' MUHAMMAD KHALID MEHMOOD KHAN, J.---The petitioners have challenged the legality of unfinished annual general meeting of respondent. No,1 held on 25-8-2012. The petitioners ar sert that respondent No,1 is a Public Limited Company, incorporated under the Companies Ordinance 1984, having its registered office at Ismail Aiwan-e-Science, Off Shahrah-e-Roomi, Lahore (hereinafter referred to as the COMPANY). The petitioner No,1 is a public limited company and petitioner No,2 is its Chief Executive (hereinafter collectively referred to as petitioner) are holding 24.96% fully paid shares of respondent No,1 and are its single largest shareholders. Respondents Nos.2 to 8 are the owners of approximately 10.66% of the total issued and paid-up share capital of respondent No,1. Respondents Nos.2 to 8 are the former directors of respondent No, 1 and stand retired on 7-7-2012 in terms of section 180 of the Companies Ordinance, 1984 (hereinafter referred to as ORDINANCE) but they are performing their duties by virtue of section 177 of the Ordinance.
Respondent No,9 is the alternate director for respondent No,2 appointed on 5-8-2012. Respondent No,10 is the Secretary of the company. Respondent No,11 is the statutory regulator of respondent company and respondent No,12 is the Stock Exchange. The shareholders , of the Company called its Annual general meeting on 25-8-2012 but it was adjourned to the extent of election of directors in compliance of order of learned civil court. The said annual general meeting held on 25-8-2012 is liable to be set aside being violative of its Articles of Association and the Companies Ordinance 1984 (hereinafter referred to as the Ordinance).
2. Mr. Ahmed Pervaiz, Advocate learned counsel for petitioners submits that under section 158(3) of the Ordinance at least 21 days clear notice of annual general meeting is required to be published in two widely circulated newspapers. The respondents got published statutory Notice in daily The Nation, Karachi and Roznama Nawa-e-Waqt, Lahore on 5-8-2012, hence a clear period of 21 days was not given or provided to the shareholders which is violation of section 158(3) of the Ordinance.
Further the notice of annual general meeting is required to be sent to every share holder at least 21 days before the date fixed for meeting. Respondents have not issued notices as provided in section 160(1)(a)(i) of the Ordinance and as such meeting dated 25-8-2012 is illegal. Learned counsel further submits that the share transfer books of respondent No,1 remain closed from 19-8-2012 to 25-8-2012 so the latest list of shareholders/members could not be finalized or made available up to 20-8-2012 to the shareholders for the reasons that 20-8-2012 to 22-8-2012 there was public holidays of Eid-ul-Fitr, the list was provided on 24-8-2012 which is less then 24 hours before the scheduled annual general meeting, hence, notice under section 161(5) of the Ordinance and Article 72 of the Articles of Association of respondent No,1 could not be deposited within 48 hours of the scheduled meeting. As per listing regulation No,18(1) of the KSE Listing Regulations, every listed company is required to send the prescribed number of copies of its annual report and audited accounts to the Karachi Stock Exchange not later than 21 days before the meeting of shareholders.
The company under section 233(4) of the Ordinance is bound to provide copies of its audited balance sheet and profit and loss account together with a copy of the auditor's report to every member of company at least 21 days before the meeting but the respondent No,1 failed to fulfill the mandatory requirements of Law. Further submits that as per Articles of Association the Electoral College for the election of the board of directors of company is comprised of its registered shareholders/ members and every member has a right to caste vote and to obtain copies of the register of members maintained as required under Section 147 of the Ordinance. Inspite of petitioners' repeated demands the required information was provided to the petitioners on 24-8- 2012 which is less than one day before the scheduled meeting. The publication of the notices about list of contesting candidates for the election of the directors of company is required to be published in one English and one Urdu language newspapers which has not properly been done.
The members were not allowed to inspect proxies lodged with the respondent/ company. The proxies accepted as valid suffers from material defect and illegality. Learned counsel for petitioners has objected each and every action of respondent company qua the holding of annual general meeting and submits that proceedings of annual general meeting dated 25-8-2012 are required to be set aside being without lawful authority and respondents be directed to convene a fresh annual general meeting in accordance with law. Further submits that a direction may be issued to respondents Nos.11 to 12 to proceed against respondents Nos.1 to 10 for violation committed by them under sections 158, 160, 161, 173, 177, 178 and 233 of the Companies Ordinance, 1984. Learned counsel has relied on Lt. General (Retd.) Shah Rafi Alam and others v. Lahore Race Club and others (2004 CLD 373), Central Cotton Mills Limited and 2 others v. Naveed Textile Mills Limited and another (1996 MLD 1943), Naveed Textile Mills Ltd. Karachi and 3 others v. Central Cotton Mills Limited, S.I.T.E.
