These Original Petitions are directed against the common order disposing of I.A. 3340 of 2014 in C.M.A. 48 of 2014 and I.A. 3309 of 2014 in C.M.A. 47 of 2014.
2. The relief sought for in I.A. 3309 of 2014 in C.M.A. 47 of 2014 and in I.A. 3340 of 2014 in C.M.A. 48 of 2014 was for an order of injunction restraining the respondents from holding the Annual General Meeting of the Kerala Chamber of Commerce and Industry on 19.7.2014 and pursuing any action in furtherance of the action taken on 23.6.2014. The court below found that the issue that arose for consideration in both the C.M.As. are common and hence the applications were disposed of by a common order. It dismissed all the applications.
3. O.P.(C). 2044 of 2014 arises out of I.A. 3340 of 2014 in C.M.A. 48 of 2014 and O.P.(C). 2051 of 2014 arises out of I.A. 3309 of 2014 in C.M.A. 47 of 2014.
4. The petitioners in both the I.As., namely, I.A. Nos. 3309 & 3340 of 2014 were Directors of Kerala Chamber of Commerce and Industry duly appointed under the Companies Act. The main attack was regarding the decision to conduct the Annual General Meeting on 19.7.2014. While the matter was being heard by the court below, it so happened that it could not complete the hearing before 19.7.2014 and the lower court passed an interim order to the effect that any decision taken on the meeting held on 19.7.2014 was subject to the result of the C.M.As.
5. The main attack was against the decision to convene the Annual General Meeting on 19.7.2014 was accusing the respondents for having manipulated the records and adopting dubious methods whereby the petitioner in I.A.
3309 of 2014 was forced to retire from the Board of Directors. It is also pointed out that the Company is in error in trying to reduce the membership from 25 to 15 without the approval of the Government and also that the Company was adopting illegal methods to oust the two Directors who are the petitioners in these petitions.
6. The main resistance offered on behalf of the respondents in the petitions is that if the petitioners have any grievance, they have to approach Company Law Board under Sections 397 and 398 of the Companies Act, 1956. It is also contended that the Companies Act, 1956 has been replaced by Companies Act, 2013. However, several of the corresponding provisions have not been notified so far. As per Section 430 of the Companies Act, 2013 the jurisdiction of the civil court is ousted with respect to any matter which the tribunal or the Appellate Tribunal are empowered to determine under the new Act.
7. At the time of hearing, it is conceded that since the relevant notification has not been issued, Sections 397 and 398 of the old Act will continue to apply.
8. Learned counsel appearing for the petitioners in both these cases relied on several instances and steps taken by the Chamber to remove them from Directorship when they questioned mismanagement and in order to approve such decisio, Annual General Meeting was called on 19.7.2014. The specific contention taken was that it was without following the legal formalities that the decision was taken to hold the Annual General Meeting on 19.7.2014.
9. It is not in dispute that the Company is registered under Section 25 of the old Act and as per the Articles of Association the maximum number of Directors shall be 25 and out of them 1/3rd should retire annually. As on May, 2013 there are 23 Directors for the Chamber.
10. It is contended on behalf of the Chamber that going by Section 149 of Act 18 of 2013 the maximum number shall not exceed 15. It was found by the court below that out of the 8 Directors appointed in the year 2011, one had resigned and after excluding the remaining 7 Directors, one more Director will have to retire in the year 2014 in order to fix the number of Board of Directors as 15 assuming that Section 149 of the new Act applies. Based on that principle, the court below found that all the Directors appointed in the year 2011 including the petitioner in I.A. 3340 of 2014 will have to retire in the year 2014.
11. There is considerable debate as to the applicability of the provisions of the new Act and the consequences thereof before this Court. Even assuming that Section 149 of the new Act applies, whether the other provisions in the new Act which are not in the old Act have any application and the implications thereof are in issue in this case.
12. It is seen that in a letter dated 17.6.2014 the petitioner in I.A. 3309 of 2014 had informed the Secretary of the Chamber that he was not willing to retire from the Board of Directors. However, it was found that in the meeting held on 23.6.2014, where it was decided to eliminate one of the Directors and limit the number of Directors to 15, he has not objected.
13. The main relief sought for was in the context of the meeting held on 19.7.2014. The other grievance voiced before the court is regarding the applicability of the new Act and also the limitation of number of Directors and also the consequence of the various provisions of the new Act which are not in the old Act have no foundation in the pleadings in the trial court nor before the lower appellate court. Probably the court below was not justified in coming to the conclusion that the proper remedy of the petitioners is to approach under Sections 397 and 398 of the old Act. It was also probably wrong in coming to the conclusion that none of the rights of the petitioners under the old Act survives for consideration under the new Act.
14. True, the court below has considered in extensive the provisions of the new Act. How far they are applicable etc are matters to be determined on proper pleadings and materials before the court concerned.
15. Under the old Act as well as under the new Act there are provisions for retirement and removal of Directors. There is also provision for retirement of Directors as envisaged under the old Act. How they are to be worked out is a different matter?
16. The court below has found that in the Board of Directors meeting held on 22.5.2014, when it was decided that the term of office of the Directors shall always be subject to restrictions, 16 supported the said decision and the remaining 3 raised objections with respect to some of the decisions taken in the meeting. It is seen from the minutes of the said meeting that the Chairman of the Chamber was duly authorised to convene the Annual General Meeting. The court below found that the contention of the petitioners that the Chairman was not duly authorised to convene the Annual General Meeting on 19.7.2014 could not be accepted nor countenanced.
17. Whatever that be, in the light of the subsequent events after 19.7.2014 it becomes difficult to grant any relief as of now going by the pleadings of the parties. This Court is given to understand that the petitioners have moved for amendment of the plaint and other pleadings before the court below and that petition is pending.
Anyhow, copy of the amendment application is not before this Court. In the light of the fact that the relief sought for in the I.As. no longer survives and since petitioners have moved for amendment of the plaint, nothing more survives for consideration in these Original Petitions. However, it is made clear that if the pleadings are amended, the petitioners will be at liberty to move interim applications for reliefs if they are so advised and those applications will be considered in accordance with law untramelled by the observations in this judgment.
These Original Petitions are disposed of as above.
P. BHAVADASAN, JUDGE sb.