ZEE- Invesco Case
Invesco- Zee dispute
Invesco had filed a Company Petition under Section 98 (1) read with Section 100 of the Act before the
Aggrieved by the said order, Invesco filed an appeal before the
Issues-
The Judgement has broadly considered two key issues-
1. Statutory right of shareholder of
2. What will be the appropriate judicial forum for addressing such shareholders disputes
Analysis-
1. With respect to the first issue, the Court analyzed Section 98 and 100 of the Act and concluded that Single
Section 100(2) uses the expression "shall" casting a mandatory obligation on the Board to adhere to the requisition. Section 100(4) furnishes an additional right to members to proceed to call and hold a meeting themselves should the Board fail to call the requisitioned meeting. On a plain and literal reading of Section 100(4), the words "valid requisition" appear to mean numerical and procedural compliance and nothing further. The Court relied on the case of -
"In other words, to put it shortly, all that is required to be seen before the provisions of sub-section (6) of section 169 become applicable would be to consider whether the requisition deposited was in accordance with the provisions of section 169 as to its contents, the number of signatories and similar matters, and it would not be open to the board of directors of a company to refuse to act on a requisition on the ground that, although such requisition was in accordance with the requirements of section 169, it was otherwise invalid."
The said Judgment further states that the word or the adjective "valid" in section 169 has no reference to the object of the requisition but rather to the requirements in that section itself.
Further, the Court relies on the case of LIC v. Escorts3 to hold that every shareholder of a company has the right, subject to statutorily prescribed procedural and numerical requirements, to call an extraordinary general meeting in accordance with the provisions of the Companies Act.
Relying on the above-mentioned precedents, the Court held that the words "valid requisition" as appearing in Section 100(4) of the Act are restricted to numerical and procedural compliance and nothing further. On a literal and plain reading of Sections 98 and 100, there is no discretion/power vested with the Board of a Company to sit in judgment over "any matter" for consideration of which the meeting is requisitioned. On a plain reading, the Board of a Company is mandatorily obliged to requisition a meeting if the requirements specified in sub-sections (2) and (3) of Section 100 are satisfied. Needless to state, whether or not the proposed requisition should be given effect to, is to be decided by the shareholders at the general meeting. even if the requisition was illegal or invalid, the Board was still obliged to call for the meeting.
The Court further observed that –
"In the present case itself, the Appellants, being shareholders of Zee, have been unable to call for and hold an EGM despite the Requisition being addressed as early as on
2. Concerning the second issue of appropriate forum for jurisdiction, the Court Relied on Section 430 of the Act which bars Civil Court's jurisdiction in respect of any matter, which the NCLT or NCLAT is empowered to determine. Secondly, it states that no Civil Court shall grant an injunction in respect of any action taken or to be taken by the NCLT or NCLAT in pursuance of any power conferred on them. In accordance with the bar prescribed under section 430, the Court held that the matter at hand would fall within the purview of NCLT and therefore Civil Court could not interfere in passing of such order of injunction. Thus, the Single Judge bench had no power in restraining Invesco from calling the requisition.
Footnotes
1 [2022]232 CompCas20(Bom)
2MANU/MH/0009/1974
3 (1986) 1 SCC 264
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
NovoJuris Legal
NovoJuris Legal
#495, I floor
Indiranagar
560 038
Tel: 8040924173
E-mail: manas@novojuris.com
URL: www.novojuris.com
© Mondaq Ltd, 2023 - Tel. +44 (0)20 8544 8300 - http://www.mondaq.com, source