Case No: Civil Appeal No. 20 of 1980
Judge: Badrul Haider Chowdhury,
Court: Appellate Division ,,
Advocate: Amirul Islam,,
Citation: 33 DLR (AD) (1981) 315
Case Year: 1981
Appellant: A.S.A. Nur
Respondent: Registrar of Joint Stock Companies, Dacca
Subject: Company Matter, Business and Commercial Law,
Delivery Date: 1980-11-24
Kemaluddin Hossain, CJ.
Fazle Munim, J.
Ruhul Islam, J.
Badrul Haider Chowdhury, .J
Shahabuddin Ahmed, J.
Registrar of Joint Stock Companies, Dacca
November 24, 1980.
A member of a company which has separate legal entity is entitled to apply to the Court under sec 79(3) for calling an appeal general meeting.
Amirul Islam, Advocate, instructed by Md, Aftab Hossain, Advocate-on-Record—For the Appellant.
Ex-parte—For the Respondent.
Civil Appeal No. 20 of 1980.
(From the Judgment and Order dated 30.4.79 passed by the High Court Division in Company Matter No. 10 of 1979.)
1. Leave was granted to consider whether Jamuna Oil Company Ltd., a private limited company incorporated under the Companies Act, 1913 is required to hold the Annual General Meeting of the Members, or is a special type of 'one-member Company' established under section 8(2) of the Petroleum Act of 1974 and that Bangladesh Petroleum Corporation virtually being the only member it cannot hold any meeting with the appellant who is an employee and a nominee-shareholder of the Bangladesh Petroleum Corporation.
2. The appellant filed an application under sections 79(3) and 76 of the Companies Act, 1913 for condonation of delay in holding the Annual General Meeting of Jamuna Oil Company Limited for the years 1976, 1977 and 1978 in the High Court Division and the High Court Division after bearing rejected the application on the finding that the relevant provisions of sections 76 and 79 of the Companies Act are not applicable to such special One Member Company like Jamuna Oil Co. Ltd. and the decision of Bangladesh Petroleum Corporation in any way at the administrative level, shall be the decision of Jamuna Oil Company Limited for the purpose of its management.
3. The relevant facts which led to the formation of the Company are as follows:—
(b) After emergence of Bangladesh all business and assets of the said Pakistan National Oil Limited vested in the Government of the People's Republic of Bangladesh under the Bangladesh Abandoned Properties (Control, Management and Disposal) Order, 1972 (P.O. No. 16 of 1972).
(c) The Bangladesh Oil and Gas-Corporation also known as "Petro-Bangla" in exercise of the powers vested in it by section 8 2) of Petroleum Act, 1974(Act No. LXIX of 1974) established a private limited company in the name and style of Jamuna Oil Company Limited under the Companies Act, 1913. The company was incorporated on 12th day of March. 1975 and a Certificate of incorporation No. 181—C4522 of 1974-75 was issued by the Registrar of Joint Stock Companies of Bangladesh.
(d) As required by the Companies Act for the formation of a Private Limited Company, there were two subscribers Dr. Habibur Rahman, Chairman, Petro Bangla and Mr. S A. Azim, Director, Petro Bangla to the Memorandum and Articles of Association of the Company.
Article 4 of the Articles of Association of the Company states that the Company is to be a private company and the number of members of the company for the time being would not exceed 50 (fifty).
4. Prior to the transfer and acquisition of the properties, rights, interests and assets of Pakistan National Oil Limited by the said Jamuna Oil Company, an Ordinance, namely, Bangladesh Petroleum Corporation Ordinance 1976 (Ordinance No. LXXXVIII of 1976) was passed by which all the properties, rights, interests and assets of Pakistan National Oil Limited were vested in Bangladesh Petroleum Corporation under section 31 (c) of the said Ordinance.
