Companies Act, 1994 | Case Reference

Companies Act, 1994

Sections 2(d) & 3(1) –

The Company

Court has a special company jurisdiction and that jurisdiction has to be found from specific provisions of the Act. Abdul Muhit and others vs Social Investment Bank Limited (SIBL) and others 54 DLR 306.

Section 38–

Discretion as to registration of any transfer of shares implies just and proper consideration of the proposal in the facts and circumstances of the case. Giasuddin Ahmed vs Green Delta Insurance Company Ltd and another 56 DLR (AD) 31.

Section 38

of the Companies Act gives the Court a wide discretion to scrutinize any fraud, error or undue influence or misrepresentation in the matter of transfer of any share and grant relief commensurating with the appropriate possible relief. Ahmed lmpex (Private) Ltd & others vs Moqbul Ahmed and others 56 DLR (AD) 92.

Section 38

The provision of section 38 of the Companies Act gives the Court a wide discretion to scrutinize any fraud, error or undue influence or misrepresentation in the matter of transfer of any share and grant relief commensuration with the appropriate possible relief contemplated under the said section. Ahmed Impex ( Private) Ltd & Ors vs Moqbul Ahmed ors. (Mohammad Fazlul Karim J)(Civil) 2ADC 107

Section 38(3)–

In order to be a valid and complete transfer of share for the company to register in its register of members the instrument of transfer must be executed both by the transferor and the transferee, the instrument of transfer must be duly stamped and such instrument is delivered to the company along with the scripts. Ahsan Karim Jinnah vs Meghna Insurance Company Limited & others 52 DLR 160

Section 38- Rectification of share register In the present case since the company court having jurisdiction under section 38 of the Companies Act has found that the petitioners validly acquired 2,800 shares, the civil suit in the civil court will no longer proceed. The learned Advocate has contended that since complicated question of facts are involved in this case these should be decided by the civil court. But we do not accept this contention of the learned Advocate. It is evident that in this case the transfer of total 2,800 shares in favour of the petitioners by the respondent No. 6 is rather an admitted fact and the company court and this court also have found that these transfers of 2,800 shares in favour of the petitioners were valid. It is not acceptable at all that for the reason of pendency of a civil suit on the same matter the company court had no jurisdiction to decide whether the transfer of shares in favour of the petitioners were valid or not. In the circumstances both the civil appeals be dismissed on contest without any order as to cost. ... Bangladesh Paper Mills Limited =VS= Mosharraf Hossain, [9 LM (AD) 223]

Section 43–

The jurisdiction of the Company Court is sufficiently wide to resolve the question of rectification of the register of members. Matiur Rahman (Md) vs Dhaka Stock Exchange Ltd and another 51 DLR 530.

Section 43

Director of the respondent No.1 Bank ipso facto stood vacant and she ceased to be the director by operation of law (section 108 (4) of Companies Act, 1994. Mur Hussain and another -vs- Jamuna Bank Ltd and others (Md. Fazlul Karum J)(Civil) 3ADC 768

Section 43–

The application under section 43 of the Companies Act for the rectification of the Members Register is held to be not maintainable as the said matter has not been earlier referred to the Arbitration Tribunal as provided in section 12 of the Ordinance and/or as stipulated in Article 66 of the Articles of Association of the Chamber of Commerce. Ibrahim Cotton Mills Ltd and others vs Chittagong Chamber of Commerce and Industry and others 51 DLR 538.

 Section 43- We note from the impugned judgement that the learned Judge of the Company Bench compared the signature of the petitioner (respondent No.1 herein) appearing on Form-117 dated 8.10.2007 with those of his signatures appearing on other documents on record, including the Memorandum of Association.

This is well within the jurisdiction of the learned Judge under the provisions of section 73 of the Evidence Act.

In such circumstances, we cannot but hold that the claim of the present respondent No.1 is established and that the Company Bench of the High Court Division came to a correct finding in allowing the petition for rectification of shares. ... Reza Bin Rahman =VS=A.T.G. Mortaza, [7 LM (AD) 8]

Section 43- Rectification of the Register of Member- Proprietary right vested to any member cannot be extinguished or ceased at the instances of an employee like a Secretary of the Club without any approval of the Board of Directors and without giving an opportunity of hearing of the concerned member to make payment of the outstanding amount as guaranteed in Articles 27 and 52 of the Articles of Association.

The learned Company Judge of the High Court Division has clearly and specifically failed to appreciate the legal consequences in failing to comply the mandatory provisions of Articles 27 and 52 of the Article of Association wherein it has been contemplated as regard the disciplinary provisions in the Articles of Association. ...Monir Hossain Emon(Md.) =VS= All Community Club Ltd., [10 LM (AD) 155]

Section 59(1) –

A mistake, whether clerical or others in the Memorandum of Articles can be amended by altering the Memorandum and Articles. Court’s approval has to be obtained if particular amendment requires such approval. Tropical Homes Limited vs Registrar of Joint Stock Companies 48 DLR 576.

