TaxTMI 
TaxTMI 
2013 (5) TMI 39
X X X X Extracts X X X X
X X X X Extracts X X X X
....r dated 2-12-2010 questioned the validity of the requisition on the ground that though it was signed by the Company Secretary of IFCI, but specific authorisation/board resolution to file such requisition had not been annexed and it requested IFCI to send the said board resolution within a period of one week. Subsequently, on not getting the said information, TFCI through its board meeting held on 14-12-2010 decided not to convene EOGM of TFCI. On receiving this information, IFCI on 15-12-2010 initiated the process under section 169(6) of the Act for convening an EOGM on 17-1-2011. IFCI then filed the present Company Petition No. 124(ND) of 2010 under sections 398 and 402 of the Act on the same day. 3. On 16-12-2010, the CLB passed the following interim order :- "CP No. 124/ND/2010 mentioned. Heard on interim reliefs. After considering the submissions and perusing the petition following interim order is passed :- A. Both parties shall maintain status quo as it exists today on the Board of Directors. B. Petitioner shall, besides the steps already taken by him, not take any further steps for holding of EOGM before the next date of hearing. Response to the petition be filed withi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ve notices under section 257 and another notice under section 190 of the Act after printing her name and designation she did not either print her name and designation on either page of the requisition under section 169(1) of the Act or affix her signature on either page of the requisition. Her signature is not to be found in the requisition under section 169(1) on page 199-200. These pages only bear an impression of the seal of TFCI and the initial of the person receiving it but does not bear the signature of Rupa Sarkar. A very small initial appears to have been made by someone below the requisition on page 199-200. ** ** ** 21. In the present case, sub clause (2) of section 169 mandates that the requisition shall be signed by the requisitionist. The use of the work 'shall' before each of the three conditions enumerated in section 169(2) reflect clearly the intention of the law maker that a mere illegible initial at the end of the requisition would not render it valid. The letter dated 2611.2010 of Mr. Javed Yunus, Annexure P-6 on page 198 does not disclose in any manner that the requisition has been duly signed by the Company Secretary of IFCL. It is also pertinent to note that....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n EOGM under section 169(6). It is pertinent to note that the petition was filed on 15-12-2010 and was heard on interim relief on 16-12-2010 at 2.30 PM. Neither in the petition nor during arguments of the Senior Counsel for the IFCI there was even a whisper that a notice for convening an EOGM under section 169(6) had been issued on 15-12-2010. The petition stated in para V that after the refusal by TFCI to convene EOGM, the Petitioner had initiated the process to convene an EOGM under section 169(6). Learned Counsel for the Petitioner made a categorical statement before me that on 15-12-2010, notice under section 169(6) of the Act by IFCI had not been issued. A certificate given by International Print-O-Pac Ltd., was also handed over which stated that they handed over 63906 numbers of EOGM notices of TFCI to M/s. Blaze Flash Courier on 16-12-2010 at 7 AM. One can easily comprehend the time required for sending 63906 notices by enveloping such notices and putting address on each notices. IFCI could not have, in any manner anticipated the tenor of the interim order to be passed by CLB during mention hour, so as to be in a tearing hurry to dispatch the notices before arguing for inter....
X X X X Extracts X X X X
X X X X Extracts X X X X
....No. 13 of 2011, within one week from today. Since the impugned order is an interim order, we need not pass any further order in that regard. Subject to above, the special leave petition is dismissed." 10. Thereafter the matter was heard on day to day basis, subject to availability of learned senior counsel for the parties. 11. Mr. Ashwini Mata, learned senior counsel for IFCI submitted that section 169 of the Act creates a vested legal right in favour of shareholders to call for a meeting of shareholders of the company. He further submitted that section 169(1) of the Act imposes corresponding statutory duty on the Board of Directors of a company to forthwith proceed to call for an EOGM of the shareholders within 21 days from the receipt of the requisition. He submitted when the conditions set out in section 169(2) and (4) of the Act are fulfilled then it is not open for the Board of Directors to refuse to act on the requisition on any other ground whatsoever. 12. Mr. Mata submitted that any authorisation/Board resolution authorising the Company Secretary to make requisition is an internal matter of IFCI which was not within the scope of TFCI to ask for. Mr. Mata submitted that ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....73(2) of the Act and notices under sections 257/190/284 of the Act along with the actual requisition. Mr. Chaudhary submitted that these are separate documents not forming the part of actual requisition and in the present case, these other documents are signed but not the actual/stand alone requisition which forms the most relevant document under section 169 of the Act. 16. Mr. Chaudhary further submitted that TFCI's Company Secretary's letter dated 2-12-2010 and the Board Minutes dated 14-12-2010 from which it appears that TFCI had no doubt that the said requisition was in fact signed by Company Secretary of IFCI does not in any way bar judicial scrutiny of it. He submitted that there cannot be any estoppel against a statute and if a statute provides something to be done in a particular manner, the same cannot be waived by any party. He quoted judgments of Supreme Court in Sidh Bali Steel Ltd. v. State of U.P. [2008] 12 SCC 675 and State of U.P. v. U.P. Rajya Khanij Vikas Nigam JT 2008 (6) SC 489. 