Kotri, District Dadu and 2 others (PLD 1997 Karachi 432), Integrated Technologies and Sustems Ltd. v. Interconnect Pakistan (Pvt.) Limited through Acting Chief Executive and others (2001 CLC 2019).
3. Learned counsel for respondents Nos. 2 to 8 has raised preliminary objection about the maintainability of petition being premature and submits that the election of directors was suspended due to restraining order obtained by the petitioners from civil court and annual general meeting was adjourned till the vacation of restraining order by the learned civil court and as such petition under section 160-A of the Companies Ordinance, 1984, is not maintainable. Section 160-A of the Companies Ordinance can only be invoked after the final and concluded meeting. As the annual general meeting was not finalized and concluded and as such the petition is liable to be dismissed being premature.
' Learned counsel has relied on Sued Amir Hussain Shah v. Progressive Papers Ltd. And others (PLD 1969 Lahore 615).
4. Heard, record perused.
5. The petitioners' shareholding is admitted fact between the parties. The petitioners are disputing number of acts of respondent No,1 for holding the annual general meeting.
6. The first question required for determination is whether the annual general meeting was concluded on 25-8-2012 or it is yet to be concluded. Learned counsel for petitioners have placed on record the draft proceedings of annual general meeting dated 25-8-2012 provided by respondent No,1 vide e-mail in response to petitioners letter dated 7-9-2012 available at page 476 on Court file. It is an admitted fact that petitioners attended the impugned meeting and 4 items were on agenda. The petitioners raised their all objections and produced civil court order. On the objections of petitioners the Chairman called the poll as under:- "Election of Directors.
In view of the above said court order Chairman gave his ruling that the Company had honoured the Stay Order and not going to hold election and consequently, instant meeting is proposed to be adjourned for the unfinished agenda regarding the Election of Director's until the conclusion of the supra referred Stay order. In this regard following resolution was presented by Mr. Hamayoun N. Shaikh with the approval of the chair before the house for consideration and approval.
"Directors Election is stayed by the order of Civil Court Lahore. We will honour the stay and adjourn the instant AGM to the extent of Election of Directors that were to be held today. The Election of Directors shall be held as soon as possible under the law after vacation of the stay on same book closures with same candidates and proxies and the authority letters received by the Company."
' The above said resolution was approved by the majority of the members present at the meeting by show of hands. However, when voting on this resolution was demanded by the Chairman representative of Jahangir Siddiqui and Company Limited and Mr. Saiman Lalalni (one of the contesting candidate of election of directors) shown their concerns that Company could not pass this resolution in view of the Stay order however this objection was overruled by the Chairman."
7. The perusal of the Draft minutes of the impugned meeting shows that election of directors was adjourned due to the order passed by the learned civil court and remaining items on agenda was passed and finalized. Now it has to be seen what order learned civil court passed and what was the prayer of petitioner in the suit. Copy of plaint is available at page 442 of court file. All legal objections and facts narrated in the present petition under section 160-A of the Ordinance, are available in the suit and the petitioners' prayer before the learned civil court was as under:-- "In view and by reason of the aforementioned, it is most humbly prayed that this Hori'ble Court may graciously grant the following reliefs to the plaintiffs:
(1) That the captioned suit may be decreed as prayed, with costs;
(2) That a judgment and decree be passed declaring and holding that the impugned actions are illegal, unlawful, void, without authority and of no legal effect or consequence and void ab initio:
(3) That additionally, a permanent injunction be issued by this Hon'ble Court restraining the defendants from proceeding with the Impugned Actions; .
(4) That, additionally, a mandatory injunction be issued by this Hon'ble Court directing the defendants to forthwith call an annual general meeting afresh for the same agenda as that proposed for the AGM scheduled for 25-8-2012 after fulfilling all the codal formalities and in accordance with the Ordinance and the applicable law; ' ANY OTHER RELIEF that this Hon'ble Court deems fit and proper under the circumstances of the case may also be granted".
8. Learned civil court after hearing the parties passed the following order on 24-8-2012:-- "Though, the plaintiffs/petitioners have prayed for restraining the defendant/ respondents from holding the annual general meeting their main grievance are regarding the election of directors. I am not inclined to restrain the holding of the general meeting for the agenda items other than the holding of election of directors. Subject to notice and till the next date of hearing the defendant/ respondents are restrained from holding the election of directors but they may hold the annual general meeting for the other agenda items. The annual general meeting that may be held for items other than the holding of election of directors shall he subject to the outcome of the titled suit".
