Mostafa Jamal Mohiuddin Vs. Magura Paper Mills & and others, 3 LNJ (2014) 248

Case No: Company Matter No. 184 of 2013

Judge: Md. Rezaul Hasan,

Court: High Court Division,,

Advocate: Mahbubey Alam,Mr. Ahsanul Karim,,

Citation: 3 LNJ (2014) 248

Case Year: 2014

Appellant: Mostafa Jamal Mohiuddin

Respondent: Magura Paper Mills & and others

Subject: Company Matter,

Delivery Date: 2013-10-10


HIGH COURT DIVISION
(STATUTORY ORIGINAL JURISDICTION)
 
Md. Rezaul Hasan, J.

Judgment on
10.10.2013
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Mostafa Jamal Mohiuddin
. . .Petitioner.
-Versus-
Magura Paper Mills Ltd. and others.
. . .Respondents.
 

Companies Act (XVIII of 1994)
Sections 58(3), 85(3), 87, 95 and 108(f)
Companies Rule, 2009
Rule 8
From the conduct of the BCIC as well as the facts and circumstances of the case it appears that the petitioner has been able to make out a case that it has become impracticable to hold the Board meeting of the company owing to deliberate absence of the BCIC nominee directors inspite of receiving the notice calling 143rd  Board meeting as required to be served upon them as per section 95 of the Act but BCIC remained absent without leave. This conduct of BCIC amounts to waiver of their right to attend the Board meeting, inspite of receiving the notice for the same and this should not be a bar for holding the Board meeting nor such conduct or unfair practice can be allowed in the rest of the company, to avoid a dead lock situation and this is a fit case where section 85(3) should be applied to overcome the dead lock situation.
Besides that section 108(f) will have overriding effect upon any provisions of the Article of Association. Hence, if BCIC nominee directors absent themselves from the Board meeting, after receiving the notices of the same, then the provisions of section 108(f) of the Act shall be applicable and the office of the nominee directors of BCIC shall remain to be vacated. This provision of statute shall prevail over the provisions of the Article 109.
The Act does not lay down any manner as to how a Board meeting is to be conducted, although sub-section (I) of sections 85 and 87 lays down procedure for holding AGM, and EGM. So impracticability has arisen, in this case, for deliberate decision of BCIC to remain absent and thereby to present formation of quorum per Article 109. This conduct of the BCIC is contrary to the interest of the company and is intended to create a dead lock situation. There is no materials, except absurdity, in the submission that Sub-section (3) of Section 85 applies only to Annual General  Meeting.
The learned Advocate for the respondents has, however, frankly conceded that the Board meeting must be held and there can not be any question about it.
Accordingly, a direction was given that the Chairman (or the company secretary, if so ordered) should call the Board meeting upon servicing on all the directors as required under the provision of section 95 of the Act, informing the date, time, venue and agenda of Board meeting and transact the business in such meeting whether any of the nominees directors of B- Group share holders is present or not, provided that at least 5 directors should be present  to such meeting. If BCIC decides to waive their right to attend the Board meeting, which they can always waive, that will not, however, prevent formation of quorum and the Board can transact business as per the agenda noted in the notice. Notwithstanding anything contained in Article 109 of the Article of Association of the company, the board meeting to be called, held and conducted as per this judgement and order shall be binding on all concerned, including the company (MPML) and its share holders/ directors as well as on all dealing with the company and all such meeting shall be deemed to be meeting duly called, held and conducted. . . . (13-15, 17, 19, 22 and 23)
 
Mr. Ahsanul Karim, Advocate with
Mr. Khairul Alam Choudhury, Advocate
 . . . For the petitioner.

Mr. Mahbubey Alam, Senior Advocate with
Mr. Mohammad Ashraf Uddin Bhuiyan
 . . . For the Respondent Nos. 12, 13, 14 and 15.

Company Matter No. 184 of 2013
 
JUDGMENT
Md. Rezaul Hasan, J.
 
This is an application filed under section 58 (3) of the Companies Act, 1994 (the Act) read with Rule 8 of the Companies Rule, 2009 (the Rule).The petitioner ahs also filed a supplementary affidavit, sworn on 24.9.2013, let the same do form part of the substantive application.