17. Mr. Chaudhary further relied upon CLB's findings that fraud was played by IFCI and the notices were issued after passing of the order dated 16-12-2010. He submitted that the petiti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d 'signature' is defined as :- "A signature is made by use of any name, including any trade or assumed name, upon an instrument, or by any word or mark used in lieu of written signature." He submitted that every page of the requisition dated 26-11-2010 is signed and on the last page there is full seal and stamp of the Company Secretary. In this connection, he relied upon the decision of the Supreme Court in Municipal Corpn. of Greater Bombay v. P.S. Malvenkar [1978] 3 SCC 78 wherein it has been held that that there is no legal difference between an initial or a signature and unless the law specifically requires affixation of full signatures, affixation of signatures by initials on a document does not detract from its authenticity. Mr. Mata further relied upon judgment in Gouni Satya Reddi v. Government of Andhra Pradesh [2004] 7 SCC 398 wherein the Hon'ble Supreme Court has held that the use of initials instead of full name should not be the ground to suspect the genuineness of a document. 22. Mr. Mata submitted that the expression that 'notices as on 15-12-2010 stand issued' simply means that as on 15-12-2010 notices had been given for printing. In this regard he placed relianc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed hereinbelow :- "Extract of minutes of the meeting of the board of directors of ifci ltd. (IFCI) held at 12.00 noon on thursday, the 29th november, 2001 in the board room, IFCI tower, 61 Nehru Place New Delhi - 110019. ITEM No. 2.13Delegation of signing powers to the officers of IFCI. ** ** ** The Board considered the matter and passed the following resolution : "Resolved that all officers of IFCI in all disciplines, except Private Secretaries viz., Chairman & Managing Director, Whole-time Directors, Executive Directors, Chief General Managers, Company Secretary, General Managers, Dy. General Managers, Asstt. Company Secretary, Asstt. General Managers, Managers and Asstt. Managers and such other officers as may be authorized by the Chairman & Managing Director, be and are severally authorized to : ** ** ** (ii)Sign and execute on behalf of IFCI all legal documents, instruments, guarantees and agreements which are required to be executed for and on behalf of IFCI in connection with the current and authorized business of IFCI... ..." (Emphasis supplied) 25. Section 2(15) of the Act defines a document to include a requisition. Consequently, if the IFCI's Board minutes dated ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n entrusted with the power of management by its board) in turn authorised its Company Secretary to take all necessary steps to issue a requisition for convening an EOGM. 29. The judgments relied upon by Mr. Chaudhary, namely, Mohan Lal Mittal's case (supra) and Nibro Ltd.'s case (supra) are not applicable to the present facts as in the present case the Board of IFCI had deliberated on the policy matter relating to re-constitution of TFCI's board and issued direction to its officers to execute its decision dated 27-10-2010. 30. As far as the finding of the CLB that the requisition dated 26-11-2010 was not signed as required under section 169(3) of the Act is concerned, I am of the view that law prescribes no particular form of the requisition. 31. All the documents as annexed at pages 152 to 176 to the paper book comprising of notices under sections 169, 257, 190, 284 of the Act and explanatory statement under section 173(2) of the Act were served as a bundle and were deposited 'in one go' with the registered office of TFCI on 26-11-2010. In my opinion, if all the documents served by IFCI are taken as a composite document, there is no iota of doubt that requisition was signed by ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....fore him only to make a correction in that resignation. The question, therefore, which was dealt in the above said judgment was as to whether the Councillor had signed the resignation letter before the Collector or not. 35. Moreover, the issue whether requisition is signed or initialed by the Company Secretary is a question of fact. TFCI neither in its reply to the company petition nor in its Company Application bearing No. 17/2011 filed before the CLB raised any objection on this score. In my opinion, in view of the admission by the Board of TFCI that the requisition had been duly signed by the Company Secretary of IFCI, the findings of CLB to the contrary in the impugned order is unsustainable and are hereby set aside. 36. I am also of the opinion that CLB's finding that IFCI has played fraud upon it, is a finding based on presumptions and surmises. It is pertinent to mention that CLB has primarily reached this conclusion on the ground that there is no mention in the petition that notices had been issued and/or that the date of EOGM had been fixed for 17-1-2011. 37. In fact, in para 5( v) of the company petition filed before CLB it has been categorically averred by IFCI that i....
