TMI Blog2007 (10) TMI 608X X X X Extracts X X X X X X X X Extracts X X X X ..... mas Mathew, is a promoter and subscriber to the memorandum and articles of association of the Company and director of the Company. Besides the managing director, there are eight directors, which include three non-member directors and Mrs. Asha Verghese, yet another daughter of the deceased Thomas Mathew. The Company neither convened the board meetings nor the annual general meetings since the year 2001 and is not able to function in terms of the memorandum of association. Consequently, the Registrar of Companies was constrained to initiate prosecution proceedings against the Company and its Managing Director for non-compliance with the statutory requirements, leading to imposition of a penalty of ₹ 7,200 on them. Nevertheless, there was no compliance of the relevant provisions of the Act. By virtue of article 20, the applicant and first respondent will hold office of directors for life, unless, they resign from directorship. All other directors are bound to retire at the annual general meeting and therefore, except the petitioner and first respondent, other directors cannot continue as directors without being re-appointed as directors at the annual general meetings. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eirs will not be in compliance with section 53(5) of the Act. The notice dated 19-5-2003 indicates that the annual general meeting for the year 1998-99 would be conducted at the registered office located at 9D, Katticaran Towers, Katticaran Street, Cochin - 628 018 on 16-6-2003, whereas the registered office came to be shifted, without the knowledge or consent of the shareholders, to a new place with effect from 1-6-2003. None of the shareholders save respondents 6 7 could have attended the annual general meeting at the changed venue. The board minutes dated 26-4-2003 and 19-5-2003 clearly show that the registered office was already moved to a new different place. The board of directors decided at the meeting held on 19-5-2003 and 26-5-2003 to convene the adjourned annual general meeting for the year ended 31-3-1999 and 31-3-2000 on 16-6-2003 and 25-6-2003 respectively at the new registered office, but at the same time, the notice dated 19-5-2003 convening the annual general meeting on 16-6-2003 and the notice dated 26-5-2003 indicate that the annual general meeting for the year ended 31-3-2000 was to be held on 25-6-2003 at the old registered office, which evidence the fact o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l general meeting for the year 2001-02 and the notice dated 28-6-2003 for the annual general meeting for the year 2002-03 could not have been sent under the same cover on 23-6-2003 as per the alleged postal certificate stamped on 23-6-2003. The notice dated 28-6-2003 could not have been sent on 23-6-2003, when no such notice was in existence on 23-6-2003. The board minutes dated 26-4-2003 disclose the shifting of the registered office, though the respondents 6 7 contend that the decision to shift the registered office was taken on 26-5-2003 and was given effect from 1-6-2003. Thus, the minutes dated 26-4-2003 were subsequently created without cross reference to the alleged decision of the board taken at the meeting held on 26-5-2003. The minutes of the alleged board meeting held on 26-4-2003 and produced by the respondents 6 7 show that at an extraordinary general meeting was to be held on 5-5-2003, to appoint a new statutory auditor of the Company. However, no such extraordinary general meeting was held on 5-5-2003 and no new auditor was appointed in the place of M/s. Venkat Hari, in accordance with sections 224 225 of the Act. The Company did not file any Form No. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d respondents 2 to 5, the respondents 6 7 claim that the Annual General Meetings for all these years were held after notice to the original living shareholders. No notice of the annual general meetings was admittedly sent to the legal heirs of (late) Thomas Mathew, namely, the respondents 2 3 as required under section 172(2)(ii) of the Act. Similarly, no notice of the annual general meeting was sent to the auditors as required under section 172(2)(iii) of the Act. The registered office of the Company was reportedly shifted with effect from 1-6-2003, but no intimation was ever sent to any of the members. The minutes of the board meeting dated 26-4-2003 reveal that the meeting was held at the new registered office of the Company. Nevertheless, the respondents 6 7 are not furnished any reason as to why they decided on 26-5-2003 to shift the registered office against with effect from 1-6-2003. The minutes of board meeting dated 26-4-2003 show that an extra-ordinary general meeting of the Company would be held on 5-5-2003 at the new registered office to appoint an auditor for the Company. However, no notice of any extraordinary general meeting was sent to the members for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eetings for the years 2001-02 and 2002-03. The respondents 6 7 claim that the annual general meeting for the year 2003-04 has been duly conducted, but there is no material produced by these respondents showing the dispatch of notice to the shareholders or minutes of the purported annual general meeting. 