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2017 (7) TMI 1296 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHIOppression and mismanagement - siphoning off funds - illegal removal of Appellant from his directorship from the respondent No.1 company - It is the case of the appellant that the tribunal despite its finding that there is oppression and mis-management against the appellant with minority holding in the respondent no. 1 company instead 'of reinstating the appellant as director has directed the removal and exit of the appellant from the respondent no. 1 company. HELD THAT:- Respondents have clearly stated that dividend was not given because it was never declared. However, it is noted from the impugned order that the respondents have not been able to rebut the contention of the appellant as when a company is not functioning, then the purpose of taking the whole amount of lease is not justified and amounts to siphoning off funds of the company and oppression of minority shareholders in the company - It is not in dispute that the respondent no.1 company is non-operating company and is in losses. Also, the respondent no. 1 company is mainly having the property of 5000 sq. yards at 13 leather complex, Jalandhar, Punjab, which has been given on lease to M/s M.A.Traders for a lease amount of ₹ 1,00,000/- per month. The said lease which expired on 13.04.2013 was further renewed for a period of 5 years, however there is no record and reference of any board's resolution authorising to execute lease agreement by the respondents. It can also not be denied that on the date of expiry of the lease agreement - the appellant was not appointed -as the director of the company. Further, it is also not in dispute that the appellant has been removed from the directorship of the respondent no. 1 company illegally because as per section 101 of the companies act 2013, a general meeting of the company can be called by giving not less than a clear 21 days' notice in writing or through electronic mode in such manner as may be prescribed and section 100 of the Act relates to calling of the EOGM of the company, for which decision has to be taken by the board of directors, here both the statutory requirements have not been complied with. The business of the company is practically not there, also the removal of the appellant from directorship of the R1 company is illegal and the remuneration drawn by the respondents when the company is not functional in itself may amount to siphoning of funds and an act of oppression against the minority shareholders - the law cannot be used as a weapon to remove the minority shareholder from the company when there is an act of oppression against the minority shareholders. Otherwise, it would become easy for a majority shareholder to commit an act of oppression against the minority shareholder and then get him removed from the company by giving him his value of share which has already been reduced due to the act of oppression and mismanagement. The exit of the appellant without giving him the prior right to purchase the majority shareholding may also be unfair to him - It is directed that the appellant be restored as director of the R company till he exits the company. The order passed by the tribunal dated 19.01.2017 stands modified with certain directions - appeal disposed off.
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