/a> was complied and the resolution passed <\/p>\n
      was   a   valid   class   resolution   and   the   earlier   Scottish   case   of <\/p>\n
      Henderson Vs. James Louttit  & Co. Ltd., was not followed as the
\n      dictum  therein  was  considered  obiter.    It  was observed by  Wynn-\n<\/p>\n
      Parry   J.  that   the   expression   “quorum   is   to   be   present   when   the
\n      meeting   is   to   proceed   business”   would   cover   cases   where   the
\n      meeting proceeded to vote because, on the face of it, the condition of <\/p>\n
      the  Article  is fulfilled  if the quorum was  present when a meeting
\n      proceeded to consider business for which it was convened.  If there
\n      was no such quorum there would be an automatic adjournment for
\n      one   week,   then   the   members   present   would   form   a   quorum.
\n      Consequently, it was observed that such an article was designed to
\n      save a meeting which was properly convened, but which could not
\n      proceed to business because no quorum was ever present, but it did <\/p>\n
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\n              This Order is modified\/corrected by Speaking to Minutes Order<\/p>\n
                                               11          NM.3701.09-S.2429.97-ORDER.sxw<\/p>\n
      not apply in a case of a meeting at which a quorum is present at the
\n      beginning when the meeting proceeds to business and  has ceased to <\/p>\n
      be   present   when   it   proceeds   to   vote   on   any   resolution   before   it.
\n      Upon observing such a mandate in the Articles of Association of the <\/p>\n
      Company   and in the Scottish case the learned Judge nevertheless
\n      concluded   upon   the   facts   of   the   case   before   him   that   when   the <\/p>\n
      member opposing the resolution left the meeting before the vote was
\n      taken, the meeting in fact passed a valid class resolution because at
\n      the   beginning   of   the   meeting   when   it   proceeded   to   business   the <\/p>\n
      quorum was present.\n<\/p>\n
    25.It is impossible to conclude that in this case the Plaintiff could be <\/p>\n
      given protection by the Court for an act unbecoming of a Director
\n      and   which   was   inconsistent   with   the   duties   of   a   Director.   The
\n      quorum was therefore present and the business transacted cannot be <\/p>\n
      challenged.\n<\/p>\n
    26.It is contended on behalf of the Plaintiff that Defendant No.12 who <\/p>\n
      was   the   other   Director   present   at   the   meeting   could   not   have
\n      remained present as Director. He was an alternate to the Defendant
\n      No.2.   He was appointed when Defendant No.2 was to leave India.\n<\/p>\n
      Defendant No.2 is stated to be carrying on business in Singapore.
\n      After his appointment Defendant No.2 returned to India, but had not
\n      attended any Board Meetings thereafter.\n<\/p>\n
    27.The Plaintiff has shown on a separate single sheet of paper   dated
\n      12th  April   1999   the   signatures   of   Defendant   No.2   with   herself
\n      obtained by her with regard to certain repairs to the building of the <\/p>\n
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\n             This Order is modified\/corrected by Speaking to Minutes Order<\/p>\n
                                              12          NM.3701.09-S.2429.97-ORDER.sxw<\/p>\n
      Company.   It is the Plaintiff’s case that that was a Board Meeting.