9. The petitioners produced the said restraining order to the members of annual general meeting and the election of directors was adjourned by the members of meeting present and other agenda items were approved.
10. The order of learned civil court will show that the other agenda items of annual general meeting were also the subject to final disposal of suit, meaning thereby, the entire proceedings of the impugned meeting was subject to final disposal of the suit, but the petitioners unilaterally without reserving any right withdrew the said suit and filed the present petition, hence the restraining order of learned Civil Court dated 24-8-2012 come to an end and the shareholders of the company were within their rights to hold and complete the proceedings of adjourned meeting, but the respondents Nos.2 to 8 has not completed the proceedings of adjourned impugned meeting, the respondent Nos.2 to 8 made the statement before this court on 5-10-2012 that they will not hold the election of directors till the final order of this Court, meaning thereby the status of the impugned meeting remain the adjourned meeting.
11. The argument of learned Counsel for respondents Nos.2 to 8 is that present petition is premature and is liable to be dismissed.
12. For appreciating the provision of section 160-A of the Ordinance, 1984, the same is reproduced as under:- "160-A. Circumstances in which proceedings of a general meeting maw be declared invalid.--- The Court may, on a petition by members having not less than ten per cent of the voting power in the company that the proceedings of a general meeting to be declared invalid by reason of any material defect or omission in the notice or irregularity in the proceedings of the meeting which prevented members from using effectively their rights, declare such proceedings or part thereof invalid and direct holding of afresh general meeting".
13. The plain reading of section 160-A of the Ordinance shows that the court has the power to set aside the proceedings of annual general meeting and declare it invalid if there is a material defect or omission in the issuance of statutory notice of 21 days in terms of section 158(3) of the Ordinance 1984, or irregularity in the proceedings of the meeting which prevented members from using effectively their rights. The court has the powers to set aside the whole proceedings of annual general meeting or any part thereof. This will show that word "proceedings" used in the above said provision of law is significant, the proceedings of annual general meeting has the vital role. The proceedings of impugned meeting will show that impugned meeting was not finalized but it was adjourned, under the orders of court. It has to be seen what is the effect and status of the adjourned meeting. If the impugned meeting is the adjourned meeting and has not been finalized than it has to be seen whether the petitioners can press into service section 160-A of the Ordinance 1984 or not.
14. The argument of learned counsel for petitioners is that as per clause 72 of the Article of Association of respondent No,
1. Read with section 161(5) of the Ordinance, forty eight hours time was not provided to the members to lodge their proxies. The petitioners challenged this alleged act of respondent No,1 through suit for declaration before Civil Court, but withdrew the same and challenged the respondent No,l.'s action under section 160-A of the Ordinance.
15. Under Article 55 of respondent No,l's Articles of Association, the Chairman has the powers to adjourn the meeting, the said Article is read as under:-- "55. The Chairman may with the consent of any meeting at which a quorum is present (and shall if so directed by the meeting), adjourn the meeting from time to time and from place to place but no business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place. When a meeting is adjourned for ten days or more, notice of the adjourned meeting shall be given as in the case of an original meeting.
Save as aforesaid, it shall not be necessary to give any notice of an adjournment or of the business to be transacted at an adjourned meeting."
16. The Article will show that no business shall be transacted in the adjourned meeting other than the business left unfinished of the scheduled meeting. The petitioners' all objections were entertained and poll was called, the majority shareholders rejected the petitioners' objections and Draft of minutes of meeting shows that Agenda item No,4 was deferred and the meeting was adjourned. The above said facts will shows that 19th annual agenda of respondent No,1 was not concluded and stand adjourned till the.Vacation of restraining order of Court, hence as stated above, the status of impugned meeting is of a unfinished meeting. The issue for the adjourned meeting came up for adjudication in McLaren v. Thomson (Chancery Division) [1917 M. 4791 [1917] 2 Ch.41: "A company's Article enabled members to vote by proxy, but provided (Article 72) 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":-- ' Held, that proxies lodged between the dates of an original meeting and the adjournments thereof were invalid, the adjourned meeting being in law merely a continuation of the original meeting".
