January 25, 2012
Applicant company’s request to convene an EGM was rejected by the respondent company on the ground that company secretary was not authorized to sign. The grounds were later quashed and the EGM held was legal and valid - Sections 169, 398, 402 of the Companies Act, 1956. DECIDED ON 16/05/2011 Brief facts:
- The appellant company (‘’IFCI’’) owned 37.85% of shares of respondent-company (‘’TFCI’’).
- On 26th November, 2010 IFCI sent a requisition to TFCI for convening an Extra-Ordinary General Meeting (“EGM’’), on which , TFCI questioned the validity of the requisition on the ground that though it was signed by the Company Secretary of IFCI, but specific authorization /board resolution to file such requisition had not been annexed and it requested IFCI to send the said board resolution within a period of one week.
- Subsequently, on not getting the said information, TFCI through its board meeting held on 14th December, 2010 decided not to convene EGM of TFCI. On receiving this information, IFCI convened an EGM on 17th January, 2011.
- IFCI then filed the Company Petition on the same day before the CLB.
- The CLB deferred the holding of the EGM and this order was impugned before the High Court, wherein the High Court allowed the EGM to be held but directed that the decisions taken by EGM would not be given effect to till the CLB decides the petition finally.
- Having heard the parties, the opinion that the mere fact that IFCI did not reply to TFCI’s letter does not mean that any legal presumption can be drawn that the requisition was not authorised by the Board and/or the Company Secretary of the Company.
- The fact is that the Board of IFCI has vide its earlier resolution given specific authority to its Company Secretary to sign all legal documents.
- In view of the aforesaid discussion, it was opined that the reasoning given by the CLB in the impugned order was unsustainable. Accordingly, the impugned order was set aside and the requisition as well as the EGM were held to be legal and valid.