\n      The three signatures of the three Directors required to transact the <\/p>\n
      business   unanimously   are   not   shown.     A   separate   sheet   of   paper
\n      cannot be termed as minutes of the meeting of the board which are <\/p>\n
      required   to   be   kept   as   per   the   specific   mandate   contained   under
\n      Section 193<\/a> of the Companies Act, 1956. Mr. D’vitre on behalf of the <\/p>\n
      Plaintiff   concedes   that   aspect.     However   he   contended   that   the
\n      signature of Defendant No.2 would show his presence in the State of
\n      Maharashtra and merely by such presence, Defendant No.12 would <\/p>\n
      ipso facto cease to be the alternate director of Defendant No.2.\n<\/p>\n
    28.It has been argued by Mr. Rao on behalf of the Defendant that the <\/p>\n
      interpretation   of   Section   313<\/a>   must   be   made   such   that   the
\n      requirement   for  the  alternate  Director  to  cease  to  be  the  Director
\n      would be not when the Director appointing him merely returns to <\/p>\n
      the State, but when the Director actually attends the Board Meeting <\/p>\n
      held in that State.\n<\/p>\n
    29.A reading of Section 313<\/a> shows that that specific requirement is not
\n      made. For the alternate Director to cease to be a Director, the actual
\n      attendance at Board Meeting of the Director appointing him is not <\/p>\n
      contemplated  under   the   Section.     Consequently,   the   return   to  the
\n      State   would   suffice   though   the   Director   does   not   commence
\n      attending Board Meetings held after his return.\n<\/p>\n
    30.However what would be the extent and quality of such return has to
\n      be seen.\n<\/p>\n
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               This Order is modified\/corrected by Speaking to Minutes Order<\/p>\n
                                                13          NM.3701.09-S.2429.97-ORDER.sxw<\/p>\n
    31.Section   313<\/a>   of   the   Companies   Act,   1956   enables   the   alternate
\n       Director to hold office for the period that the Director appointed him <\/p>\n
       would   have   held     such   office   and   to   vacate   that   office   when   the
\n       Director appointing him returns to the State.  The alternate Director <\/p>\n
       is   essentially   appointed   during   the   absence   of   the   Director
\n       appointing him from the State in which the meetings of the Board <\/p>\n
       are ordinarily held.   Defendant No.2 returned to India for a short
\n       period.     During   that   period   the   Plaintiff   and   Defendant   No.2   are
\n       stated to have met when the signature of Defendant No.2 came to be <\/p>\n
       obtained   on   a   separate   paper   showing   his   agreement   thereon.\n<\/p>\n
       Defendant   No.2   has   thereafter   left   India   for   Singapore.     The
\n       provision in Section 313<\/a> of the Companies Act, 1956 with regard to <\/p>\n
       the absence of the Director from the State in which the meetings of
\n       the Board are ordinarily held until the Director returns to the State
\n       in which the meetings of the Board are ordinarily held as set out in <\/p>\n
       Sub   Sections   1<\/a>   &   2<\/a>   thereof     respectively   would   show   not   only   a <\/p>\n
       temporary return, but an intention to stay in that State so as to able
\n       him   to   transact   the   business   of   the   Company   in   the   State   where <\/p>\n
       board meetings are ordinarily held.  If a Director such as Defendant
\n       No.2 merely comes to the State and leaves India again he would not
\n       be   able   to  transact   business.     Hence   the   alternate  Director  would <\/p>\n
       require   to  continue  until  the  Director  appointing  him  would  have
\n       continued.  In this case it would be permanently or until Defendant
\n       No.2 resigns or is removed is as Director or otherwise vacates office
\n       under Section 283<\/a> of the Companies Act.\n<\/p>\n
    32.What precisely the Section contemplates by the term “the original
\n       Director returns to the State”, must be read as contemplating only <\/p>\n
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\n              This Order is modified\/corrected by Speaking to Minutes Order<\/p>\n
                                               14          NM.3701.09-S.2429.97-ORDER.sxw<\/p>\n
      such return which would have some amount of permanence.   The
\n      Director must return to carry on the business.  He must return for a <\/p>\n
      length of time.  The intent of the Director must be not to make his
\n      visit merely temporary when he does not partake in the management <\/p>\n
      of the Company and when he intends to go abroad again.  It should
\n      therefore, be the intention to return to India and the State in which <\/p>\n
      the   Board   Meetings   are   ordinarily   held   (i.e   where   the   registered
\n      office   is   generally   situate)   not   for   a   temporary   period     e.g.   on   a
\n      holiday   or   on   vacation.     It   will   imply   the   intention   akin   to   the <\/p>\n
      intention required to be domiciled in the State.  Therefore, when the <\/p>\n
      original Director returned to India and the State in which the board
\n      meetings   were   held   to   carry   on   his   business   in   India   that   the <\/p>\n
      alternate Director would vacate his office under Section 313<\/a> (2) of
\n      the Companies Act<\/a>, 1956.\n<\/p>\n
    33.Consequently, the interpretation sought to be put by Mr. D’vitre that <\/p>\n
      even if Defendant No.2 came to India for a week on his holiday or to
\n      visit   his   family,   the   Defendant   No.12   would   ipso   facto   vacate   his <\/p>\n
      office is wholly unacceptable.  Similarly the interpretation put by Mr.
