9911796707
TMI Blog2017 (10) TMI 359X X X X Extracts X X X X X X X X Extracts X X X X ..... that he has been continuing as a director and managing director without any break; and (ii) direct the Ministry of Corporate Affairs to delete the relevant Form No.32 filed by the Respondents on 18/10/2011. b. To declare that the Respondent No.3 had lost his office on 28th September 2010 being the date of AGM 2010 when his appointment was not regularized. c. To declare the AGM 2010 purportedly held on 26th September 2010 as unauthorised, invalid and illegal and consequently set aside the proceedings thereof. d. To declare the Board Meeting purportedly held on 10th November 2010 and 20th January 2011 and other subsequent board meetings as unauthorized, invalid and illegal and consequently set aside the proceedings thereof. e. To declare the Board Meeting purportedly held on 27th October 2011 and 21st December 2011 as unauthorized, invalid and illegal and consequently set aside the proceedings thereof. f. To declare that the impugned allotment of 40,000 fully paid up equity shares purportedly allotted to Respondents 2, 3 and 4 on 27th October 2011 as oppressive, unfair, fraudulent, invalid, illegal, unlawful, null and void and consequently to (i) set aside the said allotmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f shares purportedly issued to Respondent No.5 on 16th January 2012, 3rd August 2012 and 6th June 2013 and declare the said meetings as illegal, null and void and consequently Form 2 filed with the Registrar of Companies on 18th January 2012, 15th November 2012, 21st January 2014 as illegal, null and void. p. To declare the increase in authorized capital of the Company made in the EGM allegedly held on 24th January 2012 as illegal, null and void and consequently Form 5 filed with the Registrar of Companies on 24th January 2012 as illegal, null and void. q. To declare that the Board Meeting allegedly held on 27th January 2015 with respect to shifting of registered office as invalid and illegal and consequently declare the Form-INC 22 filed on 3rd March 2015 as illegal, null and void. r. To declare that all documents and returns filed by the invalid board of directors constituted by the Respondents with the Registrar of Companies after moving of the Company Petition i.e. 10th January 2012 as illegal, null and void. s. To direct an investigation into the source and origin of the funds allegedly pumped into the Company. 2. Brief facts of the case, which are relevant to present ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... removed from his Directorship with effect from 20/01/2011 and Form 32 was filed for the same purpose. (g) Respondent No. 2 is a Director of the Company with effect from 08/09/2009. He holds 100 fully paid up Equity Shares of Rs. 10 each constituting 1% of the share capital of the Company. 10,000 fully paid up shares have been allegedly allotted to him on 27th October 2011. This allotment is under challenge. (h) Respondent No. 3 became a Director of the Company 20th February 2010 by virtue of an arrangement made by the Petitioner to meet requirements during his absence from India. The relevant Form 32 was filed on 23rd February 2010. He is continuance as a Director of the Company is under challenge. He is also shown to be having 20,000 [Twenty Thousand Only] equity shares of the Company in the impugned share allotment purportedly made on 27th October 2011. It is also under challenge in this petition. (i) Respondent No. 4 is the wife of Respondent No. 3 and is shown to be having 10,000 [Ten Thousand Only] equity shares of the Company in the impugned share allotment purportedly made on 27th October 2011 The same is under challenge in this Petition. (j) Respondent No.5 has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irectors i.e., Petitioner and Respondent No.2. His continuance as a Director of the Company after the AGM is illegal, null and void. (o) It is alleged that Respondents No.2 and 3 had colluded with each other and filed Form 32 on 18/10/2011 intimating cessation of Directorship of the Petitioner with effect from 20/01/2011. This action of the Respondent Nos.2 and 3 is accentuated by mala fides. This is highly oppressive and unfair act besides being completely invalid and illegal. (p) Since, only Petitioner and Respondent No.2 are Directors of the Company constituting the Board of Directors, without petitioner presence, there cannot be any valid Board meeting to contend that the Petitioner had lost his Directorship due to operation of Section 283(l)(g) of the Companies Act, 1956. Therefore the question of petitioner vacating office does not arise at all. If petitioner should be deemed to have vacated, Respondents No.2 and 3 too would follow suit. (q) On 27th October 2011 the Respondents allegedly held a Board Meeting and in the said meeting the 40,000 equity shares of Rs. 10 each totalling Rs. 4,00,000/- were allotted to Respondents No.2 to 4. The particulars where of have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... December 2011, 2,69,834 shares have been illegally allotted to Respondent No.5. Considering the fact that the Petitioner was kept in the dark with regard to these allotments, one may conclude that the said allotments were made purely with the intention of