 Sections 81, 85(3) read with sections 91(1)(b) and 36

Without holding and completion of 9th AGM by electing its Directors of the Board of Directors should not be de- clared to be illegally done and im- practible to call the 10th AGM of respondent No.1 bank, namely, Export- Import Bank of Bangladesh Limited vide "Price Sensitive Information" pub- lished in the Daily "Samakal" on 24.04.2009 (Annexure-'H') and Notice of the AGM dated 15.07.2009 (Annex- ure-'C-2'). Md. Mazakat Ali Harun vs. Export Import Bank (Md. Abdul Wah- hab Miah J) (Civil) 9 ADC 779

Sections 81(2) & 85(3)–

Delay in holding the adjourned annual general meeting of the petitioner company is condoned as it appears that the same could not be held as the balance sheet profit and loss account were not ready to be laid in the meeting. Bengal Steel Works Limied vs Registrar of Joint Stock Companies and Firms 48 DLR 101.

Section 81(2) read with section 85(3)  

Seeking condonation of delay for holding statutory first annual general meeting of Yongtai Industries Bangladesh Ltd. Sarwar Zaman vs. Yongtai Industries Bangladesh Ltd. and another (Md. Tafazzul Islam J) (Civil) 4ADC 855 On the cloak of a review petition, the same matter cannot be reopened. It has been repeatedly observed by this Division that a review is never meant nor can be allowed to be utilized as another opportunity for rehearing a matter, which has already been closed by a final judgment. Boalkhali Sirajul Islam College vs. Al-haj Ahmed Hossain Chowdhury (Syed J. R. Mudassir Husain CJ)(Civil) 4ADC 860 

Seeking declaration of title in respect of the land in suit. The settled principle of law is that in the garb of the review a party is not competent to resort to the re-hearing of the appeal. Most. Hamida Bewa vs. Jasiron Nesa and others (Md. Ruhul Amin J) (Civil) 4ADC 862

Sections 81(2) & 85(3)–

If it is made to appear to the Court that the annual general meeting or meetings were not held in accordance with the directions made by its earlier order the Court shall have competence to order for holding such meeting or meetings afresh. Tahmid Ahmed vs Jalaluddin Jaffar Ali Hussain.YZ DLR 141

 

Sections 81(2) & 85(3)–

The omission of notifying a director about the holding of a board meeting invalidates the proceedings and such meeting of directors cannot be said to have been duly convened in the absence of service of notice. Tahmid Ahmed vs Jalaluddin Jaffar Ali Hussain 52 DLR 141

 

Section 81(2) and 85(3)- A company is a juristic person comprised of its members/share holders, governed by its own Article of Association through the Board of Directors selected/appointed by the Members for taking decisions in the formal meeting in accordance with the Article of Association as well as in accordance with law. So the members/shareholders of a company. whose combined effort, expressed through the Board of Directors is the key stone in running the company. It is the shareholder who can take any decision in respect of management of company through different types of meetings. The appellant company being one of the oldest company of the country, incorporated on 18.11.1959 and being run smoothly since then upon holding all its meetings in accordance with law. Thus it is held that the supreme power being in the hands of the shareholders they can take any decision in respect of running of the company in its meetings and when upon holding the 33rd annual general meeting and all subsequent meetings thereafter, the company took several resolutions approved by all subsequent meetings and the copies of those resolutions upto 38th meeting having already been submitted with the Registrar of Joint Stock Companies now no shareholder can have any grievance against any of such resolutions. ... Mirpur Ceramic Works Limited =VS= Yousuf Ariff Tabani, [5 LM (AD) 77]

Section 85(2)(3)–

If for any reason it is impracticable to call, hold and conduct a meeting on the happening of any circumstance the Court being satisfied to that effect to call a meeting in the manner such a meeting is to

be called, could pass an order for holding the meetings to be conducted by a neutral Chairman even in the absence of an application. United Commercial Bank Ltd vs Jahangir Alam Khan and others 56 DLR (AD) 76.

 

Section 85(2)(3)–

If for any reason it is impracticable to call, hold and conduct a meeting on the happening of any. circumstance the Court being satisfied to that effect to call a meeting in the manner such a meeting is to be called, could pass an order for holding the meetings to be conducted by .a neutral Chairman even in the absence of an application. United Commercial Bank Ltd vs Jahangir Alam Khan and others 56 DLR

(AD) 76.

Sections 85(3)–

There is no fetter on the powers of the Court in invoking sub–section 3 of section 85 to call, hold and conduct a meeting and not restricted only to the articles or the Act. However, the Court shall not invoke its power on a mere trifling domestic squabble between the directors but only when it is necessary in the paramount interest of the company, looking at the facts from a reasonable commonsense point of view and acts as a prudent person of business to decide whether it has become impracticable to call a general meeting. Jahangir Alam Khan vs Registrar, Joint Stock Companies and ors 55 DLR 495.

 

Sections 85(3)–

The Court, in considering a prayer for holding a meeting, should be cautious and in normal circumstances should not supersede the rights and wishes of the share–holders and their representatives, the directors to manage and run the company including holding of their meetings. Jahangir Alam Khan vs Registrar, Joint Stock Companies and ors 55 DLR 495.

 

Section 89(3)–

The provision of law that until the contrary is proved a meeting of the Directors of a company shall be deemed to have been duly called will be of no avail without the foundation of minutes of the meeting which is yet to be produced. Mohibul Ahsan (Md) (Shawan), Director, Ittefaq Group of Publications Ltd and others vs Ittefaq Group of Publications Ltd represented by Mainul Hosein Executive Director 1 and others 50 DLR (AD) 138.

