# BALKRISHNA v. SWADESHI POLYTEX - **Citation:** [1985] 2 S.C.R. 854 - **Court:** Supreme Court of India - **Decided:** 1985-02-12 - **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/balkrishna-v-swadeshi-polytex-8864 - **Pages:** 37 ## Headnote A B c D F G H BALKRISHAN GUPTA AND ORS .. v •. SWADESHI POLYTEX LTD. AND ANR. February 12, 1985 [E.S. VENKATARAMiAll AND SABYASACIU MUKHARn, JI.] .. Companies Act, l9S6-Sectlons 41, 87, 137, ISO and· 169-Member/ sl:are-holder of a· cOmpany-Meaning of-When does a person cease to be a member/shareholder-Rights and Privileges of a shareholder when a Receiver i.r appointed in respect of the shares-Scope of-Sections 182A~ 149 of the U.P. Land R~rtnue Act 1901and1. SI and Order XL o/C.P.C. . · U.P. Land Rerenue Act 1901, ss. IB2A, 149 ands. SI and order XL of C.P.C.-Appofntment of Receiver In respect of shares-Attachmeni' and Pledge of sharer-Whether it deprlve1 the' shareholder of irs title or right to vote and other privllege~Whether ownership of shares vests in the Recei11er-A charging order and order of attachment-Distinction between. Industrial (DeP , BALKR,Sl!AN v. SWADESl!I POLYTEX 857 right to receive notice of a general meeting (Section 172), (iv) the right to appoint proxy and inspect proxy register (Section 176), (v) in tho case of a body corporate which is a member, the right to appoint a representative to attend a general meeting on its behalf (Section 187) and (vi) the right to require the company to circulate his resolution (Section 188). Therefore, it is clear from the relevant provi"ions of the Act which are referred to above that a member can participate and exercise bis vote at the meetings of a company in accordance with the Act and the ar iticles of association of the company. (875 G, 876 A, 878 A·B,] A B 2. (i) Section l SO of tlie Act requires every company to keep a register of members containing the names, address and the occupation, if any, of each member and other particulars mentioned therein. The privileges of a member can be exercised by only that person whoso name is entered in C the Register of Members. A Receiver whose name is not entered in the Register of Members cannot exercise any of these rights unless in a proceeding to which the company concerned is a party an order is made authorising him to do so. Even where the holder of a share whose r.ame is entered in the Register of Members hands over bis shares with blank transfer forms duly signed, the lransferee would not be able to claim the rights of a member as against the company concerned until his names is entered in the Register of Members. (875 D, 880 D·E, 881 0) Matha/one v. Bombay Life Assurance Co. Ltd., [1954] S.C.R. 117 and Messrs HOwrah Trading Co. Ltd. v. The Commis~ioner of Income-tax, Calcutta, (1959] Supp. 2 S.C.R. 448, followed. In re: Wala Wynaad Indian Gold Mining Company, [1882] 21 Ch. D. 849, Kurapati Venkata Mal/ayya & Anr. v. Thondeput Ramaswami & Co. & Anr. [1963] Supp. 2 S.C.R. 995 and Jagat Tarlni Dasi v. Naba Gopal Chaki, (1907] I.L.R. 34 Cal. 305, referred to. D E Wise v. Landsdell, (1921] l Ch. 420 and Morgan & Anr. v. Gray & F Ors., (1953] 1 Ch. D' 83 at p,87, relied upon. 2, (ii) A perusal of the provisions of s.182A of the Land Revenue Act shows that there is no provisions in it which states that on the appointment of a person as a receiver the property in respect of which he is so appointed vests in him similar to the provision in s.17 of the Presidency Towns Insolvency Act, 1909 where on the making of an order of adjudication the property of the insolvent wherever situate would vest in the official assignee, or in s.28(2) of the Provincial Insolvency Act, 1920 which states that on the making of an order of adjudication, the whole of the property of the insolvent would vest in the court or in the official Receiver. Sub·section (4) of section 182A of the Land R.evenue Act provides that Ruies 2 to 4 of Order XL of the Code of Civil Procedure 1908 shall apply in rel atioo to a Receiver appointed under that section. A Receiver appointed under order XL of the Code of Civil Procedure only holds tho property committed to G H \ A B c D E F G H SUPRBKll COUll.T REPORTS (1985) 2 s.c.li.. bis cont£ol under the order of the court but the property does not vest in him. A receiver appointed by a court or authority io respect of a property bolds it for the benefit of the true owner subject to the orders that may be made by such court or authority. Under s.51 of the Code of Civil Procedure, 190& a Receiver may be appointed by a civil court oa the