X X X X Extracts X X X X
X X X X Extracts X X X X
...." 41. Further, the fact that IFCI on 15-12-2010 had asked for an updated list of the shareholders from TFCI, does not prove that the notices had been dispatched subsequent to the interim order passed by the CLB. This is more so when the admitted position is that the updated list subsequently furnished by TFCI had not been accepted by IFCI. 42. I am also of the view that the alleged receipt of EOGM notices by LIC and Bank of Baroda around 21-12-2010 do not prove that IFCI had issued notice subsequent to the passing of the interim order by the CLB. This is more so when 17-12-2010 was a holiday on account of 'Id-ul-zuha' and 18-12-2010 and 19-12-2010 were Saturday and Sunday respectively. Consequently, I am of the view that finding of fraud given by the CLB is based on no evidence. 43. In view of the aforesaid discussion, I am of the opinion that the reasoning given by the CLB in the impugned order is unsustainable. Accordingly, the impugned order is set aside and the requisition dated 26-11-2010 as well as the EOGM dated 17-1-2011 are held to be legal and valid. Consequently, subsequent appointment of five Directors by TFCI's Board on 22-3-2011 is set aside, as on the said date th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n bearing Company Petition No. 124(ND) of 2010 seeking permission of CLB to give effect to the said resolutions. 46. As during the course of hearing certain allegations have been made by IFCI's counsel that the minutes of the board meetings of TFCI do not correctly reflect as to what transpired in the said meetings and removal of CMD in the EOGM scheduled for 18-5-2011 is a virtual certainty, I appoint Mr. Justice R.C. Chopra, a retired judge of this Court as Chairman of the Board of TFCI till the term of present CMD expires, that means, 19-1-2012 or till earlier determined by CLB. The Chairman would attend and chair the board meetings of TFCI, but would not vote. The minutes of said board meetings would be prepared and circulated under the supervision of Mr. Justice R.C. Chopra. Justice Chopra shall be entitled to a fee of Rs. 40,000 for every board meeting that he chairs and attends. Fees will be paid by TFCI. 47. However, before I pass the final directions, I must deal with Mr. Mata's objection with regard to this Court's power to examine subsequent events and to mould the relief. I am of the opinion that this Court has extremely wide powers to mould the relief and to examine ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....relevant to determine the power of this Court. The said sections are reproduced hereinbelow :- "398. Application to (Tribunal) for relief in cases of mismanagement.-(1) Any members of a company who complain- (a)that the affairs of the company [are being conducted in a manner prejudicial to public interest or] in a manner prejudicial to the interest of the company; or (b)that a material change not being a change brought about by, or in the interests of, any creditors including debenture holders, or any class of shareholders, of the company) has taken place in the management or control of the company, whether by an alteration in its Board of directors, [***] [or manager], [***] or in the ownership of the company's shares, or if it has no share capital, in its membership, or in any other manner whatsoever, and that by reason of such change, it is likely that the affairs of the company [will be conducted in a manner prejudicial to the company [will be conducted in a manner prejudicial to the interests to public interest or] in a manner prejudicial to the interests of the company, may apply to the [Tribunal] for an order under this section, provided such members have a right so to ap....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ld as under :- "172. Even though the company petition fails and the appeals succeed on the finding that the Holding Company has failed to make out a case of oppression, the court is not powerless to do substantial justice between the parties and place them, as nearly as it may, in the same position in which they would have been if the meeting of 2nd May were held in accordance with law." (Emphasis Supplied) 51. The Bombay High Court in Bennet Coleman & Co. v. Union of India [1997] 47 Comp. Cas. 92 has, after referring to the entire scheme of the Act, held as under :- ".....Further, an analysis of the sections contained in Chapter VI of Part VI of the Act will also indicate that the powers of the court under section 397 or 398 read with section 402 cannot be read as being subject to the other provisions contained in sections dealing with usual corporate management of a company in normal circumstances. Moreover, the topics or subjects dealt with by sections 397 and 398 are such that it becomes impossible to read any such restriction or limitation on the powers of the court acting under section 402. Similarly, under section 398 read with section 402 power has been conferred upon th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Act and we are also of the further view that the learned judge had ample powers to alter the original article 95 of respondent No. 1-company in the manner done by him while acting under section 398 read with section 402 of the Act." (Emphasis Supplied) 52. In Sangramsinh P. Gaekwad v. Shantadevi P. Gaekwad [2005] 123 Comp. Cas. 566/ 57 SCL 476 , the Supreme Court has held that section 402 of the Act provides for reliefs which may be granted without prejudice to the generality of the powers of the Court under such provisions. 53. In Manish Mohan Sharma v. Ram Bahadur Thakur Ltd. [2006] 67 SCL 91, the Supreme Court has held that the powers under section 402 of the Act are residuary in nature and in addition to the powers available under sections 397(2) and 398(2) of the Act which permit the CLB and this Court in appeal to make such order as it thinks fit with a view to bringing an end to the matters complained of under section 397(1) of the Act and with a view to bring to an end or prevent the matters complained or apprehended under section 398(1) of the Act. 54. In fact, in M.S.D.C. Radharamanan v. M.S.D. Chandrasekara Raja [2008] 83 SCL 451 the Apex Court specifically rejected ....