History Uncategorized

Pugalenthi v. Ministry of Home Affairs

By Kirthi Jayakumar

The judgment of Chief Justice M.Y. Eqbal and Justice T.S. Sivagnanam of the Madras High Court, in P. Pugalenthi v. The Ministry of Home Affairs, The Unlawful Activities (Prevention) Tribunal, W.P. No. 23141 of 2010 and M.P. No. 1 of 2010, was delivered on September 30, 2010.

The petitioner had filed the writ petition under Article 226 of the Constitution of India and prayed for the quashing of an order passed by the Unlawful Activities (Prevention) Tribunal  (“the Tribunal”), on October 6, 2010, that had rejected the petition filed by the petitioner under sub-section 4(3) of the Unlawful Activities (Prevention) Act, 1967 (“the Act”). The crux of the facts were that the first respondent, namely, the Union of India, had issued a notification dated May 17, 2010 under sub-section 3(1) and the allied proviso to sub-section 3(3) of the Act, in the course of which it declared that the Liberation Tigers of Tamil Eelam (“the LTTE”) was an unlawful association. The petition claimed that the petitioner was a sympathiser of the LTTE and had a right to appear before the Tribunal. It was further contended that the Tribunal was required to adjudicate whether or not there was sufficient cause for declaring the association unlawful. It was contended by the petitioner that the Tribunal was under an obligation to give an opportunity to be heard before declaring a person or association as unlawful under the Act.
The Tribunal rejected the petition filed by the petitioner on the grounds, inter alia, that the tribunal had had occasion to consider the submissions made by other persons, including the political leader Mr. Vaiko, and none of the submissions made by the petitioner transcended the arguments advanced by Mr. Vaiko. The core contentions of the petitioner were that the LTTE itself was not present in India, but that its supporters and sympathisers were. This being a given, it was contended that notices under sub-section 4(2) of the Act should not only have to be sent to the LTTE in Sri Lanka but also to the alleged sympathisers, supporters and agents, all of whom were present in India. It was submitted by the petitioner, that unless the process prescribed under sub-section 4(2) of the Act was completed, the tribunal could not have commenced the actual process of adjudication under sub-section 4(3) of the Act.

The respondents, however, drew the attention of the court to the relevant provisions of the Act, and went on to submit that the tribunal had fully complied with all the requirements under the Act. Section 3 of the Act empowers the Central Government to declare any association to be unlawful through a notification in the official gazette, if the Central Government is of the opinion that such an association has become an unlawful association. Sub-section (2) to section 3 of the Act provides that such notification shall specify the grounds on which it is issued and such other particulars as the Central Government may consider necessary. However, the Central Government is not required to disclose any fact which it considers to be against the public interest. Section 4 of the Act provides that if any association is declared unlawful under section 3, the Central Government shall within thirty days from the date of publication of the notification, refer it to the Tribunal for the purpose of adjudicating whether or not there is sufficient cause for declaring the association unlawful. The Tribunal shall then call upon the association affected by notice to show cause and then, after holding an enquiry and adjudicating upon it, either confirm or cancel the said notification.

Section 7 of the Act lays down the provisions with regard to the power of the Central Government to prohibit the use of funds of the unlawful association. According to this section, after the association has been declared unlawful by a notification issued under section 3, the Central Government may issue a prohibitory order for the use of funds of the unlawful association. Sub-section (4) of section 7 gives the right to any person aggrieved by such an order to make an application to the District Judge to establish that the moneys, securities or credits in respect of which prohibitory order has been made, are not being used or are not intended to be used for the purpose of the unlawful association. On receipt of such application, the Court of the District Judge shall decide the question.

Sub-section 8(8) of the Act makes it manifestly clear that any person aggrieved by the notification issued in respect of a place under sub-section 8(1) or by an order made under sub-section (3) of sub-section 8(4) may, within thirty days from the date of the notification or order, make an application to the Court of the District Judge for declaring that the place has not been used for the purpose of unlawful association, and the Court of the District Judge shall decide the same in accordance with law.

