In corporate governance, the Annual General Meeting (AGM) occupies a central position. It is the one statutory requirement recognised in corporate law as well as in governance ethics where shareholders directly exercise oversight over the company’s management, approve financial statements, appoint auditors, and raise concerns. Primarily, the responsibility to convene an AGM rests with the Board of Directors. However, corporate reality is not always orderly. Deadlocks, disputes, mismanagement among the company’s stakeholders, or even inaction can make it impossible for the Board to convene an AGM within the prescribed timeline. It is precisely to address such governance paralysis that the law empowers a judicial authority to step in and convene an AGM.

Convening of AGM-Statutory Basis for Tribunal

Under Indian company law, the power to convene an AGM through judicial intervention flows from Section 97 of the Companies Act, 2013. This provision empowers the National Company Law Tribunal to direct the calling of an AGM where a company has failed to convene it within the prescribed statutory period.

Any member of the company is entitled to approach the NCLT by way of an application under Section 97, upon which the Tribunal may either itself call the AGM or issue appropriate directions for convening it.

The legislative intent underlying Section 97 is remedial rather than punitive in nature. The provision operates as a statutory safeguard to ensure that shareholders are not deprived of their fundamental corporate rights merely due to managerial default, board-level deadlock, or internal disputes that impede corporate governance and decision-making.

Importantly, this power is discretionary. The Tribunal does not mechanically order an AGM in every instance of delay. It evaluates whether the failure is genuine, whether shareholder interests are being compromised, and whether intervention is necessary to restore corporate discipline.

Circumstances Triggering Tribunal Intervention

An application under Section 97 can be made by any member of the company. The law deliberately keeps the threshold low, recognising that minority shareholders are often the first to suffer when AGMs are not held.

Common situations that lead to such applications include:

a. Prolonged boardroom disputes that prevent a quorum or resolutions

b. Resignation or disqualification of directors leaves the company directionless

c. Management deliberately avoids an AGM to suppress dissent

d. Companies experiencing financial stress, where statutory and regulatory compliance is often deprioritised.

e. Closely held companies where internal promoter disputes adversely impact governance structures.

However, what matters is not the motive alleged by the applicant but the objective fact that the AGM has not been held in accordance with the law.

Scope of Tribunal’s Powers

Once satisfied with the application, the Tribunal has wide powers to ensure that the AGM actually takes place and serves its purpose.

The NCLT may:

a. Fix the date, time, and place of the AGM

b. Direct the manner in which notices are to be issued

c. Decide the quorum, even permitting a reduced quorum if circumstances warrant

d. Appoint an independent chairperson to conduct the meeting

e. Issue directions to ensure voting and resolutions are properly recorded

f. Impose a penalty or a fine on the company for defaulting in conducting the AGM

A crucial legal consequence is that any AGM convened under Tribunal directions is deemed to be a valid AGM for all statutory purposes. This means resolutions passed in such a meeting carry the same legal weight as those passed in a regularly convened AGM.

Standard AGM versus Court-Mandated Compliance

Although both involve shareholder meetings, a Tribunal-ordered AGM differs fundamentally in character from a standard AGM.

A regular AGM is an expression of internal governance. A Tribunal-convened AGM, on the other hand, reflects a breakdown of that governance. It signals that statutory compliance has shifted from a voluntary obligation to a legally enforced action.

From a compliance perspective, this distinction matters. Companies that reach a stage where Tribunal intervention becomes necessary often face heightened scrutiny in future regulatory or judicial proceedings. The record of non-compliance does not disappear merely because the AGM is eventually held.

Interaction with Other Provisions of the Act

It is important to distinguish Section 97 from related provisions:

a. Section 96 prescribes the time limits and place of AGM

b. Section 98 empowers the Tribunal to call meetings other than AGMs, such as extraordinary general meetings, when it is impracticable to do so otherwise

While Sections 97 and 98 appear similar, their application differs. Section 97 is specific to AGMs and presupposes a statutory default. Section 98 is broader and focuses on impracticability, even where no default has technically occurred.

Understanding this distinction is critical while drafting such applications, as misclassification thereof can lead to procedural objections and delays.

Practical and Strategic Implications for Companies

A Tribunal-convened AGM is not merely a procedural fix; it has deeper implications for the company’s future.

First, it often exposes internal dysfunction to the public record. Tribunal orders are detailed and frequently highlight governance lapses, which can affect lender confidence, investor perception, and even valuation.

Second, such AGMs are typically tightly controlled. Management loses the flexibility it otherwise enjoys in agenda-setting, timing, and the conduct of meetings.

Third, once shareholders realise that Tribunal intervention is possible, it alters the power dynamics within the company. Minority shareholders gain confidence to assert their rights, knowing legal remedies are available.

Judicial Pronouncements

In recent judgments, [Ref: C.P. 167/KB/2025, Raghib Parwez versus RGB Bistro Private Limited & in C.P. 79/KB/2025, Dilip Kumar Jaiswal versus Prem Tradecom Private Limited], the NCLT Kolkata Bench upheld the petitions filed by the shareholders of the respective companies and ordered the concerned companies to hold the pending AGMs for the respective financial years. The Tribunal also imposed a penalty of INR 25,000 for each year of non-compliance, underscoring the importance of timely statutory adherence.

Lessons for Directors and Management

For directors, failure to convene an AGM is not a trivial lapse. It reflects poorly on fiduciary responsibility and can trigger cascading legal consequences, including penalties under other provisions of the Act.

Boards should view Section 97 not as a remote contingency but as a reminder that corporate governance cannot be indefinitely postponed due to convenience, disputes, or strategic avoidance.

From a compliance standpoint, proactively seeking extensions, resolving quorum issues, or even approaching regulators in advance is far preferable to allowing matters to escalate to Tribunal intervention.

Conclusion

The provision for an AGM convened by the Tribunal is a quiet but powerful instrument within company law. It reinforces the principle that shareholder rights are not optional and that corporate democracy cannot be suspended by managerial inaction.

While Section 97 is framed as a remedial provision, its invocation carries reputational, legal, and strategic consequences. Companies that find themselves before the Tribunal for failure to hold an AGM are not merely addressing a missed meeting; they are confronting a broader governance failure. A Tribunal-convened AGM is less about compliance paperwork and more about restoring accountability and addressing statutory lapses at the core of the corporate structure.

The failure to convene an AGM not only constitutes a clear statutory lapse under company law but also signals a breakdown in the company’s internal governance framework. It disrupts established compliance processes and workflows, creating gaps in reporting, accountability, and oversight. Such a failure can delay critical decision-making, affect strategic planning, and weaken the checks and balances that ensure the Board acts responsibly. Beyond procedural non-compliance, it exposes the Board of Directors to legal and reputational liability, eroding stakeholder confidence and ultimately undermining their authority and ability to govern effectively. The question, therefore, remains as to how the company proposes to rectify this failure and ensure that such lapses do not recur.

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