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2016 (12) TMI 421 - Tri - Companies LawCreation of mortgage of the property and fixed assets - mortgage by the Respondents over the assets of the First Respondent Company to secure a loan/credit facility to an extent of ₹ 5,95,76,764 - Held that:- Petitioners and Respondents 2 to 7 have a common stand as against the notice issued by the Bank under the provisions of SARFAESI Act, 2012. To that extent during March, 2015 and thereafter till filing of Writ Petition in the High Court, there was no conflict of interest among the Directors, including petitioners and the Respondents 2 to 7. The conflict has cropped up only after dismissal of the Writ Petition by the High Court of Allahabad. It is an admitted fact that Bank has approached the Debt Recovery Tribunal and the proceedings are pending there. We therefore, are constrained to infer that this Tribunal's jurisdiction is invoked by the parties under section 397 and 398 of the Act to foil the proceedings pending before the Debt Recovery Tribunal. This Tribunal for the aforesaid reasons, find that it cannot be declared as such that the mortgage of the Company's property in favour of Bank of Baroda, the 8th Respondent herein, was unlawful, illegal, null and void, as claimed by the petitioners. We place on record that our observations, if any, would not stand in the way of the Debt Recovery Tribunal to decide the validity of mortgage, if raised before it, in accordance with law. It is suggested to the Respondent No. 8 Bank to take initiative to pursue the Company to hold Annual General Meeting and get ratification for the authorisation given to the Directors to create mortgage over the assets of the Company towards corporate guarantee. We are alive to the fact that there is conflict among the directors and therefore, it is necessary to place this subject in the agenda before the AGM. - Decided against petitioner. Unlawful appointment of directors in the meeting of the Board - Held that:- The letters of appointment issued to the Respondents 5 to 7 are in pages 364, 365 and 366 of the Petitioner's paper book and these letters are not disputed by the respondents. These documents show that the Respondents 5 to 7 are appointed as 'Directors' and not as 'Additional Directors'. In From DIR-12 (page No. 352 of the Petitioners' paper Book) also shows that it is appointment of 'Director'. This is therefore clearly in defiance of Sec. 260 of the Act, in as much of the Board of Directors has no power and authority to appoint Directors. It is not the case of the Respondents that the Respondents 5 to 7 are appointed as Additional Directors and later appointed as Directors in the annual general meeting of members. In view of the precedent reported in Varshaben S Trivedi vs. Shree Sadguru Switchgears Pvt Ltd. (2014 (3) TMI 1070 - COMPANY LAW BOARD MUMBAI) we hold that the appointment of Respondents 5 to 7 as Directors of the Company is unauthorized, and against the provisions of law and thus, is liable to be set aside.- Decided in favour of the petitioners.
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