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2019 (7) TMI 1673 - Tri - Companies LawOppression and Mismanagement - validity of Board Meeting - validity of AGM - Mandatory signature to operate the Bank Account - alteration of composition of Board of Directors. Whether the removal of the name of the first petitioner vide resolution passed in the board meeting held on August 22, 2016 who was sole signatory for operating the bank account of the first respondent-company, constitutes an act of oppression? - HELD THAT:- The petitioners were duly informed about the board meeting proposed to be held on August 22, 2016 through e-mail dated August 19, 2016 because as per the past practice, the company used to send the notice of the board meetings through e-mails. The first petitioner had attended the meeting and signed the incoming and outgoing register. However, he denied to have attended the board meeting, but did not deny the signatures put on the entry register. It is noted that the presence of the first petitioner at the registered office of the first respondent-company, where the board meeting was conducted is sufficient proof of the fact of his participation in the board meeting held on August 22, 2016, as claimed by the respondents. In the case on hand the resolution passed by the majority of the directors is only to regulate the procedure pertaining the signatories to the bank accounts of the first respondent-company, which in no way can said to be oppressive - this Tribunal is not inclined to interfere with the decision of the board by which any two of the directors have been authorised to operate the bank accounts of the first respondent-company. Accordingly, issue No. 1 is decided against the petitioners and in favour of the respondents. Whether in the facts and circumstances of the case, this Tribunal can interfere with the management of the first respondent-company by directing to give proportionate representation to the shareholders on the board of the directors? - HELD THAT:- It is noted that the respondents have not pleaded anything on the issue under reference. However, in case of a private company, the articles of association can prescribe the method to appoint any and all directors. In case the articles are silent, the directors must be appointed by the shareholders. In the case on hand the articles of the first respondent-company provide that any person whether a member of the company or not, may be appointed as director of the company and no qualification by way of shareholding shall be required from any director. Therefore, in the absence of any provision in the articles of association or shareholders ? agreement, the first respondent-company cannot be forced to have a proportionate representation of the shareholders or their nominees on the board - the issue stands decided against the petitioners and in favour of the respondents. Whether the alleged construction made on the Government land by the respondents without any approval of board and competent authorities constitutes an act of mismanagement? - The petitioners have not placed any evidence on record to prove the construction of buildings or superstructures as contended. Moreover, the act complain of is an isolated act, which need not be inquired into. Therefore, the issue stands decided against the petitioners and in favour of the respondents. Whether writing-off the bad debts of ₹ 48,41,801 during the financial year 2017-18, by the respondents constitutes an act of mismanagement? - HELD THAT:- The petitioners would contend that during the financial year 2017-18, an amount of ₹ 48,41,801 has been written off as bad debts, while in the previous it was nil and the details as to the identity of the party, whether a related party or otherwise is not disclosed. The respondents would contend that bad debt written off is in the normal course of business and the tractions are absolutely with unrelated parties and since the recovery was not forthcoming, to reflect a true and fair view in the accounts, these sums were written off. It is noted that the decision of the board of directors to write off the bad debt is a commercial decision, which does not warrant any judicial interference - this issue also stands decided against the petitioners and in favour of the respondents. The acts complained of are neither falling within the purview of oppression nor mismanagement - Petition dismissed.
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