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2013 (9) TMI 385 - CALCUTTA HIGH COURTOppression and Mismanagement u/s 397 and 398 - Proceedings of the Annual General Meeting was declared null and void - Held that:- Under section 172(3) of the Companies Act non-receipt of notice will not invalidate the proceedings - That service was effected under certificate of posting was disclosed in the sur-rejoinder - In doing so CLB had acted with perversity - service of the notice of meeting cannot be disputed and the decisions taken at the meeting cannot be challenged by the respondent AKM as he abstained from the said meeting for reasons best known to him - The finding of the CLB in respect thereof was bad and was setaside. From the copy disclosed in the proceedings it appeared that not only an attempt was made to serve a copy of the notice of the meeting by hand which was the usual practice followed by the company but that such notice was also accepted on behalf of the respondent AKM - Besides the said mode of service, notice was also issued under certificate of posting and by way of pre-cautionary measure a publication was made in Financial Express Calcutta Edition - Publication was notice to all and is good service. Consideration of Accounts – The sum had been directed to be paid on the basis of no explanation given by the appellant in respect thereof, which was ex-facie incorrect as the appellants did take the plea of the audited accounts which had not been assailed and that sums had been spent on account of Travel expense of AKM and the mother - The expense borne to meet statutory requirement had also been given and in not appreciating evidence in this respect, CLB could not reach the conclusion of misappropriation and the said findings with regard to reimbursement cannot be upheld. The existence of the company continued the statutory requirements had to be complied with and for such purposes staff on job-work basis was maintained - CLB based on its reasonings in respect of misappropriation from sale of plant and machinery had reached the conclusion of siphoning of funds in respect of expenses and liabilities - This evidences non-application of mind - If the basis of the demand does not exist to grant such sums will be contrary to the tenets of all law. Allotment of Shares - Even after receipt of the notice, if respondent abstained from attending the meeting, he did so at his peril - The reason for increasing the share capital was to facilitate influx of funds –The CLB failed to consider that in the event all the parties had complied with the Family Settlement the company would have been sold and the proceeds divided amongst its heirs - The acts of the respondent created a situation which made it impossible to sell the company and to only meet the statutory requirements of a shell company expenses had to be borne by the company which had become defunct since 1999. To do so finance was required which was raised by the company by increasing its share capital by allotment of shares - The respondent did not apply for additional shares inspite of notice and cannot blame the appellant for shares allotted.
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