TMI Blog2015 (11) TMI 1702X X X X Extracts X X X X X X X X Extracts X X X X ..... ign it as a 2nd holder. There is no record to show that what legal action the petitioner has taken if he was threatened to sign the share transfer form and transfer the shares to the 4th respondent. As per law the transfer of shares by the petitioner is legal and valid. Further the petitioner contends that he represented the company when the company filed a suit for specific performance against the defendant being OS No. 82 of 2006 before the Hon'ble Court of Subordinate Judge, Calicut. The R1 Company is the plaintiff in the suit however the petitioner represented the company in the capacity as managing director. The said stand cannot be a ground to contend that he continued to be a shareholder of She company or has any vested interest, further the 4th respondent filed an affidavit dated 26.07.2011 before the Hon'ble Sub-court in OS No. 82 of 2006 clarifying the position and stated that the petitioner had transferred his shares on 27.04.2011 itself and he ceases to be a director of the company and lost all association with the company. The petitioner ceases to be a shareholder of the company and has no locus standi to file a petition before this Bench - C.P. No. 100/2011 - - - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the power to manage the affairs of some 'Meezan Group' including the respondent company. The petitioner was shocked and surprised to note as to how a person completely unrelated to the affairs of the respondent company, since its inception, can be entrusted with the powers of management of the respondent company and that too by an imaginary entity called 'Meezan Group'. The petitioner submits that there is no separate entity in the name of 'Meezan Group' and hence the resolution purportedly passed by the shareholders of the so called entity 'Meezan Group' is all sham and void ab initio. Furthermore in the affidavit filed by R4 it has been mentioned that in a meeting of the board of directors purportedly held on 27.04.2011 of the imaginary entity 'Meezan Group' under the chairmanship of one Panakkadu Hameed Ali Shihad Thangal it was resolved to entrust the entire control of all the businesses of 'Meezan Group' with the 4th respondent. Also, it has been mentioned that in such board meeting purportedly held on 27.04.2011 it was [resolved to transfer the entire shares held by the petitioner to the 4th respondent. The mala fides of the 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings made by the respondents without the knowledge of the petitioner. While the petitioner was sincerely attempting to sell the immovable property belonging to the company the respondents were indulging in oppressive acts and trying to mismanage the affairs of the respondent company by appointing the 3rd respondent and the 4th respondent as directors in the respondent company and fraudulently transferring the equity shares without the consent or knowledge of the petitioner The respondents have also vide another Form 32 without the knowledge or consent of the petitioner changed the designation of the petitioner from that of a managing director to that of a director, vide a board meeting purportedly held on 15.09.2011. The petitioner wishes to reiterate that the requisite statutory filings of the Form 32 for appointment of the 3rd respondent as director and the 4th respondent as managing director of the respondent company were done by the 2nd respondent without notice to the petitioner when they were very well aware of the fact that such acts required the express consent and notice to the petitioner. The above acts of respondents 2, 3 4 were with an intention to sideline the petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he company which is the sole asset of the company, which if not prevented will lead to the company's sub-stratum being destroyed. That many acts of oppression and mismanagement on the part of the respondents are serious, continuous and are completely against the interests of the R1 Company and its shareholders. If the respondents are permitted to continue managing the affairs of the company the petitioner would suffer immense loss and injury. In view of the reasons it is prayed to allow the petition. 2. The respondents have filed counter to the petition. The counsel appeared for the respondents submitted that the above petition suffers from serious material irregularity and legal and factual infirmity, illogical interferences and is against all principles of equity and natural justice, in as much as it seeks to hoodwink this Hon'ble Board into believing that certain transactions, acts and deeds have been entered into and/or committed by the petitioner, whereas in fact it is the first respondent company that is a party to such transactions, acts and deeds. From the averments in the petition, it appears as if the petitioner believes that his actions and those of the R1 Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 05.11.2003, and the board, of which the petitioner was a part, also unanimously approved the share transfer and handed over the share certificate in favour of the 2nd respondent, A copy of the minutes of the meeting of the board of directors held on 05.11.2003 is attached as Annexure B-3. It is submitted that there is no provision in law whereby a person is entitled to execute a contract in his capacity as 'promoter of a company', Once a company is incorporated, it comes into existence as an artificial juristic person and is entitled to enter into contracts in its own name, or it may be represented