\n      Rao   that   only   when   Defendant   No.2   actually   attended   the   Board
\n      Meetings of Defendant No.1 that Defendant No.12 would vacate his <\/p>\n
      office as alternate Director cannot be accepted.   It would be when
\n      Defendant No.2 ceased to have the global business that he is stated
\n      to have in Singapore and would commence his business in India, in
\n      the State of Maharashtra so that he would be available for attending
\n      Board Meetings of Defendant No.1 Company held in Mumbai on an
\n      almost regular basis as required under Section 285<\/a> of the Companies
\n      Act,   1956   that   Defendant   No.12   would   vacate   his   office   under <\/p>\n
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\n              This Order is modified\/corrected by Speaking to Minutes Order<\/p>\n
                                               15          NM.3701.09-S.2429.97-ORDER.sxw<\/p>\n
       Section 313(2)<\/a> of the Act.\n<\/p>\n
    34.That   has   not   happened.   The   Defendant   No.12   would,   therefore,
\n       continue to act as a permanent Director of the Company which was <\/p>\n
       the position held by Defendant No.2 prior to he going abroad and
\n       appointing Defendant No.12 as his alternate.  Defendant No.12 has, <\/p>\n
       therefore,   validly   attended   the   board   meeting   held   on   6th  August
\n       2009.     This   was   with   the   Plaintiff   and   Defendant   No.3.     The
\n       resolution could be passed unanimously, but for the wholly wrongful <\/p>\n
       act of the Plaintiff.\n<\/p>\n
    35.Consequently, it is seen that the Plaintiff cannot take exception to <\/p>\n
       the presence of Defendant No.12 at the Board Meeting.\n<\/p>\n
    36.Consequently   as   in   the   case   of    Perrott   &   Perrott,   Ltd.   Vs. <\/p>\n
       Stephenson   1933   All   E.R.   Ch.D   549  relating   to   the   true <\/p>\n
       construction   of   such   an   article   giving   powers   to   the   governing
\n       directors to be exercised unanimously which was held to be correctly <\/p>\n
       exercised,   the   act   of   the   directors   in   properly   convening   and
\n       commencing the meeting cannot be whittled down by the improper
\n       discontinuation   of   the   meeting  and  the  improper  dis-allowance   to <\/p>\n
       continue the meeting by the Plaintiff.\n<\/p>\n
    37.Protection of the Court which would be a premium on the default of
\n       the Plaintiff cannot be granted.  This has been similarly held when  a
\n       tenant who had defaulted in making payments of rent under Section
\n       13(4)  of   the   Bombay  Rent   Act   1947,   but   whose   defence   was  not
\n       applied to be struck off by the landlord was held not entitled to take <\/p>\n
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\n             This Order is modified\/corrected by Speaking to Minutes Order<\/p>\n
                                              16          NM.3701.09-S.2429.97-ORDER.sxw<\/p>\n
      advantage of the inaction on the part of the landlord (See in the case
\n      of  Prakash Chand   & Ors Vs. Firm Pohap Singh Kishan Sahai & <\/p>\n
      Ors.   RLW   2006(4)   Raj   2763,   2006(4)   WLC   248)     Similarly   the
\n      defaulting parties to an arbitration who sought to adopt their own <\/p>\n
      procedure was not permitted to insist later that the Arbitrator should
\n      have been appointed as per procedure   indicated in the arbitration <\/p>\n
      clause on the same principal (See in the case of HBHL-VKS (J.V.) Vs.
