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PETITIONER: NAZIR HOPSEINAND ANR.

       Vs.

RESPONDENT: DARAYUS.  BBATTCNA AND ORS.

DATE OF JUDGMENT:       12/05/2000

BENCH: A.P.Misra, M.B.  Shah

JUDGMENT:

JUDEMENT

MISRA.  J.

Leave granted.

     The present appeal is directed against the order dated 10th  Feburary, 1999 passed by the Bombay High Court in A.O. N0.1058  of 1998 in N/M No.  6325 of 1997 in Suit No.6559 of 1997  dismissing  appellants’ appeal from Bombay City  Civil Court order dated 9th September, 1998 dismissing

     aforesaid    appellants’   notice    of   motion    in the.aforeserd   suit.   In  the   suit   following   interim injunctions were sought:-

     "[a]  Respondents 1 to 3 from acting on the resolution dated  13.11.97, [b] Respondents from enrolling new members, [c]  Respondents 4 to 8 from acting as directors of the suit Club  and  restraining Respondents I to 8 and  life  members enrolled  after 7.11.95 from casting their votes at the AGM, [d]  Respondents  I  to 8 &’om holding Board  of  Directors’ meeting  dated 19.12.97 and [e] for an order appointing  Mr. Satish  Shah.  Advocate as a Chairman of the meetings of the Club/Company"

     The  appellants  are  the   Directors  of  the  Indian Automotive  Racing  Club  (hereinafter referred to  as  "the Cqmpany’}.   As  per the appellants, appellant no.l  is  the Chairman  of  the  Board of Directors of the  said  Company. Respondent  nos.   I to 3 are the Directors  and  respondent nos.   4  to 8 are Additional Directors allegedly  appointed along  with  7 others under the challenged resolution  dated 29th March, 1997.  The appellants challenged this resolution to  be  illegalandvoid,asit stood obliterated by the  agreed and  consent  order dated’30th June, 1997/2nd July, 1997  in A.O.No.274 of 1997 beforc ’the High Court.

     In order to appreciate the controversy it is necessary to  shortly  dwell  upon certain antecedents  and  essential short  matrix (of facts.  At the .annual General Meeting  of the  Company  held on 29^ December, 1993 the appellants  and respondent  nos.   I to 3 were elected as Directors and  the first  appellant as the Chairman of the Board of  Directors. The  case  of the appellants is, on the 8th  November,  1995 respondent   nos.   I  to  3  with  under  current  designs, purportedly  held a meeting, without serving any notice upon

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appellant  no.   I and other 4 Directors supporting him  and passed the following resolutions:-

     "[a] to shift the office of the Club to Respondent No. I’s  office;   [b] to remove appellant No.  I  as  Chairman; {c]  appoint Respondent no.  I as Chairiman in his place and [dj  appoint  12  additional  Directors   on  the  Board  of Directors."

     Thereafter on the 13th November, 1995, another meeting was  held by the same group, viz., respondent nos.  I to  3, to  approve the minutes of the meeting held on 8th November, 1995.   On  the 16h November, 1995, the appellants  and  two other  Directors  filed  the first Suit No.  7179  of  1995, challenging  the  said resolutions passed at the  behest  of respondent nos.  I to

     In order to appreciate the controversy it is necessary to  shortly  dwell  upon certain antecedents  and  essential short matrix of facts.  At the Annual General Meeting of the Company  held  on  29th December, 1993  the  appellants  and respondent  nos.   I to 3 were elected 09 Directors and  the first  appellant as the Chairman of the Board of  Directors. The  case  of the appellants is, on the 8th November.   1995 respondent   nos.   I  to  3  with  under  current  designs, purportedly  held a meeting, without serving any notice upon appellant  no.   I and other 4 Directors supporting him  and passed the following resolutions:-

     "[a] to shift the office of the Club to Respondent

     No.   I ’s office;  [b] to remove appellant No.  I  as Chairman;   jc] appoint Respondent no.  I as Chairman in his place  and [d] appoint 12 additional Directors on the  Board of Directors."

     Thereafter on the 13th November, 1995, another meeting was  held by the same group, viz., respondent nos.  I to  3, to  approve the minutes of the meeting held on 8th November, 1995.   On  the 16th November, 1995, the appellants and  two other  Directors  filed  the first Suit No.  7179  of  1995, challenging  the  said resolutions passed at the  behest  of respondent nos.  I to

     3,  and 4 out of the 12 newly appointed Directors.  On the  l8th  March.  1997 the City Civil Court by means of  an order  did  not interfere with the resolution, so  far  the shifting  of the office and removal of appellant no.I a.s  a Chairman  but  injuncted the 12 additional  Directors  which included  defendant nos.  4 to 8.  from acting as Directors. Aggrieved  by one part of the order, viz.,  non-interference with shifting of the office and removal of Appellant No.  J, the  appellants  filed FAO No.  274 of 1997 before the  High Court.   On  the other hand, respondent nos.  1 10 3  and  5 additional  Directors  being aggrieved by the other part  of the   order,  viz.,  injuncting  12  Add.   Directors   from functioning filed a cross appeal.

