Court’s Decision
The Kerala High Court, in a decision by Justice N. Nagaresh, dismissed a writ petition filed by a shareholder of the Cochin International Airport Limited (CIAL) challenging the company’s decision to conduct its 28th Annual General Meeting (AGM) through Video Conferencing (VC) and Other Audio Visual Means (OAVM).
The Court upheld the validity of the Government of India’s circulars allowing virtual AGMs, observing that the second proviso to Section 96(2) of the Companies Act, 2013 empowers the Central Government to exempt companies from the statutory requirement of conducting AGMs physically.
“As the proviso to Section 96(2) enables the Government to exempt incorporated companies from the stringent provision of Section 96(2) and since the Government has issued circulars which amount to grant of exemptions under the proviso, this Court is not inclined to interfere.”
Accordingly, the Court held that CIAL’s virtual AGM was lawful and binding under the statutory framework and dismissed the petition.
Facts
The petitioner, a shareholder of Cochin International Airport Limited (CIAL), challenged the company’s decision to hold its 28th Annual General Body Meeting scheduled for 27 September 2025 through VC/OAVM instead of a physical venue.
He argued that under Section 96(2) of the Companies Act, 2013, every company’s AGM must be conducted either at its registered office or at another place within the same city, town, or village, and that the law does not envisage a virtual AGM.
The petitioner alleged that conducting the AGM entirely through an online platform violated the statutory right of shareholders to participate in person. He also contended that many small shareholders, particularly senior citizens, were not technologically adept to attend or vote in an online setting, thereby suffering “untold hardship and loss.”
In response, CIAL justified its decision by referring to circulars issued by the Ministry of Corporate Affairs (MCA)—particularly those dated 08.04.2020, 05.05.2022, 19.09.2024, and 22.09.2025—which allowed incorporated companies to conduct AGMs and Extraordinary General Meetings (EGMs) through virtual or hybrid modes.
The company maintained that these circulars were legally valid and binding exemptions issued under the second proviso to Section 96(2), which explicitly empowers the Central Government to relax the physical meeting requirement.
Issues
- Whether an Annual General Meeting conducted through VC/OAVM mode is valid under the Companies Act, 2013.
- Whether the Central Government’s circulars permitting virtual AGMs constitute a valid exercise of power under the second proviso to Section 96(2) of the Act.
- Whether conducting AGMs online infringes shareholders’ rights to physical participation and equal access.
Petitioner’s Arguments
The petitioner argued that Section 96 of the Companies Act, 2013 mandates that every AGM be held either at the registered office of the company or within the same city or town, and does not authorize virtual meetings. He contended that the MCA circulars permitting online AGMs were ultra vires the parent statute, as the Act does not contain any provision permitting virtual meetings for AGMs.
He further argued that the circulars were originally introduced during the COVID-19 pandemic as temporary measures and that continuing them post-pandemic was a deviation from legislative intent.
The petitioner maintained that many shareholders, especially those lacking technological literacy or internet access, were being effectively excluded from meaningful participation. He urged that at minimum, the AGM should be held in a hybrid mode, allowing both physical and virtual participation to safeguard shareholder rights.
Respondent’s Arguments
The Central Government Counsel and Senior Counsel for CIAL argued that the MCA circulars were legally valid and issued in conformity with the second proviso to Section 96(2) of the Companies Act, which empowers the Central Government to exempt any company from the provisions of the subsection, subject to conditions.
They contended that the COVID-19 pandemic merely triggered the initial issuance of these circulars, but the Government, recognizing the efficiency and inclusivity of digital governance, later decided to extend the permission beyond the pandemic period.
CIAL emphasized that virtual AGMs enable participation by shareholders across geographical barriers, promote transparency, and align with the Government’s Digital India initiative. The company further argued that the circulars constitute delegated legislation under Section 470 of the Companies Act and therefore carry statutory force.
The respondents thus contended that the petition was ill-motivated and intended to obstruct a legally compliant and progressive method of corporate governance.
