TaxTMI 
TaxTMI 
TaxTMI 
2005 (4) TMI 306
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....ation has arisen out of a suit for declaration that the plaintiffs are, and each of them is entitled to be, eligible for contesting the election for the post of Executive Committee member of the company at the AGM of the company scheduled to be held on 18 December, 2004 and for other appropriate consequential reliefs. 1.1 The short facts of the case are stated hereunder. The plaintiffs and each of them are undisputedly permanent members of the defendant No. 1, club. In terms of the rules and regulations of the club - each and every year annual general meeting and the election of the Executive Committees are held, and from and amongst them office bearers of the club for the next year are selected. By notice dated 9 November, 2004 -annual general meeting of the defendant No. 1 was convened and to be held on 18 December, 2004 to transact the following business : "(i )To receive, consider and adopt the audited balance sheet as at 31st March 2004 and the profit and loss account for year ended on the date and reports of the Committee and auditors thereon. (ii)To appoint auditors for the year 2004-05 and fix their remuneration. (iii)Election and balloting. (iv)To announce the results....
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....Justice Subhro Kamal Mukherjee staying the operation of the decision of the Election Officer dated 15 December, 2004 rejecting the nomination papers of the candidates for election of the office bearers at the annual general meeting and restrained the club from holding election of office bearers until further orders. 3.1 This interim order was not appealed against and the same is still valid and subsisting. 4. Mr. S.B. Mukherjee, learned senior counsel appearing for the plaintiffs/petitioners, contends that the subsequent decision of the Election Officer is illegal, invalid and arbitrary as after scrutinising all the nomination papers including those of the plaintiffs and after having found the same being valid, it was not open to them to cancel the same on the plea as mentioned in the subsequent notice. In the relevant Rules, nowhere it provides that each and every candidate has to file declaration in Form DD-A under the provision of section 274, sub-section (1), of the Companies Act, 1956. The relevant clause only says that nomination papers are to be scrutinised and validity has to be ascertained and nothing else. The aforesaid section 274, sub-section (1), clause (g), of the C....
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.... other than bona fides and lawful decision. He contends that requirement of filing declaration in the above form is applicable to those directors who are the directors of the public company. Under such circumstances, he submits that this decision should be set aside and the club should be directed to hold the annual general meeting which has been suspended and to hold election by appointing an independent person as an Election Officer and to observe and supervise the same. 8. Mr. P.C. Sen, learned senior counsel appearing for the defendant Nos. 1, 2 and 3, submits, firstly, that this court has no territorial jurisdiction to entertain, try and determine the instant suit in view of the fact that the entire cause of action as pleaded in the plaint has arisen outside the territorial jurisdiction of this court. The respondent No. 1 club, is situated at 4/1, Sarat Bose Road, Calcutta-700020 outside the territorial jurisdiction of this Court. He contends that the nominations filed by the respective candidates, including the plaintiffs, have lawfully and rightly been rejected by the Election Officer. He contends that in order to contest the election, a candidate must file a valid nominati....
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.... 274(1)(g) of the Companies Act, 1956, they forfeited their right for nomination for reappointment as directors and/or to continue any further. Lastly, he argued that this application and the suit filed by the plaintiffs/petitioners are mala fide as they have not made eight candidates, viz., Sri Hari Prasad Kanoria, Sri Vinit Mehta, Sri Vijay Kumar Chandak, Sri Mahabir Prasad Saraf, Sri Radheshyam Banka, Sri Radheshyam Tulsian, Sri Subir Poddar and Sri Suryakant M. Damani parties to the suit, although they had filed declaration and had qualified to be valid candidates. 10. Mr. Sen submits that, apart from deciding the issue raised in the application, for future guidance, this court should give a declaration and/or opinion as to whether the plaintiffs/petitioners are entitled to be nominated as elected Executive Committee members of the club in view of the violation/non-compliance of section 274(1)(g) of the Companies Act, 1956 read with rule 9 of the Companies [Disqualification of Directors under section 274(1)(g) of the Companies Act, 1956] Rules, 2003 on/or before the cut-off date for filing nominations dated 26 November, 2004. 11. Mr. Debal Banerjee, learned senior counsel app....
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....ory application, the first point has been taken regarding jurisdiction of this court. I have examined the copy of the plaint filed in the suit. It appears that the suit has been filed on obtaining the leave under clause 12 of the letters patent. No application has been made for revocation of leave under clause 12 on the letters patent. However, it cannot be the law unless such application is made, the court will not examine the question of jurisdiction, rather it is the duty of the court to examine at the threshold, if such plea has been raised by the contesting party. But at this stage, this plea is to be examined only looking at the plaint unless the defendant, raising question of jurisdiction, has supplied an unimpeachable document and materials for rendering a decision on this issue. 14. Here, Mr. Sen merely raises the point that no part of the cause of action has arisen within the territorial jurisdiction of this court, even going by the disclosure of the jurisdictional fact in the plaint. I have seen the plaint. The plaintiff has pleaded in paragraph 5 that the Auditors' report to the members included in such annual general report is made over to the company on/or about 9 No....
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....se or second or to offer himself or herself as a candidate. All such payments should be made before exercising such rights. 3. A permanent member may send one or more nominations but the same candidate cannot stand for more than one post of the office bearers or Executive Committee member. 5.(a) Scrutiny of proposals : The Election Officer shall scrutinise the nominations received as a list of valid nominations will be displayed on the notice board of the club, at least before two weeks of the date of annual general meeting; (b) If the number of the candidates for the office bearers and the members of the Executive Committees is equal to the office bearers and members to be elected, the ballot papers will not be issued and those candidates would be considered having duly been elected; (c) If the number of candidates for the post of any office bearer and/or members of the Executive Committees exceed the number of the elected members, then election shall be held by ballot only for such post for which the numbers so exceed." 18. From careful examination of the aforesaid rules, it appears to me, as right submitted by Mr. Mukherjee, that in order to hold the nomination papers filed....
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....y, as it appears that there are members who are also the directors of other public limited companies. Therefore, at the time of the appointment or re-appointment whether by election or otherwise of the members of the Executive Committee or the office bearers, filing of the declaration in the prescribed form is a must. The language of section 274, sub-section (1), read with the rules in this regard, are mandatory and one cannot escape from these provisions. Accordingly, I hold agreeing with the argument of Mr. Sen that any of the members who is appointed by an election of this club immediately after being elected shall file the aforesaid declaration. It is not necessary that at the time of filing of nomination, such declaration is required to be furnished but this must be done immediately after having been elected, in default, his election will be illegal and he cannot be appointed under the law. 24. Now coming to the question of the correctness of the Auditors' report I am of the view that it is the duty of the auditors to submit a report amongst others about disqualification of any of the directors or members under the provision of section 227, sub-section (3), clause (f). 25. A....