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No Separate Meeting Needed When Same Terms Apply to Entire Shareholder Class: Calcutta HC

Case Law Details

TaxGuru Citation
2026 taxguru.in 3347
Case Name
Industrial Investment Bank of India Limited Vs Smt. Persis A. Khambatta & Another (Calcutta High Court)
Date of Judgement/Order
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Industrial Investment Bank of India Limited Vs Smt. Persis A. Khambatta & Another (Calcutta High Court)

The Calcutta High Court considered an appeal challenging an order of a learned Single Judge that had confirmed an interim direction requiring the appellant bank to set aside properties worth ₹2 crore to secure the claims of certain preference shareholders. The dispute arose from a resolution passed in the 13th Annual General Meeting (AGM) held on September 20, 2010, whereby the appellant bank decided to redeem preference shares at 20% of the principal amount as full and final settlement.

The respondents, who held C-class preference shares, challenged the validity of the resolution, contending that their rights could not be altered without convening a separate meeting of their specific class and obtaining their consent. They also alleged that the AGM notice lacked proper explanatory notes and that the resolution violated Section 106 of the Companies Act, 1956. The Single Judge accepted these arguments, holding that there was no evidence of written consent from the requisite 75% of shareholders and that the resolution was not valid under Section 106.

The appellant bank contended that the resolution was passed in compliance with Section 106 and that consent from more than 75% of preference shareholders had been obtained in writing. It argued that all preference shareholders were treated uniformly and that the same terms were applied across the entire class. The appellant also submitted that it was not given an opportunity to produce relevant documents, including consent letters, meeting notices, and minutes, before the Single Judge. It further argued that the explanatory statement was part of the AGM notice and that the respondents’ representative had attended the meeting through a proxy.

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Author Info

CA Sandeep Kanoi
Qualification: CA in Job / Business
Company: Taxguru Consultancy
Location: Mumbai, Maharashtra
Articles Published: 21,361

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