     Subsequently  on 21st March, 1997 a .notice was issued for  a meeting of the Board of Directors for the 29th March, 1997  for  the  co-option of another set  of  additional  12 Directors,  in  place  of   the  injuncted  Directors  which included  respondent  nos.   4  to  8.   This  led  to   the appellants,  to  file another application on the 27th  March 1997,  for  injunction  to restrain these  respondents  from

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holding  the  said  meeting.  The court, by an  order  dated 27.3.1997,  however,  did not injunct the said meeting,  but directed that any resolution passed at the meeting shall not be implemented for two weeks which was subsequently extended .  As scheduled the said meeting was held,

     in  which  again  12 newly additional  Directors  wore appointed,  including respondents 4 to8..  till such time as the  injunction  against the first set of twelve  additional Directors  remained  in operation.  Next on I1h April,  1997 notices  were  issued  and served upon  Directors  including those covered by the aforesaid order dated 27th March, 1997, proposing  a  meeting  for  the  17th  April,  1997.   This, according  to  the appellants, was in breach of  the  .order dated  27th  March  1997, not to  implement  the  resolution appointing  them as Directors.  On an application thereafter made  by  the  appellants, the court by an order  dated  17^ April  1997  recorded respondents’ statement  that  co-opted Directors  will not be permitted to participate in the  said meeting.   That  meeting was held on the 17th’  April  1997, under the Chairmanship of respondent no.  1.  The appellants though  attended  the meeting but did so under  protest  and without  prejudice, which was recorded in the minutes of the meeting.   It  is  relevant  to  record,  in  this  meeting, question  of the induction of more new life members came  up for  consideration.   Relevant portion of the discussion  as recorded in the minutes is quoted hereunder:

     "Mr.   Hussain (Appellant No.  1) raised the topic  of new  applicant and whether the old practice would be adopted in deciding membership of new applicant.

     Regarding  the  interview  the  life  member  category applicant Mr.  Bhathena (Respondent No.  1) pointed out that in  the past each Life Member applicant was not physical  ty called  for  the interview.........  Mr.  Bhathena  proposed and  Mr.  G.L.  Goenka seconded and it was resolved that all Life  members applications, as wel) as any other 3 category, be   invited   and  become   members  in  their   respective categories."

     When  this series of on-going resolutions was going on at  the behest of respondent no.  I and the appellants  were protesting repeatedly through various applications in court, as  aforesaid,  then reached some understanding between  the parties.

     On the 30* June/2nd July, 1997, the appellants’ appeal from  order, as aforesaid, came up for admission in the High Court.   On  this  date, a consent order was passed  that  a fresh  meeting  of the Board of Directors be held with  only those  who  were  on.   the Board of Directors  on  the  8th November,  1995 under the Chairmanship of Mr.  Satish  Shah, Advocate to consider the earlier agenda of the 8th November, 1995.   Hence, the High Court passed the following order  on the 2nd July 1997:

     "In  view  of this.  appeal stands disposed  of  Civil application  also  does  not   survive.   Same  also  stands disposed of.  In view of

     the  fact  that appeal has been disposed  of,  nothing survives in the Suit.  Parties to withdraw the suit".

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     This is how proceedings in the first Suit No.  6559 of 1997 is said to have culminated.

     Thereafter in pursuant to the aforesaid consent order, a  meeting  of the Board of Directors was held on 4th  July, 1997  under the Chairmanship of Mr.  Satish Shah.  Two major decisions  were  taken therein.  First 16th September,  1997 was  fixed  as the next date for holding the Annual  General Meeting,  and  secondly,  it  turned down  the  proposal  to appoint  12 additional Directors by the group of  respondent no.   I  by  the majority of 4 to 2.  When  parties  are  at variance  then  they try to pull other down, disputes  start cropping up from an insignificant to other magnified issues. One  of  such  dispute  raised is of the  recording  of  the minutes  of  the meeting dated 4^ July, 1997.  According  to respondent  no.  I, it was the prerogative of the  Secretary to  write  the minutes and thus the minutes recorded by  him should  be  accepted.   This  dispute   is  because  of  the difference  in  the  recording of the  minutes  between  one recorded by the Secretary of respondent no.  I and the other submitted  by Mr.  Satish Shah.  The significant  difference is  in  the  recording ofltemNo.6, of the agenda of  the  8^ November 1995, under

     which  the appointment of twelve additional  Directors was   c-onsidwQd.   There  is   neither  recording  nor  any reference  about this consideration in the minutes  prepared by  the  Secretary,  while in the recording by  Mr.   Satish Shah,  it  clearly records this.  The relevant part  of  his report under item no.  6 is quoted hereunder:-

     "lo.   appomt 12 additional Direetoi’s whose  m^uence, .contact  would  assist  the   club  to  procure  attractive sponsorships as also those who could spare time to assist in organising and running events.

