Mohibul Ahsan (Md) (Shawan), Director, Ittefaq Group of Publication and others (Petitioner)
Ittefaq Group of Publication Ltd. represented by Mainul Hosein Executive Director 1 and others (Respondents)
ATM Afzal CJ
Mustafa Kamal J
Latifur Rahman J
Md. Abdur Rouf J
Bimalendu Bikash Roy Choudhury J
June 30, 1998.
The Companies Act, 1994 (VIII of 1994), section 83 (3)
(i) It does not appear from the impugned judgment that the minutes of the meeting was either prepared or produced at any stage before the Court. Rather, the High Court Division observed that the defendants did not produce a scrap of paper in support of their submission that they have all the records with them. Therefore, section 83 (3) will be of no avail without the foundation of minutes of the meeting which is yet to be produced ……………………(10)
(ii) Courts are generally reluctant to interfere with the decisions taken at company meetings unless there is almost a manifest breach of the Articles (of Association) or the Statute, because it is the company and not the Court which is responsible for its management. The High Court Division having found, apparent breach of section 95 in holding the impugned meeting granted the temporary injunction. No illegality in the order…………(12)
Moudud Ahmed, Senior Advocate, instructed by Md. Nawab Ali, Advocate-on-Record-For Petitioner.
Aktar Imam, Advocate, instructed by Md. Aftab Hossain Advocate-For the Respondent Nos. 1 & 2.
Rofique-ul Huq, Senior Advocate, instructed by Mvi. Md. Wahidullah, Advocate-on-Record-For Respondent No. 5.
Not represented— Respondent Nos. 3, 4 & 6.
Civil Petition for Leave to Appeal No. 552 of I998
(From the judgment and order dated May 5 passed by the High Court Division, Dhaka in FMA No. 1998).
ATM Afzal CJ.- This petition by defendant Nos.2 and 3 arises Out of a proceeding for temporary injunction in the Suit No.29 of 1997 of the First Court of Subordinate Judge, Dhaka which was refused by the trial Court but granted in appeal, EMA No.10 of 1998 by the High Court Division by the impugned judgment and order dated 5 May, 1998.
2. Plaintiff- Respondent filed the aforesaid suit claiming, inter alia, two reliefs that:
a) A decree be passed declaring that the resolution dated 7-1-95 is illegal, ultra vires and void ab initio.
b) A decree for permanent injunction restraining the defendants from acting upon the aforesaid resolution dated 7-1-95 and/or allowing the operation of the Bank accounts of the company maintained with the defendant No.1 Bank at BCCI Bhaban, 30-3 1, Dilkusha Commercial Area, Dhaka or elsewhere.
3. The plaintiffs by another application prayed for temporary injunction in the above terms and upon notice, the defendants put in their written objection.
4. For the present purpose it will be sufficient to notice that the Board of Directors of the plaintiff respondent No. 1 company in its meeting held on 30-9-90, among others, resolved to authorise the company to open two separate accounts,—A/C. Daily Ittefaq and A/C Purbani (weekly) with the Arab Bangladesh Bank Ltd (defendant respondent No 5) and further to authorise Executive Director- 1 (plaintiff respondent No.2) and Executive Director-II (defendant-appellant No.2) to sign and execute all necessary papers for the purpose of opening and for operating such accounts. Subsequently in another meeting of the Board held on 7-1-95, ii was, inter alia, resolved to cancel the aforesaid resolution dated 30-9-90 and further that “the operation of the company’s Bank accounts including borrowing, adjustments of accounts, etc. with Arab Bangladesh Bank Limited be operated henceforth jointly by Mr. Anwar Hossain (Executive Director-II) and Mr. Mohibul Ahsan (defendant petitioner No.1) or in their absence by such Directors to be nominated by them”.
5. The plaintiffs have impugned the subsequent resolution dated 7-1-95 in the Suit alleging that the defendants have fraudulently and collusively passed the said resolution without any notice to other directors, namely, plaintiff Nos. 2-4 and in violation of article 52 of the Memorandum and Articles of Association and, as such, the same was illegal, void ab initio, etc.