reducing the majority shareholder to a minority (his shareholding having been reduced from an overwhelming 99% to 3.09%) and to reduce him to the capacity of a mere observer and prevent his active participation in the affairs of the Company. Thus the allotment may be said to be detriment to the welfare of the Company and its shareholders and is null and void. (v) The Petitioner, in exercise of his available rights, as per Article 31 of AOA, had issued to the Company a letter dated 11th November 2011 expressing his intention to appoint five more directors, who are experienced in different fields, on the Board of Directors of the Company with a view to increase the business of the Company and expand its operations. The appointment of those persons as directors would go a long way in increasing the business potential of the Company. (w) However, at the time, he wrote the letter dated 11th November 2011, the Petitioner was not awa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Rs. 10 each to Respondent No.5 which is oppressive and illegal. Further they have increased the share capital of the Company from Rs. 50,00,000/- to Rs. 1,00,00,000/- in the Extraordinary General Meeting allegedly held on 24th January 2012. (aa) Further the said invalid Board constituted by Respondents No.2 and 3, allegedly conducted a board meeting on 3rd August 2012 and allotted 3,30,000 shares of Rs. 10 each to Respondent No.5 and appointed Respondents No.6 and 7 as directors of the Company on 3rd August 2012. There was no board meeting at all on the said date. The Respondents have cooked up records and filed forms with Registrar of Companies. (bb) It is alleged that by virtue of illegal allotment of shares to others, the stake of the Petitioner has been reduced from 99% to almost 0.01% which is oppressive, prejudicial to the interests of the Petitioner, who is the founder member of the Company and without his presence and consent there could not have been any board meeting or general meeting at all. (cc) It is alleged that the Company has been used as a conduit for routing black money from abroad and requires a thorough investigation in the origin of funds. (dd) The a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an abuse of process of law, devoid of merits and therefore deserves to be dismissed in limini. Also the company petition is not maintainable as the petitioner is not qualified under the provisions of section 399 of the Act to file a company petition under the provisions of sections 397 & 398 of the Act. The petitioner, who vanished from the company within a period of six months from the date of its incorporation has no locus standi whatsoever to make wild allegations against the present management. All such allegations do not warrant any consideration as the same are false, baseless, wild and against the records. (b) The Petitioner was initially working in a Delhi-based company viz., GS Infocomm Data Private Limited as Office Manager for a period of one year. The said company was handling outsourcing services of the UK-based company Duncan & Lewis & Co. During the course of the employment, the petitioner had to co-ordinate with the Duncan Lewis & Co Solicitors on a daily basis. Due to a hike in rates charged by GS Infocomm Private Limited, Duncan Lewis & Co Solicitors decided to terminate its contract with the Delhi-based company in India and consequentially petitioner was also t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner to meet requirements during his absence from India. The petitioner and the second respondent were shareholders till 27/10/2011 when the Board allotted 40,000 equity shares of Rs. 10/- each to the second, third and fourth respondents. (g) It is admitted that petitioner was the Managing Director from the date of incorporation till 20.01.2011, when he ceased to be Director by virtue of not attending three consecutive Board meetings without leave of absence. It is an admitted fact that the petitioner migrated to the UK for employment where his family already resides, and had taken up full-time employment with none other than Duncan Lewis & Co. Solicitors, in the UK, which is the backbone of the first respondent company. The visa given to the petitioner is that of HSMP i.e., Highly Skilled Migrant Programme. The said visa is neither a short term visa given to students nor a tourist visa. This is a visa given as Work Permit for a period of 2 years and can be further extended by another 3 years. After staying in the UK for a total of 5 years (including extension of visa), one can apply for permanent residence visa). The Petitioner who claims to be the Managing Director of the firs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions of section 283(l)(g) of the Companies Act, 1956. Accordingly, the first respondent company has also filed Form 32 intimating his cessation of office to the Registrar of Companies. Hyderabad as required under the law. In case, the petitioner claims that he has not vacated his office as Director, he needs to first prove as to his arrival in India on the said dates by furnishing the passport with immigration seal. Therefore it is submitted that the vacation of office of petitioner is legal and valid. (j) It is stated that the Board at its meeting held on 27/11/2011 has allotted 