TMI Blog2018 (4) TMI 547X X X X Extracts X X X X X X X X Extracts X X X X ..... s misused and thus, the CLB rightly arrived at the finding that there appears proper acquiescence on the part of the petitioner in respect of the increase of authorised capital of the Company from ₹ 1 lac to ₹ 3 lacs. The alleged transfer of the shares by the first respondent in favour of the appellant no.2 herein, has been declared illegal by the CLB while deciding a separate petition preferred by the first respondent. Though the first respondent had contended before the CLB that special notice dated 14.8.10 under Section 284 read with Section 190 of the Act of the Board Meeting held on 30.9.10, was served upon the first respondent but no documentary evidence was produced to establish the factum of service of the notice as alleged. Apparently the petitioner was not given an opportunity to explain his position against the proposed removal from directorship. Violation of mandatory provisions of Section 284 of the Act, the removal of the first respondent from directorship of the Company has rightly been held illegal by the CLB. It is also not in dispute that Smt. Rakhee Panday, the appellant no.4 herein, was appointed as Director of the Company in the Board Meeting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and decided the same on merits, this court does not find any justifiable reason to entertain the objection raised on behalf of the appellants at this stage. Appeal dismissed. - S. B. Company Appeal No. 4 / 2014 - - - Dated:- 4-4-2018 - Sangeet Lodha, J. For the Appellant : Mr. Manoj Bhandari For the Respondent : Mr. Vikas Balia with Mr.Dinesh Pal Singh JUDGMENT 1. This Company Appeal under Section 10F of the Companies Act, 1956 ( for short the Act ) is directed against judgment and order dated 31.3.14 passed by the Company Law Board, Northern Region Bench, New Delhi ('CLB'), whereby the Company Petition [No.98(ND)/2013] preferred under Sections 397 398 read with Section 402 of the Act by the first respondent for restoration of his directorship, for declaring the issuance and allotment of 60,000 equity shares to the appellants no.2 to 8 as null and void as also to declare Form No.2 dated 5.9.12 filed with the Registrar of Companies, Jaipur for giving effect to the share allotment as void ab initio, for declaring the appointment of appellant no. 3 as Director of the Company w.e.f. 6.1.10 and appointment of respondent no.4 as Director w.e.f. 30.9.10 as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. Shri Mohit Panday 3,500 3. Smt. Rakhi Panday 5,500 4. Shri Prabash Panday 10,000 5. Smt. Vimla Panday 10,000 6. Shri Rohit Panday 13,500 7. Smt. Ritika Panday 7,500 TOTAL 60,000 5. The first respondent alleging oppression and mismanagement on the part of the Appellants filed a petition under Section 397 398 read with Section 402 of the Act claiming the reliefs indicated as above. The petition was contested by the Appellants by filing a reply thereto. 6. Precisely, the case set out by the first Respondent before CLB was that he was removed from the Directorship of the Appellant Company without tendering an opportunity to give representation against the removal, in gross abuse of the mandatory provision and procedure provided for under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transfer of aforesaid shares for alleged purported settlement of the debt of the Appellant no.2 if any with the first Respondent and thus, the transfer of the share as alleged is a concocted story and the ledger entries were made without any consent or authorisation by the first Respondent. 9. It is pertinent to note that the petition filed by the first Respondent challenging the transfer of 2500 shares was allowed by the CLB vide order dated 19.3.14. Aggrieved thereby, an appeal (No.2/14) preferred by the Appellants before this court stands dismissed vide order dated 10.10.14 and thus, the order passed by the CLB setting aside the transfer of 2500 shares held by the first Respondent in the name of Appellant No.2-Laxmi Narayan Pandey and accordingly, the directions issued to enter aforesaid share holdings of 2500 shares in the name of the first Respondent in the Register of Member has attained finality. 