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2009 (2) TMI 859 - HC - Companies LawOppression and mismanagement - Rights issue of shares - shareholding of the Petitioners had been diluted - no notices were given for the meetings pertaining to the rights issue - shifting of the registered office, also, no notice for the same is given - appointment and removal of directors - Directorial disputes - HELD THAT:- The finding of the Company Law Board that the several resolutions alleged to have been passed in the meeting of the Board of Directors on various dates cannot be held to be validly convened or passed and the decision rendered by the Company Law Board in that regard requires no intervention. The petition is therefore well founded and the grievance seeking for intervention of the Company Law Board u/s 397 and 399 are, therefore, tenable in law. Hence, the persons who were admittedly the Directors of the Company as on 29.10.2005 were entitled to be served with due notices on every share holder found mentioned on the Register of Companies as on that date before taking any decision. It shall be open for the appellants to take such action in his personal capacity as transferee of shareholding of Ajmer Singh to give notices in the manner required by the law and take appropriate decisions after due notices in the manner sanctioned by law. The entitlement or otherwise of Zora Singh to obtain transfer of shares pertaining to 25% held by Amrik Singh will be decided in the Civil Suit which is pending before it and no observation made by this Court shall be construed as constituting any remark in favour of or against either of the parties to contend that one way or the other about the respective merits of the case before the Civil Court. From the discussions made above and the findings rendered for the points raised in appeal by capturing them under relevant sub- headings, the following is summary of the conclusions:- (a) The MOU dated 09.11.2005 did not involve or contemplate transfer of asset of the company. It was an instrument to transfer the shares of the company to the parties to the document and a chosen medium for total control over the affairs of the company to one of the parties to the document. It did not operate to transfer the assets of the company to either of the parties. The fidings rendered by the Company Law Board, and found expressed in para 51 of the impugned order are set aside. (b) The actual payment of consideration under MOU and the entitlement to obtain transfer of all the shares of the company to Zora Singh including the shares of Amrik Singh and Malkiat Singh to give a valid discharge on behalf of Amrik Singh (the respondent No.1 herein) shall be matters which shall fall adjudication only in the civil suit pending between the parties and nothing mentioned in this judgment nor the Company Law Board will operate to be final against the respective interests of the party. (c) The findings rendered by the Company Law Board that Amrik Singh had no due notice of the meetings of the Board of Directors and the notices alleged to have been sent to him for meetings on 09.05.2006, 11.05.2006 and 19.05.2006 are confirmed and consequently the resolutions alleged to have been passed on the respective dates are set aside. Amrik Singh cannot be imputed with constructive notices of the meetings to be bound by any of the decisions in the said meetings. (d) The effect of non-services of the notices on Amrik Singh, admittedly, a 25% shareholder and the purported decisions to appoint additional directors, removal of existing directors, including Amrik Singh and his son and increase in share capital shall constitute oppression and mismanagement of the affairs of the company, actionable before the appropriate forum. The appeal is disposed of in the above terms.
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