The Madras High Court held that the Tribunal had indeed given the petitioner a full opportunity to be heard, and it had, with due reasonableness, rejected the petition, thereby warranting no interference by the High Court. The writ petition was thus dismissed.

Although the case hinges upon an issue pertaining to natural justice, the judgment did not quite look at the merits of the case that were presented before the tribunal. In understanding natural justice, the court has not overreached itself. What natural justice mandates is the grant of an opportunity to be heard, and reasonably so. The Tribunal had, clearly, accorded that in the petitioner’s case. It is very essential that courts work in a way that is friendly to the aim of dispensing speedy justice. In keeping with this, the tribunal refused to hear the contentions of the petitioner, since they were essentially the same as those that were raised on an earlier occasion by Mr. Vaiko. The court cannot encourage the re-iteration of the same subject matter by hearing the very same line of arguments submitted in the context of the same dispute.


For Petitioner: Mr. M. Radhakrishnan

For Respondents: Mr. M. Ravindran, Additional Solicitor General of India; assisted by J.Ravindran,           Assistant Solicitor General

Human Rights Supreme Court of India

Conciliation of the coerced!

Today would have been as good a day as any to hear the verdict of the Allahabad High Court in the Ayodhya title suit, writes Shadan Farasat.

Can two parties, who have been unable to come to a settlement for over 60 years, come to a settlement through an intervention of the Supreme Court? Two judges of the Supreme Court could not agree on an answer yesterday when they heard a Special Leave Petition to stay the impending decision of the Allahabad High Court on the title suit over the land where the Babri Masjid stood until 1992. The court eventually passed an order that abides with the Supreme Court’s tradition of issuing notice when two judges disagree on a grant of notice. The Court issued notice and granted a stay on delivery of judgment by the Allahabad High Court until September 28, 2010, when the matter is listed next before the Supreme Court. The Attorney General of India has been requested to be present in the Court for the next hearing.

Rear view of the Babri mosque before it was destroyed in 1992. Photograph by Shaid Khan.
Rear view of the Babri mosque before it was destroyed in 1992. Photograph by Shaid Khan.

But first, some background information. The Babri Masjid, as it was called, was built by Mir Baqi in Ayodhya in 1528 on the orders of Emperor Babur. It stood there as such until December 6, 1992 when it was demolished. On January 7, 1993 the President of India issued the Acquisition of Certain Area at Ayodhya Ordinance through which 67.703 acres of the Ram Janambhoomi-Babri Masjid Complex, as it came to be called by then, was acquired by the Central Government. Existing litigation in respect of this area abated. However, the President of India, under a reference under Article 143 of the Constitution, sought the opinion of the Supreme Court on whether such action on behalf of the government would be constitutional. In Ismail Faruqui v. Union of India, AIR 1995 SC 605, a five-judge bench of the Supreme Court held that this action of the Central Government was unconstitutional to the extent it abated all pending legal disputes before courts and referred the matter to the Allahabad High Court for decision on the multiple title suits, some of which had been pending since 1949. The Supreme Court has now stayed this judgment of the Allahabad High Court until September 28, 2010.

The odds against the petitioner before the Supreme Court were indeed high. A similar request had been made before the Allahabad High Court last week, and the majority had rejected it, with costs! If the High Court does not give the decision by October 1, one of the judges, Justice D.V. Sharma, will retire and the matter will have to be heard in its entirety once again by a reconstituted bench. The new decision will take a few more years. The Allahabad High Court had already tried mediation and conciliation, but failed. The petitioner, who is one of the twenty-seven parties in the suit, also had its bona fides in question, because it had failed to actively participate in the proceedings before the High Court. Finally and most importantly, none of the other parties to the suit were willing to consider a settlement at this belated stage and political settlement by various religious leaders and as many as three former prime ministers had also failed.