     Mr.   Hoosern (.Appellant No.  I ) said that this item did  not survive because it had been agreed in principle  to hold  the Annual General Meeting.  Mr- Swadi, Mr.  Futehally and Mr.  Bbiwandiwalla concurred.

     Mr.  Bhathena {’ respondent No.  1) and Mr.

     Goenka  opposed.Mr.   Bhathena  said   that  "he   was disagreeing  because in his view fresh blood was required on the  Board.   Mr.  Rao abstained.  The view of Mr.   Hoosein was adopted by a majority of 4 to 2:’

     {Emphasis supplied)

     It was thought, the aforesaid meeting will resolve the conflict   and  parties  shall   restrain  themselves   from precipitating  any  other  issue  till  the  Annual  General Meeting.  But it was so done.  Now the succeeding facts and

     resolutions  gave rise to the cause for the filing  of the  present  second suit.  On the 6 November, 1997,  notice was issued proposing a meeting for the 13 November, 1997 for the  "Afloption  of the previous minutes" and for  fixing  a date  for  holding the Annual General Meeting.  On  the  13* November, 1997, a meeting was held.  in which the appellants :.r^ed  objection  about  respondent no.   I  presiding  the meeting  instead  of Satish Shah and about the  presence  of respondentnos.   4 to 8.  The appellants’ demand for  fixing

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an  early  date of Annual General Meeting was overruled  and the  minutes of the meeting dated 13th November, 1995.  29th March, 1997.  17th April, 1997, and minutes of meeting dated 4th  July, 1997 (held as per courts order under chair of Mr. Satish  Shah), as per the minutes prepared by the  Secretary of  respondent  no.   I and not as prepared by  Mr.   Satish Shall,  were  approved.   Thereafter a  notice  was  served, proposing  tor  a  meeting on the 19th  November.   1997  to approve  and  confirm the minutes of the meeting dated  13th November,  1997.   The appellants attended the  meeting  and reiterated  their  demand,  but   the  same  was  overruled. Thereafter,  on 18th December, 1997 the appellants filed the aforesaid  suit No.6559 of 1997 for the declaration that the resolutions  dated  13th November, 1997 .and 19th  November. 1997 are null and void, including the ind’uction of new life

     members after November 1995, as also he appoinmiont of 12  new additiona} Directors wh’ch inclucled respondent nos. 4 to 8.

     The  respondents  contested  the .said  claim  of  the appellants.   Their reply is that the suit is  misconceived, non-maintainabie.   Mr.   Satish Shah’s minutes can  not  be relied,  because it is the prerogative of the Secretary  and it is his obligation to prepare the minutes of that meeting. Further,  all  decisions  and  resolutions  other  than  the resolution dated 8th November, 1995 are valid and binding on the appellants.  When earlier suit was withdrawn all interim orders came to an end.

     The  trial court dismissed the appellants’  injunction application  and also the contention that the consent  order dated  30th  June,  1997 wiped off the  earlier  resolutions passed  by  the Board of Directors.  The appellants  earlier sought  injunction  in the earlier suit, against  hoding  of this  meeting  dated  17th  April, 1997 in  which  new  life members  were to be taken in and the court did pass an order not  to  implement  any  resolution  passed  therein.   .the appellanta   being  aggrieved  by   the  dismissal  of   the injunction application filed an appeal before the High Court which  was  dismissed.   The High Court held, there  was  no effective resolution annulling, rectifying or modifying

     the  resolution  dated 8th November, 1995.  The  court rejected  the  appellants’ contention that order  dated  30^ June;   1997.  wiped of the the earlier resolutions  passed. It  held,  neither party agreed nor the Court set aside  the resolution  dated  8th  November.   1995.   It  ordered  tor holding.   the Annual General Meeting under the Chairmanship of  Shri  A.P.  Kothari, the Company Registrar, to hold  the election  afresh  of the Board of Directors.   Aggrieved  by this the appellants have filed the present appeal.

     The  main  thrust  of  submission  on  behalf  of  the appellants  is,  "whether the consent order dated 30th  June 1997 wipes off:

     (i) the resolution dated 8th November 1995, in which:

     (a)  12 additional Directors were appointed;  .  .   . (b)  Appellant  no.   I was removed as the Chairman  of  the Board;  .  .  (c) The respondent no.  I was appointed as the Chairman   of  the  Board  of   Directors;   and   (d)   The administrative office of the company was shifted.

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     (ii)  the  resolution dated 29^ March 1997  appointing the second set of 12 additional Directors in place of the 12 aforesaid injuncted additional Directors;

     (iii)  the resolution dated 17th April 1997  enrolling dccordmg  to  respondent no.l, 57 additional hTe members  of the company.