10. In the instant case, after due consideration of the pleadings, material on record and rival submissions of the parties, the CLB arrived at the finding that though there is no evidence on record to prove that proper notice of Extra Ordinary General Meeting held on 9.10.09 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng for the Appellants contended that as per provisions of Section 399 (1) (a) of the Act, for a member to apply under Section 397 398 of the Act, he must hold at least 1/10th of paid up capital of the Company and since, the first Respondent at the time of filing the petition before the CLB was not holding 1/10th of the paid up capital of the Company was not entitled to maintain the petition. Learned counsel submitted that a combined reading of the order impugned dated 31.3.14 and order dated 19.3.14 passed in Company Petition No. 08/111/2013, reveals that on the one hand, CLB invalidated the transfer of share holding of 2500 shares of the first Respondent to the Appellant no.2-Laxmi Narayan Pandey, on the other hand, it validated the allotment of 20000 shares made on 2.11.09 in favour of Shri Mohit Pandey, Smt. Rakhi Pandey and Shri Laxmi Narayan Pandey and thus, as per impugned order, after 2.11.09, the subscribed and the paid up capital of the Appellant Company stood increase from 10000 shares to 30000 shares with the first Respondent holding only 2500 shares. In this view of the matter, since the first Respondent was not holding 1/10th of the issued share capital i.e. 1/10th o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Respondent was holding much more than 1/10th of issued share capital of the Company prior to increase of the share capital which was impugned in the petition and thus, by no stretch of imagination it can be said that the first Respondent was ineligible to maintain the petition by virtue of provisions of Section 399 of the Act. Learned counsel submitted that right from the act of illegally transferring the share held by the first Respondent, his removal from Directorship of the Company without notice and the increase of the share capital unilaterally were the acts indicative of oppression and mismanagement continuing as on the date of the filing of the petition and thus, the question of the first Respondent being non suited on the ground that he was not holding requisite share in the issued share capital of the Company does not arise. In support of the contention, learned counsel has relied upon a decision of Karnataka High Court in the matter of Mr.Vijayan Rajes Anr. vs. M.S.P. Plantations Private Limited rep. by Managing Director Ors. , (2009) 151 CompCas 413 (Kar). Learned counsel would submit that the findings arrived at by the CLB remains findings of facts and thus, on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in increasing the share capital of the Company from 10,000 shares of ₹ 10 each to 30,000 shares of ₹ 10 each as on 2.11.09 as also further increase of 60,000 shares as 27.8.12. In the considered opinion of this Court, the increase in number of shares and admission of additional members being part of the cause of action for filing the petition , the eligibility of the petitioners to maintain the petition in terms of Section 399 of the Act, cannot be determined on the basis of increased share capital, which is subject matter of challenge as an act oppressive to the first respondent as member of the Company. As laid down by the Karnataka High Court in Vijayan Rajes s case (supra), if the date of presentation of the petition be looked into in a technical way, it could defeat the very purpose of the legislative enactment of Section 397 398 of the Act, as overbearing majority shareholders can simply by high-handed action or even for the purpose and by oppressive methods, dismember minority shareholders and leave them with no remedies as, dismembered minority shareholders technically do not qualify for maintaining a petition under Section 399 of the Act, being not member at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of mandatory provisions of the Act, he was removed from the directorship. Precisely, the case of the respondent is that the first respondent was a shareholder of the Company only till 2010 and thereafter since, he had transferred 2,500 shares of value of ₹ 25,000 in favour of the appellant no.2 herein, for adjustment of the amount of personal loan given by the appellant no.2. As noticed above, the alleged transfer of the shares by the first respondent in favour of the appellant no.2 herein, has been declared illegal by the CLB while deciding a separate petition preferred by the first respondent. Though the first respondent had contended before the CLB that special notice dated 14.8.10 under Section 284 read with Section 190 of the Act of the Board Meeting held on 30.9.10, was served upon the first respondent but no documentary evidence was produced to establish the factum of service of the notice as alleged. In this view of the matter, apparently the petitioner was not given an opportunity to explain his position against the proposed removal from directorship. In this view of the matter, for violation of mandatory provisions of Section 284 of the Act, the removal of the f ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