\n      Union of India (UOI) & Ors. 2007(1) ARBLR 252 (Delhi). Also
\n      when   parties   settled   their   dispute   in   a   suit   upon   a   mortgage <\/p>\n
      requiring a preliminary decree to  be passed,  but which procedure <\/p>\n
      was   circumvented   by   their   settlement,   were   held   not   entitled   to
\n      contend that the provisions of Order 34 of the C.P.C relating to a <\/p>\n
      mortgage   decree   did   not   apply   to   a   compromise   decree   as   that
\n      would   be   taking   advantage   of   one’s   own   wrong   and   putting   a
\n      premium   on   the   defaulter   under   the   decree.   (See   in   the   case   of <\/p>\n
      Rabindra Narain Lall Vs. Smt. Nirmala Sinha & Ors. AIR 1978 <\/p>\n
      Patna 162).\n<\/p>\n
    38.Consequently, reliance by Mr. D’vitre on behalf of the Plaintiff upon
\n      the   judgment   in   the   case   of  Ranjit   Sinh   V.   Patil   Vs.   Collector,
\n      Kolhapur 2004(3) Mh.L.J. 642 at page 646  that for a meeting to <\/p>\n
      be valid it must begun with the minimum number of persons fixed
\n      by provisions of law, rules or Bye-laws constituting the quorum and
\n      to continue the same to business and to validly transact its business
\n      would not apply in the case of an ulterior action meant to frustrate
\n      the board meeting.   Of course, in the normal case a board meeting
\n      cannot be held such as to have the quorum only at the time of its
\n      commencement and later to continue the meeting of the board by <\/p>\n
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\n             This Order is modified\/corrected by Speaking to Minutes Order<\/p>\n
                                              17          NM.3701.09-S.2429.97-ORDER.sxw<\/p>\n
      passing   resolutions   in   the   absence   of   the   minimum   number   of
\n      Directors required to constitute the quorum. Consequently, in a given <\/p>\n
      case if it does so happen that if some of the Directors have left the
\n      venue of the meeting upon understanding that the proceedings at <\/p>\n
      the meeting have come to an end and after some of those Directors,
\n      unknown   to   the   other   Directors   who   have   left,   mala   fide   or <\/p>\n
      otherwise pass further resolutions in their absence, generally such
\n      resolutions would be rendered as invalid for want of quorum.  In fact
\n      such resolution would not be valid even if there was quorum and <\/p>\n
      some of the Directors on the board were not notified of the later <\/p>\n
      resolutions.  It is in that light that it has been held in paragraph 11
\n      of the judgment in the case of Ranjit Sinh (supra) that the quorum is <\/p>\n
      required to constitute a meeting or to continue the same to business
\n      or to validly transact its business.   It is indeed, as observed in the
\n      case of   Punjab University, Chandigarh   Vs. Vijay Singh Lamba <\/p>\n
      (1976) 3 SCC 344 referred to in the said paragraph, “to enable that  <\/p>\n
      body to transact its business validly so that its act may be lawful”. It
\n      must, therefore, be concluded that in this case the quorum which <\/p>\n
      was   present   at   the   beginning   enabled   that   body   to   transact   its
\n      business   to   pass   resolutions   lawfully   after   the   Plaintiff   who   had
\n      notice of the meeting attended, but failed to perform her functions <\/p>\n
      as the Director attending that meeting.\n<\/p>\n
    39.Because of the continuous and persistent objections of the Plaintiff
\n      for holding any of the meetings and transacting any business there
\n      has been a complete deadlock   in the Company.   If the Plaintiff’s
\n      contents were to be countenanced even for considering whether she
\n      has been oppressed, her singular act has resulted in and would result <\/p>\n
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\n              This Order is modified\/corrected by Speaking to Minutes Order<\/p>\n
                                               18          NM.3701.09-S.2429.97-ORDER.sxw<\/p>\n
       in   a  complete   deadlock.     In  the  case   of     Krishan  Lal  Ahuja  Vs.
\n       Suresh Kumar Ahuja [1983] 53 Comp. Cases  (Del.) 60 one such <\/p>\n
       company   started   by   four   brothers   as   a   family   partnership   and
\n       continued by their heirs who had irretrievably fallen from each other <\/p>\n
       it was observed that collaboration in management of the company
\n       was   out   of   question.   Consequent   upon   the   deadlock   the   brothers <\/p>\n
       were directed to buy out the heirs upon a fair price being ensured.\n<\/p>\n
    40.In the case of  Sishu Ranjan Dutta Vs. Bhola Nath Paper House <\/p>\n
       Ltd. [1983] 53 Comp. Cases 883,  at page 891(Cal)   there was a <\/p>\n
       complete deadlock and two groups in the family could go together.
