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2017 (1) TMI 1343 - Tri - Companies LawOppression and mis-management - Whether giving a notice for holding EGM for removal of Sanjay is oppressive or not? - Whether a proposal for removal of P1 in a family Company in the given facts of the case be treated as an oppressive act or not? - Held that:- General fulfilment to meet u/s 397 & 398 is that the act complained of shall be unfair to the aggrieved or the company and laced with malafide, and it shall be consequently led to winding up of the company, it always remains there, but when none of such fulfilment is evident, then removal of director even in a family company cannot be taken on standalone basis to pass orders under section 402, because in the case of removal of director in a family company also, it is incumbent upon the aggrieved to prove said act falls within the four corners of sections, either 397 or 398, if it is not so, the only recourse is suit. Here Sanjay himself is at fault and his conduct is doubtful in relation to the affairs of the company, on the other hand, the mother has 98% shareholding, therefore when Sanjay as director could not discharge his fiduciary obligations effectively in the company, he cannot seek a relief by owning this family concept. Whether non-payment of statutory dues by the Company be treated as an act done by the Respondents causing oppression to the Petitioners or to the Company? - Held that:- Respondents placed voluminous material, employees writing letters to R2 and R3 that P1 directly taking out cash from the cash counter on his own, but whereas for third party’s statement cannot be taken as evidence unless it is proved before Court of Law, such material cannot therefore have any legs to say that Sanjay siphoned the monies of the Company by taking cash from the cash counter. Hence, the same is not taken into consideration. It is also pertinent to point out that when R2 and R3 went to PNB to withdraw money from PNB account for medical treatment of R2, P1 wrote a letter to the authorities of PNB not to allow them to withdraw money from the account. It is a fact that this Company is bread and butter to R2, R3 and to P1 as well. In the Order passed by the Hon’ble High Court of Bombay, the Hon’ble High Court itself passed an Order directing the Company to meet the medical expenses of R2 i.e. mother. By reading these two observations, an inference could be drawn that R2 is an ailing mother requires money from time to time to meet the medical expenses. For the reasons stated above, the Petitioners failed to prove that Respondents caused hindrance for clearing the statutory dues. Therefore, this issue is decided against the Petitioners. Despite the case of the petitioners not being proved, this Company alone being major source of income of the family members including Sanjay as director, of course his wife (P2) working as Ophthalmologist, this Bench, for the well being of all the members of the family and for smooth running of the company, hereby directs R1 Company to allow P1 to continue as director of the Company only to claim salary equivalent to the salary Rajiv taking, but not to interfere with the affairs of the Company, including day to day affairs of the company as long as R2 has remained alive. If the mother who is holding above 98% shareholding, changes her mind to make P1 as active as R3, she is at liberty to do so. Therefore, first petitioner, hereafter, shall not operate any of the bank operations of the company; accordingly, his cheque signing authority in both the accounts is hereby revoked. As to casting vote given to the mother in the order dated 22.4.2015 in the Board Meetings, it will continue and without her sign, no cheque shall be passed. The Company shall provide financial statements on fortnightly basis to P1 so as to keep him informed about the business happening in the Company. However, R1 Company shall give notice and allow P1 to attend Board Meetings as and when they are called. For the company already passed a resolution for appointment of R3’s wife Bavana as director, the same could be hereafter given effect to. The reason for considering Bavana’s appointment is, one - the company already approved the resolution making her as director; two - for P1 and his wife being directors, to balance the same, it is just and equitable to have two directors from R3 side as well. Since R2 is natural mother to P1 and R3 as well, her continuation in the Board as director cannot be looked as weighing to the side of one son or the other.
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