application of a decree-holder in execution of a decree for purposes of realising the decree-debt, · This is only a mode of equitable relief granted ordinarily when other modes of realisation of the decretal amount are impracticable. A Receiver appointed under that section will be able to realise the amounts due from a garnishee and his powers are akin to the powers of a Receiver appointed under Order 40 Rule I of the Code of Civil Procedure, 1908. But be would oot have any beneficial interest in the assets of the judgment .. debtor. He collects the debts not as bis own but as an officer of the court. Thus whatever may be the other powers of a Receiver dealing with the pro .. perty which is custodia legis while in bis custody, he is not to be construed as either an assignee or beneficial owner of such property. [880 A, 887 H, 888 A-B, 882 H) 2. (iii) Section 137 of the Act provides that if any person obtains an order for the appointment of a Receiver of, or of a person to manage, the property of a company, or if any person appoints such Receiver and any powers contained in any instrument be shall within thirty days from the date of the passing of the order of the making of the appointment under the said powers, give notice of the fact to the Registrar; and thr: Registrar shall on payment of the prescribed fee, enter the fact in the register of charges. main· tained under s.130 of the Act. It is not clear in the instant case whether any entry bad been made in the register of charges of the order of appoint· mdnt of Receiver. Even granting that such an entry bad been made, it would not have the effect of takiog away the right of the Cotton Mills Company" to exercise the right to vote in respect of the shares in question. [884 C-E] 3~ There is oo substance io the argument based on ss.1S3B, 187B and 187C of the Act. Section 153 of the Act states that no notice of any trust, express implied or constructive, shall be entered in the reg:ister of members or of debenture holders. Section 1S3B of the Act retee as !'.Uch member and become exercisable by the public trustee. Section 187C of the Act makes it incumbent upon a person \1ihose name is entered in the Register of Members of a company but who does not bold the beneficial interest in the share in question in such form as may be prescribed specifying the name and other particulars of the persons who bolds the beneficial interest in such llhare. The Companies (Declaration of beneficial Interest in shares) Rules, 197S are made in this connec- , BALKR!SHAN v. SWADESH! POLYTEX 859 tioo. It is obvious from the foregoing that none of the provisions referred to above has any bearing on the question before this Court. Thus, mere appointment of a Receiver in respect of certain shares of a company without more cannot, therefore, deprive the holder of the shares whose name is entered in the Register of Members of the Company the right to vote at the meeting of ~he company or to issue a notice under s.169 of the Act. (884 F·H, 885 A·C] 4. Under Rule 76 of Order 21 of the Code of Civil Procedure, 1908, the shares in a Corporation which are attached may be sold through a broker. Jo the alternative such shares maY be sold in public auction under Rule 77 thereof. On bucb sale eithei lioder Rule 76 or under Rule 77 the purchases acquires title. Until such sale is effected, all other rights of the judgment debtor remain unaffected even if the shares may have been seized by the officer of the court under Rule43 of Order 21 of the Code of Civil Procedure, 1908 for the purpose of effecting the attachment, or through a Receiver or though an order in terms of Rule 46 of Order 21 of the Code of Civil Procedure may have been served on the judgment-debtor or on the company coocerne4. The consequence of attachment of certain shares of a company held by a shareholder for purposes of sale in a proceeding under s.149 of the Land Revenue Act is more or less the same. The effect of an order of attachment is what s.149 of the Land Revenue Act itself says. Such attachment is made according to the law in force for the time being for the attachment and sale of moveable property under the decree of a civil court (886 B-C, 885 D] 5. (i) It is to be noted that a charging order and~r the English Law is not the same as an attachment of property or appointment of a Receiver under the Land Revenue Act. Charging Orders under the English Law are made under order SO of the English Supreme Court Practice under which the English court may for the purpose of enforcing a judgment or order ot that