 

Section 91–

Appellants representing majority shares having contested the written objection filed by the respondent No.1 challenging election of Mr A Matin Khan before the Company Judge have locus standi to file the appeal. ASF Rahman and another vs AM Agha Yousuf and others 52 DLR (AD) 127.

 

Section 91(1)(b)–

Under the

garb of recommendation Board of Directors cannot reject the candidature of any person for the election to the office of the director of the Bank. ASF Rahman and another vs AM Agha Yousuf and others 52 DLR (AD) 127.

 

Section 95–

For holding a valid meeting of the Board of Directors written notice must be given to all the members of the board of directors. If anyone is left out the resolution taken in that meeting becomes invalid. Ittefaq Group of Publications Limited & others vs Arab Bangladesh Bank Limited & others 50 DLR 597.

 

Section 95–

In all companies either private or public for holding a board meeting a written notice shall be given to every director and civil Court may not interfere when there is a valid meeting. When there is prima facie and invalid resolution the civil Court can interfere. The respondents are restrained by an order of temporary injunction from acting on the alleged resolution of the Board of Directors. Ittefaq Group of Publications Limited & others vs Arab Bangladesh Bank Limited & others 50 DLR 597.

 

Section 95–

The Courts are generally reluctant to interfere with the decisions taken at company meetings unless there is almost a manifest breach of the Articles or the Statute, because it is the company and not the Court which is responsible for its management. Mohibul Ahsan (Md) (Shawan), Director, Ittefaq Group of Publications Ltd and others vs Ittefaq Group of Publications Ltd represented by Mainul Hosein Executive Director 1 and others 50 DLR (AD) 138.

 

Section 95–

Unless jurisdiction is provided in the Companies Act the petitioners cannot come to this Court for violation of any provision of the Act. This court does not have any general, plenary or residuary jurisdiction to deal with other matters and questions arising under the Companies Act. Abdul Muhit and others vs Social Investment Bank Limited (SIBL) and others 54 DLR 306

 

Section-95 - Temporary Injunction

The courts are generally reluctant to interfere with the decisions taken at company meetings unless there is almost a manifest breach of the Articles or the statute, because it is the company and not the Court which is responsible for its management. Moharnmad Mohibul Ahsan(Shawart) & Ors. Vs. Ittefaq Group of Publications Ltd. 7 BLT (AD)-14

 

Whether any conflict between the Companies Act and the Trade Organisations Ordinance, 1961

Held: I am of the view that in the case of a trade organisation, provisions of the Companies Act shall be applicable, subject to the provisions of the Trade Organisations Ordinance. Thus I find no conflict between the Companies Act and the Trade Organisations Ordinance, 1961. Ibrahim Cotton Mills Ltd. Vs. Chittagong Chamber of Commerce & Industry Ltd.  & Ors. 7 BLT (HCD)-152.

Section 106

I attempting to dispose of an applica- tion pending the disposal of Civil Mis- cellaneous Petition M/s. Ok-Kyung vs. Tea Hung Packaging (S.K. Sinha J) (Civil) 8 ADC 193

Section 108–

There was no obligation on the part of the petitioner to tender resignation in terms of Articles 49 ( c) as stated in the plaint specially when by operation of law, he automatically ceased to be a director. Tanveerul Haque vs Unistar Shipping Limited and ors 52 DLR 215

Section 108 (1) (f)- The High Court Division correctly held that the Board meetings which could not be called to order due to lack of quorum were 'meetings' in the eye of law and the petitioner's deliberate absence without leave must be treated as 'absence' in those meetings and will attract the mischief of section 108(1)(f) of the Act and his office would fall vacant by operation of law, for which no resolution need be taken, save to record the fact of vacation of the office of the absentee in the minutes and to submit a Form XII to the RJSC and, thereafter, that director will not be entitled to receive any notice of Board meeting or to attend the meeting of the Board. The High Court Division further held that although the impugned Board resolution dated 16.02.2017 has become infructuous because of the order of stay and the subsequent EGM decision dated 17.05.2017, however, the conduct of the petitioner in deliberately absenting himself from three consecutive Board meetings, so that quorum could not be formed and the meetings could not be called to order, amounts to absence without leave in the said Board meetings, within the meaning and for the purpose of section 108 (1)(f) of the Act and the impugned Board resolution dated 16.02.2017 was valid. Such conduct of the petitioner also amounts to breach of his statutory duties and it was clearly prejudicial to the interest of the company inasmuch as a director, by resorting to any tactics or measures whatsoever, cannot lead the company to a situation in which it will become impracticable for the company to call or hold its Board meeting or any other meetings permitted or required by law. We do not find any illegality or infirmity in the impugned judgement and order of the High Court Division. ... Mobarak Hossain(Md.) =VS=SBS Cables Limited, [6 LM (AD) 194]

Companies Act (XVIII of 1994)

Section 155 The Board of Directors of a company has the fiduciary power to issue the shares for the purpose of enabling them to raise the capital when required bonafide for the general advantage of the company. The whole aim of the provision of law is that when such share capital is enhanced the existing members should be given preference by an offer to accept the same within a fixed time but if any of such member does not respond to such offer which is given by a notice it will be presumed that he has declined to accept the said offer. [73 DLR (AD) (2021) 208]