     The  submission is, on composite reading of the orders dated  30^ June 1997 and 2th July 1997, in the background of the  aforesaid  meeting dated 4^ July, 1997 of the Board  of Directors.    it  clinchingly  proves   that  the   impugned resolution dated 8th November 1995 is scored of.  In further support,   it  is  submitted   that  the  first,  respondent unambiguously admits this position in his affidavit in reply to the affidavit of appellant No.  I in the notice of motion in Suit No.  6’559 of 1997.  There respondent No.  I clearly averred  that there could be no dispute that the meeting  to be  held  under the Chairmanship of Mr.  Satish  Shah  would consider the matter de novo and except the resolution passed in  the  meetmg  held after:  8th November  1995  all  other resolutions  are valid, implidely admit that the meeting and the  resolutions  dated  8^ November 1995 were  not  valid., Thus,  it proves that the clock was set back to 8th November 1995.   Hence all edifices buiJt on it subsequently, through various resolutions since looses its base and also goes.  In any  case,  the  appointment  of  first  respondent  as  the Chairman  of the Board of Directors and of the 12 additional Directors  is also knocked off.  In fact withdrawal of  both the  appeals  before the High Court and the suit shows  that the  entire dispute including removal of first appellant  as the

     Chairman,  appointment  of  12  additional   Direotora including  induction  of life members stood  dissolved  a.nd settled  between  the  parties.   In   view  of  this,   all resolutions  passed in a meeting at the behest of the  first respondent  where  he  presided as  Chairman,  are  patently illegal and have no force of law.

     Challenge  to the resolution dated 29th March 1997  is also  the  same.  Ita base is alao the resolution dated  8th November.   1995, which was also hold under the Chairmanship of  the first respondent and it also stands wiped off by the consent  order  dated 30^ June 1997.  As said  before,  when this  meeting  was  to  be   held,  appellants  applied  for injunction  to  restrain  respondents   from  holding   this meeting.  On this.  Court ordered that any resolution passed in  this  meeting  shall  not   be  implemented.   -By  this resolution,   as  aforesaid,  2th   set  of  12   additional Directors-was   appointed.   Next  challenge   is   to   the resolution  dated 17th April 1997.  This resolution is  also challenged  on  the  same  ground, viz.,  it  was  illegally chaired  by respondent No.  1.  Even for this meeting  court directed resolution passed therein shall not be implemented. Submission  is,  this meeting was also held in not haste  to overreach  the  order of the Court.  On 10th April 1997  the aforesaid A.O.  274 of 1997 was adjourned to 21th April 1997 for

     admission.   Coming to know of this, on the 11th April 1997 notice was issued for a meeting on the 17th April 1997. This  clearly exhibits, the unholy motive of the respondents to  overreach the order of the Court.  At this meeting it is

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said 57 new life members were enrolled.  This was opposed by the  appellants in the meeting which was turned down by  the respondent No.  1.

     For  the  respondents the aforesaid  submissions  were challenged.   Submission is, both meetings dated 29^  March, 1997,  and  17th April, 1997, were validly held.   Even  the court  did  not  grant  any stay against  holding  of  these meetings.   These  meetings were attended by duly  qualified Directors.   The meetings were chaired by respondent no.   I whose  appointment as the Chairman was held to be valid by a competent  court  by an order dated 18th March, 1997 in  the Notice  of Motion No.  6337 of 1995 in the earlier suit  No. 7179  of 1995.  Reference is also made to Section 175 of the Companies  Act, 1956 - i.e.  members present at the  meeting could  elect  among  one o/ themselves to be  the  Chairman, hence   no  illegality  would   arise  even  otherwise,   if respondent  no.   I  presided  the meeting.   The  order  by consent  on  30th June, 1997 did not and could not wipe  off what was done on the.

     atoresaid two dates of meetings.  There is no order of the court settina aside these resolutions.

     The  crux  of  the grievance of the  appellants  which requires  our consideration is three fold:  (i) reftioval of appellant  no.  I and the appointment of respondent no.i  as Chairman  of  the Board of Directors by means of  resolution dated  8^  Novem’ber,  1995;   (ii)   The  induction  of  12 additional  Directors  through resolution dated  29^  March, 1997;   and finally (iii) the induction of 57 life mertibers through  resolution  dated 17111 April, 1997, both of  these two last meetings were presided by respondent no.  I.

     The aforesaid tacts reveal that the proceedings of the first  suit  culminated in the passing of the consent  order dated 30 Junc/2 July, 1997.  It was expected that litigation would  come  to an end but that was not to be.  The  present second  suit  is  filed  in view of resolution  dated  13  ’ November,  1997  which  in effect brings back  to  life  the matter which was subject matter of the earlier suit.  In the meeting  dated  13^  November,  1997.  the  minutes  of  the meeting  dated  13^ November, 1995,29^ March, 1997  and  17^ April,  1997 including the minutes of the meeting dated  4th July.   1997  as  prepared by the Secretary and not  by  Mr. Satish Shah, were approved.  The meeting

     dated  19^  November,  1997 approved  and  corifirmtid the.minutes  of  meeting  dated  I  ^November,  1997.    The question  is,  whether passing of the consent order  in  the earlier suit obliterates the meetings and resolutions passed on 29th March, 1997 and 17th April, 1997?  Also what was the resolution  passed in the meeting dated 4 July, 1997 and  in this context;  whether the minutes prepared by the Secretary or what is prepared by Mr.  Satish Shah should be accepted?