court under which a debtor is required to pay a sum of money to a creditor make an order imposing on any such property of the debtor as may be specified in the order, a charge for securing the payment of any money due or to become due under the judgment or order. Such an order is referred to as the 'charging order'. A charging order on the property or assets of the debtor is one of the modes of enforcement of a judgment or order for the payment Of money to the creditor. It is, bowev~r, not a direct mode of enforcement in the sense that the creditor can immediately proceed to recover the fruits of his judgment, but it is rather an indirect mode of enforce· ment in the sense that it provides the creditor with security, in whole or in part, over the property of the debtor. It makes the creditor secured creditor who having obtained his charging order must proceed, as may be neces .. sary according to the nature of the property charged, to enforce bischarge in order to obtain the actual proceeds of bis charge to satisfy bi!l judgm::at, in whole or in part. Subject to the other provisions of law a charge-imposed by a charging order will have effect and will be enforceable in the same court and in the same manner as an equitable mortgage created by the debtor by writing under his hand. An order of attachment cannot, therefore, have the effect of d>priving the holder of the shares of his title to the shares. There· fore, the attachment of the shares in the Polyte•Company held by the Cotton A B c D E F G H \ A B 860 stlPlllDlll COURT REPORTS (1985] 12 s.c.a. Mills Company had not deprived tho Cotton Mills Company of its right to vote at the meeting or to issue the notice under s.169 of the Act. (887 B-F, 888 C} Hawksv. MeArthur&Ors. [1951] 1 All E.R. 22, inapplicable. 5. (ii) The fact that 3,50,000 shares have been pledged in favor of the Government of Uttar Pradesh also would not make any difference. Sections 172 to 178-A of tbo Indian Contract Act, 1872 deal with the contract of pledge. A pawn is not exactly a mortgage, The two ingredients of a pawn are: "(1) that it is essential to the contract of pawn that the property pledged should be actually or constructively d 0 olivored to tho pawnee and ( 2) a C pawnee has only a special property in the pledge but the general property therein remains in the pawner and wholly reverts to him on discharge of the debt. A pawn therefore is a security where by contract a deposit of goods is made as security for a debt. The right to property vests in the pledged only so far as is necessary to secure the debt. The pawaer however has a right to redeem the property pledged until the sale. Under s.176 of the D) Indian Contract Act, 1872 if tho pawner makes default. in payment of tho debt, or performance, at the stipulated time, of the promise, in respect of which the goods were pledged, tho pawnee may bring a suit against the pawnor upon the debt or promise, and retain the goods pledged as a collateral security, or he may sell the thing pledged, on giving the pawnor reasonable notice of the sale. Ip the case of a pledge, however, the legal title E to the goods pledged would not vest in the pawnee. The pawnee has only a special property. A pawnee has no right of foreclosure since he never bad absolute ownership at law and bis equitable title cannot e.xceed what is specifically granted by law. In this sense, a pledge differs from a mortgage. In view of the foregoing the pawoee in the instant case i.e. the Government of Utlar Pradesh could not be treated as the bolder of the shares pledged F in its favour. The Cotton Mills Company continued to be the member of the Polyte:m Company in respect of the said shares aod could exercise its rights under s.169 of tho Act. [888 D·H, 889 A-CJ G Lal/an Prasad v. Rahmat All &1 Anr., [1967] 2 S.C.R. 233 pp, 238-239 Bank of Blhar v. State of Blhar & Ors., [1971] Supp. S.C.R. 299 and Swa. deshi Cotton Mills v. Union of India, [1981] 2 S.C.R. 533, referred to. 6. There is no substance in the contention that on the passing of an order by the Central Government under s.I8A (1) (a) of the Industries (Development and Regulation) Act, 1951 taking over the management of _....._ the Cotton Mills Company alongwith its five other industrial units, H the Cotton Mills Company lost its right to exercise its voting. rights ' " • , BALKRUHAN v. SWADESHI POLYTEX 861 io respect of the shares in question. What was tlken over under the above said orders was the management of the six industrial units referred to there· in and not all the rights of the