Companies Act (XVIII of 1994) 

Section 155

Notice is a must in respect of making the offer to the share-holders and that notice has to be sent either personally or by registered post to the registered address. Non-fulfillment of the statutory provision in respect of serving notice, as provided in the Regulation, shall make any subsequent action nugatory. The Board of Directors of the Company increased the share capital and allotted new shares, among the share-holders excepting the petitioners, who are also the existing share holders of the company, in violation of section 155 read with Regulation 113 of the 1st Schedule of the Act.  [73 DLR (AD) (2021) 208]

Sections 210(7) & 233–

The  provisions of appointing auditors in the Annual General Meeting is for prospective auditing of a Company when the minority share–holders apply under section 233 of the Companies Act, the Court has inherent power to make alternative arrangements for appointment of Auditors for past years, if no

auditing has taken place. Faruk (Md) vs Abdul Hamid and others 51 DLR (AD) 48

Section 185(2)

Upon hearing both sides, by the im- pugned judgment, the High Court Divi- sion made the Rule absolute upon finding that BCIC is selling urea fertil- izer at Tk.10,000/- per metric ton and showing in the balance sheet sale price of Tk.8,000/- per metric ton; that the balance sheet, therefore, does not reflect the true and correct picture of the profit and/or of loss of the company and sec- tion 185(2) of the Companies Act is being violated at the time of preparation of the balance sheet; that if the BCIC prepares an untrue and unfair balance sheet of ZFCL, the workers would be deprived of getting their due share from the profit of the workers participatory fund. BCIC vs. Zia Fertilizer Company Limited (Muhammad Imman Ali J) (Civil) 8 ADC 567

Section 193

Now, we are to see as to whether the Registrar had any authority to entertain the application and assume the jurisdic- tion to conduct a hearing on the same within the meaning of sub-section (6) of section 193 of the Act or whether any burden was explicitly put on the Regis- trar to afford the company concerned a right to be heard if the affairs of the company were not being managed in ac cordance with the provisions of the Act and whether the Registrar was author- ized to investigate as to whether the ap- pellant was removed from the office of the Director lawfully or in contravention of section 106 of the Act as formulated in point Nos. 1 and 2 of the leave grant- ing order; to decide the above points we feel it necessary to consider section 193 of the Act in its entirety which reads as follows. Ms. Ok-Kyung Oh vs. TeaHung Packaging (BD) (Md. Abdul Wahhab Miah J) (Civil) 9 ADC 472

 

Section 233–

Half of the board comprises the petitioners. In other words, out of 4 directors, two are the petitioners and the petitioners hold 50% of the shares. Thus the petitioners, having holding 50% of the shares cannot be said to be minority share–holders. Accordingly, the petitioners are not entitled to invoke the jurisdiction of the court under section 233 of the Companies Act, 1994. Moksudur Rahman, son of late Al–haj Syedur Rahman and another vs Bashati Property Development Limited, and others 49 DLR 539.

 

Section 233

The High Court Division, after hearing the applications analogously, by com- mon judgment, allowed the applications and cancelled the respective debentures as being void holding, amongst others, that (a) A member has an interest in maintaining the value of his share and he may bring himself within section 233 if he can show that the value of is share- holding is seriously diminished or jeop- ardized by reason of conduct of those having defact control of the company which is unfair to the member con- cerned. A member has an interest in competent management of a company, its profitability, dividend policy which will have effect on his financial interest as a shareholder and on the value of his shares. People's Republic vs. Dr. A.B.M. Safdar (Md. Tafazzul Islam J) (Civil) 9 ADC 901

Section 233–

There cannot be any profit out of revaluation of any fixed assets of the company without disposal of the same by sale or otherwise and that too without writing off the trading losses in earlier financial periods. ABS Safdar and ors vs People’s Republic of Bangladesh and others 52 DLR 249.

 Section 233 

Seeking amongst others, appointment of auditors to audit the accounts of the company since its inception. HBS Association (Pvt.) Ltd. vs. professor Shahabuddin Khaled Chowdhury (Md. Tafazzul Islam J) (Civil) 5ADC 271

Since the title in the suit land belonged to the plaintiff and was not challenged, the plaintiff field a suit for cancellation of deed only followed by a consequential relief of recovery of khas possession. He next submits that the Government is not an interest party in the present suit land and as such there is no need for making the Government a party in the suit as the present suit is neither for specific Performance of Contract nor declaration of title and thus the provision of P.O. 142 of 1972 are not applicable in the present case...(8) Md.Shahidur Islam vs. Md.Habibur Rahman (Mohammad Fazlul Karim J) (Civil) 5ADC 289

Seeking declaration that the order dated 7.7.1993 passed by the defendants- respondents discharging the petitioner from his service is illegal, void and also seeking reinstatement in his service with all arrear benefits....(2) S. M. Nurul Islam vs. padma oil Company Limited (Md. Tafazzul Islam J)(Civil) 5ADC 292

Section 233

It was stated that following the signing of the said shareholders' agreement af- fairs of the company was run by respon- dent No.4 as majority shareholder and was also holding the post of Managing Director of the company. H.B.M. Iqbal vs. Md. Shirajul Islam (Md. Abdul Matin J) (Civil) 6 ADC 565

Section 233–

A shareholder does not become automatically entitled to any part of the profit until a resolution is taken and a dividend is declared by the company out of such profit. ABS Safdar and ors vs People’s Republic of Bangladesh and others 52 DLR 249.

