1973 (5) TMI 74 - HC - Companies Law

Petition challenging election of directors dismissed under Companies Act - Meeting irregularities not impracticable

The court dismissed the petition filed under section 186 of the Companies Act, 1956, challenging the election of directors due to irregularities in a ... Meeting and Proceedings – Power of Company Law Board to Order Meeting to be Called Issues:Challenge to election of directors under Companies Act, 1956 - Petition under section 397 and section 186 - Maintainability of petition under section 186 - Allegations of irregularities in a meeting of members - Competence of court to order a meeting under section 186.Analysis:The judgment pertains to a petition filed under section 397 and section 186 of the Companies Act, 1956, challenging the election of certain directors of a company and seeking a fresh election. During the hearing, the petitioners decided to withdraw the challenge under section 397 and focused solely on the petition under section 186. The main issue framed by the court was the maintainability of the petition under section 186 of the Companies Act. Section 186 empowers the court to order a meeting of a company to be called, held, and conducted in certain circumstances where it is impracticable for the company to do so. The court can also give ancillary directions as deemed necessary.In this case, the petition did not assert any impracticability in calling, holding, or conducting a meeting of the company. Instead, the petition raised objections to the conduct of a specific meeting held on September 3, 1972. The objections included irregularities such as allowing latecomers to vote, permitting ineligible persons to vote, and unauthorized voting on behalf of certain members. The court observed that the nature of these objections did not fall within the purview of section 186 of the Companies Act, which deals with situations where it is impracticable to hold a meeting. As no such allegation was made by the petitioners, the court held that the petition was incompetent and dismissed it with costs.The judgment emphasizes that for the court to intervene under section 186, there must be a clear demonstration of impracticability in calling, holding, or conducting a meeting of the company. The court cannot address issues related to the conduct of a meeting or alleged irregularities unless they directly relate to the impracticability of holding the meeting. Therefore, in this case, where the petition primarily raised objections to the conduct of a specific meeting rather than impracticability, the court found the petition under section 186 to be incompetent and dismissed it accordingly.