Cotton Mills Company. The shares belong to the company and the orders referred to above cannot have.any effect oo them. Hence the passing of the orders under s. l 8AA (I) (a) of the Indus· tries (Development and Regulation) Act, 1951 has no effect on the voting rights of the Cotton Mills Company. [889 E·H, 890 A] CtVIL APPELLATB JURISDICTION : Civil Appeal No. 4803 of 1984 From the Judgment and Order dated 7 .8.84 of the Allahabad A B High Court in Civil Misc. Application No. 10968 of 84 & S.A. No. C 2/82. K.K. Venugopal, RN. Karanjawala & Mrs. Manik Karanjawala for the appellant. K.Parasaran, Attorny General of India. K. S. Cooper, Csril S. Shroff. S.S. Shroff and S. A. Shroff for the respondents. Ashok Desai, Anil Diwan Pinaki Mishra and Praveen Kumar for respondent No. I. Dr. Y. S. Chita/e, V.D. Mehta V. A. Bobde, S. Swarup K.J. John for respondent No. 2. Soli J. Sorabjee, V. D. Mehta, S. Swarup and K, J. John for D respondents Nos. 6-8. F Ani/ Dewan, R. Karanjawa/a, Mrs. Manik Karanjawa/a and Arun Jetly for the Intervenor. Miss Bina Gupta for the Intervenor. TS. Krishnamurthi and Vineet Kumar for the Intervenor . The Judgment of the Court was delivered by G H \ B c D E G 862 SUPRBME COURT REORTS ( 1985] : S.C.R. VENKATARAMIAH, J. This appeal by special leave is filed against the order dated August 7, 1984 passed by the High Court of Allaha - bad in Civil Misc. Application No. 10968 of 1984 in Special Appeal No. 2 of 1982 on its file. The dispuce involved in this case relates to the validity of an extraordinary general me. ting of the Swadeshi Polytex Ltd. (hereinafter referred to as 'the Polytex Company'), a company governed by the Companies Act, 1956 (hereinafter referred to as 'the Act') held pursuant to a notice dated February 11, 1984 issued under section 169 of the Act by some of its members. The controlling interest in the Swadeshi Cotton Mills Company Ltd. (hereinafter referred to as 'the Cotton Mills Company') whicl: is also governed by the Act was acquired by Mangturam Jaipuria and his family in 1946. Sitaram Jaipuria is the adopted son of Mangturam Jaipuria. After his adoption Magturam Jaipuria got a natural son, Rajaram. In or about the year 1964, Sitaram Jaipuria became the Chairman and Managing Director of the Cotton Mills Company. In 1970, the Jaipmia family decided to promote another company and accordingly the Polytex Company was established. In 1970, Rajaram became the Managing Director of the Cotton Mills Company and Sitaram continued as its Chairman. Sitaram became the Chairman and Managing Director of the newly established Polytex Company in which the Cotton Mills Company had acquired 10 lakhs shares of Rs. 10 each. From about 1975-76 on account ofa very serious set back in its financial position the Cotton Mills Company could not meet the wage bill, the dues of the U.P. Electri· city Board and several other monetary claims against it. There were serious labour tro~bles in its factory and its work virtually became paralysed. The total liability of the Cotton Mills Company was in the order of Rs. 2 34 crores in the year 1977. On October 27, 1977, the Collector of Kanpur passed an order under section 128-A of the U.P. Land Revenue Act, 1901 (hereinafter referred to as 'the Land Revenue Act' read with section 5 of the Utta\ Pradesh Government Electrical Undertakings (Dues Recovery) Act, 1958 appointing a Receiver in respect of the Cotton Mills Company for a period of six months with variovs powers specified therein and in particular to seize 1 lakh of shares of the Polytex Company of the face value of Rs 10 lakhs held by the Cotlon Mills Company and to pledge them in favour of the State Government of Uttar Pradesh against a loan for the purpose of meeting the dues payable to the employees of the Cotton Mills Company and he made a further order under section 149 of the Land Revenue Act read with section 5 of the U. P. Government Electrical Undertakings (Dues Recovery) Act, 1958 • llALKRISHAN v. SWADESHI POLYTEX (Venkataramiah, J.) 863 . ., attaching the remaining 9 lakhs shares of the Polytex Company held A by the Cotton Mills Company and empowering the receiver to seize them. Both the order appointing the Receiver and the order attaching 9 lakhs shares were incorporated in the same document, the relevant part of which read thus : ',-' ORDER B "Whereas electricity dues are payable by M/s · Swadeshi Cotton Mills Co. Ltd., Kanpur, to the U.P. State Electricity Board and recovery certificates for the amount enumerated below have been received for realisation of the dues above