3. Shri George Cherian, learned Counsel representing the respondents 2 to 4 submitted :- Shri Thomas Mathew, holding 12,500 shares of the Company died on 30-10-2002, leaving behind his widow, son and two daughters. The Company, on a request letter dated 7-11-2002 made by the legal heirs of the deceased Thomas Mathew transmitted on 27-11-2002, 6,250 shares in the name of the second respondent and the remaining 6,250 shares in favour of the third respondent, being the son and one of the daughters of the deceased Thomas Mathew, thereby, becoming the shareholders of the Company. Mrs. Gracy Thomas, the widow and Asha Varghese, one of the daughters of (late) Thomas Mathew are on the board of the Company. Nevertheless, the respondents 2 3 never received any notice of the annual general meeting of the Company as required under section 172(i) or section 172(2)(ii) of the Act des ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents 1 to 4 submitted :- The respondents 6 7 failed to serve notice of the annual general meetings on the legal heirs of (late) Thomas Mathew, in violation of section 172(2)(ii) of the Act, which has been admitted by the respondents 6 7 in their counter filed to the petitioner. Hence, all annual general meetings must be set aside. No notice was either sent as required under section 172(2)(iii) to the auditor of the Company for the annual general meeting for the year ended 31-3-2000, as evidenced from the certificate of posting issued by the postal department on 26-5-2005. The Directors report dated 19-5-2003 for the year ended 31-3-1999 shows that no auditor was appointed. The auditor was neither appointed at the adjourned annual general meeting held on 16-6-2003. All minutes of the annual general meetings are fake ones. 5. Shri J. Sivanandaraj, learned Counsel for the respondents 6 7 opposed the company application on the following grounds :- The applicant in collusion with fifth respondent has filed the present application falsely alleging that no annual general meetings were held between 1998-99 and 2003-04. The applicant suppressing crucial facts has approached ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce, using the letterhead with the address of the old registered office. However, by oversight, the notice of annual general meeting did not specify the new registered office address. Had the shareholders attended the meeting at the old registered office, they would have known the change of the registered office, but never even attempted to attend the meeting, but are raising frivolous grounds challenging the genuiness of the notices and other records. (iii) decided on 26-5-2003 to convene the adjourned annual general meeting for the year ended 31-3-2000, on 25-6-2003 to consider and adopt the accounts for the year ended 31-3-2000; (iv)held the adjourned annual general meeting for the year ended 31-3-2000 on 25-6-2003, after due notice to all the shareholders approving the balance sheet, reports of the auditors and directors for the year ended 31-3-2000; (v) decided on 16-6-2003 to convene the adjourned annual general meeting of the Company for the period ended 31-3-2001 on 15-7-2003; (vi) held the adjourned annual general meeting for the period ended 31-3-2001 on 15-7-2003, after serving notice upon the shareholders and approved the annual return, balance sheet and audi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ointment of the auditors, the board of directors already decided that K.C. Tharu would be the new statutory auditors and the formalities have been completed. The board in consultation with K.C. Tharu finalized the accounts. The directors and shareholders are almost one and the same and therefore, any approval at the annual general meeting was a mere formality. Non-sending of notice of the annual general meeting to the auditors, being an accidental omission, cannot invalidate the proceedings, as envisaged in section 172(3) of the Act. 6. I have considered the pleadings and arguments of learned Counsel for the parties. The short issue before me is whether the applicant is entitled for the reliefs in terms of section 167 of the Act, in the facts of the present case. This Bench, on the present application of the applicant, by an order dated 30-5-2005, directed the Company, which was willing to abide by any order which may be passed in this behalf, to convene the annual general meeting for the years between 2000-01 2004-05 and further issued consequential directions in relation to holding and conducting the meetings. The respondents 6 7 aggrieved on account of the order, dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the respondents 6 7. The respondents 6 7 categorically contended that the annual general meetings for the years ended 31-3-1999, 31-3-2000, 31-3-2001, 31-3-2002 and 31-3-2003 were held, after due notice to all the shareholders under certificates of posting on 16-6-2003, 25-6-2003, 15-7-2003, 25-7-2003 and 4-8-2003 respectively and further that the annual reports as well as the balance sheets of the Company for all these financial years have been submitted before the Registrar of Companies as reflected in the receipts dated 19-9-2003 issued by the latter, thereby duly complying with the statutory requirements. The contentious issue before me is whether there was any valid annual general meeting of the Company held during the period between 1998-99 and 2003-04. In this connection, the civil suit in OS No. 521 of 2004 filed before the Court of Sub-Ordinate Judge, Ernakulam by the Company represented through the fifth respondent and the applicant herein against, among others, the respondents 6 7 for a decree declaring that a sale deed executed by the respondents 6 7 in respect of the immovable property belonging to the company, in favour of a third party, being the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that he will abeyed with all the decisions to be taken by the Board of Directors for the upcoming of the company. Shri K.M. Varghese has also informed the 1st defendant that he and his wife are not in a position to come down to India as there are number of criminal cases and no bailable warrants are pending against them. There after, the board of directors remaining over here have conveyed and Annual General Meeting, Extraordinary Annual General Meetings and board meetings etc., to fulfil the ROC requirements. It is pertinent to point out that all these meetings were conveyed only after giving due notices to other directors of the company and on 19-9-2003 these defendants have submitted annual returns for years 1999-2000, 2000-01, 2001-02 2002-03, balance sheets for the above said years before the ROC. If the agent of Shri K.M. Varghese has pleaded guilty before the Addl. Chief Judicial Magistrate Court (EO) Ernakulam, in ST 121/2004 122/04 and remitted fine as alleged by them in the plaint, it is without the knowledge of the Board and for which these defendants or the company are not responsible. All the formalities complied by these defendants are reflected in the ROC records ..... X X X X Extracts X X X X X X X X Extracts X X X X
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