Section 97.Power of Tribunal to call annual general meeting.

(1) If any default is made in holding the annual general meeting of a company under Section 96, the Tribunal may, notwithstanding anything contained in this Act or the articles of the company, on the application of any member 

(55) “member”, in relation to a company, means(i) the subscriber to the memorandum of the company who shall be deemed to have agreed to become member of the company, and on its registration, shall be entered as member in its register of members;(ii) every other person who agrees in writing to become a member of the company and whose name is entered in the register of members of the company;(iii) every person holding shares of the company and whose name is entered as a beneficial owner in the records of a depository)

of the company, call, or direct the calling of, an annual general meeting of the company and give such ancillary or consequential directions as the Tribunal thinks expedient:

Provided that such directions may include a direction that one member of the company present in person or by proxy shall be deemed to constitute a meeting.

(2) A general meeting held in pursuance of sub-section (1) shall, subject to any directions of the Tribunal, be deemed to be an annual general meeting of the company under this Act.

Interpretation of Section 97:

Sub-section (1): Default in Holding an AGM

• Trigger: If a company defaults in holding an Annual General Meeting (AGM) as required under Section 96 of the Act, any member of the company may apply to the National Company Law Tribunal (NCLT).
• Authority of the Tribunal: The Tribunal has overriding powers under Section 97, enabling it to:
  • Call or direct the calling of an AGM.
  • Issue any ancillary or consequential directions necessary to convene the meeting, including fixing the date, time, venue, or quorum for the meeting.
• Special Quorum Provision: The Tribunal may direct that a meeting can be constituted with the presence of even one member (in person or by proxy), regardless of the company’s articles.

Sub-section (2): Recognition as AGM

• A general meeting convened under Section 97(1) is deemed to be a valid AGM as per the Companies Act, 2013, irrespective of the procedural deviations from the company’s articles or previous practices, provided it adheres to the Tribunal’s directions.

Analysis of Key Aspects:

1. Role of NCLT:
   • The NCLT acts as a safeguard to ensure corporate governance and compliance with statutory requirements.
   • It prevents companies from avoiding AGMs, thereby protecting the rights of shareholders to participate in decision-making.
2. Quorum Relaxation:
   • The provision to allow a single member to constitute a meeting is designed to facilitate the AGM even if the company is non-functional or facing disputes.
3. Applicability:
   • Applies to all companies except One Person Companies (OPCs).

Case Laws and Judgments:

1. Pravin Gada v. MG Gada & Co. Pvt. Ltd. (2014 SCC Online CLB 1)

• Facts: The company failed to hold an AGM for three consecutive years. A shareholder petitioned the NCLT for intervention under Section 97.
• Judgment: The Tribunal directed the calling of an AGM and issued specific instructions for holding the meeting, including the appointment of an independent observer.
• Significance: This case highlights the Tribunal’s proactive role in restoring statutory compliance.

2. Sundaram Industries Pvt. Ltd. v. NCLT (2020 SCC Online Mad 2000)

• Facts: The shareholders of a private company applied to the Tribunal after repeated failures to convene an AGM due to internal disputes among directors.
• Judgment: The court upheld the Tribunal’s power to call an AGM under Section 97, emphasizing that member rights should not be jeopardized by management disputes.
• Key Point: Section 97 empowers the Tribunal to act in the best interest of the company and its shareholders.

3. In Re: Ghose & Co. Pvt. Ltd. (2016 CLB Case 1)

• Facts: Members alleged the company defaulted on AGMs due to deliberate actions by the board.
• Judgment: The Tribunal issued directions for an AGM to be held, mandating the appointment of an independent chairperson for transparency.
• Significance: The Tribunal ensures fairness in meetings convened under its orders.

Key Takeaways:

• Section 97 empowers shareholders to seek recourse if a company defaults in holding an AGM, thereby ensuring accountability.
• NCLT’s orders under this section supersede company articles, ensuring statutory compliance prevails over internal governance issues.
• Case law demonstrates the judiciary’s commitment to maintaining transparency and safeguarding shareholder rights.

Practical Implications:

1. For Companies:
   • Must adhere to statutory deadlines for AGMs to avoid Tribunal intervention and associated penalties.
2. For Shareholders:
   • Provides a legal avenue to protect rights if AGMs are not convened.
3. For Legal Practitioners:
   • Highlights the necessity of balancing procedural compliance with the broader goal of protecting shareholder interests.

Disclaimer: This content is written by Chiman Soni, a CS Executive student and founder of Corporate Laws Hub. The information provided is for educational and informational purposes only and does not constitute legal advice. While every effort has been made to ensure accuracy, readers are encouraged to consult a qualified professional or refer to official resources for specific legal concerns.

Section 97 of the Companies Act, 2013, empowers the National Company Law Tribunal (NCLT) to call or direct the calling of an Annual General Meeting (AGM) when a company fails to comply with Section 96. This provision ensures compliance with statutory requirements, safeguarding shareholder rights. The NCLT can issue directions to convene an AGM, including specifying the quorum, which may even allow one member to constitute a valid meeting. Key judgments like Pravin Gada v. MG Gada & Co. Pvt. Ltd. and Sundaram Industries Pvt. Ltd. v. NCLT emphasize the Tribunal’s role in protecting corporate governance and ensuring transparency. Understanding the implications of Section 97 is crucial for companies, shareholders, and legal practitioners to ensure effective corporate compliance.

Disclaimer: This content is written by Chiman Soni, a CS Executive student and founder of Corporate Laws Hub. The information provided herein is for educational and informational purposes only and should not be construed as legal advice or financial advice. While every effort has been made to ensure the accuracy and reliability of the information, readers are advised to consult a qualified legal professional, financial advisor, or refer to authoritative sources for specific legal or financial queries or concerns.