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Physical Meetings cannot be substituted by postal ballots

Court :
Bombay High Court

Brief :
The issue raised before the Bombay High Court was that whether a resolution for approval of a Scheme of Amalgamation can be passed under Section 110 of the Companies Act, 2013 and SEBI Circular dated May 21, 2013, by a majority of the equity shareholders casting their votes by postal ballot, which includes voting by electronic means, instead of an actual meeting. Various aspects of the purpose and conduct of shareholders’ meetings, issues of corporate law and governance prescribed in the Companies Act, 2013 along with various SEBI circulars was debated in the court of Gautam S. Patel, J, to reach to an inference that the mechanism of postal ballot, which includes electronic voting, ought to be offered as an additional facility for voting by shareholders and the need for conducting a meeting cannot be done away with. Procedural issues regarding the notification of various provisions of the 2013 Act as well as the Rules thereof were also raised before the bench. It was highlighted that the Ministry of Corporate Affairs website provided a link to a single scanned PDF file named as “Companies 2013 – Statement of Notification of Rules” which contained 21 rules that were all to be made enforceable from 1st April 2014. It was further observed that many of these rules were not yet gazetted. The Court laid down that they do not see how any such rules can be made effective on this basis where a ministry simply puts up some scanned document under the signature of one of its officers without any publication in the official gazette. The Court held that such publication is not merely a formality and has a well-established legal purpose and such purpose cannot be achieved in this ad-hoc manner. The Court, further held that till such time as these rules are gazetted, or there is some provision made for the dispensation of official gazette notification, none of the rules in the Ministry of Corporate Affairs PDF document that are not yet gazetted can be said to be enforceable.

Citation :
Re Godrej Industries Limited, Company Summons for Direction 256 of 2014




In the matter of the Companies Act, 1956

(1 of 1956);


In the matter of Sections 391 and 394 read

of the Companies Act, 1956;


In the matter of Scheme of Amalgamation


Wadala Commodities Limited (“WCL” or“Transferor Company”)


Godrej Industries Limited (“GIL” or “Transferee Company”)


Their respective shareholders

Godrej Industries Limited, a Company incorporated under the provisions of the Companies Act, 1956 and having its registered Office at Pirojshnagar, Eastern Express Highway, Vikhroli, Mumbai – 400 079, Maharashtra ...Applicant Company


FOR THE APPLICANT Mr. Shyam Mehta, Senior Counsel, i/b M/s. Rajesh Shah & Co.,


AMICUS CURIAE Mr. Gaurav Joshi, Senior Advocate

CORAM: G.S. Patel, J.

DATED: 8th May 2014

JUDGMENT: (Per G.S. Patel, J.)

1. Following the recent extensive amendments to the Companies Act, 1956 and bringing into force of various sections of the Companies Act, 2013, a question has been raised in this Company Summons for Direction, viz., whether in view of the provisions of Section 110 of the Companies Act, 2013 (“the 2013 Act”) and SEBI Circular dated 21st May 2013, a resolution for approval of a Scheme of Amalgamation can be passed by a majority of the equity shareholders casting their votes by postal ballot, which includes voting by electronic means, in complete substitution of an actual meeting. In other words, whether the 2013 Act, read with various circulars and notifications, has the effect of altogether eliminating the need for an actual meeting being convened.

2. In the facts peculiar to the present case, an actual meeting may not be necessary. Yet, this order is necessitated because the application as original made in this Company Scheme for Directions sought precisely such a dispensation. This is an issue that is likely to recur in several matters; hence this order.

To read the full judgement, find the attachment enclosed herewith


on 12 July 2014
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