As stated in the petition, amongst other, that the petitioner is one of the Directors of the respondent No. 1 company, namely Magura Paper Mills Limited (MPML). The respondent No. 1which is a public limited company, incorporated under the Companies Act, 1913. The respondent No. 2 is Registrar of Joint Companies & Firms. The respondent No. 3 is Chairman and Director of the respondent No. 1 company. The respondent No. 4 is nominated director of Sonali Bank Ltd., a shareholder of the respondent No. 1 company, in the respondent No. 1 company. The respondent Nos. 5 and 6 are nominated directors of Magura Group Ltd. in the respondent No. 1 company. The respondent Nos. 7, 8 and 9 are nominated directors of Bangladesh Development Group Ltd. in the board of respondent No. 1 company. The respondent No. 10 is independent director in the respondent No. 1 company. The respondent No. 11 is Managing Director of the respondent No. 1 company. The respondent Nos. 12, 13 and 14 are nominated directors of Bangladesh Chemical Industries Corporation (BCIC), a shareholder of respondent No. 1, in the board of the respondent No. 1 company. The respondent No. 15 is BCIC; that the petitioner and the respondent Nos. 3 and one Miah Md. Rezoul Hoque in capacity of being shareholder of the respondent No. 1 company earlier filed Company Matter No. 284 of 2011 before Hon'ble High Court Division of the Supreme Court of Bangladesh under section 43 of the Companies Act, 1994 for rectification of share register against another shareholders namely BCIC. The Hon'ble High Court Division of the Supreme Court of Bangladesh vide judgment dated 19.02.2013 allowed the said application for rectification in Company Matter No. 284 of 2011 and directed to rectify the share register book and submit Schedule-X as per judgment dated 19.02.2013. Copy of the certified copy of the said judgment dated 19.02.2013; that thereafter BCIC filed appeal being Civil Petition for Leave to Appeal No. 609 of 2013 before the Appellate Division of the Supreme Court of Bangladesh on 14.03.2013 against the said judgment dated 19.02.2013; that thereafter the respondent No. 1 company rectified share register book and submitted Schedule-X on 24.03.2013 pursuant to the said judgment dated 19.02.2013 in accordance with decision of Board of Directors dated 14.03.2013. In the said Board Meeting dated 14.03.2013, the nominated directors of BCIC were also present. Copy of the said board resolution dated 14.03.2013, copy of the share register book as rectified and Schedule-X dated 24.03.2013 are annexed herewith; that thereafter the Judge-in-Chamber of the Hon'ble Appellate Division in the said C.P. No. 609 of 2013 vide order dated 04.04.2013 directed the parties to maintain status quo regarding share structure of the respondent No. 1 company as of 04.04.2013 till 6th October 2013, on which date the leave petition is fixed for hearing. Copy of the said order dated 04.04.2013 is annexed hereto; that the secretary of the respondent No. 1 company vide notice dated 18.08.2013 issued a notice for 143rd board meeting to be held on 31.08.2013; that the said notice of board meeting dated 31.08.2013 was duly served upon the nominated directors of BCIC namely respondent Nos. 12, 13 and 14; that under Article 109 of the Articles of Association of the respondent No. 1 company, the quorum of the board meeting constitutes with five directors including one director from each group. Under Article 2 of the Articles of Association of the respondent No. 1 company BCIC constitute Group-B. Therefore, in absence of any director of BCIC, the no quorum is constituted for holding board meeting; that BCIC having failed to succeed in any litigation, started to jeopardize the business of the respondent No. 1 company by way of preventing to constitute the quorum in the board meeting by remaining absent in the board meeting. BCIC took a opinion dated 26.08.2013 from one Mohammad Ashrafuddin Bhuiyan, Advocate, Supreme Court of Bangladesh, vide which opinion the said Mr. Bhuiyan advised BCIC to remain absent from board meeting so that no quorum is constituted. Pursuant to the said opinion dated 26.08.2013 BCIC vide letter dated 29.08.2013 requested the Chairman of the respondent No. 1 company, i.e., the respondent No. 3 to cancel the 143rd meeting to be held on 31.08.2013. Copy of the said opinion dated 26.08.2013 and letter dated 29.08.2013 are annexed herewith; that in such situation stated above, the directors present on 31.08.2013 were compelled to cancel the board meeting vide decision dated 31.08.2013. Copy of the attendance sheet and the minutes dated 31.08.2013 are annexed herewith; that due to arbitrary and whimsical decision of BCIC, the nominated directors of BCIC are abstaining to attend board meeting on purpose so that no quorum of board meeting is constituted. In such situation it has become impracticable for the respondent No. 1 company to hold and conduct board meeting. But under section 96 of the Companies Act, 1994 there is a compulsion upon the respondent No. 1 company to hold at least one board meeting in every three months and at least four board meeting in every year. Further, without board meeting, it is virtually impossible to run business of the company. As such holding and conducting board meeting in accordance with Article 109 of the Articles of Association of the respondent No. 1 company being impracticable, this Hon'ble Court may be pleased to direct the company under section 85(3) of the Companies Act, 1994 read with Rule 8 of the Companies Rule, 2009 to hold the board meeting of the respondent No. 1 company without requiring presence of one director from each group compulsorily to constitute quorum of board meeting and in these facts and circumstances the petitioner has prayed for the reliefs as mentioned in the petition.