     It  is  very unfortunate, though very common,  in  any organisation,  including  companies,  there  is  tussle  for holding  dominant  position to control the  ftinctioning  of such  organisation.   It  is  often said, "it  is  not  like sportsman  spirit".   Meaning, the spirit of a sportsman  is treated to be highly cooperative even in the hour of defeat. He  is  always in the best of spirit.  But such  spirit  now even  in  the  field  of sports seems  to  have  receded  to oblivion.   The  present  company  is   also  one  of   such

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companies,  working in the field of sports.  But this spirit between  the parties is lacking.  The battle of supremacy to control  started between respondent no.l and appellant since 8th  November.   1995 leading to two separate suits and  the battle is still raging for about five years.

     Now.   we  proceed  to test the  submissions  for  the appellants  regaming  the  consent  order  obliterating  the resolutions  dated  29th March and 17th April, 1997.  As  we have  said,  the  nucleus  of conflict started  on  the  8th November,  1995 when in this Board’s meeting, appellant  no. I  was  removed and respondent no.  I was appointed  in  his place  as  the  Chainnan of the Board of  Directors  and  12 additional  Directors  were also appointed.  When the  first suit  was  filed  by the appellants,  they  challongod  this meeting as it was held without any notice to them.  The very texture  of  this  resolution shows  two  clear  distinctive groups,  and  the  group of respondent no.   I  by  removing appellant  no.   I came in full control of the Board.   Next another  meeting  was  held on the 13th  November,  1995  to confirm-the  resolution dated 8th November, 1995.  It is  at this  stage,  appellants  filed their first suit on  the  16 November,  1995 along with injunction application, in  which 12   additional  Directors  were   injuncted  to   function. However,  undaunted  another  meeting  was  held  under  the Chairmanship of respondent no.  I, of the Board of Directors on  the 29h March, 1997 in which resolution was again passed appointing  another  set  of 12  additional  Directors  till injunction  against earlier 12 additional Directors remained in  operation.   When  this stress and  strain  between  the parties  was  going on, with various interim orders  of  the court, good sense prevailed on both-the parties which led to the passing, of

     the  consent order.  Through the consent order,  dated 30th  June  Cfild  2nd.  July 3997, the parties  agreed  for holding a fresh meeting of the Board, under the Chairmanship of  Mr.  Satish Shah, to consider afresh the original agenda oi  8  November, .1995.  In this regard submission  for  the appellants   is.   even   concerned  respondents   including respondent  no.   I understood that agenda was going  to  be considered  de novo.  For this, reliance is on the following affidavit filed by respondent no.  .1 in reply to the notice of  motion  filed before the trial court by the  appellants. Tlie  relevant  portion of the said statement is  reproduced below:-

     "1  say that.  the gravamen of the charge, inter alia. levelled  in the previous suit revolved round the allegation that tlie Meeting of the Board of Directors of the Club held on  8^  November 1997 was never hold and no notice  therefor was  given.  In view of the tact that the Club is  primarily brought  into existence to promote motor sports, it was felt that  no scope would be left for any complaint and therefore it  was agreed that the items of Agenda of the said  meeting which  was  held on 8h November 1995 should be  convened  de novo and under the said Mr:  Satish Shah, Advocate."

     On   tlie   other  hand,   learned  counsel  for   the respondents submits that neither the .said consent order nor the  resolution  .passed on the 4 ’ July.  1997, in any  way set asides any resolutions passed prior to the said consent

     .order.  Thus, it would be deemed that they coitiinued

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.notwihstanding holding of the said meeting dated 4th July., 1997.

     We have considered the submissions made by the parties including the various orders passed, both in the earlier and the   present   suit.   In   our  considered  opinion,   the culmination  of the appeal, the suit.  by its withdrawal  as per court’s order, as a con,scnsequence of the consent order indicates  one and the only inference that once the  parties agreed to hold a fresh meeting under the Chairmanship of Mr. Satish Shall to re-consider afresh the agenda of the meeting dated 8^ November, 1995, then it implicitly voices, what was resolved  in  the said meeting earlier is wiped off and  has become  non-est.   The very re-consideration of the  earlier agenda  clinchingly reveals that what was done then is wiped off.   How can earlier resolution dated 8th November,  1995, would  survive  when  it  is to be  considered  afresh?   Of course,  it is open to the Board to pass tile same.   modify or pass entirely different resolution.  Thus.  company would be  bound  by the resolution passed in this  later  meeting. The  High Court committed error of law by concluding to  the contrary.   The  High Court misdirected itself  and  miscons stnied  the  consent order that "neither parties agreed  nor did  the  court  set aside the resolution of  the  Board  of Directors   dated  8^  November,   1995".   The  effect   of the.order.

     passed  by the court was to undo what was done on  tho 8th^  November.  1995 and consider the matter afresh.   This was  done in the background of the appellants’ case that  it was  held  without notice to the appellants.  Tins  is  also clearly  spelt  out from the aforesaid quoted  statement  of respondent  no.l himself.  The meeting which was held  under tile  Chairmanship of Mr.  Satish Shah was not a meeting  to confirm, modify or annul the resolutions dated 8th November, 1995  but was to consider the agenda afresh.  Hence all that was passed on the 8thNovember.  1995 cannot be treated to be alive  after the consent order followed by resolution  dated 4th  .July,  1997.   Thus,   appointment  of  12  additiohal Directors  on  that  date  also goes.   So  far  removal  of appellant no.  I and appointment of respondent no.  I in his place,  it  was fairly agreed to that both will not  preside the  meetings  of the Board, instead Mr.  Satish  Shah  will preside.   In other words, no one could be treated to be the Chairman of the Board.