\n       It was observed that though the business was flourishing the Court <\/p>\n
       had   the   power   to   wind   up   the   company   (as   it   would   just   and
\n       equitable to wind it up under Section 433(f)<\/a> of the Companies Act)
\n       as it could not be managed in the “present situation” and therefore, <\/p>\n
       it   followed   that   there   was   mismanagement   of   the   company <\/p>\n
       amounting to oppression of one group by the other “whichever way
\n       it may be looked at”.  It was observed that the grounds were made <\/p>\n
       out for the intervention of the court by exercising its extraordinary
\n       power under Sections 397-398<\/a> of the Companies Act, 1956 to put an
\n       end to the matter complained of,  so that “no further prejudice could <\/p>\n
       be caused to any of them”.\n<\/p>\n
    41.The   case   of  Yashovardhan   Saboo   Vs.   Groz-Beckert   Saboo   Ltd.
\n       1995 Company Cases 371 also had two rival groups having unequal
\n       shareholding,   but   equal   participation   under   the   articles.   The
\n       requirement   of   unanimous   resolution   resulted   in   an   impasse   on
\n       issues resulting in consequent deadlock in management.  The reliefs <\/p>\n
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\n               This Order is modified\/corrected by Speaking to Minutes Order<\/p>\n
                                                19          NM.3701.09-S.2429.97-ORDER.sxw<\/p>\n
       under   Sections   397<\/a>   and   398<\/a>   of   the   Companies   Act   were   held
\n       grantable.\n<\/p>\n
    42.In   fact   in   this   case   also   the   Court   suggested   a   fair   settlement <\/p>\n
       between the parties by paying off\/selling off between the Plaintiff
\n       and the Defendants.   However, the Court cannot allow the parties <\/p>\n
       who do not call it a day despite the deadlock created by at least one
\n       of them and seek relief to perpetuate the deadlock.  If the company
\n       were   to   be   a   going   concern   it   must   run   as   a   going   concern.   To <\/p>\n
       frustrate such running of the company would be putting a premium <\/p>\n
       on such default and aiding the party creating the deadlock.\n<\/p>\n
    43.Once it is seen that the board meeting held on 6th August 2009 was
\n       validly   convened     and   properly   continued,   the   resolutions   passed
\n       thereat  and  the  business  transacted  thereat  are seen  to be  validly <\/p>\n
       transacted and have to be effectuated.  One of such businesses was <\/p>\n
       the   resolution   issuing   the   notice   for   holding   the   EGM   of   the
\n       Company on 31st  August 2009 inter alia for altering the Articles of <\/p>\n
       Association to delete Article 51(e)<\/a> enjoining resolutions as at board
\n       meetings by a unanimous vote.\n<\/p>\n
    44.The notice of the EGM has been posted on 21st  August 2009 and <\/p>\n
       received by the post  office of the addressee on 25th August 2009.  It
\n       is, therefore, sent by the company by post more than 7 days before
\n       holding of the EGM as required by Article 48(2)(i)<\/a> of the Articles of
\n       Association   of   the  Defendant  No.1   Company.    The  Plaintiff  claims
\n       that that was not received by her more than 7 days before the EGM
\n       was held and hence contends that the resolutions passed at the EGM <\/p>\n
                                                                     ::: Downloaded on – 09\/06\/2013 17:39:25 :::<\/span>
\n              This Order is modified\/corrected by Speaking to Minutes Order<\/p>\n
                                               20          NM.3701.09-S.2429.97-ORDER.sxw<\/p>\n
      held on 31st August 2009 are not valid and has applied for injunction
\n      restraining the Defendants from acting thereupon.  This argument is <\/p>\n
      wholly erroneous.  What the Articles of the Company as well as the
\n      Section   171<\/a>   of   the   Companies   Act   relating   to   notices   for   general <\/p>\n
      meetings   contemplate   is   the   giving   of   the   notice   of   the   requisite
\n      period.  If a notice is given of not less than 7 days in writing and is <\/p>\n