5. With the passing of Bangladesh Petroleum Corporation's Ordinance, 1976 and the vesting of the properties and business of Pakistan National Oil in Bangladesh Petroleum Corporation the Articles of Association of Jamuna Oil Company had to be amended so that the powers and function of Petro-Bangla-viz-a-viz the company would be taken over and exercised by the Bangladesh Petroleum Corporation.
Two shares held by Dr. Habibur Rahman and S.A. Azim were transferred to Bangladesh Petroleum Corporation and the applicant respectively.
6. An agreement was reached between Bangladesh Petroleum Corporation and Jamuna Oil Company Ltd. whereby the Corporation would transfer all properties and assets of Pakistan National Oils Limited vested in it to the said Company against issue of shares to the Corporation.
7. Due to certain circumstances it was not possible to call the Annual General Meeting of the Company within the stipulated time and the appellant as a shareholder filed an application before the High Court Division for condonation of delay in holding the Annual General Meeting. But the application was rejected by the High Court Division on the ground that Jamuna Oil Company Ltd. is a Special One Member Company established under section 8(2) of the Petroleum Act, 1974 and, therefore, the relevant provision of sections 76 and 79 of the Companies Act was not applicable to it.
8. Mr. Aminul Islam, learned Counsel submitted that the High Court Division has erred in arriving at the findings that Jamuna Oil Company is not a private limited company under the Companies Act but a special type of One Member Company under section 8(2) of the Petroleum Act, 1974, He submitted that Bangladesh Petroleum Corporation and the Company are separate and distinct person in the eye of law and therefore the Jamuna Oil Company are required to hold annual general meeting under the Companies Act, 1913.
9. The contention has substance. Jamuna Oil Company was established by Petro-Bangla (Bangladesh Oil and Gas Corporation) “in exercise of the powers vested in it by section 8(2) of the Petroleum Act" with the main objective of "marketing petroleum products" It was duly incorporated on 12.3.75 as a private limited company. Article 3B of the Me memorandum of Association of the Company states the object for which the company was established, namely, to take over all the properties, rights, interests and assets of "Pakistan National Oil Company Ltd." which attained the character of an 'abandoned company'. Under section 31 of Bangladesh Petroleum Corporation Ordinance 1976 certain functions and lights were transferred to the Petroleum Corporation. By virtue of such transfer the share holding interests of Jamuna Oil Company were represented by the Petroleum Corporation and its Secretary, Mr, A.S.A Nur, the appellant in this case. Thus there are only 2 shareholders of the Jamuna Oil Company. The High Court Division considered that A. S. A. Nur is a shareholder as he is the Secretary of the Corporation. It, therefore, took the view that Jamuna Oil Company for all practical purposes is 'One Member Company. The error lies here. Mr. Nur is mere ex-officio shareholder and he is a share-holder in the capacity of being the Secretary of the Corporation. He will cease to be a share-holder of the company when he ceases to be the Secretary and under the law he is obliged to execute a deed of transfer to the Secretary of the Corporation whoever may be the individual holding such post: Only because the overwhelming share-holding interest of the company is vested with Petroleum Corporation that would not make the company a One Member Company.
10. Section 8. Bangladesh Petroleum Act, 1974 read originally as follows:—
(2) For the purpose of exploration, development, exploitation, production, processing refining or marketing of petroleum or for the effective exercise of any of its rights and powers the Corporation may. With the previous approval of the Government, establish companies, either wholly owned by it or jointly with any other person, incorporated under the Companies Act, 1913 of 1913."