The respondent Nos. 12, 13 and 14 and 5 have filed an affidavit-in-opposition denying the materials allegations. However, it has further been stated in paragraph Nos.7 and 8 of the affidavit-in-opposition that the statements made in paragraph Nos.07 to 11 of the application are partly matter of facts and partly matter of records, but its not true that the Advocate, Mr. Bhuiyan advised BCIC to remain absent form the Board Meeting. Actually, Mr. Bhuiyan advised if the situation is treacherous, BCIC may not attend the same. In respect of matter of facts, the burden of proving the facts exclusively lies upon the petitioner and in respect of matter of records; the respondent No.15 refrains from making any comment; that with regard to the statements made in paragraph No.12 of  application, it is submitted that there were 08 (Eight) directors of the Magura Paper Mills Limited, among 08(Eight), 03 (Three) from BCIC, 01 (One) from Sonali Bank Limited and rest  04(four)  private sponsors. The Chairman of the Magura Paper Mills Limited is from the private sponsors. In the above stated circumstances, the Chairman of the Magura Paper Mills Limited, by using his casting vote usually takes all the decisions which are always against the interest of the BCIC and as such it doesn’t make any different sense weather the directors on behalf of the BCIC and Sonali Bank Limited attend the Board Meeting of the Magura Paper Mills Limited or not. For the reason that there is no protection of the interest of the minority which is guaranteed under the companies. Moreover, 03 (Three) representatives of the BCIC were engaged the said Magura Paper Mills Limited, but they were bound to leave the said mill due to threat to their life and also lodged a General Diary being No. 659 dated 12.09.2013.
The learned Advocate Ahsanul Karim, appearing alongwith the learned Advocates Mr.Khairul Alam Choudhury and  Mr. Shamim Ahmed Mehedi, having placed the petition and referring to the documents annexed therewith submits that, as per Article 109 of the Articles of Association  (Annexure-K), for the purpose of forming the quorum presence of 5 Directors including 1(one) Director from each Group is required to dispatch or transaction any business in the Board meeting of the company. He next, referring to Article 2 of the Articles of the Association (AOA), submits that Bangladesh Chemical Industries Corporation (BCIC) is a GROUP-B share holder. The learned Advocate, thereafter, referring to a notice under reference No. MPM/CS-002/143/13 dated 18.8.2013 (Annexure-E), submits that 143rd Meeting of the Board of Directors fixing 31.8.2013, was issued by the company and copy of the said notice was issued upon the nominee directors of the BCIC i.e. the officials, representing the BCIC. He next, referring to a letter number 36.091.000.02.12.0312.2013/ 1438 dated 29.8.2013 (Annexure-F1) of BCIC, addressed  to the Chairman Magura Paper Mills, submits that, BCIC has requested the Chairman to cancel the 143rd Board Meeting stating that they have solicited opinion from the legal advisor of the BCIC (enclosed photocopy) and their legal advisor has advised  them not to attend the 143red Board Meeting. The said opinion was given by their legal advisor upon a query made by the BCIC as to whether BCIC should attend the Board meeting. Then, referring to legal opinion under reference AUA/ASH/2013 dated 26.8.2013 (Annexure-F), the learned Advocate submits that in this letter the legal advisor of the BCIC has opined that  the Board Meeting (of MPML) cannot be  held without presence at BCIC as per Article 109 of the Articles of Association, that requires presence of al least one  Director from each Group to form a quorum and it has been further opined that to attend the meeting in the circumstance will go against the interest of the BCIC. As such, the Directors of the BCIC may not attend the Board meeting as because without their presence the quorum of the Board meeting shall not be formed. The learned Advocate submits that this opinion expressed in that letter dated 28.8.2013 and the request for cancellation of the Board meeting made by BCIC in their letter dated 29.8.2013, is contrary the provisions of law as well as  prejudicial to the interest of the company inasmuch as the company is under legal duty to hold at least 4(four) Board meetings as per provisions of Section 96 of the Act and the company has served notice upon all the Directors as required by section 95 of the Act. Besides, this willful act to prevent formation of quorum in holding board meeting by remaining absent, inspite of receiving notice of the meeting, and the request made on the part of the BCIC  to cancel  the 143rd Board meeting has made it impracticable to call and conduct the Board meeting as per Article 109 of the Articles of Association of the company.