      put in post it matters not that the addressee receives it much later  or
\n      less   than   7   days   before   the   meeting   or   even   thereafter.       What
\n      matters is whether the Company has sent the notice more than 7 <\/p>\n
      days in advance.\n<\/p>\n
    45.Under Section 53<\/a> of the Companies Act any document served upon <\/p>\n
      any member of the Company by the Company sent by post shall be
\n      deemed   to   be   properly   effectuated   by   properly   addressing,   pre-
\n      paying and posting a letter containing the document in post.  Under <\/p>\n
      Section 53(2)(b)<\/a> the service will be deemed to have been effected 48 <\/p>\n
      hours after the same is posted in case of a notice of a meeting.  The
\n      notice of the EGM is sent by the Company to the Plaintiff is deemed <\/p>\n
      to have  been  received  by the  Plaintiff on  23rd  August 2009, more
\n      than 7 clear days prior to 31st August 2009, the date of EGM.\n<\/p>\n
    46.In the case of  Shailesh Harilal Shah Vs. Matushree Textiles Ltd.,
\n      AIR 1994 Bombay 20 relied upon by Mr. Rao, the prejudice caused
\n      by a shorter notice came to be considered.   In that case instead of
\n      the   notice   of   21   days   the   notice   was   sent   20   days   prior   to   the
\n      meeting.  Since no prejudice was shown to have been caused to the
\n      Plaintiff no relief was granted.   It was held that the requirement of
\n      the service was directory and not mandatory.\n<\/p>\n
                                                                    ::: Downloaded on – 09\/06\/2013 17:39:25 :::<\/span><\/p>\n
               This Order is modified\/corrected by Speaking to Minutes Order<\/p>\n
                                                21          NM.3701.09-S.2429.97-ORDER.sxw<\/p>\n
    47.Consequently, none of the meetings have been invalidly convened or <\/p>\n
       held and no resolution passed at any of the meeting can be injuncted
\n       by the Court.\n<\/p>\n
    48.The Plaintiff has also sought an injunction against Defendant No.6 <\/p>\n
       being   restrained   from   acting   as   the   Director   of   the   Company.
\n       Defendant   No.   6   has   been   appointed   Director   of   Defendant   No.1
\n       Company also under the resolution passed at the board meeting held <\/p>\n
       on  6th  August 2009.    His appointment  also does not  come   up for
\n       challenge.\n<\/p>\n
    49.In fact strangely the Plaintiff has sought to restrain the convening
\n       and   holding   of   all   forthcoming   meetings   of   Defendant   No.1
\n       Company also.  It need hardly be said that that would tantamount to <\/p>\n
       bringing about and complete deadlock without the company being <\/p>\n
       wound up, without any proceedings having been taken before the
\n       competent   forum   upon   proof   of   any   other   oppression   or <\/p>\n
       mismanagement and merely upon the whim of the Plaintiff. No such
\n       relief can be granted.\n<\/p>\n
    50.The   Notice   of   Motion   is,   therefore,   dismissed   with   costs   of   Rs.
\n       25000\/-.\n<\/p>\n
    51.Ad-interim order, if any, in force shall continue for 2 weeks.\n<\/p>\n
                                                               (SMT. ROSHAN DALVI, J.)<\/p>\n
                                                                     ::: Downloaded on – 09\/06\/2013 17:39:25 :::<\/span>\n <\/p>\n","protected":false},"excerpt":{"rendered":"
Bombay High Court Naina D. Kamani vs Janson Engineering & Trading Pvt. … on 18 August, 2011 Bench: R. S. Dalvi This Order is modified\/corrected by Speaking to Minutes Order 1 NM.3701.09-S.2429.97-ORDER.sxw mnm IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION NOTICE OF MOTION NO. 3701 OF 2009 IN SUIT NO. […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[11,8],"tags":[],"class_list":["post-249661","post","type-post","status-publish","format-standard","hentry","category-bombay-high-court","category-high-court"],"yoast_head":"\nNaina D. Kamani vs Janson Engineering & Trading Pvt. ... on 18 August, 2011 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/naina-d-kamani-vs-janson-engineering-trading-pvt-on-18-august-2011\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Naina D. 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