These Provisions were amended by Ordinance No. LIV of 1976 on 8.7.76 and anew section was substituted which reads as follows:
11. The legislative change shows that the Government revised its policy. Originally feasibility of establishing companies either wholly owned by it or generally with any other person was contemplated by the Act. As already noticed that Jamuna Oil Company was incorporated in March 1975 but subsequently the Government policy changed and only Petrobangla or any other Government Agency was given the right of marketing of the petroleum. This change of policy was responsible for the inactivity of the Jamuna Oil Company and the company did not transact any business throughout this period. However, it seems, the Government has given a second look to the matter in 1976. The petroleum Corporation Ordinance was passed and Bangladesh Petroleum Corporation was established. Formation of Companies "for carrying out the purposes of the Ordinance" has been the policy and the Corporation has been allowed to hold shares in such companies and permit any person whether or not a Bangladeshi national to hold shares therein. Section 24 provides that notwithstanding the provision of the Companies Act. The Corporation may amend, alter or modify the Memorandum and Articles, of Association of any company wholly owned by it whereas section. 18 provided that the corporation' may with the previous approval of the Government sponsor formation of new companies and it can hold shares in such companies and jointly with any person whether or not a Bangladeshi National to hold shares therein. One of the functions of the Corporation is "to supervise, co-ordinate and control the affairs of the enterprises". “Enterprise" as defined in section 2(e) means "any firm or company engaged in any activity related to the proceedings, (sic) refining, binding or marketing of petroleum including its import, export, purchase, storage sale or distribution" The Corporation has been given the function to act as managing agent or to enter into management or any other agreement or contract with any firmer company. Thus the provision shows that the Government decided to allow the private enterprises to operate in the field and Jamuna Oil Company was established with the main objective of marketing Petroleum Products. The Government allowed the private sector to operate in this limited field and such policy can be adopted when the Government decides to go for mixed economy. That was precisely done in this matter. Jamuna Oil Company is such a company with its limited objectives of marketing petroleum. It is, therefore, erroneous to consider such company as a one-man company. This company has a distinct legal entity in the eye of law.
12. In the case Ebbw Vale UDC vs. South Wales Traffic Area Licening Authority (1951) 2 KB 366 the Court of Appeal held that wholly owned subsidiary of the British Transport Commission was a separate legal entity. In that case the shares of an omnibus company which provided passenger road services in a district in South Wales were, by virtue of power contained in the Transport Act, 1947 acquired by the British Transport Commission which held all save two shares in it The omnibus company applied to the licensing authority for permission to increase the fares but the Ebbw Vale UDC objected on the ground that as the services provided by the Company were, in fact, provided by the British Transport Commission, the licensing authority had no jurisdiction to hear the application. The Court of Appeal held that the omnibus company had retained its character as a separate legal entity and did not act as agent of the Commission. Cohen. L.J. observed:
13. The learned Company Judge observed that company was for all practical purposes one man company and therefore it would be useless to hold general meeting. This view is also incorrect.
14. In Palmers Company aw the consequences of reduction of number of members below legal minimum has been considered. The following passage is illuminating-
Palmers' Company Law, Vol I, page 152 (22nd Ed).
15. In the Companies Act 1913, the aforesaid contingency is contemplated and section 79(3) reads as under:
16. To revert to the facts, we find, Mr. Nur, the petitioner is a member of the Company by virtue of his office and since the company has a separate legal entity, he can apply to the court invoking section 79 (3) for calling such meeting and the-meeting "shall for all purposes be deemed to be a meeting of the Company."
17. The High Court Division observed that sections 76 and 79 are not applicable to such special one member company like Jamuna Oil Co Ltd. and further the decision of Bangladesh Petroleum Corporation in any way in the administrative level shall be the decision of Jamuna Oil Co. Ltd. for the purpose of its management. With great respect, there is no legislative support for such conclusion. The law has not exempted the Jamuna Oil Co. Ltd. from the provision of the Companies Act. Had it been the case the legislature would have said so.
18. In this view of the matter, we are of the opinion that Jamuna Oil Co. Ltd. is a private Company having a separate legal entity and therefore it is required by section 76 of the Companies Act to hold its annual general meeting and since it could not do so, the appellant who is a member of the Company has a right to file the application under section 79(3) of the Act.
In the result, therefore, this Appeal is allowed. The judgments of the learned Company Judge and the Division Bench are set aside. The case is remitted back to the Company Judge for disposal of the matter in accordance with law.
There will be no order as to costs.