6. The defendant-petitioners denied the allegations made by the plaintiffs and asserted that the impugned resolution was validly passed in a validly held meeting of the Board upon service of notice to the plaintiffs.
7. It is not necessary to notice all the various allegations and counter-allegations made by plaintiff No.2 and defendant No.3 who are respectively Executive Directors 1 and 11 of the company as aforesaid. They will be gone into in the suit.
8. The High Court Division in granting temporary injunction, inter alia, found that not a scrap of paper was filed either before the trial Court or before it to prove prima facie that notice of the Board meeting on 7-1-95 was served in writing upon the plaintiffs, that accordingly, there was no compliance of section 95 of the Companies Act, 1994 and the memorandum and articles of association, that the meeting and resolution dated 7-1-95 was prima facie invalid, that if the injunction was granted this would not in any way create problem in the running of the business of the company, particularly the publication of the newspaper, the daily Ittefaq, and that the learned Subordinate Judge failed to appreciate the case from a correct and legal perspective.
9. Mr. Moudud Ahmed, learned Counsel for the petitioners, submits, upon drawing our attention to section 89, particularly sub-section (3) thereof of the Companies Act, 1994 which, inter alia, says that until the contrary is proved a meeting of the directors of a company, in respect of the proceedings of which minutes have been made, shall be deemed to have been duly called and held, that the High Court Division ought to have held that notice of the meeting dated 7-1-95 was duly served upon the plaintiffs and the meeting was duly held. Mr. Ahmed submits that non-consideration of the provision of sub-section (3) of section 89 has vitiated the impugned judgment.
10. It is not fair to blame the High Court Division of non consideration of the said provision or any provision without making any submission before it on the basis thereof. However, the sub-section in question lays down a rule of evidence which can be invoked subject to proof of minutes of the proceeding of the meeting having been prepared. It does not appear from the impugned judgment that the minutes of the meeting was either prepared or produced at any stage before the Court. Rather, the High Court Division while considering the question of service of notice upon the plaintiffs observed that the defendants did not produce a scrap of paper in support of their submission that they have all the records with them. Therefore, the provision of law referred to and relied upon by Mr. Ahmed will be of no avail without the foundation of minutes of the meeting which is yet to be produced.
11. Mr. Ahmed has next submitted that the High Court Division erred in law in not following the judicial principles in respect of granting temporary injunction, particularly that not to affect the internal affairs and management of a company and more so, when the Appellate Division in an earlier proceeding between the same parties refused injunction on the said ground. Mr. Ahmed in support of his contention referred to Bhajekar vs. Shinkar AIR 1934 Bombay 242, Rameswar vs. Ca W & S Assn. 40 CWN 1201 and Mahaliram vs. Fort Gloster Jute Man Co. Ltd. AIR 1955 Calcutta 132.
12. It is now a well-defined principle that the Courts are generally reluctant to interfere with the decisions taken at company meetings unless there is almost a manifest breach of the Articles or the Statute, because it is the company and not the Court which is responsible for its management. The High Court Division was well aware of the legal position and having found, among others, that there was apparent breach of section 95 of the Companies Act, 1994 in holding the meeting on 7-1-95 granted the temporary injunction. It may be that on an earlier occasion, an order of injunction was found to inappropriate but the same cannot be a routine matter to be followed under all circumstances.
13. Mr. Ahmed upon referring to certain disputed facts as to difficulty of running the company involving the two Executive Directors (which we do not find to be of any easy solution) submits that the order of temporary injunction granted by the High Court Division and its suggestion for ratification of the impugned resolution apart from being bad on merit are wholly unpractical.
14. We do not think that the impugned order is bad on merit nor do we think it to be wholly unpractical. It has at least certainly the merit of reminding an old wisdom of joining even unfriendly hands for protecting a common inheritance.
The petition is dismissed.
Source: 50 DLR (AD) (1998) 138