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2015 (3) TMI 464 - HIGH COURT OF KARNATAKAApplication for Winding up of company - Breach of mutual trust and confidence - Provisions of the Act would override anything to the contrary in the Articles of Association - Held that:- Having regard to the allegations by the petitioner and the equally strong counter-allegations against the petitioner by the contesting respondents, this court would have to be satisfied that there is material produced before the Court to demonstrate that the management and conduct of the company ought not to be continued, while exercising discretion under Clause (f) of Section 433 of the Companies Act, 1956. It cannot be said that there is any such clinching material made available by the petitioner. The allegations on both the sides would require a detailed enquiry, which is not contemplated in these proceedings. The allegations by the petitioner as a minority shareholder, are primarily of oppression and mismanagement. The petitioner is provided with a remedy by recourse to Sections 397 & 398 of the Act. The powers of the Court under Sections 397 to 403 have been conferred on the Company Law Board by the Company (Amendment) Act, 1988 (with effect from 31-5-1991). Therefore, in the circumstances of the case the petition is not maintainable and ought to be rejected. But the peculiar circumstance that has been created by the parties of their volition, is in inviting this court to dispose of the application in CA 1886/2013, where by mutual consent - an Extraordinary General Meeting of the company was convened under the Chairmanship of an independent member of the Bar, in whom both the sides had reposed confidence. The contesting respondents having found that the tables were turned on them at the said meeting, whether they would be in a position to refuse to abide by the result of the meeting, dehors the merits of the petition, is a question that looms up for consideration. The contesting respondent shareholders have sought to place reliance on Article 12 (iii) of the Articles of Association in holding that the result of the Extraordinary General Meeting was inconclusive and was not binding on them. Section 284 of the Act provides for the manner of removal of a Director of the company, and notwithstanding anything to the contrary in its Articles, would be removable by an ordinary resolution of which special notice has been given. The Section is general and applies to all Directors and includes all those not retiring by rotation. It applies to permanent Directors or Life Directors and Directors appointed for a fixed term even though they may have been appointed with reference to the Articles or otherwise. here fore, the contesting respondents are held bound by the result of the said meeting. The petitioner is at liberty to enforce the result of the meeting in terms of the report of the Chairman of the Extraordinary General Meeting referred to here in above in the manner known to law.
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