Guwahati Co-operative Urban Bank’s plea dismissed HC upholds earlier ruling on AGM being invalid

GUWAHATI: A Gauhati High Court bench, headed by the Chief Justice, upheld the earlier judgement of the single judge regarding invalidity of the Annual General Meeting (AGM) of Guwahati Co-operative Urban Bank Ltd and the resolutions taken in it.

As the tenure of the Board of Directors at the bank was set to expire in 2020, an Annual General Meeting (AGM) was called for September 11, 2020 but it lacked the required quorum. Following this, it was adjourned to September 18, 2020. However, although only 101 out of 426 shareholders were present at the later meeting, a new Board of Directors was elected.

The single judge, in his judgement dated August 25, 2023, had ruled that the quorum for constituting a valid AGM was not completed in the first meeting on September 11, 2020 and the subsequent meeting held on September 18, 2020 also lacked quorum and could not be said to be a meeting of the General Assembly of the Bank. It was also stated that the approval of the minutes and resolution of the meeting on September 18, 2023 by the Assistant Registrar of Co-operative Societies was not valid.

The judgment dated August 25, 2023 rendered by the learned Single Judge was subjected to challenge at the instance of the Co-operative Bank, the Chairman and the Board of Directors.

The bench said the short controversy posed for adjudication in this appeal is as to whether the subsequent meeting held on September 18, 2020 constituted a valid AGM entitled to transact the business set down for discussion in the earlier meeting dated September 11, 2020. As per Section 34(1) of the Act of 2007, the minimum requisite quorum required to constitute a valid meeting of the AGM is not less than 10% of the members eligible to vote at the meeting. The Co-operative Bank comprised of 4265 shareholders as on March 31, 2020. In the first meeting on September 11, 2020, only 22 shareholders were present presumably because of the prevailing COVID pandemic. While, for a valid meeting of the AGM to be constituted, presence of minimum of 426 members was essential. The Chairman of the Bank adjourned the 51st AGM to September 18, 2020.

The proceedings of the later meeting reflected that only 101 shareholders were present, which is less than 1/4th of the minimum requirement of 426 shareholders so as to complete the quorum essential to constitute a valid AGM. Nonetheless, the agenda set out earlier was discussed and a new BOD was appointed for the period from 2020 to 2025. The Managing Director of the Bank issued a communication to the Assistant Registrar of Co-operative Societies seeking approval of the 51st AGM. The Assistant Registrar accorded approval to the minutes and resolutions adopted therein.

The bench considered and analyzed the statutory provisions in context to the facts of the case at hand, stating the firm view that on the first date fixed for the AGM, quorum for constituting a valid AGM was not completed and hence the said meeting was not an AGM in the eyes of law. In the meeting dated September 18, 2020, only 101 shareholders were present out of the 4265 shareholders entitled to vote and thus, it could also not be said to be a meeting of the General Assembly of the Bank. The HC bench, therefore ruled that the resolutions adopted therein and the approval given to such resolutions by the Assistant Registrar of Co-operative Societies are invalid in the eyes of law and were rightly interfered with by the learned Single Judge.

The bench, thus, found no reason to interfere in the judgment dated August 25, 2023, passed by the Single Judge. The appeal was dismissed as being devoid of merit.

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