Minutes of Meetings – not a Conclusive Evidence

INTRODUCTION:

Minutes, are notes or the instant written record of a meeting or hearing. It serves as a record or as an important source of information. People referring to it, assume it to be correct on the face of it. There is a statutory obligation on the Corporates under Companies Act, 2013 to record the proceedings of the meeting of Board & its Committees thereof and of General Meetings.

IMPORTANCE:

Minutes are required in order to record any agreed actions to be taken and also serve as an evidentiary tool to know the attendance of Directors, becomes a source of information to the Directors or Members who were unable to attend the Board or General Meetings respectively. In case of any dispute, it can be produced as an evidence in the court of law. It is a general presumption, that minutes once signed are a conclusive evidence of the meetings held, but it is not so when looked into the validity of minutes as an evidence. Let us examine the evidentiary validity of minutes in the court of law.

LEGAL EVIDENCE:

Minutes serves as an evidence of the proceedings of meetings and according to section 118(8) of the Companies Act, 2013, if the minutes are kept in accordance with the provisions of section 118, then, until the contrary is proved, the meetings are deemed to have been duly called and held, and all proceedings thereat to have duly taken place, and in particular, all appointments of directors or liquidators made at the meeting are deemed to be valid.

PRESUMPTION THAT ITS TRUE:

The wordings – “Where the minutes have been kept in accordance with sub-section (1) then, until the contrary is proved…..” led us to draw the rebuttable presumption with regard to the correctness of the minutes and so long as the minutes are not challenged, it will have to be presumed that what is stated in the minutes is correct. [Killick Nixon Ltd v Dhanraj Mills Pvt Ltd (1983) 54 Comp Cas 432 (Bom).]

When talked about evidence, looking into Indian Evidence Act, 1872, the definition of Evidence includes documentary evidence (electronic Form also). The Documentary evidence is held to be defined as “all documents produced for the inspection of the Court; such documents are called documentary evidence” (Public Prosecutor in Andhra … vs Kuraba Sanjeevamma, Andhra High Court). In Sirohi Investment Ltd., New Delhi vs Assessee, Income Tax Appellate Tribunal held that “Minutes as maintained under Section 193 (of 1956) (Now Section 118 of Companies Act, 2013), if produced in court of law it will be construed as Documentary Evidence. The essentials of Documentary Evidence were critically examined in Bhima Tima Dhotre vs The Pioneer Chemical Co. on 23 June, 1967:

Bombay High Court held that,-

• Once a document is proved it must be admitted in evidence, and that once it is admitted in evidence, the court is entitled to rely on its contents.
• A document could not be admitted in evidence without calling the signatory or the writer thereof, if what was sought to be proved was the contents of that document. But it was also held that the mere fact that a party might be unable to call the author of the document as a witness does not affect its admissibility, although it may considerably damage the probative value of such a document.
• Proof of the signature or the handwriting in respect of a document in accordance with Section 67 of the Evidence Act would be “sufficient in those cases where the issue between the parties was whether a document was signed or written wholly or in part by that person.”
• Admissibility: Admission of a document only means, that the contents of the document are produced before the Court in the form of evidence. It is at that stage that the Court applies its mind to see whether it is a reliable document and what is the probative value of that document. It was observed that the statements in a document admitted in evidence are not, and certainly not, admitted as true statements, because, like any other evidence, it would have to be weighed, its probative value ascertained, and either accepted or rejected.
• Even if the entire document is held formally proved, that does not amount to a proof of the truth of the contents of the document.
• When a document is proved in the manner laid down by the Evidence Act, the contents of that document are also proved.

MINUTES – A  DOCUMENTARY EVIDENCE AND A PRIMA FACIE EVIDENCE

Under Section 118 sub-section (2) it is stated that minutes shall contain true and correct summary of the proceedings there at. But it may or may not be true and correct. The correctness of the minutes has to be examined up on its admissibility as evidence which relies on the following:

• When the minutes are proved as evidence, its contents are also proved.
• When the minutes are held to be correctly maintained in procedural aspects that does not amount to a proof of the truth of the contents of the minutes.
• Admission of minutes as evidence does not conclude that it is evidence. It is at that stage that the Court applies its mind to see whether it is a reliable document and what is the probative value of that document.
• Minutes must be signed and the oral evidence of signatory of the minutes can be helpful in proving the contents of the minutes.

Examining the minutes as Documentary evidence can rule out that it is not prima facie, as the wordings under section 118(8) “minutes have been kept in accordance with sub-section (1) then, until the contrary is proved, the meeting shall be deemed to have been duly called and held, and all proceedings thereat to have duly taken place”… construes that minutes are prima facie evidence.

In G. Govindaraj vs Venture Graphics (P.) Ltd. on 19 January, 2007, it was held that “The minutes are prima facie evidence on the conduct of the meeting and resolution passed therein”.

Here we are questioning the admissibility of evidence but not its validity as evidence. Hence once minutes are admissible as Documentary evidence, it can be admitted as prima facie evidence too.

MINUTES – NOT CONCLUSIVE EVIDENCE:

Minutes once kept in accordance with this section and held to be documentary and prima facie evidence can be again brought into question.

Minutes cannot be proved as conclusive proof.  Attention is to be drawn towards the wordings of Sub-section 8 “unless the contrary is proved …………… all appointments of directors, key managerial personnel, auditors or company secretary in practice, shall be deemed to be valid.”

Meaning thereby, in the event of any legal proceeding, it will be accepted as prima facie evidence, and the onus of disproving them will be upon the person who is contesting their accuracy. In Man Industries Limited, Bombay High Court held that, “Minutes are not conclusive evidence but is a prima facie evidence in the eyes of law.”

Hence, if due to some grounds of defects in appointment of Directors is proved in contrary to the minutes, then such an appointment can be held as invalid, but the actions taken by such director shall not be invalidated.

In M. Ramachandra Bail v/s M.R. Kanniah, Madras High Court held that:

“The recording of continuance of Dr. Bail as director in the minutes of the meeting of the Board of Directors, will not constitute an appointment for the purpose of S. 282(2)(b) of the Companies Act, 1956, and much less an invalid appointment, attracting the first limb of that section.”

In this case Mr. Bail was 65 years old, and he was disqualified under Section 282(2) of the Companies Act, 1956 (Now repealed) for not disclosing his age and it was held to be an invalid appointment, though the same was recorded in the minutes. The recording of continuance of a person as director in the minutes of the meeting of the Board of Directors would not constitute an appointment if the facts are otherwise.

Conclusion:

Minutes kept in accordance with the provisions of the Act are held to be documentary and prima facie evidence on their admissibility and can be brought into question.

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Disclaimer: The entire contents of this document have been developed on the basis of relevant information and are purely the views of the authors. Though the authors have made utmost efforts to provide authentic information however, the authors and the company expressly disclaim all and any liability to any person who has read this document, or otherwise, in respect of anything, and of consequences of anything done, or omitted to be done by any such person in reliance upon the contents of this document.