TMI Blog2017 (10) TMI 914X X X X Extracts X X X X X X X X Extracts X X X X ..... dent Directors and investigation of the affairs of the first respondent company. This Tribunal hereby direct respondents No. 2 and 3 to purchase the shares of the petitioner and his wife if they are willing to sell their shares for a fair market value fixed by an independent valuer appointed by this Tribunal. Petitioner and his wife if they are willing to sell their shares, they shall file an application before this Tribunal within two months from the date of this order for appointment of independent valuer to assess fair market value of the shares of the first respondent company as on the date of filing of petition. In case if the petitioner and his wife file such application, this Tribunal shall appoint independent valuer to determine the fair market value of shares of the first respondent company as on the date of filing of petition and further decide the mode and manner of transfer of shares. - TP NO. 109/397-398/NCLT/AHM/2016 (NEW) AND CP NO. 77/397-398/CLB/MB/2015 (OLD) - - - Dated:- 20-9-2017 - MR. BIKKI RAVEENDRA BABU, J. For The Petitioner : S. Suriyanarayanan, Ld. Adv. For The Respondent : Dhiren Dave, Ld. PCS ORDER 01. This petition is filed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mployment as Printing Master and that is how he joined the first respondent company. But, according to the petitioner, respondents No. 2 and 3 allotted only 3,00,000 shares @ ₹ 10/- each on 11.09.2010, 1,00,000 shares on 28.10.2010 and another 1,00,000 shares on 01.11.2010 but in the returns filed in the Office of the Registrar of Companies, date of allotment is shown as 12.05.2011. Wife of petitioner was allotted 2,00,000 shares @ ₹ 10/- fully paid-up on 28.12.2010 and did not allot further shares. Petitioner further pleaded that in September 2015 when he conducted search of the website of Ministry of Corporate Affairs he came to know that respondents have not allotted 50% shares to the petitioner group but allotted further equity shares of 5,00,000 each to respondent Nos. 2 and 3 on 20.04.2010 and 12.05.2011 behind the back of the petitioner. 05. Although petitioner was made Director of the first respondent company with the powers to sign cheques and operate the bank account of the first respondent company in Allahabad Bank, Nanpura Branch, Surat, he was removed as Director in the Annual General Meeting held on 08.10.2015 without following the provisions of the Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2014 authorisation to the petitioner to operate the bank account of the first respondent company in Allahabad Bank, Nanpura Branch, Surat was invoked by respondents No. 2 and 3 by using their brute majority in the Board of Directors of the first respondent company. Petitioner was not given any notice of the Board of Directors meeting or General Meetings and, in fact, such meetings were never held. It is also stated that no accounts were circulated or supplied to the petitioner. Since the atmosphere was totally vitiated and suffocating, the petitioner had no alternative except to stop going to the registered office of the first respondent company since May 2013. 09. Petitioner has prayed for the following reliefs in the petition. (a) Restrain respondents No. 2 and 3 from proceeding with the Extraordinary General Meeting to be held on 08.10.2016. (b) To declare handing over possession of the process house to third parties without the concurrence of the petitioner is illegal. (c) To order transfer of balance shares of the first respondent company to the petitioner aggregating to 50% of the paid-up share capital. (d) To order to appoint relatives of petitioner and respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the first respondent company. Petitioner ran away from employment of the first respondent company and joined another company as employee and alleging that the respondents not allowed the petitioner to continue. Respondents No. 2 and 3 stated that petitioner was removed after giving due notice and after considering his replies. Respondents further stated that the petitioner was removed as authorised signatory with his knowledge. Petitioner stopped attending the company business and took employment in another company which is competing with the first respondent company. It is stated by the respondents that petitioner did not state any acts of oppression and mismanagement qua shareholding of petitioner. According to respondents, some of the prayers are not at all maintainable and he has to approach the Civil Court. According to the respondents there are no acts of oppression and mismanagement. 11. In the rejoinder it is stated that the averments that ₹ 63.00 lacs were transferred by respondents No. 2 and 3 to the petitioner and, therefore, practically there is zero investment of the petitioner in the first respondent company are false. 12. Proprietary firms viz. Naresh Ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he allotment of further shares of 5,00,000 each to respondents No. 2 and 3, even according to the petitioner, took place in 2011 and it has not been questioned by the petitioner except in this petition which is filed in September, 2015. He also contended that petitioner is Director of the first respondent company and on his own saying petitioner stopped coming to the company from 2013 and, therefore, petitioner is not entitled to question the allotment of further shares of 5,00,000 to each respondents No. 2 and 3 in the year 2010 and 2011. 