' The petitioner who is an ordinary Member of the Lahore Race Club having a right of vote has filed this petition under sections 76(3) and 79(3) of the Companies Act, 1913, praying for cancellation of a meeting called by the Ex-Stewards of Lahore Race Club, Lahore, scheduled for the 23rd April 1978, and for appointment of an Administrator to call such a meeting and conduct the elections according to law.
2. The Lahore Race Club is a private limited Company with its registered office at Lahore. The business of the Company, as prescribed in Article 28 of the Articles of Association, is carried on by the Stewards elected annually in the Annual General Meeting held under Article 21. Article 11 provides that such a General Meeting shall be held once in every year at such time (not being more than fifteen months after the holding of the last preceding General Meeting) and place as may be prescribed by the Company in the General Meeting, or, in default at such time in the month following that in which the anniversary of the Company's incorporation occurs, and at such place as the Stewards shall appoint. In default of a General Meeting being so held, a General Meeting shall be held in the month next following and may be called by any two members in which meetings are to be called by Stewards.
3, The fifty-second General Annual Meeting in the year 1977 was called for the 24th December 1977.
Some time before that, on the 13th November 1977, Martial Law Regulation No, 28 had been issued by the Chief Martial Law Administrator to take effect retrospectively with effect from the 1st day of October 1977. It restrained all persons from taking any steps "for holding elections to any organization or association of students or to any professional body or association" and provided that "any steps so taken, and any election held, at any time after the commencement of this Regulation, shall be void and of no effect." Paragraph No, 3 of the Regulation provided for three years' rigorous imprisonment and/or whipping up to ten stripes for violation of any provision of the Regulation.
4. In view of this Regulation Makhdumzada Syed Hassan Mahmud wrote a letter to the Chairman of the Stewards that on account of this Regulation the holding of elections was barred. He suggested that the meeting be cancelled and fresh agenda be issued for a meeting in the month of January 1978. In the meanwhile, he promised, that he would approach the Martial Law Authorities to make necessary amendment in the Regulation.
5. The Chairman obtained legal advice on the question of applicability of this Regulation and he was advised that the Regulation did not apply to the elections of this Company. He, however, referred the matter to the Martial Law Authorities for clarification. It was, therefore, resolved that the meeting be adjourned pending the receipt of clarification till the 31st December 1977.
6. The adjourned meeting was held on the above date. The Chairman informed the House that Captain M. Nawaz Khan of Martial Law Headquarters, had informed the Acting Secretary and the Chief Accounts Officer of the Club on telephone that the election of this Company could not be held under the existing Orders. By a unanimous vote the meeting was postponed to a date to be notified by the Chairman. It was also decided that till the next meeting the present Stewards shall continue in office.
' Martial Law Regulation No, 28 was withdrawn on the 1st March 1978. Despite the fact that only ten days' notice is necessary under Article 16 of the Articles of Association for holding a general meeting the next meeting was called after about 54 days of the withdrawal of Martial Law Regulation No, 28.
8. The petitioner's case is that Martial Law Regulation No, 28 was not applicable and as such the meeting should not have been cancelled or postponed and alternatively the meeting of 1976 having been held on the 29th December 1976, the 52nd Annual General Meeting could have been held at most by the 29th March 1978, i,e, within the maximum period of 15 months from the last General Meeting. Such a meeting could have been arranged within time after the repeal of Martial Law Regulation No, 28.
9. It was alleged in the petition that proxies issued in the end of November or the first week of December 1977, were declared valid for the meeting scheduled for the 24th April 1978, despite the fact that these proxies were issued only for the meeting held on the 24th December 1977. Objection was taken even to the nomination papers filed for the meeting of December 1977, to remain effective for the meeting called on the 24th April. Since, according to the petitioner, the Stewards and the Chairman had ceased to hold office, it was necessary for the High Court to arrange the holding of the meeting under sections 77(3) and 79(3). The learned counsel for the petitioner raised all these points during the arguments and relied upon In re: Messrs K. S. B. Pumps Co. Ltd., Lahore (1). He referred to a number of other authorities also.
10. The learned counsel for the respondent argued that section 77(3) was not attracted since there have been four General Meetings during the (1) PLD 1974 Lah. 362 calander year 1977 in addition to the Annual General Meetings held on the 24th December 1977, and the 31st December 1977. These earlier meetings were held on the 20th April 1977, 21st April 1977, 4th June 1977, and the 25th October 1977. He argued that since the full calendar year had not elapsed since the holding of at least two of the last meetings, the meeting scheduled for the 24th April 1978, was a lawful meeting. As regards section 79, he argued that this was not applicable to a private limited Company. The learned counsel conceded that Martial Law Regulation No, 28 did not bar the elections of the Lahore Race Club, but he submitted that the General House considered it fit not to take the risk of prosecution, and the clarification made by the Martial Law Headquarters at Lahore confirmed their apprehensions.