The learned Advocate further submits that the management and control of the affairs of the company is done by the Board of Directors and the Managing Director-perform his functions subject to the control and supervision of the Board of Directors. Now, unless the Board of Directors cannot act, by holding meetings, for want of quorum then a dead lock situated will arise that they may lead to the winding up of the company, which BCIC wants. He next submits that, in this circumsta-nces and owing to the willful refusal of the BCIC to attend the Board meeting, inspite of receiving the notice, and thereby preventing the formation of quorum as per Article 109, it has become it practicable to call  and conduct the Board meetings of the company as per Article 109 of the Articles of Association and in the result it will seriously affect interest of the company inasmuch as the company will not be able to take any move requiring the Board approval or Board  decision, nor it will be able to transact its business or to operate its’ Bank Account  or to approve payment of government dues and other authorities or to enter into any transaction or dealing by the company. Hence he has prayed for an order, as per provisions of sub-section (3) of Section 85 of the Act read with the Rule 8 of the Companies Rules, to enable the Board of Directors to call and conduct the Board Meetings of the company in the absence of the BCIC, if they remains absent even after receiving notice of the Board meeting. The learned Advocate further submits that, Article 109 provides for presence of at least one Director of each Group in the interest of the share holder of each group and any  director representing any group of share-holder can waive their right not to attend the Board Meeting, inspite of receiving the notice inasmuch as this provisions has been made for securing  individual interest of the each group of the share holders and such right and interest can be waived by the shareholder or the Directors of Group-B. Besides, this is not a statutory provisions that the presence of Director of each group is required to form the quorum. He also submits that the petitioner and others filed Company Matter No. 284 of 2011, under section 43 of the Act, in which judgment was passed, on 19.02.2013, allowing the petition. Against that, BCIC has filed CPLA No. 609 of 2013, but the Honorable Judge in Chamber did not allow that prayer to stay operation of the said judgment dated 19.2.2013. Inspite of knowing that the apex court is seisin of the matter, the BCIC, through the same lawyer, has moved another petition under section 43, regarding the self same subject matter, before the last Vacation Bench, but the learned Advocate for the petitioner having learnt  about filing of this petition opposed admission of the same and the Vacation Bench was pleased to let the matter go out of the list for mentioning  before the regular Bench. But the BCIC, being aware of their unfair conduct amounting to contempt of court, restrained from filing the application before the regular Bench even after reopening of  the court on 15.9.2013 and the said petition was rejected inlimine, since Appellate Division is in seisin of the self same matter. He submits that such conduct on the part of the BCIC amounts to utter disrespect to the apex court. The learned lawyer finally submits that, as per section 108 (f) of the Act read with the Articles of Association, the office of directors represe-nting of the BCIC is liable to be vacated for their absence in the Board meeting and the provision of section 108(f) with prevail over the provision of Article 109. He also submits that the company (MPPL) is not an enterprise of the BCIC. It is a public company limited by shares in which the BCIC is one of the share holders and the company is to be run and managed  by it’s Board of Directors without any external interference. BCIC officials are resorting to multiplicity of proceedings without debiting or single taken from their own pocket.  Hence, for the survival of the company and to ensure  compliance of the statutory provisions of section 96 as well as to run and manage the day to day business of the company the relief prayed for in the petition may be allowed.

Mr. Mahbubey Alam, the learned  Counsel appearing along with the learned Advocate Mr. Mohammad Ashraf Uddin Bhuiyn, appearing for the respondent No.12, 13, 14 and 15 on the  other hand, having placed the affidavit-in-opposition, firstly submits that this application is not maintainable. He continues that sub-section (3) of section 85 applies only relating to Annual General Meeting (AGM) of a company. It has no manner of the application  in the matter of a Board meeting. He next refers to sections 90-110 of the Act and submits that, function of the Board of Directors is quite different from that of AGM and for that reason as well sub-section (3) of section 85 is not applicable in this case. He next submits that this application itself is not bonafide. The purpose of this application is to transact business of the company by ousting the BCIC from the Board Meeting. Thereafter, referring to the prayer portion of the application, the learned counsel submits that even the relief prayed for in the substantive petition is beyond the scope of sub-section (3) of Section 85 of the Act. He finally submits that there are litigations pending before the Appellate Division and other courts between the parties and many things are yet to be finally resolved. At this stage, when asked from the Bench as to whether the learned Advocate suggests that Board meetings of the company should not be called and conducted till decisions have been arrived in the pending litigations between the parties,  the learned counsel has replied that Board meetings should be held. No one is against holding of the Board meeting of the company, but the agenda should be setforth in a manner that will serve best interest of the company and not of any particular group of shareholders. With these submissions the learned Advocate prays that this petition is liable to be rejected.

