S. Varadarajan Vs Venkateswara Solvent Extraction Private Limited (Madras High Court)
In, the Madras High Court dismissed an application seeking interim injunction against holding an extraordinary general meeting (EGM) convened by a shareholder under Section 169 of the Companies Act, 1956. The applicant had challenged the validity of the EGM notice dated March 28, 1992, contending that the requisition notice did not contain a proper agenda, violated mandatory provisions of Section 169, and failed to comply with Section 284 regarding removal of the managing director. The dispute arose in the context of pending company petition proceedings alleging oppression and mismanagement.
The Court noted that the second respondent, holding nearly 49.2% shareholding, had requisitioned the EGM to fill vacancies on the board and remove the managing director. Since the board failed to convene the meeting within the statutory period prescribed under Section 169, the requisitionist himself convened the EGM. The Court examined Sections 169, 172, 173 and 284 of the Companies Act and referred extensively to the Supreme Court judgment in LIC of India v. Escorts Ltd..
The High Court held that a shareholder possessing the requisite numerical strength has a statutory right to requisition an extraordinary general meeting and cannot ordinarily be restrained by injunction from convening such a meeting. The Court observed that the requisition dated February 8, 1992 clearly disclosed the matters for consideration, namely filling board vacancies and electing a proper managing director, thereby satisfying the requirements of Section 169. It further held that the subsequent notice dated March 28, 1992 properly set out the business proposed to be transacted and was issued within the statutory period.