"An adjourned meeting when held is a continuation of the meeting from which the adjournment takes place: Scadding v. Lorant":
17. Again the same issue was dilated upon in Mrs. A. Ananthtlakshmi Ammal v. The Hindustan Investment and Financial Trust Lt. (A.I.R. (38) 1951 MADRAS 927) and court held as under:-- "Now, what is the position? The annual general meeting was originally called for 31-12-1950. It was thereafter adjourned to 28-1-1951 by the Court and It was not contended before us that the Court had no power to adjourn the meeting. The meeting so adjourned has not till now been held but is being adjourned from time to time. Now, Art. 26 of the Articles of Association of the company provides that the transfer books of the company shall be closed during 14 days immediately preceding the ordinary general meeting in each year. Presumably therefore, the transfer books must have been closed on and from 17-12-1950. The meeting convened for the 31st was adjourned on the 27th December to 28-1-1951 and thereafter to subsequent dates. But meeting nevertheless is, in our opinion, the meeting originally convened for 31-12-1950 which however is being adjourned from time to time, if the meeting had been held on 31-12-1950 as originally convened, then those persons who were entered in the list of share-holders as on 17-12-1950 would alone have been entitled to take part and vote at the meeting. We think it neither legal nor equitable that merely because of adjournments due to the action of one party or the other, there should be any prejudice to the entire body of share-holders as on the material date namely 17-12-1950. We therefore hold that only such of the share-holders who were entered in the list of shareholders on 17-12-1950 would be entitled to vote at the meeting to be held on the adjourned.Date. This direction does not in any way contravene the provisions of S. 79(1)(e) of the Act".
18. Delhi High Court 47 (1992) DLT 363 Equivalent 1992 (22) DRJ 431 and the Court held as under; 'There is no dispute between the parties that on January 8, 1992 the members had collected at the venue of the meeting to participate in the "AGM". The purpose of the "AGM" was definite and known and on that particular date they were also to elect the members of the Managing Committee. In view of the generally accepted meeting of the word "Meeting" it seems to me that on January 8, 1992 a meeting in the eye of law did take place as sufficient number of members were present to form a quorum for the purpose of transacting the business of the "AGM" and Chairman, to control the meeting, had been duly appointed and was present at venue of the meeting. The Chairman also addressed the meeting but the business of the "AGM" could not be transacted because of the interdiction by two courts mentioned above. Since on January 8, 1992 the meeting was adjourned now a new date only has to be fixed which means that the original meeting will be continued on that date. There is simple authority for the proposition that the adjourned meeting is a continuation of the original meeting. In A. Ramaiya's Companies Act at page 526 the learned author has to say the following in this regard: AN adjourned meeting is a continuation of the original-meeting, and no new notice need be given except in cases provided by the articles."
(14) Palmer also reiterates the same proposition of law. To the same effect are the observations of Shackleton in his treatise on The Law and Practice of Meetings (8th edition) at page 153: "SINCE an adjourned meeting is by operation of law a continuation of the original meeting, there is in principle, no need to give notice of the adjourned meeting, but here the articles may make specific provision."
(15) According to Halsbury's Laws of England, Fourth edition Volume 7 and adjourned meeting can transact that business which was to be transacted at the original meeting. The relevant para reads as under: "FOR the purposes of considering what business can be transacted at an adjourned meeting, the adjourned meeting must be considered as the original meeting; but where a resolution is passed at an adjourned meeting of a company or of the holders of any class of shares, the resolution must be treated as having been passed on the date on which it was in fact passed. A meeting of shareholders cannot by a majority refuse to hear the views of the minority, but after a reasonable opportunity has been afforded for the expression of their views it is competent for the chairman, with the meeting's consent, to declare the discussion closed and put the motion to the vote".
(17)Again in Watrap S. Subramania Aiyar, High Court Vakil and others v. The United India Life Insurance Company Limited, Madras (1928) 55 Madras Law Journal 385 and Jackson and others v.
Hamlyn and others (1953) Chancery Division 577 it was held that art adjourned/ reconvened meeting is continuation of the original meeting.
(18)Therefore in view of the aforesaid legal position I am of the view that the 'AGM" when it meets will be entitled to transact the business which it was to transact on January 8, 1992 and section 171 of the Companies Act will not be attracted as the adjourned meeting will be continuation of the original meeting. But this does not mean that no notice would be required to be given to the members. Since the meeting was adjourned without fixing a date for the "AGM" notice will have to be given to the members in this regard".
19. In Syed Ameer Hussain Shah v. Progressive Paper Limited (PLD 1969 Lahore 615), the. Court held as under:- "An adjourned meeting is nothing but a continuation of the previous meeting and therefore it cannot be subject to any objection on that account."
20. The judgment relied upon by learned counsel for petitioners will show, in these cases there was no dispute of adjourned meeting.
21. From the above discussion it is clear that petition under section 160-A of the Ordinance will be maintainable in the case of concluded meeting, petitioners after the conclusion of meeting has two remedies one is under C section 160-A of the Ordinance when he challenges the legality and validity of Annual General meeting as whole and under section 179 of the Ordinance if the petitioner is aggrieved of the election of directors.
22. In view of above the petition is dismissed being premature.