I have heard the learned Advocates for the petitioner and of the respondents, perused the substantive application alongwith supplem-entary affidavit as well as the affidavit-in-opposition and the documents annexed with them.
Having examined the Articles of Association of the company (Annexure-K to the supplementary affidavit), I find that the BCIC is GROUP-B share-holder. Then having examined the provisions of Article 109, I find that Article 109,  reads as follows:

“ 109.The Directors may meet together for the dispatch of business, adjourn and otherwise regulate their meetings and proceedings, as they may think fit, and the quorum necessary for the transaction of business will be five Directors including one Director from each group.”(underlining is mine)

As such it is apparent that Article 109 required attendance of 5 Directors to form a quorum in order to transact the  meeting of the Board of Directors, whereas Article 72, on the contrary, required that  presence 5 members personally  present shall form quorum for holding the Annual General Meeting (AGM) and participation from each group has not been required. Then having perused the record, I find a  notice dated 4.8.2013 (Annexure-E) issued on 18.8.2013, by the company secretary calling 143rd Board meeting, fixing, 31.8.2013 and that the notice contains 6 agendum (including miscellaneous agenda) and that the said meeting was issued upon all Directors including the nominee directors representing  BCIC. The said notice reads as follows:-

Board of Directors
এমপিএম সিএস-০০২/১৪৩/১৩                        ১৮-০৮-২০১৩খ্রিঃ
মাগুরা পেপার মিলস লিঃ এর ১৪৩ তম পর্ষদ সভার নোটিশ
মাগুরা পেপার মিলস লিঃ এর ১৪৩ তম পর্ষদ সভা আগামী ৩১-০৮-২০১৩ইং তারিখ রোজ শনিবার বেলা ১২.০০ ঘটিকায় মিলের প্রশাসনিক ভবনের সম্মেলন কক্ষ, মেঘনাঘাট এলাকায় অনুষ্ঠিত হবেz
উক্ত সভায় সভাপতিত্ব করবেন কোম্পানী পরিচালনা পর্ষদের মাননীয় চেয়ারম্যান জনাব মোস¹ফা কামাল মহীউদ্দীনz
সভার আলোচ্যসূচীঃ
১. গত ১৩-০৫-২০১৩ ও ১৫-০৫-২০১৩ ইং তারিখে অনুষ্ঠিত কোম্পানীর ১৪২ তম পর্যদ সভার কার্যবিবরনী নিশ্চিতকরনz
২. গত ১৩-০৫-২০১৩ ও ১৫-০৫-২০১৩ ইং তারিখে অনুষ্ঠিত কোম্পানীর ১৪২ তম পর্যদ সভার গৃহীত সিদ্ধা¿¹ সমুহ বাস¹বায়নের অগ্রগতি পর্যালোচনাz
৩. সোনালী ব্যাংক হতে গ্রহীত ঋণ হিসাব নিয়মিত করনের জন্য ডাউন পেমেন্ট প্রদান ও ঋণ হিসাব নিয়মিত করনের অগ্রগতি পর্যালোচনাz
৪. মোম্পানীর সম্পদ ও দায় নির্রপন ও শেয়ারের মূল্য নির্ধারনের জন্য নিযোগকৃত নিরীক্ষক মেসার্স এম| জে| আবেদীন এর কাজের অগ্রগতি পর্যালোচনাz
৫. ১৯৯৪ সাল থেকে ২০১৩ সাল পর্য¿¹ বিসিআইসি কর্তৃক মাগুরা পেপার মিলস লিঃ পরিচালনাকালীন সময়ে সংগঠিত বিভিন্ন অনিয়ম চিহ্রিত করন, আর্থিক ক্ষতি নির্রপ, সংশ্লিষ্ট কর্মকর্তাzকর্মচারীদের দায়-দায়িত্ব নির্ধারন ও ক্ষতিপূরন অদায় কল্পে নিরীক্ষক নিয়োগ সহ অন্যান্য বিষয়ে আলোচনা ও সিদ্ধা¿¹ গ্রহনz
৬. বিবিধ
সভায় সম্মানিত পরিচালকগণকে যথাসময়ে উপসিহত থাকার জন্য বিনীত অনুরোধ জানানো যাচ্ছেz
স্বাঃ
(মোঃ আবদুল কুদ্দুছ)
সচিব
এমপিএমএল পরিচালনা পর্যদ
 
Thereafter I, have perused the letter dated 29.8. 2013 (Annexure-F1) and I find that the BCIC has admitted to have received the aforesaid notice dated 18.8.2013, whereby 143rd  meeting was called, but BCIC, referring to the opinion of their legal advisor, has  requested the Chairman of the company to cancel the Board meeting. The said letter read as follows:-