     Next  we  proceed to scrutinize the  resolution  dated 4thJuly,  1.997,  which  was held as a  consequence  of  the court’s  order, under the Chairmanship of Mr.  Satish  Shah. But  here  again  we find a dispute is raised,  whether  the minutes prepared by the Secretary or the one by the Chairman Mr.   Satish  Shah.   be  accepted.   We  find  the  minutes recorded are at variance

     between  the two.  The relevant variance ia under item no.6.   in the seoretary report there is no reference of the conside.ra.tion  by  the  Board for the appointment  of  12 additional  Directors,  while in the report of  Mr.   Satish Shah  it  records so under item no.  6, which is  reproduced below:

     "Item.,  No  6:   To appoint 12  additional  Directors whose  influence,  contact would  assist,the.clubto  procure attraotivo  sponsorships as also thoso who could spare  tjme to assist in organising and running events.

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     Mr.   Hoosein  said  that this item  did  not  survive because  it had been agreed in principle to hold the  Annual General   Meeting.   Mr.   Swadi,   Mr.Futehally   and   Mr. Bhiwandiwalla concurred.

     Mr.   Bhathena and Mr.  Goenka opposed.  Mr- "Bhathena said that he was disagreeing because in his view fresh blood was required on the Board.  Mr.  Rao abstained.  The view of Mr.  Hoosein was adopted by a majority of 4 to 2."

     Before  drawing  our  conclusion  we  may.   refer  to Section  193  of  the  Companies Act,  1956.   The  relevant portion of Section 193 is quoted below:-

     "Section  193:   Minutes  of  proccedings  of  general meetings and of Board and other meetings:

     (I-A.)  Each  page  of  every   such  book  .shall  be iniialled  or  signed  and the last page of  the  record  of proceedings of each books shall be dated and signed -

     (Q)  in  the  ca.se  of minutes of  proceedings  of  a meeting  of  the  Board  or of.a committee  thereof  by  the Chairman  of  the said meeting or the Chairman of  the  next succeeding meeting.

     (6) If default is made in complying with the foregoing provisions  of  this section inrespect of any  meeting,  the company,  and  ever)’  officer  of the  company  who  is  in default,  shall be punishable with fine which may extend  to fifty rupees.

     Explanation:   The chairman shall exercise an absolute discretion  in  regard to the inclusion Or non-inclusion  of any  matter in the minutes on the grounds specified in  this sub-section.  "

     With reference to minutes of the proceedings as to who shall initial or sign, the sub-section (I-A} mandates, every page  of every booJc shall be initialled or signed including the  last page of the record of proceedings by the  Chairman of  the Board.  Under Explanation to sub-section (6) of  the aforesaid  Section.   Chairman is empowered to  exercise  an absolute   discretion   in  regard  to  the   inclusion   or non-inclusion  of any matter in the minutes.  Sub- section 6 makes  defaulters for not complying the foregoing provisions punishable   with  fine.   Thus,   this  section  casts   an obligation on the.Chairaian

     of  the  Board,  to authenticate the  minutes  of  the meeting  of  the Board.  Further when the court directs  Mr. Satish  Shah to preside the meeting of the Board, he acts as the  Chairman m the said meeting.  This apart, in the  past, because  of the conflict between two groups, a via media was found  to  eliminate  this mistrust by  appointing  a  third agreeable person then even if there be conflict, the minutes prepared  by  such  third person is to be accepted  and  not ofthe  other  who belong to one of such  conflicting  group. Hence  for  all  these  reasons we  have  no  hesitation  to conclude  that the minutes prepared by Mr.  Satish Shall are to be accepted as authentic.

     According  to the minutes authenticated by Mr.  Satish Shah,  under item no.6, the Board considered the question of

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appointment  of 12 additional Directors and after discussion between  the  two contesting groups, which is also  recorded therein,  the  proposal of appellant no.  I that  this  item docs  not  survive as it had been agreed to hold the  Annual General Meeting was accepted and objection of respondent no. I that they should be appointed was rejected by the majority of  4 :  2.  Thus, question of appointment of 12  additional Directors  came to an end by the passing of this resolution. If  this  is  the  position  how  can  resolution  dated  8^ November,  1995  or  resolution dated  29th’  March.   1997, survive so tar appointment of these 12 additional

     Directors.   So  if  on  the 4*thJuly.   1997  it  was resolved  not  to appoint .i additional Directors  then  any .such  resolution  including  29thMarch.    199’  cannot  be sustained.  It would be treated to have died both on account o  consent  order and the resolution dated 4th July,  .1997. The   resolution  date(  27  March,   1997,  was  itself   a consequential  resolution  to  the.    resolution  dated  8^ November,  1995,  as it appointed 2th set of  12  additional Directors in its place till injunction against the first set was  m  operation.  This 27th March, 1997 resolution  itself was temporary in nature.  Hence we conclude after passing cf the  consent  order  and passing of the resolution  dated  4 July,  1997  so far appointment of 12  additional  Directors cannot survive.