Section 233–

Balance–sheet, no doubt, is a good evidence of acknowledgment of any liability of the company. But the balance–sheet should not be accepted as an acknowledgment if it is found that the directors or those who are in control of the company took decision favouring or in furtherance of their interest although that was to the detriment of the company and the minority shareholders. ABS Safdar and ors vs People’s Republic of Bangladesh and others 52 DLR 249

 

Section 233–

Since the points raised by the applications under consideration do not require detailed investigation and can be entertained and adjudicated upon by the Company Court, pendency of the civil suit will not operate as a bar. ABS Safdar and ors vs People’s Republic of Bangladesh and others 52 DLR 249

 

Section 233–

When an application is admitted the same is not liable to be dismissed/ rejected summarily without hearing on merit, unless such application is absolutely incompetent being without jurisdiction. Nahar Shipping Lines Limited and another vs Homera Ahmed and others 52 DLR 585.

 

Section 233–

A minority share holder can petition the Court for relief if there has been fundamental breach of the rules and where the majority endeavoring directly or indirectly to appropriate to themselves money, property or advantages which belonged to the company. Syed Al Nesar Ahmed, MD, United Food Complex Ltd vs Nafisa Choudhury and others 5 DLR (AD) 83.

 

Section 233–

This Court has the power to give direction for protection of interest of the minority. The word interest has been used in various legislations in various senses. In the present context, it need not, however be only the possibility of a pecuniary advantage, it may equally be the likelihood of a pecuniary loss. Nafisa Choudhury vs United Food Complex Ltd. and another 53 DLR 81.

 

Section 233–

The Court can make any just order beyond the relief sought for, to bring the affairs of the company to its right track to safeguard the interest of the minority share holders. Nafisa Choudhury vs United Food Complex Ltd. and another 53 DLR 81.

 

Section 233–

The Managing Director appointed for a particular period under the articles should be allowed to function as Managing Director with all such powers as given in the Articles of Association and in accordance with the provision of law. Nafisa Choudhury vs United Food Complex Ltd. and another 53 DLR 81.

 

Section 233–

The section specifically protects the interests of the minority shareholder/ shareholders when prejudiced and discriminated against, it does not protect the interest of a director, however prejudiced or discriminated by the way the company is conducted. ASM Shamsul Islam Rashedi vs Satellite Fishing Ltd and others 54 DLR 28.

 

Section 233–

In an application under section 233 the main function of the Court is not to see whether fraud is committed but whether the resolutions adopted are unfair to the company and the minority shareholders. hahadat Hossain (Md) vs Base Textile Ltd 54 DLR 583

 

Section 233–

For adoption of a special resolution in any Extraordinary General Meeting amending an article or articles, there should be a decision of the Board expressing the need for such amendment of the article. Shahadat Hossain (Md) vs Base Textile Ltd 54 DLR 583.

 

Section 233–

Nothing is produced as evidence to show that the secretary was empowered by the concerned authorities to call the Extraordinary General Meeting. The Extraordinary General Meetings are not properly called meetings and no meetings in the eye of law. Any decision taken in those meetings suffers from illegality. Shahadat Hossain (Md) vs Base Textile Ltd 54 DLR 583

 

Section 233–

Absolute authorisation to give loan by the Managing Director from the Company’s fund is contrary to the provisions of the company law and prejudicial to the interest of the company and its members. Shahadat Hossain (Md) vs Base Textile Ltd 54 DLR 583

 

Section 233–

A remedy under section 233 can be given only if the directors have acted in breach of duty or if the company has breached any of its articles or any relevant agreement. Nahar Shipping Lines Ltd and anr vs Homera Ahmed and others 56 DLR (AD) 36.

 

Section 241–

The petitioner having not shown how he would derive any advantage or minimise some disadavantage from winding up of the respondent company he has no locus standi to petition for its winding up. Mazharul Haque vs Bulk Management (Bangladesh) Ltd, and others 48 DLR 453. 

Sections 241 & 242–

The claim is not undisputedly ascertained, and unless it is admitted it cannot be said it is a debt and the respondent company is liable to pay the debt. Winding up of a company by Court for debt is not called for where there is a bonafide dispute relating to the existence of the debt. Ambala Cold Storage (Pvt) Ltd vs Prime Insurance Co. Ltd 56 DLR 422.

 

Section 241(III)–

The company has been stopped for more than one year which itself is a ground for winding up of the company. Vega Sweaters (Pvt) Ltd 52 DLR 372.

 

Section 241(IV)–

The number of members having been reduced to less than two the company is liable to be wound up as per section 241(1V) of the Companies Act. Vega Sweaters (Pvt) Limited 52 DLR 372.

 

Section 241 (V) & (VI)–

Company’s inability to pay debts, and when it is just and equitable that it should be wound up, are also legal grounds for winding up under section 241 (V) and 241 (VI) respectively of the companies Act. Vega Sweaters (Pvt) Ltd 52 DLR 372.