চেয়ারম্যান,
মাগুরা পেপার মিলস লিঃ
মেঘনাঘাট, সোনারগাঁও,
নারায়ণগঞ্জ।
বিষয়ঃ মাগুরা পেপার মিলস লিঃ এর ১৪৩ তম পর্যদ সভা প্রসঙ্গে
জনাব,
উর্পযুক্ত বিষয়ে মাগুরা পেপার মিলস লিঃ এর পত্র সূত্র নং-এমপিএম/সিএম-০০২/১৪৩/১৩ তারিখ- ১৮-০৮-২০১৩ইং এর মাধ্যমে মাগুরা পেপার মিলের ১৪৩ তম কোম্পানী বোর্ড সভা আহবান করা হয়েছে। বর্তমান অবসহার প্রেক্ষিতে উক্ত বোর্ড সভায় বিসিআইসিঞ্চর পক্ষের পরিচালকগণ অংশগ্রহণ করতে পারবেন কিনা- সে বিষয়ে সংসহার আইনজীবীর মতামত চাওয়া হলে তিনি তার বিজ্ঞ মতামত প্রদান করেন (ফটোকপি সংযুক্ত)। এমতাবসহায়, আইনজীবীর উক্ত মতামতের আলোকে সংসহার পক্ষের পরিচালকগণ আহুত ১৪৩ তম কোম্পানী বোর্ড সভায় অংশগ্রহণ করবেন নাz এ প্রেক্ষিতে আহবানকৃত ১৪৩ তম বোর্ড সভা বাতিল করার জন্য আপনাকে অনুরোধ করা হলো।
আপনার বিশ্বস্ত
বিষয়টি জর্ররী
স্বাঃ
(জহিরুল হক)
উর্দ্ধতন মহাব্যবসহাপক
কোম্পানী উপ-বিভাগ
 
Turning my attention, next, to legal opinion dated 26.8.2013 (Annexure-F), I find that the legal advisor Mr. Mohammad Ashraf Uddin Bhuiyan has advised that BCIC may not attend the Board meeting as because without their presence the quorum of the Board meeting shall not be formed and if they attend the Board meeting this may go against the interest of BCIC. The said opinion reads as follows:

“Mrs. Bithi Ahmed
Manager Legal Arrears Department
Bangladesh Chemical Industries Corporation
B.C.I.C Bhaban
30-31, Dilkhusha C/A
Dhaka.”
This is in reference to the above subject. Upon perusal of the available papers/ documents, if appears to us that the 143rd Board Meeting of Magura Paper Mills Limited (the company) is schedule to be held on 31.08.2013. One of the agenda of the Board Meeting is to discuss about the illegal/arbitrary activities of the BCIC so far done.
Under the prevailing circumstances, Bangladesh Chemical Industries Corporation (the BCIC) has solicited our legal opinion to the effect that whether the Directors on behalf of the BCIC including Directors of the Private Sector will attend the said Board Meeting or not.
From our understanding, we would like to inform you that according to Article 109 of the Articles of Association of the Company, for a valid Board Meeting to be held the quorum necessary for the same is minimum five Directors including one Director from each group. Moreover, we have also come to know that the present situation in the company is hostile and they have already taken few arbitrary actions which go against the interest of the BCIC. Under the prevailing circumstances to attend the Board Meeting by the Directors of the BCIC appears to be treacherous. As such the Directors of the BCIC may not attend the Board Meeting as because without their presence the quorum of the Board Meeting shall not be formed.
Further, BCIC may send a letter to the company stating that because lack of security and few arbitrary actions already taken by them the BCIC is unable to attend the Board Meeting.
For further query, if any please feel free to contract the undersigned.
Thanking you.
Yours faithfully,
Mohammad Ashraf Uddin Bhuiyan
Barrister-at Law
For: ASHRAF UDDIN & ASSOCIATES”
(emphasis added).
 
Finally I have examined at the minutes of 143rd Board meeting dated 30.8.2013 (Annexure-G(1) and find that, it has been recorded in the minutes that since the 3 Directors nominated by the BCIC was not present so the said meeting was cancelled for want of quorum and the agendum mentioned in the notice dated 26.8.2013(Annexure-F) could not transacted.
 
As such, from the conduct of the BCIC as well as the facts and circumstances recorded herein above, I find that the petitioner has been able to make out a clear case that it has become impracticable to hold the Board meeting of the company owing to deliberate absence of BCIC nominee directors, inspite of receiving the aforesaid notice calling 143rd Board meeting, as required to be served upon them as per section 95 of the Act.
 
I have also taken notice of the unprecedented request dated 29.8.2013 (Annexure-F1) of the BCIC to cancel the Board meeting. There is no provisions either in the Articles of the Association or in the Act to make any such request and apparently such request was made taking unfair advantage of the provisions of Article 109 that requires presence of at least one Director from each group, in order to form a quorum. I also find that the BCIC did not make the request to cancel  the board meeting in the interest of the company, but upon a legal opinion dated 26.8.2013(Annexure-F) and their conduct was not to protect the interest of the company. This fact also transpires that BCIC remained absent in 143rd Board meeting without leave.
 