     This  leaves us to the last relevant resolution  dated 17th  November, 1997 in which 57 life members were inducted. This  is a meeting admittedly presided by respondent no.   I to  which appellants had due notice.  Appellant no.  I  also participated,  under protest and without prejudice.  So  far those  inducted life members, we tried to find out from  the parties,  whether  there  is  any  prerequisite  or  minimum qualification  for their induction.  Parties could not point any  such.   The  dispute,  if  any,  could  be  that  those inducted..   were brought in by respondent no.  I to  muster his majority in the Annual General Meeting.

     Learned  counsel  tor the app’aliants referred to  The Conduct  of Meetings by T.P.E.  Curry and J.  Richard Sykes, Twentieth Edition, which is quoted hereunder:-

     "Board  Meetings:  To constitute a valid board meeting the.  following conditions must be complied with:

     (  I  )  The proper person must be in  the  chair  His appointment   is  generally  governed   by   the   articles. Regulation  101  of Table A, for example, provides that  the directors  may  elect  a  chairman  of  their  meetings  and determine  the  period for which he is to hold  office,  and that  if  no such chairman is elected, or if at any  meeting the  chainman  is not present within five minutes after  the time appointed for .holding the same.  the directors present may  choose  one  of  their number to  be  chairman  of  the meeting.

     An  appointment  of  a chairman of directors  made  in contravention of the articles is void and is not regularised by  mere acquiescence, and consequently resolutions  carried by the casting vote of such a chairman are inoperative."

     Learned  counsel for the appellants also referred to a

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decision  of  dark v- Workman (1920) I I.R.  107.   Relevant portion of the headnote is quoted hereunder:  -

     "Ail  appointment  of a chairman oi’ directors  madein contravention  to Article,s of association is void.  and  is not  regularized  bv  mere   acquiescence  and  consequently resolutions  carried by the castina vote of such a  chairman arc inoperative."

     It  cannot be disputed that the Chairman of the  Board of  Directors  is the central figure in holding the  meeting and  is  the controlling factor in the conduct  of  meeting. Fie  authenticates  the minutes of the meeting and  performs such  other functions as empowered under the Companies  Act. A  Chairman is always elected by the Board of Directors thus he  had the full support of the majority of Directors  which helps   him  in  the  control   of  meeting  and   recording authenticated minutes.

     In   the  present  case   unfortunately  since   .1994 no-Annual  General Meeting could be held both on account  of the aforesaid dispute and also.  as per the respondents, the accounts  could  not be finalised.  When appointment of  Mr. Satish Shah to chair Board meeting was made.  both appellant no  1  and respondent no.  I fairly conceded their claim  to preside  over  the meeting.  Thus their serious dispute  got temporary  respite.   Still the question remains, as to  who could  have presided in the meeting dated 17th April,  1997, which  was antecedent to the consent order..  It is true  by that date consent order was

     not  in  existence and the tussle between the two  was continuing.   If  the  resolution dated 8h  November.   1995 evaporated,  authority of respondent no.  I to preside under it  also dissolved, unless some fresh authority was given to him.   Thus  without any fresh authority respondent  no.   I could  not  preside in any Board’s meeting.  In  .fact  this meeting  dated  17h April, 1997, at dial point of  time  was challenged  and  the  court  on   this  date  injuncted  the respondents  to  implemeht  the resolution pa.ssed  in  this meeting.   It  is  during continuation  of  this  injunction order,  the  said consent orde,r was passed.  Consent  order was  to consider 8^ November, 1995 agenda de novo.  In  view of  this  then how could resolution passed in  this  meeting survive-after passing ot the consent order.

     In  the meeting dated 4h July, 1997, no resolution was passed  as to who shall henceforth preside in the meeting of the  Board  of Directors.  The resolution dated on 4h  July. 1997  could  be  construed  that the  parties  differed  the question as to who shall preside the meeting till holding of fresh  election  of  the Board of Directors  in  the  Annual (general  Meeting.   It  is   significant  in  tlie  minutes recorded  by  Mr.  Satish Shah that before item no.   I  was taken  up  Mr.  Bhiwandiwalla and Mr.  Bhathena  (respondent no.   1)  stressed the need to hold an early Annual  General Meeting.  Another Director Mr.  Swadi also

     -suggested  the  same ior electing a new  Board  which could  finalise the accounts.  Finally, Mr.   Bhiwandiwalla. suggested the following:-

     "(i)  that  the Accounts be finalised and approved  as soon as possible.