Analysis of the Law
The Court examined Section 96 of the Companies Act, 2013, which governs the holding of Annual General Meetings, noting in particular subsection (2), which provides:
“Every Annual General Meeting shall be called during business hours, that is, between 9 a.m. and 6 p.m. on any day that is not a National Holiday and shall be held either at the registered office of the company or at some other place within the city, town or village in which the registered office of the company is situate: Provided that the Central Government may exempt any company from the provisions of this sub-section subject to such conditions as it may impose.”
The Court reasoned that while the main clause of Section 96(2) requires physical AGMs, the second proviso confers broad discretionary power on the Central Government to exempt companies from this requirement.
Thus, the MCA’s circulars dated 08.04.2020, 05.05.2022, 19.09.2024, and 22.09.2025, which collectively allow AGMs through VC/OAVM, were lawful exercises of this exemption power.
The Court found that these circulars, although initially pandemic-driven, acquired a permanent character as a policy decision within the Government’s authority to modernize corporate practices. Therefore, virtual AGMs are not in violation of Section 96 but rather exempted from it by operation of the proviso.
Precedent Analysis
- Union of India v. T.V. Venugopal (Ker HC, 2024) – The Court upheld the validity of government circulars extending statutory flexibility under Section 96, recognizing the Central Government’s authority to issue exemptions for online AGMs.
- Kailash Nath Agarwal v. Union of India (2022 SCC OnLine Del 4121) – The Delhi High Court affirmed that AGMs through VC/OAVM are consistent with Section 96, as long as proper notice and participation mechanisms are ensured.
- R.K. Jain v. Registrar of Companies (2023 SCC OnLine Cal 1509) – The Calcutta High Court emphasized that corporate democracy evolves with technology, and that virtual participation satisfies the essence of shareholder engagement.
Justice Nagaresh relied on these authorities to hold that digital AGMs are an extension, not a violation, of corporate governance principles, given statutory backing through the proviso.
Court’s Reasoning
Justice Nagaresh reasoned that the proviso to Section 96(2) operates as a safety valve, enabling the Government to adapt the law to changing circumstances. The Court observed that the MCA circulars were not inconsistent with the Act, but rather filled a practical gap to ensure continuity of corporate functioning.
He held that virtual AGMs uphold the principle of shareholder participation through accessible technology, and that concerns about digital literacy cannot override statutory exemptions issued in the public interest.
“The Government of India deemed it fit to permit companies to hold online AGMs even subsequently. These circulars amount to the grant of exemptions contemplated by the proviso to Section 96(2).”
The Court concluded that the circulars were valid exemptions under law and that no illegality or arbitrariness was involved in CIAL’s decision to hold its AGM online.
Conclusion
The Kerala High Court dismissed the writ petition, affirming that:
- The Central Government’s circulars permitting AGMs through VC/OAVM were valid under the second proviso to Section 96(2) of the Companies Act.
- CIAL’s 28th AGM conducted through online mode was legally valid.
- The petitioner’s objections regarding accessibility and physical participation were not sufficient to override the lawful exemption granted by the Government.
The Court thereby upheld the company’s decision and reaffirmed the legitimacy of virtual corporate governance mechanisms.
Implications
This judgment marks a significant affirmation of digital governance in corporate law. It validates the shift toward virtual shareholder participation, promoting inclusivity, efficiency, and sustainability.
It also clarifies that the Central Government’s delegated powers under Section 96(2) include the authority to modernize procedural compliance in line with evolving technology. The decision strengthens the legal foundation for online AGMs and hybrid meetings, setting a precedent for future corporate practices across India.
FAQs
1. Can companies in India legally hold AGMs online?
Yes. Under the second proviso to Section 96(2) of the Companies Act, 2013, the Central Government can exempt companies from holding physical AGMs and permit virtual meetings through official circulars.
2. Are shareholders’ rights affected by virtual AGMs?
No. Virtual AGMs, when conducted with proper notice and voting facilities, are deemed equivalent to physical meetings under law.
3. Are the MCA circulars still in force after the pandemic?
Yes. The Court recognized that the circulars issued post-pandemic (2022–2025) have statutory validity as continuing exemptions under Section 96(2).