mentioned from the said consumer : c Recovery certificates dated 29.9.76, 31.12.76, 1612.76, 29.12.76, 16.7 .76, 17.9.76 and 3.10.77 1,06,22,423.17 Less amount paid 19,00,000.oO D ------- Balance 87,22,423.17 Add : Collection charges 10,62,242.31 ------- TOTAL RECOVERABLE 97,84,665.48 ------- And whereas, for the expeditious recovery of the dues E outstanding as above, without affecting adversely the running of the mills, it is just and proper that a Receiver be appointed over the mills at Kanpur, belonging to M/s Swadeshi Cotton Mills Co. Ltd. Now, therefore, I, K.K. Baksi, Collector, Kanpur, in exercise of the power under sub-section (I) of section 182-A of U.P. Land Revenue Act of 1901 ~ read with section 5 of U.P. Government Electrical UnderF takings (Dues Recovery) Act, 1958, do hereby appoint Shri L.N. Batra, A.D.M. Kanpur as Receiver of the said mills belonging to M/s Swedeshi Cotton Mills Co. Ltd., for a period of six months with immediate effect and direct that the Receiver shall exercise the following powers : G 1. The Receiver shall exercise supervision over the sales ~ of products of the said mills and the disbursement of recei- , pts from day to day. 2. That the receiver shall ensure that the receipts of the said mills are, after the payment of labour dues and H .~· \ 864 A B c D E F G SUPREME COURT REPORTS [1985] 2 s.c.R. other essentials for the running of the Mill, appropriated towards recoverable arrears against M/s Swadeshi Cotton Mills Co. Ltd. as Land Revenue. 3. That the receiver shall, if necessary, for the running of the said mills borrow money from State Government or other financial institutions and other appropriate arrangement in this behalf for the repayment of the amount and the recovery thereof as arrears of land revenue. 4. That the Receiver shall seize the shares held by M/s. Swadeshi Cotton Mills Co. Ltd., of M/s. Swadeshi Polytex Ltd. of the face value of Rs. 10 lacs (Ten lacs) and shall be competent to pledge, the same by way of security for the borrowings referred to above. s. That the Receiver shall be competent also to make payment to the Punjab National Bank against the guarantee dated 16.12.1976 and relieve the State Government of its liabilities thereunder correspondingly. 6. That in the event of Guarantee furnished by the State Government in favour of Punjab National Bank dt. 16.12.76, being invoked, the Receiver shall be competent to make the payment to the State Government against the liability accruing therefrom 7. That the Receiver shall have access to all books of accounts, ledger, cash books, Stok books and all other documents kept or maintained by M/s Swadeshi Cotton Mills Co. Ltd. in course of business. 8. That the Receiver shall be competent for the reasons to be recorded also to put a restraint against any transaction being entered into by M/s. Swadeshi Cotton Mills Co. Ltd., involving the business and assets of the mills and which are not in the interest thereof or may be detrimental to the same in his opinion. 9. That the Receiver shall have all powers incidental or ancillary for carrying out of the functions and the powers referred to above. 10. That subject to the above and to any directions H that I may, hereafter issue from time time to time, the ' BALKRISHAN v. SWADESHI POLYTEX (Venkatarmiah, J,) 865 present management of the said mills shall continue to run the mill and business. In view of the urgency the order is being made exparte with the direction, however, that a notice to show cause shall issue to M/s. Swadeshi Cotton Mills Company Ltd. for November 15, 1977. And further, in exercise of the power under section 149 of U.P. Land Revenue Act 1901 read with section 5 of U.P. Government Electrical Undertakings (Dues Recovery) Act of 1958, I hereby direct attachment and sale of shares A B held by M/s. Swadeshi Cotton Mills Co. Ltd. in M/s. c Swadeshi Polytex of the face value of Rs. 90 lacs (Ninety lacs) and hereby empower the Receiver to seize the same. Dated : Kanpur October 27, 1977 ." Sd/- K.K. Baksi Collector, Kanpur. On the same date i.e. on October 27, 1977 the Receiver pledged 1 lakh of shares as per the order of the Collector in favour of the Government of Uttar Pradesh against a loan of Rs. 13.5 lakhs. 