11. The learned counsel also argued that in any case the meeting called for the 24th April 1978, was an adjourned meeting and a continuation of the meetings dated the 24th December 1977, and the 31st December 1977. He relied upon a case Amir Hussain Shah v. Progressive Papers Ltd. (1) and Subramania Aiyar and others v. United India Life Insurance Co. Ltd. (2).
12. Relying upon Kailash Chandra Dutt v. Jogesh Chandra Majumdar and others (3) he argued that Stewards elected in the last meeting continue to hold office till such time as the new Stewards are elected. Lastly, he submitted that the petitioner himself had acquiesced in the postponement.
13. Sections 76 and 79(3) read as follows :- "76.-(1) A general meeting of every company shall be held within eighteen months from the date of its incorporation and thereafter once at least in every calendar year and not more than fifteen months after the holding of the last preceding general meeting.
(2) If default is made in holding a meeting in accordance with the provisions of this section the Company who is knowingly and wilfully a party to the default shall be liable to a fine not exceeding five hundred rupees.
(3) If default is made as aforesaid, the Court may on the application of any member of the Company, call or direct the calling of a general meeting of the Company?
79.-(3) If for any reason it is impracticable to call a meeting of a Company in any manner in which meetings of that Company may be called or to conduct the meeting of the Company in manner prescribed by the articles of this Act, the Court may, either of its own motion or on the application of any Director of the Company or of any member of the Company who would be entitled to vote at the meeting, order a meeting of the Company to be called, held and conducted in such manner as the Court thinks fit, and where any such order is given may give such ancillary or consequential directions as it thinks expedient, and any meeting called, held and conducted in accordance with any such order shall for all purposes be deemed to be a meeting of the Company duly called, held and conducted."
It is clear from the first subsection of section 76 that the 52nd Annual General Meeting could be held at most within fifteen months of the last A preceding General Meeting which was held on the 29th December 1976.
(1) PLD 1969 Lah. 615
(2) AIR 1928 Mad. 1215
(3) AIR 1928 Cal. 868 ' Same is provided in Article 11 of the Articles of Association. The argument of the learned counsel for the petitioner that the Annual General Meeting ought to have been held at most by the 29th March 1978, is unexceptionable.
14. In order to cross this hurdle, the learned counsel for the petitioner relied upon the meetings held in the months of April, June and October 1977, and submitted that the meeting called for the 24th April 1978, was a meeting either within a year or within fifteen months of these meetings.
15. The learned counsel for the petitioner, however, pointed out that these meetings were not Annual General Meetings but were extraordinary general meetings. He referred to Article 12 of the Articles of Association for the distinction between an ordinary general meeting and an extraordinary general meeting.
16. Article 11, as stated above, provides for a general meeting to be held once in a year or at most within fifteen months from the holding of the last preceding general meeting and Article 27 provides for the election o Stewards in such annual general meeting. Article 12 provides that the general meeting as provided in Article 11 shall be called an ordinary meeting and any other general meeting shall be called an extraordinary general meeting.
17. In view of these provisions, the learned counsel for the respondent did not controvert the plea that the above-mentioned meetings were extraordinary general meetings and were not meetings as envisaged in Articles 11 and 27 of the Articles of Association. Hence the period of a year or of fifteen months cannot be calculated from the dates of these meetings. The argument of the learned counsel for the respondent is unsustainable.
18. The learned counsel for the respondent as a last resort, submitted that the meeting called for the 24th April 1978, was within a year at least from the meeting dated the 29th December 1977, or the 31st December 1977. This argument is entirely without merit since Article 11 read with Article 27 mentions a general meeting in which elections of Stewards have been held. The two meetings held in December 1977, were admittedly not such meetings. The period of a year or fifteen months, as provided by Article 11 or by section 76(1) would, therefore, start from the 51st General Meeting held on the 29th December 1976, and not from the 24th or 31st December 1977.
19. I agree with the learned counsel for the parties that Martial Law Regulation No, 28 is not applicable to the meetings of the Company. Its applicability is limited to elections to any organization or association of students or to any professional body or association. The present Company does not fall within the ambit of this description. There was thus no justification for adjourning the meeting of the 24th December 1977.
