1958 (5) TMI 34 - HC - Companies Law

Court Invalidates Representation under Indian Companies Act, 1913; Votes Deemed Valid

Nand Prasad Versus Arjun Prasad

The court held that Sri Arjun Prasad's representation for Bhadani Brothers and Hindustan Coal Co. in person was invalid under the Indian Companies Act, ... Meetings and Proceedings – Chairman’s declaration of result of voting by show of hands to be conclusive, Representation of corporation at meetings of companies & creditors, Compromise and arrangement, Winding up - Appeals from orders Issues Involved:1. Validity of representation by Sri Arjun Prasad for Bhadani Brothers and Hindustan Coal Co. in person.2. Validity of proxies submitted by Sri J.N. Mustafi and Sri N.N. Sahay.3. Timeliness of objections raised by the appellants.4. Validity of votes cast by Mr. G.K. Verma and Mr. P.K. Bose.5. Competency of the appeals under clause 10 of the Letters Patent.Issue-wise Detailed Analysis:1. Validity of Representation by Sri Arjun Prasad:The primary contention was whether Sri Arjun Prasad could represent Bhadani Brothers and Hindustan Coal Co. in person at the creditors' meeting. The appellants argued that under section 80 of the Indian Companies Act, 1913, only a member company could authorize a representative to act on its behalf, not a creditor company. The court held that the right for a creditor corporation to vote in person was not provided under the 1913 Act but was introduced in the 1956 Act. Therefore, Sri Arjun Prasad's representation in person was invalid as the 1913 Act applied to this case.2. Validity of Proxies Submitted by Sri J.N. Mustafi and Sri N.N. Sahay:The objections regarding Sri J.N. Mustafi and Sri N.N. Sahay's proxies were not pressed during the arguments. Therefore, the court did not delve into these objections in detail, and they were effectively dismissed.3. Timeliness of Objections Raised by the Appellants:The court considered whether the objections raised by the appellants were too belated to be entertained. It was noted that objections based purely on law could be raised at any stage, even during the final hearing. However, objections based on facts should have been raised earlier to avoid prejudice and unnecessary delay. The court found that the objection regarding the absence of signatures on the resolutions was too belated and could not be entertained at the final hearing.4. Validity of Votes Cast by Mr. G.K. Verma and Mr. P.K. Bose:The appellants argued that the proxies submitted by Mr. G.K. Verma and Mr. P.K. Bose should not have been accepted. The court found that the necessary authority had been produced by these individuals, and the chairman had satisfied himself about their validity. Therefore, the votes cast by Mr. G.K. Verma and Mr. P.K. Bose were valid.5. Competency of the Appeals under Clause 10 of the Letters Patent:The court addressed whether the order under appeal was a 'judgment' within the meaning of clause 10 of the Letters Patent. It was concluded that the order did determine a dispute between the parties as it decided the validity of the proposed scheme's approval by the statutory majority. Thus, the order was considered a judgment, making the appeals competent.Conclusion:The court held that Sri Arjun Prasad was not entitled to vote in person on behalf of Bhadani Brothers and Hindustan Coal Co. without filing any proxy. The votes cast by him in person were deemed invalid. The appeals were allowed, and the order of the learned company Judge was set aside regarding this part of the case. However, there was no order as to costs.