10000, 20000 and 10000 shares to second, third and fourth respondents respectively. Form 2 with respect to the said allotment was also duly filed with Registrar of Companies, Hyderabad. The company, in the course of its business, had to raise additional capital, and it is the prerogative of the Board to decide as to in what form funds would be raised. The Board of the Company by deciding to raise funds by way of issue of additional shares has made the impugned allotments. In fact, an offer was also made to petitioner, in his capacity as a shareholder to invest in the company. Since the petitioner di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the petitioner. (m) It is denied that petitioner did not receive any notice calling for board meeting held on 20/5/2010 as petitioner himself has walked out of the Company during March 2010 for taking up full time employment in UK. The Petitioner is only a shareholder holding 9,900 shares and not a Director of the first respondent company. Therefore the question of handing over the statutory registers/documents to the petitioner does not arise. The petitioner may however exercise his rights as a shareholder. The petitioner left the company during March 2010 to take up employment abroad and ceased to be a Director with effect from 20.01.2011 and therefore the respondents are not obliged to render any accounts to the petitioner as a Director. (n) It is stated that the petitioner was given due notice of the Board meeting held for shifting of registered office, the copy of the postal dispatch is also filed, the petitioner, after 36 months has attended in person a board meeting on 23.03.2016 that was held in the new registered office, and he has faced no problems in accessing the office. The shifting of Registered Office is due to the financial reasons due to the downsizing of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to suit Respondents. Therefore, effectively from 26th September 2010, there were only two Directors in the Company and they are the Petitioner and the Respondent No.2. As per Clause 35 of the Articles of Association, the quorum for a Board Meeting shall be two Directors. Without the presence of the Petitioner, no Board Meeting could have legally been held. (c) It is contended that the Petitioner was continuously in touch with the Company even when he was in UK until the end of June 2011. Thereafter, when he had come to India, Respondents have been hoodwinking him for about two or three months until they actually issued a notice of a general meeting for which Petitioner had to object by his letter dated 11th November 2011. There was not even an ordinary correspondence to the Petitioner that he had lost his Directorship. Subsequent to the fraudulent removal of the Petitioner by backdating the same from 20th January 2011, Respondents have made the impugned issue of shares on 27th October 2011. (d) It is stated that handing over of records on 24th March 2010 prior to his leaving for UK it cannot be understood to mean anything more than doing a job in a proper administrative way. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ] 41 SCL 237 (CLB). (c) Bhagirath Agarwala v. Tara Properties (P.) Ltd. [2002] 39 SCL 943 (Cal.). (d) Surajmull Nagarmull v. Shew Bhagwan Jalan [1973] ILR 1 Cal 207 (e) Dale & Carrington Investment (P.) Ltd. v. P.K. Prathapan [2004] 54 SCL 601 (SC). (f) Tea Brokers (P.) Ltd. v. Hemendra Prosad Barooah [1998] 5 Comp. LJ 463 (Cal.). g) Capricon Oils Limited and others Vs. Ratan Mohan Sarda and others - Manu/WB/0073/2012. 8. After hearing the parties and perusing the pleadings, the Tribunal has directed the Respondents to file Original Records pertaining to issue of Notices for the Board Meetings/AGM's/EGM's and proceedings taken during such meetings with respect to R1 Company. Accordingly, the Learned Counsel for R1 Company has filed an Index dated 30.01.2017, furnishing the details of the meetings, and the dispatch of notices etc. We have perused all the records produced on behalf of the Company and found that all the notices in question were duly sent to the petitioner by way of Speed Post/Courier/Email/Ordinary Post, in accordance with extant procedure. In fact, subsequent correspondence made by the petitioner indicates that he was aware of all the affairs of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as also recorded. Another notice dated 11.05.2010 was given to the Petitioner by communicating that the meeting of the Board of Directors would be held at Registered Office of the R1 Company on 20.05.2010 at 11 AM. The minutes of the meeting were also enclosed to the notice, wherein while transacting the other business, the absence of the petitioner without leave was also recorded. Another notice dated 17.08.2010 was given to the Petitioner by communicating that the meeting of the Board of Directors would be held at Registered Office of the R1 Company on 27.08.2010 at 11 AM. The minutes of the meeting were also enclosed to the notice, wherein while transacting the other business, the absence of the petitioner without leave was also recorded. Similarly, another notice dated 25.10.2010 was given to the Petitioner by communicating that the meeting of the Board of Directors would be held at Registered Office of the R1 Company on 10.11.2010 at 11 AM. The minutes of the meeting were also enclosed to the notice, wherein while transacting the other business, the absence of the petitioner without leave was also recorded. Another letter dated 02.12.2010 was issued to the Petitioner informing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e salary and other monthly expenses liability for the month of December, 2012. 