So what purpose did one of the judges of the Supreme Court see in coercing the parties into another (potentially) fruitless mediation process? The only answer is the resolution – or postponement – of possible law and order problems on the delivery of the judgment, if the judgment is seen as favouring one community over the other. However, unlike in 1992, the Central Government has already taken adequate measures, and all political parties and religious groups have advised restraint and promised to abide solely by the legal process. The mood of the country is also very different from 1992. So today would have been as good a day as any other to pass this judgment. While the Allahabad High Court decision would not have resolved all the disputes in respect of the issue, particularly relating to the emotions that may be attached to it, it would have been a step in that direction. By staying the decision of the Allahabad High Court, the Supreme Court may inadvertently be providing fodder to those who want to milk the issue politically in the future. While the Supreme Court does some more thinking until September 28, the country awaits anxiously.


History Lounge

Shatranj ke Khilari

By Asiddababa and Beelzebubbles

It’s a bit of a drag getting back to work from a long weekend sometimes, so we thought you might like a little something special on Monday morning!

This is the second poster from Baal-Koni Productions, images that bring legal history alive by referencing movies and other popular culture. (Click here to see the first poster, in case you missed it.)

If you haven’t got the hang of how these work yet, here’s the deal:

Asiddababa and Beelzebubbles, the deviant minds behind Baal-Koni, create these posters to depict a particular moment in Indian legal history. The previous poster was a representation of the facts surrounding the famous case of K.M. Nanavati v. State of Maharashtra, 1962 SCR Supl. (1) 567. They used key facts from the case, and created a poster which referenced the popular Hindi movie, Pati Patni aur Woh.

This time around, you get to guess which case or incident in legal history this poster represents. Try guessing what the poster is about in the comments below. The best guess – the one which explains the poster and its link to Indian legal history most accurately and completely, wins a prize – a Rs.250/- gift voucher on!

Now take a look, and post your guesses in the comments below! Best of luck!

Image published under a Creative Commons Attribution-NonCommercial-ShareAlike 2.5 India License.
Image published under a Creative Commons Attribution-NonCommercial-ShareAlike 2.5 India License.

Feel free to download the image above, but if you decide to pass it on to someone, please remember to tell people you got it from!

Corporate Litigation

One-member meetings

The High Courts of Kerala and of Punjab and Haryana have considered whether a meeting of one member alone is permissible, but have not satisfactorily laid out the law on one-member meetings. Though neither court was faced with facts specifically requiring resolution of the entire issue, both judgments leave certain critical issues unexamined while one has, in apparent error, missed the point that the statutory language itself permits one-person meetings in certain circumstances.

Quorum for meetings

Section 174 of the Companies Act, 1956 (“the Act”) prescribes the quorum requirements for a general meeting.

Sub-section (1) prescribes that two members, in the case of a private company and five, in the case of a public company, personally present shall be the quorum for a meeting of the company, unless the Articles provide for a larger number.

Sub-sections (3) to (5) are applicable, under sub-section (2), unless the Articles provide otherwise. These subsections provide that:

Sub-section (3) provides that a meeting called by requisition of members shall, if there is no quorum, stand dissolved.

Sub-section (4) provides that meetings other than those dealt with under sub-section (3) shall, in case of lack of quorum, stand adjourned.

Sub-section (5) provides that “if at the adjourned meeting also, a quorum is not present … the members present shall be a quorum”.

‘A meeting of one person’

Sub-section (1) makes it clear that, as a general rule, a meeting of a company cannot proceed with less than two members.

The sense imported by the word ‘meeting’ itself suggests the rule is well-founded; the phrase ‘a meeting of one person’ elicits an intuitive sense of unhappiness of wording.

The position under sub-section (1) is also in accordance with common law. In Sharpe v. Dawes, [1876] 2 QBD 26 (CA) it was held that a meeting, ordinarily and by the very nature of the term, implies a coming face to face of at least two persons and there is no ‘meeting’, speaking generally, if one only attends. In Re. London Flats Ltd., 1969 (1) WLR 711, which arose from very interesting facts (unfortunately beyond the scope this post) holds to similar effect.

English law recognises, however, that the word ‘meeting’ might be used in a special sense, to mean a ‘meeting’ of only one person. East v. Bennett Bros., [1911] 1 Ch. D. 163 is an example of such use. That case involved interpretation of a provision requiring the vote of a class of members in meeting. The Court held that the word ‘meeting’ in that provision permitted a one-member meeting, since the provision was framed at a time when the class comprised of one person only.

