TaxTMI 
TaxTMI 
1983 (4) TMI 196
X X X X Extracts X X X X
X X X X Extracts X X X X
....m functioning as director pending disposal of the former. The undisputed facts, in brief, are given below : At the annual general meeting of the company held on March 30, 1983, at Hotel Dasaprakash, Madras, the second respondent was elected as director. The statutory notice dated February 16, 1983, issued under section 171 of the Companies Act, 1956 (hereinafter referred to as "the Act"), did not contain any reference to the election of the second respondent as director. The company received three notices, one from K. R. Sevugan Chetty, while the rest from S. Thiagarajan and S. Venugopalan. The details of the first notice are not necessary for the present occasion as it has no impact on the points to be determined now. Under the second a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....is not open to the applicant to submit that the fixed strength of the board of directors is eight and that, therefore, unless as provided under article 109, the strength is increased, there cannot be a valid appointment of a ninth director in the annual general meeting. On the other hand, according to article 93, any number of directors, not exceeding 12, can be appointed by the members at the annual general meeting. Further, it is seen from the balance-sheets for the year ending September 30, 1981, and September 30, 1982, the strength of the board of directors was 9 and 10 respectively. Such constitution is consistent with article 93. The other contention is that the election of a director otherwise than in the vacancy caused by the ret....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... meeting, or (b) having, if the company has no share capital, not less than 95 per cent. of the total voting power exercisable at that meeting : Provided that where any members of a company are entitled to vote only on some resolution or resolutions to be moved at a meeting and not on the others, those members shall be taken into account for the purposes of this sub-section in respect of the former resolution or resolutions and not in respect of the latter". Section 257 reads thus : "257. Right of persons other than retiring directors to stand for directorship.-(1) A person who is not a retiring director shall, subject to the provisions of this Act, be eligible for appointment to the office of director at any general meeting, if he....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... he had not less than fourteen days before the meeting, left at the office of the company a notice in writing under his hand signifying his candidature for the office of director or the intention of such member to propose him as a candidate for that office, as the case may be. Section 257 does not contemplate a case of adjournment of that meeting on any ground. If the contention of Mr. Rangarajan were to be accepted, it would mean that whenever any notice under section 257(1) is received by the company, the company shall invariably adjourn the general meeting because the notice containing the explanatory note must have 21 clear days preceding the date of the meeting. Such a position is against the express language employed in section 257. A....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ot a retiring director. He must otherwise possess the requisite qualification for being nominated as a director. It does not, therefore, follow that section 257 is in any way controlled by section 173. I have already pointed out that the two sections cover two different areas. If a. subject has to be shown in the agenda in the notice under section 173, there is a statutory obligation on the part of the company to refer to the explanation with reference to the special subject. While the company was obliged to act under section 257(1A) it can validly act by sending a notice intimating its receipt of the notice from a member or members proposing the candidature of any person as a director by serving individual notices to the members not less t....