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2021 (6) TMI 704 - Tri - Companies LawMaintainability of petition - illegal removal from the post of Managing Director, in an Extra Ordinary General Meeting - first and foremost contention of the Respondents is that the consent enclosed by the Petitioners is not a valid consent under Section 399 of the Companies Act, 1956 - HELD THAT:- In the present case, the Respondent Company is having a share capital and therefore, either the shareholding requirement or the numerical requirement has to be fulfilled. Section 399(3) of the Act provides that in situations where a group of members chose to initiate an action under Sections 397 and 398 of the Act, any one member can maintain an application on behalf of and for the benefit of the other members, provided the consent in writing of the rest of the members has been obtained - the onus of proving that the shares have been indeed transferred by Respondent No.7 for valuable consideration is on the Petitioner. Prima facie, the Share Certificate on which they seek to rely, in the absence of other mandatory records to establish the transfer of 520 equity shares of the Respondent No.7 to the transferees who supports the original petitioner, is itself not conclusive about the actual date of transfer, as in Annual Returns, since both the dates are different no credence can be given to the document evidencing the share transfer as claimed by the Petitioner, which forces this Tribunal to draw an adverse inference against the consent holders Sl no.1 to 10 about the transfer of shares of the Respondent No.7 as claimed by them. Moreover, the Petitioner produced certain documents relating to the meetings conducted by the Respondent No.7 under the management of the Petitioner to sell the shares. Nowhere it is agreed or stated that these shares are sold to the consenting persons. No records have been produced by the Petitioner to prove that the consenting persons are the shareholders of the Respondent Company. Whether the Petition filed by the Petitioner along with the consent of rest of the shareholders qualify the requirement under Section 399 of the Companies Act, 1956? - HELD THAT:- Regulation 18 does not itself contain the requirement for filing the consent letters. The requirement has been prescribed in Annexure III, which is referred to in Regulation 18. Serial No. 27 of Annexure III contains a list of several documents required to be annexed to petitions relating to the exercise of powers in connection with prevention of oppression or mismanagement under Sections 397, 398, 399(4), 400, 401, 402, 403, 404 and 405. The documents required to be annexed to such petition include “where the petition is presented on behalf of members, the letter of consent given by them”. These requirements can be said to be mandatory in the sense that non-compliance with any of them would ipso facto result in the dismissal of the petition - In the present case the Petitioner miserably failed to obtain the consent letters from each shareholder who supports the contentions in the Petition. When he filed this Petition the consent in writing of the other petitioners had to be filed at the time of filing the petition and in the absence of the same, the petition is to be dismissed for failure to comply with the requirements as per the Act. The Petitioner herein individually and jointly failed to maintain the petition as they do not conform to the qualifying standards in relation to the shares as prescribed under Section 399 of the Companies Act, 1956 on the date of filing of the Petition - Application disposed off.
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