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     (ii)  that all the members of the present Board should resign and an entirely new Board should be elected:  and

     (iii)  that  in any event tlie Annual General  Meeting should be convened as early as possible even if the Accounts were not ready.

     The  other  members were agreeable to this and it  was resolved  that the Annual General Meeting should if possible be held on 16h September, 1997."

     This  also indicates that the Board desired holding an early Annual General Meeting and in favour of all members of this   Board  resigning.   In   this  context  presiding  by respondent  no.   I as Chairman of the meeting held on  17th April,  cannot be held to be proper.  However, on the  other hand  a submission is, even where there is no Chairman or in case  the Chairman not present or as in the present case  it is indispute, it is open for the Board of Directors to elect any  one  to function as such in any meeting.  But  this  is neither  the  respondents’ case nor it is shown that he  was elected as such on that date.

     .His  authority  if  at  all   was  only  through  the resolution dated 8th November, 1995.- ’Strong submission tor the  respondents was that a.ppointment of respondent no.   I as Chairman was held to be valid by a competent court of law by order dated 18h March, 1997 in Notice of Motion No.  6337 of  1995.   But this order was challenged by the  appellants through  A.O.  No.  274 of 1997 in the High Court.  It is in this  extent that consent order was passed which obliterated various  resolutions  including of 8th November,  1995.   So this submission of respondents has no force.

     Lastly,  we have considered the question of  induction of  57  new  life members.  So far in their  application  no defect  could  be pointed out.  It is true, these  new  life members  are not parties before us.  It will be in the  best of  interest  .that  question  of their  induction  as  life members instead of rejecting, beplaced for consideration, in the Annual General Meeting to be held by the Company.  So we come  to the conclusion, that meeting dated 17h April,  1997 was not only not conducted ’in the proper perspective but it also.   suffers  from procedural irregularities.   This  was part  of  the  tussle  between the two groups  to  gain  the majority over the other.  However, it would not be proper to reject the life members’ application.  So in order to

     keep  the interest of the life members, we direct that their  cases be plac before the next Annual General  Meeting to  he held for its consideration.  Since the dispute, as to who  shall preside, is still not resolved, in spite of  this long drawn litigation which can only come to an end by fresh ejection  of  the  Board  of Directors in  the  next  Annual General Meeting, it is proper in the interest of the Company that neither appellant no.  I nor respondent no.  I presides in any Board of Directors’ meeting.

     Thus,  so far the direction of the High Court to  hold Annual  General Meeting under the Chairmanship of Mr.   A.P. Kothari,  the  Company Registrar seems to be  proper,  hence needs  no interference to that extent, The relevant  portion of this is quoted hereunder:

     "However,  it is clear that a meeting of the Board  of

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Directors  has been held pursuant to an order passed by this Court  and  it is common ground betore me that the Board  of Directors  decided to hold the annual general meeting of the company  immediately, in this view of the matter, therefore, in  my  opinion, it would be just and proper to direct  that the Annual General Meeting of the Company should be held tor holding  elections to the Board of Directors of the Company. In my opinion, considering that the parties are fighting, it would be proper to direct that the Annual General

     Meeting  should be held under the Chairmanship of Shri A.P.  Kolhari, the Company Registrar."

     Hence  for  all  the aforesaid reasons  we  allow  the appeal of the appellants, se aside both the judgments of the High  Court  dated  10th  February,   J999,  except  to  the aforesaid  extent, and the trial court order dated 9h  July, 1998,  and further direct holding of Annual General  Meeting at  the  earliest  under  the   Chairmanship  of  Mr.   A.P. Kothari..   Registrar  Company  as aforesaid.  Even  if  any prior meeting before Annual General Meeting is to be held of the  Board of Directors, the same shall also be presided  by die  same  Mr.   A.P.  Kothari, Registrar.  In view  of  the aforesaid findings our conclusions are:

     (A)  Neither  appeyllant  no.  I  HOP  respondent  no. I’shall  preside  in any of the ’ meetings of the  Board  of Directors.

     (B)  The appointment of 12 additional Directors cannot be  sustained.  .  Hence resolutions dated 8h November  1997 and  29h March, 1997 and 17th April, 1997 stand  obliterated inview of the consent order dated 30th June/2nd July,1997:

     (C)  So fer resolution dated 17th April, 1997 for  the induction  of 57 life X- members, in view.of our  findings,, they not-be deemed to .have been.

     inducted on that date as member but their induction as such  would  be placed tor consideration before  the  Annual General Meeting to be held later.

     (D)-  Annual  General Meeting shall be held under  the Chairmanship  of Mr.  A.P.  Kothari, Registrar, Company  who shall  expedite  the holding of Annual General Meeting at  a very early date.  possibly within three months of this order being communicated to him.

     Accordingly,  the aforesaid appeal is allowed.   Costs on the parties.

     Office  shall  send  a copy of this order to  the  Mr. A.P.  Kothari, Registrar.  Company.