 

Sections 241(V) and 250–

Winding up–An order of winding up of a company can be made in the discretion of the Court but under section 250 of the Act; when a winding up order has been made, no suit or other legal proceedings shall be proceeded with or commenced against the company except by leave of the Court. If the proceeding under section 24 l of the Companies Act satisfies the requirements of law, it shall certainly find its mark in accordance with law and shall not be disallowed or deviated because of other equally efficacious remedies available to the petitioner in another forum. Amir Hossain vs Homeland Footwear Ltd and others 55 DLR 478

 

Sections 242 & 248–

From the conduct of the respondent company and in the manner promises were made, assurances given, new repayment schedules chalked out again and again only to be broken giving the impression that the affairs of the company are not clean and above board, the opinion is that the respondent company is unable to pay its debt and it will be just and equitable if the company is wound up. Hence, it is ordered that the respondent–company is wound up with immediate effect. Eastern Bank Limited vs Bengal Carpets Ltd 48 DLR 392.

COMPANIES ACT, 1994

Companies Act, 1994

 Principle —to Pay Loan

The Petitioners not being a money lender or a financial institution is not legally permitted to pay loan to any one for deriving interest. On the other hand, the respondent being a company and not a financial institution is also not legally permitted to take any loan and pay interest to any private individual. Mrs. Tamanna-e-Jahan Vs. Paper Converting and Packaging Ltd. & Ors. 10 BLT (HCD) 450

Section-43 Read with, Companies Act, 1913 

Section-38

Rectification of Share register of the Company

Since the identity of the actual petitioner is in serious doubt and since the allegations of fraud forgery and fabrication in respect of the different resolutions and decisions of the Board of Directors of the respondent- company have been raised, involving complicated questions of disputed facts of serious nature, requiring further examinations of evidence in details which is not possible in this forum, the instant petition is liable to be dismissed. M. Islam Vs. Al-Rajhi Hospital (Pvt.) Limited & Ors. 11BLT (HCD)-474

Section-59

The instant company is a public limited company and is authorized by Articles-37 of the Articles of Association of the said company to make reduction of its share capital. The proposed resolution reducing the paid-up share capital is not likely to prejudice the interest of the share holder or its creditors. On the contrary if the reduction of the said paid-up share capital is not confirmed by the court it is likely to Misrepresent the actual position of the paid-up share capital of the company— the reduction of the paid up share capital of the company by way of special resolution of the company, confirmed. Uttara Himghar Ltd. 8BLT(HCD)-331

Section-81(2) and 85(3)

In terms of section 81(2) of the Companies Act the High Court Division while directing the calling of a general meeting of the company may give such ancillary or consequential direction as the Court thinks expedient in relation to the calling, holding and conducting of the meeting and in terms of Section 85(3)

the High Court Division while giving an order of calling the meeting may also give such ancillary or consequential direction as it thinks expedient. Bangladesh Bank Vs. Sk. Abul Hossain & Ors 16 BLT (AD)110

Section 81(2) and 85(3)

Whether Annual General meeting to be held without the agenda of election of directors 

Petitioner is a Shareholder —Held: I am of the view that the 20th Annual General Meeting can be ordered to be held without the agenda of election of the Directors which is Agenda No. 4 of the notice of the 20th Annual General  Meeting in the overall interest of the share holders of the respondent Bank. Sk. Abul Hassan Vs. The City Bank Limited & Ors 13 BLT (HCD) 480

Section-85(2) read with Section 85(3)

Meetings to be conducted by a neutral Chairman.

We are of the view that under the circumstances, if for any reason it is impracticable to call, hold and conduct a meeting on the happing of any circumstances the Court being satisfied to that effect to call a meeting in the manner such a meeting is to be called, could pass an order for holding the meetings to be

conducted by a neutral Chairman even in the absence of an application under section 85(3) of the Companies Act invoking the provision of section 85(2) of the Companies Act in the facts and circumstances of the case. United Commercial Bank Ltd Vs. Jahangir Alam Khan & Ors 12 BLT (AD) 213

Section-91(1)(b) read with International

Finance Investment and Commerce Bank Ltd. (IFIC Bank)

Article-114

Recommendation

—Held: The power of the Board of Directors in the said Article 114 to recommend does not mean power to reject any such candidature. No such power to reject such candidature has been specifically given to the Board of Directors in the said Article or any other Article. So under the garb of recommendation Board of Directors cannot reject the candidature of any person for these election to the

office of the director of the Bank. In our considered view the word “recommended” means power of the Board to point out defects, if any in the candidature of a person for the office of director for consideration in the Annual General Meeting to avoid complications in such meeting and not the power

to reject any candidature on the ground of defect real or fanciful, It is for the Annual General Meeting to consider defect, if any, in the candidature of a person and to take a decision over the same and not for Board of Directors to do so. ASF  Rahman and Anr. Vs. A.M. Agha Yousuf & Ors. 10 BLT (AD)-86

Per Bimalendu Bikash Roy Choudhury, j:

I am unable to agree that the word ‘recommendation occurring in the Article connotes mere scrutiny without any authority to choose. I take the simple dictionary meaning of the word recommendation’. I mean speaking favourably of a person for the purpose of election. ASF  Rahman and Anr. Vs. A.M. Agha Yousuf & Ors. 10 BLT (AD)-86

Locus Standi

Aggrieved person — A voter cannot prefer an appeal against setting aside of the election of a successful candidate in an election. But that analogy will not hold good in respect of the election of directors of a company including a Bank Company. 