in the transaction by its board of directors or anyone authorised in this behalf by the board in its wisdom. The correct position is that it is not the petitioner who has entered into an agreement for purchase of 152 cents of land for the business of the R1 Company. In fact the R1 Company is the party, though it was represented in the transaction by the petitioner. The mere fact that the petitioner was representing the R1 Company cannot be tantamount to saying that the petitioner had entered into an agreement for purchase of the lands in question. However, the other details rega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s at liberty to decide through its board of directors as to who should represent it in the civil suit in OS No. 82 of 2006 and the petitioner cannot claim exclusive and unchallenged right to represent the R1 Company. The affidavit of the 4th respondent in the matter of OS No. 82 of 2006 before the Hon'ble Sub Court-III. Kozhikode uses the word 'leadership' and not 'chairmanship'. Panakkadu Hameed Ali Shihab Thangal is a well respected spiritual and community leader whose words carry a great deal of weight within the Kerala Muslim community. The management of the Meezan Group of companies decided to approach him to use good offices to resolve the disputes in management and also to assuage public feelings. Panakkadu Hameed Ali Shihab Thangal did not chair the meeting at any time at all and hence all allegations in this regard are categorically and vehemently denied. Further, when the petitioner was the managing director of the R1 Company had collected ₹ 2,24,20,000/- as share application money from prospective investors, but did not allot the shares or even increase the authorised capital of the R1 Company. When the investors came to know about the mala fide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the fact that the R1 Company has not filed any annual returns or accounts since incorporation and the R1 Company has been classified as 'Dormant' by the Registrar of Companies. Kerala and was later normalized. The board thus had no other option but to remove the petitioner from the post of managing director while retaining him as a director. The Form 32 as filed with Registrar of Companies, Kerala in respect of the petitioner duly indicates the reason as 'change in designation'. It is submitted that the petitioner has no indefeasible right to the post of managing director or arrogate to himself any exclusive right to represent the R1 Company, in terms of Clause 43 of the Articles of Association of the R1 Company, the board of directors has been given the power to appoint the managing director and to manage the affairs of the company. The Board in its wisdom chose to appoint the 4th respondent as the managing director of the R1 Company and a copy of the minutes of the Board meeting held on 25.09.2011 is annexed herewith as Annexure B-4. As a natural consequence, an application had to be made in the civil suit in OS No. 82 of 2006 for amending the cause title, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the part of the R1 Company or its directors. Consequently, the R1 Company was not required to give any notice to the petitioner about meetings of the board. Further; it is not understood what the petitioner means by saying while the petitioner was sincerely attempting to sell the immovable properly belonging to the company... . In effect, the petitioner knew that he was not removed from the post of director by the R1 Company. The petitioner cannot claim any vested right in the managing directorship of the company, nor can he dictate terms to the board of directors, since he can hold the position of managing director only so long as the board enjoys confidence in him. It is submitted that it is the acts of the petitioner that created fear and restiveness and the R1 Company had to move swiftly to restore credibility and confidence in the board, which is what it has done. There is no question of the respondents 2 to 4 usurping the property of the company, which is being held by it and which will continue to have ownership rights over the same until such time that it decides to dispose of it. Further the petitioner has not narrated what faith he had reposed in the 2nd respondent i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 108 of the Companies Act. Having transferred the shares by the petitioner on 27.04.2011 the petitioner cannot file the present petition before this Bench seeking various reliefs. To invoke the jurisdiction of this Bench under sections 397 or 398 one has to fulfill the requisite criteria as contemplated under section 399. As per section 399 the following members of a company shall have the right to apply under section 397 or 398. (a) In the case of a company having a share capital, not less than 100 members of the company or not less man one tenth of the total number of its members, which-ever is less, or any member or members holding not less than one tenth of the issued share capital of the company, provided that the applicant or applicants have paid all calls and other sums due on their shares. (b) in the case of a company not having a share capital, not less than one fifth of the total number of its members. 7. As per the above provisions of law it is crystal clear that unless and until the qualification as prescribed under section 399 of the Act, no member can file a petition before this Bench. In the present case the petitioner ceased to be a shareholder of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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