Though it is, therefore, plain that the presence of two members is ordinarily a prerequisite for a valid meeting in India as much as in England, the circumstances when this rule may be relaxed remain unclear. The question, therefore, resolves itself into whether there are exceptional circumstances in Indian law which permit a one-person meeting.

The provisions in the Act permitting the Government and CLB to direct that a one-person meeting be convened are some obvious exceptions, but involve intervention of judicial or administrative authorities.

Less obvious, however, is the fact that Section 174 itself, properly read, provides for a single-person meeting in certain circumstances.

Deemed quorum of one member

Under sub-section (1) of Section 174, the quorum for a meeting of the members of a private company is two, except where the Articles prescribe quorum of a greater number. Sub-section (2) makes sub-sections (3) to (5) applicable, unless the Articles provide otherwise. Therefore, sub-sections (1), (3), (4) and (5) govern meetings of a private company whose Articles do not require deference to amendatory or contrary provisions (“the Default Case”).

Shorn of unnecessary detail, these provisions mandate that a meeting lacking quorum shall stand adjourned (to the same place and time, unless the Board determines otherwise) by a week. Where there is no quorum at the adjourned meeting, members present constitute quorum (a “Deemed Quorum”).

In the Default Case, sub-section (5) operates, of necessity, to constitute a Deemed Quorum of one member. This is because lack of quorum arises, in the Default Case, exclusively where one member only is present.

It is a well-established principle of statutory interpretation that a provision ought to be construed in a manner which does not render it, or any part of it, otiose. Practically, this rule would require that a provision be given effect in every situation to which it can reasonably be said to apply.

Therefore, Section 174 has to be read, in the Default Case, as permitting an adjourned meeting of one person alone. To refuse to do so would be to render Section 174(5) otiose in the Default Case (a situation to which it can reasonably be said to apply).

The judgments of the High Courts 

The Punjab and Haryana High Court, in Bhankerpur Simbhaoli Beverages Pvt. Ltd. v. Sarabhjit Singh, [1996] 86 Comp. Cas. 842 (P&H), was dealing with an allegation that an extraordinary general meeting of the company was illegal since only one person was present. The Court held that “in order to give a finding as to whether the extraordinary general meeting was held, it is necessary to find out first, as to whether at least two shareholders were present in the meeting because a single person cannot constitute a meeting”.

This position, for which the Court drew reliance from, inter alia, the English cases above, went uncontested as is clear from the Court’s observation that “the proposition is not disputed by Mr. G Ramaswamy, senior advocate, and rightly so”.

Insofar as the Court proceeded on an admission, the judgment cannot provide much authority for the position in law. In any event, the Court has stated little more than what is already clear from Section 174(1), that is, as a general rule, there cannot be a meeting of one person.

In Kerala v. West Coast Planters’ Agencies Ltd., AIR 1958 Ker 41, the Kerala High Court – in appeals against Orders of acquittal in the prosecution of a company and its managing director – dealt with whether there could be a general meeting under Section 76 of the Companies Act consisting of one member (the company, at the relevant time, had only one member) and whether the managing director could be prosecuted under Section 76(2) for failure to convene such meeting of one member.

The Magistrate’s order of acquittal, the Court notes, took “the common sense view that for a meeting there must be at least two persons, that a man cannot meet himself, and that the general meeting required by Section 76(1) being an impossibility, no liability attached under Section 76(2) or Section 133(3) to either of the accused”.

The Court placed its imprimatur on the Order of acquittal and the view taken by the Magistrate. Relying, inter alia, on Sharp v. Dawes (supra) and East v. Bennett Brothers (supra), the Court said: “…[T]he common sense view taken by the Magistrate is also the true view in law”.

Excepting for one dimension discussed infra, this judgment has also not added much to the general rule that a meeting requires more than one person.

Objections to deemed quorums of one-member and the Section 13 Rule

The two objections raised against reading Section 174 as necessarily permitting an adjourned meeting of one person in the Default Case, although distinguishable, are based on a common premiss and flow into one another.