Per Bimalendu Bikash Roy Choudhury, J:

Held:

The appellants have no locus standi to maintain the appeal not being themselves aggrieved by the election. ASF Rahrnan and Anr. Vs. A.M. Agha Yousuf & Ors. 10 BLT (AD)-86

Section-95

Temporary Injunction

The courts are generally reluctant to interfere with the decisions taken at company meetings unless there is almost a manifest breach of the Articles or the statute, because it is the company and not the Court which is responsible for its management. Mohammad Mohibul Ahsan (Shawan) & Ors. Vs. Ittefaq Group of Publications ltd. 7BLT (AD)-14

Sections-228 & 229

The following principles governing the amalgamation of and merger of the companies emerge:

(i) The scheme satisfies the requirements of law.

(ii) The Court should see that the shareholders, who may be effected by the scheme have been fairly represented.

(iii) The scheme is passed by the majority of the share-holders in value.

(iv) Scheme should be in the interest of the share-holders of the transferor and the transferee company.

(v) Sanction should be given to such a workable scheme which a man of business would reasonably approve.

(vi) The Court may impose conditions and modify the scheme, if so required.

(vii) Sanction should be given to a bonafide scheme which is fair as a whole, to all concerned.

(viii) The scheme should not only be in the interest of the share-holders of the companies hut also in public interest.

Chittagong Cement Clinker Grinding Co. Ltd. Vs. Joint Stock companies and Firms. 11BLT (HCD)-81

Section-233

Petitioner as director and shareholder of Respondent No.1 Company seeking a declaration that the Board Resolution dated 10.5.2006 is discriminatory and prejudicial and in disregard to the interest of the Petitioner as a minority shareholder in the Company —Held; the ratio in The Rashedi Case, therefore. remains fully applicable to the fact. and circumstances of the case and this case is nothing but one of the Petitioner as Chairman and Director of the Company being faced with an allegation of secret profit in breach of his fiduciary duty as a director vis-a-vis the Company as has been dealt with by the Company adequately in bringing the process of enquiry and accountability to fully bear upon the Petitioner in the perceived best interests of the Company. The actions of the BOD vide the resolution dated 10.5.2006 merely reflects a part of that overall exercise aptly undertaken. Md. Shahjahan Miah Vs. car Diagnostic Centre Pvt. Ltd & Anr 16 BLT (HCD) 203

Section-233

Company was incorporated under the provisions of section 26 of the Companies Act, 1913, as an association, without any share capital, not for profit, as such, in view of section 195 (b), as required under sub-section 1 of section 233, an application is not maintainable unless filed by at least one-fifth members of the company. Since in the instant case, there is only one applicant, which number fails to fulfill the condition of the required minimum as specified under section 195(b), the instant application is not maintainable. Nurul Hoque Chowdhury Vs. Mrs. Mahzabin Chowdhury 12BLT (HCD) 261

Section-233

Private Limited company

In considering the affairs of the company, one must not lose sight of the concept of a body corporate. It has a memorandum and articles of association and it is expected that the will of the majority members of a company expressed in a general meeting, binds all the members including the members who voted against it. Even the articles of association of the company, which is a contract between the company and its members, with certain restrictions, can be altered by a special resolution. Besides, even in case of allegations of irregularities in the internal management of a company, the Court will not interfere at the instance of minority members of the company if it is confirmed or ratified in a general meeting, especially in case of a private limited company. Nurul Hoque Chowdhury Vs. Mrs. Mahzabin Chowdhury 12 BLT (HCD) 261

Section-241 and 242

For winding up of company

The respondent admitted that a sum of Tk.9,55,941 .00 was due to the petitioner up to November, 1997 out of which the respondent paid a total sum of Tk. 1,00,000.00 thereby the admitted liability of the respondent No. 1 to the petitioner is Tk. 8,55,94,100

Held: The respondent company is unable to pay its admitted debt of Tk. 8,55,941.00 and as such it is liable to be wound up. M. A. Gaffer Ltd. Vs Enjari Garments (Pvt.) Lid, 8 BLT (HCD)-295

Section-241

The company is a private Limited Company— the quorum necessary for transaction of the business of the Directors shall be two —since Articles of Association of the company provides that the business of the Board of Directors, is two, the company has been unable to do any business And the business of the company has been stopped for more than one year. The company in its present state of affairs is unable to pay its debts and it is just and equitable that the company should be wound up. Vega Sweater (Pvt) Limited & Anr. Vs. Agrani Bank 8 BLT (HCD)-226

Section-241

Since the petitioner had earlier filed a case under Section 138 of the Negotiable Instrument Act, he is debarred from proceeding with the winding up petition as contended by the respondents learned Counsel.

