2011 (2) TMI 1293 - Board - Companies Law

Issues Involved:
1. Maintainability of the company petition.
2. Membership status of the petitioners.
3. Legality of the bifurcation of assets.
4. Validity of the impugned annual general meetings.
5. Validity of the balance-sheet for the year ended 31-3-2009.
6. Legality of the appointment of the second respondent's daughter.
7. Investigation into the affairs of the company.
8. Appointment of a new committee of management.

Issue-Wise Detailed Analysis:

1. Maintainability of the Company Petition:
The petitioners filed a company petition under sections 397 and 398 read with section 237(b) of the Companies Act, 1956, seeking various reliefs. The respondents filed applications (C.A. Nos. 118 and 194 of 2010) to hear the maintainability of the company petition as a preliminary issue. The contention was that the petitioners were not members of the respondent No. 1 company on the date of filing the petition, hence not meeting the qualification under section 399 of the Companies Act.

2. Membership Status of the Petitioners:
The petitioners claimed membership based on the annual return for the year 2003-04, arguing that no valid elections were conducted after 2003. The respondents contended that the petitioners ceased to be members as they did not get elected in the 2007 elections. The court examined the articles of association, which stipulated that only members of the executive committee of the Tirunelveli Diocese Council could be members of the company. The court found that the petitioners were not listed in the annual returns for 2007-08 and 2008-09 and thus were not members at the time of filing the petition.

3. Legality of the Bifurcation of Assets:
The petitioners challenged the bifurcation of the company's assets as unauthorized and illegal. They argued that no valid general meeting was held to authorize such bifurcation. The court noted that the disputes regarding the elections and the administration of the diocese had impacted the company's ability to hold regular meetings and file statutory returns.

4. Validity of the Impugned Annual General Meetings:
The petitioners sought to declare the annual general meetings dated 27-9-2008, 24-3-2009, and 30-9-2009 as illegal. They argued that no proper notice was given to them for these meetings. The court found that the respondents had falsely claimed that these meetings were held and noted the ongoing disputes affecting the company's governance.

5. Validity of the Balance-Sheet for the Year Ended 31-3-2009:
The petitioners challenged the balance-sheet as invalid due to the alleged irregularities in the company's administration and the disputed meetings. The court's decision on the maintainability of the petition indirectly addressed this issue by questioning the legitimacy of the petitioners' claims.

6. Legality of the Appointment of the Second Respondent's Daughter:
The petitioners argued that the appointment of the second respondent's daughter was unfair and illegal. The court did not specifically address this issue in detail, as the primary focus was on the maintainability of the petition and the membership status of the petitioners.

7. Investigation into the Affairs of the Company:
The petitioners sought an investigation into the company's affairs to ascertain the extent of illegal and financial frauds committed by the respondents. The court's decision on the maintainability of the petition precluded further examination of this issue.

8. Appointment of a New Committee of Management:
The petitioners requested the appointment of a new committee of management for the company. The court's ruling on the maintainability of the petition and the membership status of the petitioners rendered this request moot.

Conclusion:
The court allowed the applications (C.A. Nos. 118 and 194 of 2010) and held that the petitioners did not meet the criteria under section 399 of the Companies Act to sustain the company petition. Consequently, the company petition was dismissed. The court emphasized that the petitioners were engaging in forum shopping and attempting to supersede the High Court's order, which permitted the Diocese of Tirunelveli to continue its administration with the elected office bearers.

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