12. The record produced on behalf of Company clearly shows that the Petitioner was given proper notices to all the meetings held by the Company from time to time. However, he did not attend them for the reasons best known to him. It is not in dispute that the petitioner did not attend the meetings of the Board of Directors as discussed supra, which deprived him the post of Director as per extant provisions of the Companies Act. The Petitioner was not present and participated in the Board Meetings and left for UK by entrusting his duties to Eturi Jagdeswara Rao, Respondent No. 3 and he has again making allegations against them too in conducting the affairs of Company. 13. The main grievance of the Petitioner as discussed supra is that, even though he is a First Permanent Director and he was holding majority of shares, were illegally removed from the Directorship and was reduced to minority by virtue of the illegal enhancement of Authorized share capital from Rs. 5 lakhs to Rs. 50 lakhs and Rs. 50 lakhs to Rs. 100 lakhs. It is not in dispute that the petitioner is still a shareholder of the Company and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner, and he can purchase those shares so as to retain his majority shareholders status in the Company. However, he is not interested to participate in the affairs of the Company. Since, the impugned allotment of shares are made in accordance with Articles of Association of the Company duly following principles of natural justice, the petitioner, in fact is not entitled to maintain the present petition. It is true that a petition under section 397/398 can be maintained by even a person holding less than 10% of shares etc., as prescribed under section 399 of Companies Act, 1956, provided that such petitioner is deprived of his shares/not offered such new shares first to him before allotting to others etc, provide such actions are questioned in Company petition. In the instant case, the petitioner was offered new shares to him, and he did not accept it and even now the same offer is kept open to him by the respondents as stated below. It is relevant here to extract the offer made by the Respondent in their addendum to the written arguments in the following paragraph. 16. Respondent has filed an addendum to the written arguments dated 30th January, 2017, the following are submission i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sity had confirmed way back in 2012 itself stated that his M.Com and M.B.A. are not genuine. However, the petitioner did not respond to this proof in his rejoinder or changed his claim in his amended petition. This shows petitioner's nature and character. (8) The seriousness of the petitioner on this petition can be seen from the fact that in the last 36 months he had not shown any interest in the company except to raise litigation dragging the Company to Court on frivolous grounds. (9) The respondents are ready and willing to oblige to the following if the Hon'ble NCLT directs them to - (a) Allot as many shares to the petitioner to subscribe at nominal value of a share, or (b) Sell all the respondents' shares to the petitioner at a fair value, or (c) Buy all the Petitioner's shares at a fair value. 17. The abovestated of the respondent would prove that their bona fides to resolve the issue amicably. It is relevant to examine bona fide of the petitioner in coming to the Tribunal with this petition. The petitioner has made so many frivolous/baseless/un-tenable/allegations to maintain the present petition. Apart from that, the petitioner's educational ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e notice only, the impugned allotment of shares consecutively was done and the same cannot be found fault with. The petitioner utterly failed to substantiate various material allegations made in the Company Petition. The Petitioner still has not shown any interest in running the affairs of the Company, except making wild allegations against the Company, which is giving employment to more than 100 employees and their families. The petitioner as stated supra, had employment in UK and still he had not shown any interest in running the affairs of the Company though he is invited for the same as stated supra. 19. As stated supra, the respondents have shown their bona fide by their willingness to allot as many shares to the petitioner to subscribe at nominal value of a share, or Sell all the respondents' shares to the petitioner at a fair value, or Buy all the petitioner's shares at a fair value. Any way, it is for petitioner and the respondents to settle their issue mutually and we are not expressing anything on this offer. 20. After perusing all the records especially with regard to conducting of meetings of Board where, the petitioner was absent, we are convinced that the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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