Held : he submissions made on behalf of the respondents, has got no substance, If the proceeding under Section 241 of the Companies Act satisfies the requirements of law, it shall certainly finds its mark in accordance with law and shall not be disallowed or deviated because of other equally efficacious remedies available, to the; petitioner in another forum. Amir Hossain Vs. Home Land Footwear Ltd. & Ors. 11 BLT (HCD)-20

Section-241

The respondent company owes to the petitioner but failed to repay the debt —it is apparent that the company not only neglected to pay its debt but at the moment it is unable to pay its admitted debt of Tk. 60.00 Lac to the petitioner. Since the papers on record do not show any effort on behalf of the respondent-company to pay off its debt to the petitioner, it should be wound up so that interest of the other creditors may not be prejudiced any further. Amir Hossain Vs. Home Land Footwear Ltd. & Ors 11 BLT (HCD)-20

Section-241

Petitioner is the publisher of a Magazine and the respondent No.1 is a limited liability Company and involved in the business of publishing, printing, and packaging —Held: Their exist a bonafide dispute relating to the existence of the debt and the amount of debt and to determine, the, same winding up  proceeding is not availabo the petitioner. Mrs. Tamanna-e-Jahan Vs. Paper Converting and Packaging lid, & Ors 10 BLT (HCD) 450.

Companies Act (XVIII of 1994) 

Section 85(3)

The provisions of section 85(3) of the Act empowers Court to suo motu call, hold and conduct any meeting on the ground of impracticability of application of the provisions of any law or any of the provisions of the Articles of Association and, in passing an order under section 85(3) of the Act, this Court has been vested with the further power to "give such ancillary or consequential direction as it thinks expedient". And, this Court's orders/ direction under section 85(3) cannot be carried out without having a Board of Directors of a company in place. 73 DLR (2021) 270

Companies Act (XVIII of 1994) 

Sections 233 and 85(3)

Section 233 of the Act empower the Court to pass "such Orders as it (this Court) deems fit", in conjunction with the specific power of regulating affairs of a company in a deserving manner, in addition to the vast power of this Court of passing "any ancillary and conse- quential directions", as authorized/appro- bated by the provisions of section 85(3) of the Act. This Court is well equipped with ample authority (i) to form a board of directors for any company, (ii) to appoint necessary number of share-holder-directors, (iii) to appoint independent director/s and (iv) appoint a Chairman for the Board, out of the share- holder-directors or Independent directors, as per the exigencies of a particular company.....(9) 73 DLR (2021) 270

Company Court

The Court is always loath to interfere in the internal business of any company unless it appears to this Court that non-interference by this Court would cause serious harm and loss to the company.  [73 DLR (2021) 271]

Companies Act (XVIII of 1994)

Section 43 

A petitioner of section 43 application is required to satisfy the Court that the petitioner's name or someone else's name either has been entered in or has been omitted from the register of the company/Club "without sufficient cause'; or there has been an error or delay in recording in the register book that the petitioner or someone else has become or ceased to be a member of the company/ Club......(16 & 18) [73 DLR (2021) 439]

Companies Act (XVIII of 1994)

Sections 34 and 43

When the Club has taken decision to expel the petitioner permanently, having his membership deleted from the Register Book, the provisions of section 43 of the Act are attracted without any contrivance. When any decision's/order's consequence is omission of a member's name from the register book of a company/Club by which the member is aggrieved, a case under section 43 of the Act is prima facie made out, irrespective of the nature of the order. The proposition that this Court wishes to lay down here is that whether the company's order is an administrative order or an order of other nature does not matter in a section 43 application, if the ultimate consequence is removal of a member's name from the register book or inclusion of any person's name therein without sufficient cause. ...(14)  [73 DLR (2021) 439]

Companies Act (xvill of 1994) 

Section 43

Section 43 of the Act in a very simple expression, sets out as to who can be a petitioner of a section 43 application or, in other words, what are the qualifications for standing as a section 43 application. Section 43 of the Act delineates that in order to be the petitioner under the section, the petitioner has to be either an aggrieved person by the entry/omission of some one's name, including the petitioner's own name, in the book of the company's membership register, i.e. a person whose right/interest has been or is likely to be jeopardized/hampered in any manner because of inclusion or deletion of the name from the company's membership book; any member of the company or the company itself.  [73 DLR (2021) 439]

How to transfer shares when the transferor

stays abroad. It is incumbent upon a company to cause transfer of shares in its members' list (Share Register) when the following conditions are fulfilled; at first, a proper instrument of transfer (i.c. Form-117 together with a deed of transfer) upon being duly stamped and executed by transferor and transferee has been delivered to the company along with share certificates; thereafter, following receiving Particulars of Directors (Form-XII), Annual Summ Statement of the company's capital, share transfer instrument and the affidavit confirming transfer of shares by the Office of the Registrar of the Joint Stock Companies and Firms (RJSC), the Register is to be satisfied that the transferor having been appeared before him has confirmed that the signatures contained in the instrument of transfer are genuine. However, the aforesaid formalities may be done through commissioni if the transferor, due to any reasonable cause, is not able to attend the office of the RJSC in person. And, if the transferor is a foreigner or staying abroad, in that event, the concerned authorized official of the Embassy of Banglades shall certify that the transferor has signed on the share transfer instrument and affidavit in his presence.  ...... (7)      [2023] 27 ALR (HCD)  14

Companies Act [XVIII of 1994]

Section 36

Procedures regarding submission of Annual List of Members and Summery (Schedule-X) and consequence of its non-submission.  [2023] 27 ALR (HCD)  14

Code of Civil Procedure [V of 1908]

Section 151 read with

Companies Act [XVIII of 1994]

Section 396(2)

Whether Company Court is competent to pass consequential Order/s in an application under Section 396(2) of the Companies Act.  [2023] 27 ALR (HCD)  14