20. Assuming that the resolution postponing the meeting of the 31st of December 1977, was bona fide, it was still possible for the respondent to hold its Annual General Meeting within time after the withdrawal of Martial Law Regulation No, 28, which was cancelled by Martial Law Regulation No, 32, on the 1st March 1978. Article 16 provides only ten days' notice for every General Meeting. The Fifty- second General Meeting for holding the elections for the next year could, therefore, have been held in the month of March 1978. It could be held up to the 29th March 1978, since there was sufficient time from the 1st March 1978 (date of cancellation of Martial Law Regulation No, 28) for notifying the members of such a meeting, if it had been held before or up to the 29th March 1978. This is a case in which default has been committed in the holding of the Annual General Meeting of the Company. The case is, clearly, covered by section 76 of the Companies, Act.
21. Even section 79(3) will apply to the Company. Section 79(1) no doubt states that its provisions shall have effect with respect to meetings of a Company other than a private-Company. But no such distinction maintained between a public Company and a private Company under subsection
(3) of section 79. I do not, therefore, agree that this provision is not attracted to the facts of this case.
22. The argument of the learned counsel for the respondent that the meeting called on the 24th April 1978, is only a continuation of the meeting dated the 24th or 31st December 1977, is far from impressive. I agree with the learned counsel only to this extent that there is inherent power in a Company to adjourn its meeting and an adjourned meeting is in continuation of the previous meeting as held in Amir Hussain Shah v. Progressive Papers Ltd. (1), but this principle will apply on the language of section 76(1) of the Companies Act only if the adjourned meeting is completed before the expiry of fifteen months of the date of the preceding meeting. If it is held that the adjourned meeting though treated as in continuation of the earlier meeting, can be held after the expiry of fifteen months' period, it will defeat the provisions of section "6(1) of the Companies Act.
The case of Amir Hussain Shah v. Progressive Papers Ltd. Is not helpful to the respondent since in that case the adjourned meeting was firstly held under the order of the Court and would be governed by the principle that no one can be made to suffer for the mistake of the Court or complying with its order and secondly the adjourned meeting was admittedly held within a period of fifteen months.
23.' On the question whether the Stewards and the Chairman continued to hold their offices, it was argued by the learned counsel for the petitioner that their term of office expired after the expiry of the period of one year from the last preceding General Meeting dated the 29th December 1976. He relied upon Article 27 that the Stewards shall be elected annually in General Meeting, and Article 29 which states that the elected Stewards shall annually elect from amongst themselves a Chairman of the Stewards who shall preside at all meetings at which he is present. He also referred to Article 19 which lays down that the Chairman of the Stewards shall preside as Chairman at every General Meeting, but argued that the Chairman had the right to preside over only such meetings which were held within the tenure of his office and not the meetings held after the expiry of his tenure.
24. The learned counsel for the respondent, on the other hand, submitted that the Law and Articles do not contemplate vacuum and the Chairman elected at the previous general meeting would continue in office till the next general meeting is held in which the Stewards would be elected. He referred to Kailash Chandra v. Jogesh Chandra (2).
25. I do not agree with the argument of the learned counsel for the petitioner that the Stewards or their Chairman would hold office only for a calendar year. If this had been so the provisions of Article 11 read with Article 27 (which are in consonance with the provisions of section 76(1) would (1)
PLD 1969 Lah. 615 (2) AIR 1928 Cal. 868 not have provided for the holding of a general meeting within 15 months of the preceding General Meeting. Wherever the expression "Annual General Meeting" has been used it does not mean necessarily the meeting held within a period of one calendar year. The expression includes a meeting held within 15 months of the last preceding Annual General Meeting.
26. I, therefore, agree with the argument of the learned counsel for the respondent that the Stewards and the Chairman can hold their offices even after the expiry of one calendar year. I am not, however, in agreement with him that the Stewards shall remain in office even after the expiry of 15 months which is the maximum period for the holding of the general meeting under the aegis of the Chairman. The argument of the learned counsel for the respondent can be upheld only to the extent that the tenure of office of the Stewards or their Chairman is extendable, by virtue of the provisions of section 76(1) only to a period of 15 months from the date of last preceding meeting. A more liberal interpretation would lead to an anomaly and give an incentive to the Chairman and the Stewards to continue in office by neglecting to hold the Annual General Meeting.
27. In the present case the tenure of office of the Stewards and the Chairman came to an end on the 29th March 1978. The Chairman could not / call a meeting after that date and preside over it.
This is eminently a case for an appointment of an Administrator for holding the meeting.
28. I, therefore, allow the petition with costs and appoint Mian Bashir Ahmad, Advocate, as Chairman to conduct the Annual General Meeting for the year 1977. He will fix the date of the meeting in accordance with the Articles of Association, issue necessary notice to the persons concerned, hold election of the Stewards and submit the minutes of the meeting and his report to this Court. The Company shall bear all the expenses of such a meeting including the expenses for issuing of notices and shall pay a fee of Rs, 2,000 to Mian Bashir Ahmad, Advocate, in advance.