The first of the two objections is that the interpretation of Section 174(5) as permitting a one-person meeting is contrary to the literal interpretation rule, since Section 174(5) uses the word ‘members’ while mandating that those remaining at the adjourned meeting would constitute quorum. The answer to this objection is simply that it fails to account for the General Clauses Act, 1897 (“the GC Act”). Section 13 of the GC Act provides:

13. Gender and Number – In all (Central Acts) and Regulations, unless there is anything repugnant in the subject or context – words importing the masculine gender shall be taken to include females, and words in the singular shall include the plural, and vice versa.”
(emphasis supplied)

The interpretive tool in Section 13 (“the Section 13 Rule”), as applied, requires that the word ‘members’ in sub-section (5) be read to include ‘member’. There is clearly nothing repugnant in the subject or context of Section 174 that excludes its application.

As a matter of fact, the context of Section 174(5) supports application of the Section 13 Rule since one dimension of its applicability (that cannot be excluded without violating the rule against redundancy) necessarily involves a situation where one member alone is present, that is, an adjourned meeting of a ‘Default Case company’ lacking quorum (a ‘Default Case company’ refers, obviously, to a private limited company whose quorum, under S.174(1) is two members and to whom sub-sections (3) to (5) applies).

The second objection to interpreting Section 174(5) as permitting a single-person meeting – in essence an extrapolation from the first – grounded the decision of the High Court of Kerala in the West Coast Planters’ Agency Case. The State had argued before the High Court that:

Regulations 51 and 52 in Table A to the First Schedule to the Act (now embodied in Section 174 of the Companies Act, 1956) … read together imply that a meeting can be held with less than two members. 

… Regulation 51 lays down that two members personally present shall be a quorum in the case of a private company and Regulation 52 says that if at an adjourned meeting a quorum is not present, the members present (which covers the case of one member, the plural including the singular, and which, in the case of a private company can be only one) shall be quorum”.
(emphasis supplied)

The High Court rejected the State’s proposition on the basis of a ‘reductio ad absurdum’ argument, holding that:

if Section 147 and 162(iv) of the Act contemplate the case of a one-man company, they contemplate also a no-man company, for the reduction of membership below two or seven as the case may be, can as well be to zero as to one (similarly in the case of the regulations, the absence of a quorum of two includes a case where none is present).”
(emphasis supplied)

There is no reference in the judgment to the General Clauses Act, 1897 and it is not known whether the State based its argument on the Section 13 or not. That provision, however, is a complete response to the Court’s objection.

The reading of ‘members’ as including ‘member’ in Section 174(5) is based on a rule of interpretation contained in Section 13 of the GC Act, which is a statutory prescription. This rule requires, context permitting, that a word in the singular shall include the plural and vice versa. Clearly, the provision does not extend to reading the singular or plural, as used, to include ‘none’.

The High Court’s view is, therefore, but a flight of fancy, unmoored from readily available interpretive tools. Apart from being mandatorily applicable to determine Parliament’s true intention, these tools, properly applied, would have left no room for such concerns as the Court raised.

Cases other than the default case

It remains to be determined whether one person can constitute a Deemed Quorum in cases other than the Default Case, viz.:

a) In cases of public limited companies where sub-section (1) applies

b) In cases of either public / private companies where a higher quorum stipulated by sub-section (1) is prescribed by Articles in exercise of power conferred by that provision

(The Default Case, together with the cases at (a) and (b), comprise the ‘universal set’ of situations conceivable under Section 174. Consequently, if a Deemed Quorum of one member is permissible in these cases also, then adjourned meetings can proceed with a Deemed Quorum of one member in all cases.)

Although absence of quorum in meetings of companies at (a) and (b) does not necessarily mean that one member alone is present (as it does in the Default Case), it must be permissible for an adjourned meeting to go on, under Section 174(5), with a Deemed Quorum of one member in these cases also.

To hold otherwise would arguably violate Article 14; such a reading implies that Parliament has chosen to treat ‘Default Case companies’ and other companies differently, although they are similarly situated (that is, faced with an adjourned meeting where one member alone is present despite lapse of stipulated time from commencement).

(Aditya Narayan is an advocate at the Karnataka High Court.)