My findings recorded hereinbefore, show that notice dated 18.8.2013 of the 143rd board meeting fixing specific time, date and venue of the meeting and deliberately abstained from attending the meeting, without leave of absence and containing specific agendum has been issued upon al  directors including the nominee directors of BCIC. BCIC in their letter dated 29.8.2013 (Annexure-F(1) has acknowledged to have received the said notice dated 18.8.2013 (Annexure-E), served upon BCIC as required under section 95 of the Act. As such the company has complied with all formalities in calling its 143rd Board meeting, but could not conduct the same, in the manner as provided in Article 109, because BCIC has requested to cancel the meeting, in their own interest, vide their letter dated 29.8.2013 [(Annexure-F (1)]. These facts clearly nullify and disprove the claim of the learned counsel Mr. Mahbubey Alam, appearing for BCIC, that the purpose of the board Meeting was to oust BCIC from the company. Indeed no share-holder can oust another, in any circumstances, from the company, nor there is any provision within four corner of the Act laying down any mechanism to oust any share holder by another. So, this contention advanced on behalf of the Respondents (BCIC) is misconceived and has no legs to stand. Rather, the facts and circumstances, recorded hereinabove, have clearly established the circumstances that the conduct of the Respondents No. 12, 13, 14 and 15 (BCIC) has rendered it impracticable to conduct the Board meeting of the company (MPML) in the manner laid down in Article 109 of the Articles of Association owing to the BCIC deliberately deciding not to attend the Board meeting of the company in their own interest. The provisions for attendance of at least one Director from each group has been,  in my considered view (based on authority), kept in the interest of each group of share holders and such right can always be waived by any group, viz BCIC in this case. This conduct on the part of the BCIC  amounts to waiver of their  right to attend the Board Meeting, inspite of receiving the notice for the same and this should not bar holding the board meeting, nor such conduct or unfair practice can be allowed in the rest of the company, to avoid a dead-lock situation, and this is a fit case were sub-section(3) of section 85 should be applied to overcome the dead lock situation.
 
Besides, section 108(f) will have overriding effect upon any provisions of the Article of Association Article 108(f) reads as follows: “he absents himself from three consecutive meeting of the directors or from all meetings of the directors for a continuous period of three months, whichever is the longer, without leave of absence from the Board of Directors.”
        Hence, if BCIC nominee directors absent themselves from the Board meeting,  after receiving the notices of the same, then the provisions of clause-(f) of Section 108 of the Act shall be applicable and the office of the nominee directors of BCIC shall remain liable to be vacated.  This provisions of statute shall prevail over the provisions of Article 109.
 
Then turning to other submissions of the learned Counsel Mr. Mahbubey Alam, submitting that Sub-section (3) of Section 85 is not applicable in respect of the Board meetings of a accompany, I hold that such a submission is fallacious and misconceived. The title of section 85 is regarding “Provisions as to meeting and Votes”. This does not refer to the Annual General Meeting exclusively, nor section 85 excludes from its ambit the meeting of the Board of Directors. Sub-section-(1) of section 85 refers to the procedure to hold Annual General Meeting (AGM). Sub-section-(2) of section 85 lays down certain provisions under Clause-(a) to (f), when the Article of the Association of a company does not make provisions in respect of matters addressed by clause (a) to (f), whereas sub-section (3) contains remedial provisions, when  it becomes impracticable to call ‘a meeting’ of a company in the manner in which meeting of that company may be called or conduct as prescribed by the Articles of Association or  this Act. It is pertinent to the quote sub-section (3) of section 85 that reads as follows:

        “(3) If for any reason it is impracticable to call a meeting of a company in any manner in which meeting of that company may be called or to conduct the meeting of the company in manner prescribed by the articles or this Act the court may either of its own motio or on the application of any director of the company or of any member of the company who would be entitled to vote at the meeting, order a meeting of the company to be called, held and conducted in such manner as the court thinks fit, and where any such order is given the court may give such ancillary or consequential directions as it thinks expedient and any meeting called, held and conducted in accordance with any such order shall for all purposes be demed to be a meeting of the company duly called, held and conducted.”
 