16. In a number of judgments, Hon ble Supreme Court considered in extenso the scope of sections 397 and 398 of the Companies Act, 1956 that are corresponding to Section 241 and Section 242 of the Companies Act, 2013. Hon ble Supreme Court mainly referred to the following judgments in order to conclude what oppression would be:- (a) Needle Industries (India) Ltd. v. Needle Industries Newey (India) Holding Ltd. [1981] 3 SCC 333 (b) M.S. Madhusoodhanan v. Kerala Kaumudi (P.) Ltd. [2003] 46 SCL 695 (SC), (c) Dale Carrington Investment (P.) Ltd. v. P.K. Prathapan [2004] 54 SCL 601 (SC), (d) Sangramsinh P. Garekwad v. Shantadevi P. Gae ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch comes to ₹ 62.00 lacs were invested by the petitioner in the company. According to the respondents from their accounts ₹ 63.00 lacs were transferred to the account of petitioner. In support of the plea, respondents filed annexure A showing the amounts transferred from the accounts of Naresh Mandlewala, Rakesh Mandlewala, Hemant Mandlewala, Rameshbhai Shah, Rohit Patelwala to the account of petitioner. In the rejoinder, petitioner stated that some proprietorship firms viz. Naresh Chemicals, Shwe Hintha Trading Company and Krishna Sales gave five notices dated 07.10.2015 to the petitioner demanding money stating that they are payable to them. Petitioner got issued replies to lenders dated 26.10.2015 stating that he is not liable to pay the amounts demanded by the aforesaid proprietorship firms. He has filed copies of reply notices as annexure A to the rejoinder. Therefore, the theory put forward by the respondents that it is the respondents No. 2 and 3 that funded the petitioners to subscribe for the shares in the first respondent company do not merit acceptance in light of annexure A reply notices issued by the petitioner to his lenders. 19. Therefore, it can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntinued to have the cheque power till the middle of May 2014. 23. Coming to the aspect of removal of the petitioner as Director, it is within the knowledge of the petitioner that the production in the first respondent company (process house) was stopped on 01.02.2013. It is the statement of the petitioner that he stopped attending the company from May 2013. It is the case of the petitioner that he joined Ravi Export Ltd. leaving the first respondent company as printing master. 24. It is also in the knowledge of the petitioner that he was not called for any Board Meeting or any General Meetings or at least it is in the knowledge of the petitioner that no Board Meetings or General Meetings were held in respect of the first respondent company but petitioner being a director did not raise any objection on those aspects till he was proposed to be removed. As can be seen from the notice dated 20.08.2015 it served on the petitioner on 25.08.2015. It is clear from the notice that the reasons for removal of the petitioner as Director is petitioner is not attending day-to-day activities of the first respondent company and petitioner is revealing the trade secrets of the company to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In that case averment of non-receipt of notice for any Board Meetings were found to be correct. In that case, it was also proved that the conduct of the respondents amounts to oppression and mismanagement in the affairs of the company. Under those facts and circumstances, Hon ble Company Law Board held that the action taken by the respondents removing the petitioner as Director was set aside. In the case on hand petitioner having been given employment as printing master and having been given the position of Director did not participate in the activities of the company, at least after 2013 till he filed the petition. In the case on hand even according to petitioner he received the notice but it was short notice. In the case on hand petitioner and his wife were served EOGM notice. In this case sufficient reasons were given for removal of the Director. Therefore, removal of the petitioner as Director in this case cannot be equated with the facts in the case relied upon by the learned counsel for the petitioner. 25. On the same aspect learned counsel for the petitioner relied upon another decision of the Company Law Board, Mumbai in Mohmad Rafiq Jafferbhai Bagwan v. Sathyaprakash Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the petitioner as Director. Therefore, the question of legitimate expectancy does not arise in this case. More so in order to exercise legitimate expectancy petitioner must be wilful and diligent enough to participate in the affairs of the company but not by running away from the company and joining another company and look towards Tribunal. 29. In view of the above discussion removal of the petitioner as Director of the first respondent company has to be upheld. 30. Contention of the learned PCS for the respondents is that an isolated single act of removal of Director would not entitle an aggrieved person to ask for relief of oppression and mismanagement invoking Section 241 of the Companies Act, 2013. On this aspect learned PCS appearing for the respondents No. 2 3 relied upon the decisions in Hanuman Prasad Bagri v. Bagress Cereals (P.) Ltd. [2001] 33 SCL 78 (SC). In that decision it is held that a Director even if illegally terminated cannot bring his grievance as to termination to winding up the company for that single and isolated act, even if it was doing good business and even if the Director could obtain each and every adequate relief in a suit in a court. 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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