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Hindustan Medical Institution v. Birla Corporation Limited & Ors.

Civil Appeal · 2026 INSC 554Decided 26 May 2026
C.A. No.-008205-008205 - 2026
Justice Vikram Nath · Justice Sandeep Mehta

Background

Three registered societies (including Hindustan Medical Institution) held shares in Birla Corporation Limited (BCL) and disputes arose over who was authorised to cast their votes on the societies' behalf: rival factions of trustees/managing committee members each claimed authority to vote in a company matter using remote e-voting. Suits were filed in the Calcutta High Court, and a Single Judge, upheld by a Division Bench, ruled that whichever vote was cast first (regardless of which body of trustees cast it) should prevail, and further held that trustees could bind the society only if they acted in unanimous consonance. The societies and a competing claimant, Ms. Anamika Lodha, both appealed to the Supreme Court against different aspects of this ruling.

Decision Breakdown

The Supreme Court held that the "first vote cast prevails" rule invented by the High Court had no basis in the Companies Act, 2013 or its e-voting rules, which require verification of proper authority (such as a Board Resolution) before a vote is counted: priority in time cannot substitute for lawful authority to vote. It also rejected the High Court's view that trustees could validly authorise a decision only by acting unanimously in consonance, holding instead that a decision evidenced in writing and signed by a majority of trustees, per the societies' own by-laws (Clause 24), is capable of constituting a valid authorization. The Court set aside the Division Bench's and Single Judge's orders, restored the underlying suits to the High Court for fresh consideration, and expressly clarified that it had not decided the ultimate factual validity of any particular resolution or any trustee's status: those questions remain for the trial court.

Lesson Learnt

In disputes over who may validly vote or act on behalf of a society or company shareholder, courts must apply the actual statutory and constitutional-document rules on authority: a vote or decision is not made valid merely by being first in time, and internal governance documents (like by-laws requiring majority trustee action) must be respected as written, not overridden by an improvised procedural shortcut.

Official source (sci.gov.in)View Judgment (PDF)

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