'J he Receiver also took possession of 9 fr khs shares as per the order made under section 149 of the Land Revenue Act. Subsequently the Receiver pledged on November 9, 1977, 1 lakh shares out of the above 9 lakhs shares in favour of the Government of Utter Pradesh against a loan of Rs. 15 lakhs and on January 4, 1977, 1.5 lakhs shares against a further loan. Thus out of the 10 lakhs shares of the Polytex Company of the face value of Rs. 1 crore held by the Cotton Mills Company, 3.5 lakhs shares stood pledged in favour of the Government of Uttar Pradesh and the remaining 6.5 lakhs shares of the face value of Rs. 65 lakhs remained with the Receiver. The events which have led to this appeal are, however, these : In the year 1976, the Cotton Mills Company filed a petition under sections 397 and 398 of the Act against the Polytex Company alleging oppression and mismanagement of the Polytex Company by Sitaram Jaipnria and other directors of the Polytex Company in Company Petition No. 20 of 1976 on the file of the Allahabad High Court. That petition was dismissed by the Company Judge of the High Court on April 19, '1982. Against his decision an appeal was filed by the Cotton Mills Company in August, 1982 in Special Appeal No. 2 D E F G lf A B c D E F G H 866 SUPREME COURT REPORTS (1985] 2 s.c.R. of 1982 before the Division Bench of the High Court. That appeal is still pending. On February 11, 1984, the Cotton Mills Company and four others, namely, Rajaram Jaipuria, Mahabir Prasad Dalmia, Siyaram Sharma and K.B. Agarwal who together held 10, 01, 950 shares of the value of Rs. 10 each sent a notice to the Polytex Company which was received by it on February 15, 1984 under section 169 of the Act requiring the Board of Directors of the Polytex Company to call an extraordinary general meeting of the Polytex Company to consider and, if thought fit, to pass with or without modification the following as ordinary resolutions : "!. "RESOLVED that the appointment of Shri Sitaram Jaipnria as Managing Director of Swadeshi Polytex Ltd., be and is hereby terminated prior to the expiry of his term, in exercise of the powers conferred by Article 110 of the Articles of Association of the Company." 2. "RESOLVED further that Shri S1taram Jaipuria be and is hereby removed from the office of Director and consequently from the office of the Managing Director of the Swadeshi Polytex Ltd." 3. "RESOLVED further that resolution passed at the 13th Annual General Meeting of Swadeshi Polytex Ltd. in respect of item. 7 "Special Business" of the Notice dated 3 lst January, 1983 of the said 13th Annual General Meeting for the remuneration of Shri Sitaram Jaipuria as Managing Director be and is hereby rescinded". 4. "RESOLVED that Shri Ashok Jaipuria be and is hereby removed from the office of Director of Swadeshi Polytex Ltd." 5. "RESOLVED that in the vacancy caused by the removal of Shri Ashok Jaipuria, Shri Sitaram Singhania, be and is hereby appointed as a Director of Swadeshi Polytex Ltd. and in respect of whose appointment special notices have been received from some members indicating their intention to appoint Shri Sitaram Singhania as a Director of the Company." • • BALKRISHAN v. SWADESI!I POLYTEX (Venkataramiah, J.) 867 6. "RESOLIED that Shri B.M. Kaul be and is hereby A removed from the office of Director of Swadeshi Polytex Limited." 7. "RESOLVED that in the vacancy caused by the removal of Shri B.M. Kaul, Dr. Rajaram Jaipuria be and is hereby appointed as a Director of Swadeshi Polytex Ltd. and in respecl of whose appointment special notices have been received from some members indicating their intention to appoint Dr. Rajaram Jaipuria as a Director of the Company." 8. "RESOLVED that Shri P.B. Menon be and is herey removed from the office of Director of Swadeshi Polytex Ltd." 9. "RESOLTED that in the vacancy caused hy the removal of Shri P .B. Menon, Shri R-D. Thapar, be B c and is hereby appointed as a Director of Swadeshi D Polytex Ltd., and in respect of whose appointment special notices have been received from some members indicating their intention to appoint Shri D.R. Thapar as a Director of the Company." " The requisit10nists of the meeting also asked the Polytex Company to treat the said notice as a special notice nnder section 284 (2l and (5) read with section 190 of th~ Act for appointment of Sitaram Singhania, Rajaram Jaipnria and R.D. Thapar in place of Ashok Jaipur;a, B.M. Kaul (who was also the Chairman of the Cotton Mills Company) and P.B. Menon respectively as directors of the Polytex Company. They enclosed an explanatory statement as required by section 173 of the Act to the notice containing reasons for moving the aforeaid resolutions. On receipt of the notice, an emergent meeting of the Directors of the Polytex Company was held on February 23, 1984 ta consider the above said notice issued under section 169 of the Act.