The wording of sub-section (3) does not refer to the Annual General Meeting or to Board meeting. If refers to ‘a meeting’ of the company, which has become impracticable to be conducted in the manner as laid down in Articles of Association (in this case as laid down in Article 109) or this Act. The expression “a meeting’ is wide enough to cover an AGM, and EGM or a Board meeting, as the case be. Though, in the circumstances recorded above, it has become impracticable to hold board meetings of the company as per the Articles of Association (Article 109 in deed). The Act does not lay down any manner as to how a board meeting is to be conducted, although sub-section (1) of section 85 and 87 section lays down procedure for holding AGM and EGM. So, impracticability has arisen, in this case, for deliberate decision of BCIC to remain absent and thereby to present formation of quorum per Article 109. This conduct of the BCIC is contrary to the interest of the company and is intended to create a dead lock situation. I find no materials, except absurdity, in the submission that Sub-section (3) of Section 85 applies only to Annual General Meeting.
 
I also do not find any substance in the submission of the learned Advocate for the respondent that section 90-110 prohibits giving a direction as per provisions of sub-section (3) of section 85. This is evident from the heading ‘Directors’ covering sections 90-110. As such, apparently section 90-110 deals with directors, not with the proceeding of a meeting of the Board of Directors. The procedure for the meeting of the Board of Directors has not been kept in the Act, rather it is conventionally  laid down in the Articles of the Association or in schedule-I of Act, if there is nor Articles of Association. If such a meeting cannot be called in the manner as provided for in the Article of Association, then apparently sub-section (3) of section 85 shall be applicable. As clearly indicated by its provisions, sub-section (3) of section 85 can be resorted to seeking  appropriate relief in the case of impartibility in conducting ‘a meeting’ i.e. any meeting of the company, whether it is the AGM, EGM or a Board meeting.
 
The last submission of the learned Advocate for the respondent that this application is not filed bonafide, has no substance in view of the documentary evidence like issuance of notice dated 18.8.2013 calling the 143rd  of the Board meeting Annexure-E), letter dated 29.8.13 [Annexure-F(1)] of the BCIC acknowledging receipt of the said notice of the Board meeting and the BCIC requesting to cancel the Board meeting as well as the legal opinion dated 26.8.13(Annexure-F) advising the BCIC not to attend the Board meeting so that the quorum can be formed and no transaction can be made  in this said Board meeting. Besides, the agendum in the aforesaid notice dated 18.8.2013 does not indicates anything that the said meeting was called to jeopardize interest of the any group of share holders. Rather the BCIC, admittedly, deliberately decided not to attend the said meeting to prevent formation of the quorum as per Article 109, on the assumption that their absence will protect their interest, as distinct from interest of the company. So in my considered view, the conduct of the BCIC is exfacie malafide.
 
The learned Advocate for the respondents has, however, frankly conceded that the Board meeting must be held and there cannot be any question about it.
 
Besides, in the case of Satish Chandra Bank vs. Dhaka Jute Mills Ltd.: PLD 1968 Dacca 610, the power of this court has been clearly articulated and the decision taken in that case is being followed, without any departure, since then. Besides, reliance on this decision has been placed by our apex court in the case reported in 32 BLD (AD)(2012) 115: Md. Mazakat Harun & Ors vs. Export Import Bank of Bangladesh Ltd. As such, this court has wide power under Sub-section (3) of Section 85, which is similar to sub-section (3) of section 79 of the Act 1913, to pass appropriate order.

        In view of the deliberation recorded above I find merit in this application. In the result the application is allowed. Accordingly, I do hereby permit and direct, in exercise of the power vested in this court under section 85(3) read with Rule 8 of the Company Rules, 2009 that the Chairman (or the company secretary, if so ordered) should call  the Board meetings upon serving notices on  all the directors as required under provision of section 95 of the Act, informing the date, time, venue and agenda of Board meeting and transact the business in such meeting whether any of the nominees directors of B-Group  share holders is present or not, provided that at least 5 directors should be present to such a meeting. If BCIC decides to waive their right to attend the Board meeting, which they can always waive, that will not, however, prevent formation of the quorum and the Board can transact business as per the agenda noted in the notice. I further hold that, notwithstanding anything contained in Article 109 of the Articles of the Association of the company, the Board meeting to be called, held and conducted as per this judgment and order, shall be binding on all concerned, including the company (MPML) and its share-holders /directors as well as on all dealing with the company and all such meeting shall be deemed to be meeting duly called, held and conducted.
       
Besides, if the office of any directors becomes vacant as per provisions of section 108 (f) of the Companies Act, then the company shall take resolution and submit Form-XII accordingly, with the Registrar of Joint Stock of Companies & Firms.

        In the facts and circumstances cost of this case cost should have ordered to be borne personally by the respondent officials. However, taking lenient view, it is ordered that the parties will bear their respective costs.

        The Chairman is directed to record in the minutes of each board meeting the fact as to who of the Directors is absent with leave and who is absent without leave in any board meeting of the company.

        Let a copy of this judgment be sent to the Registrar of the Joint Stock Companies and Firms.

        Ed.