TMI Blog2019 (2) TMI 1047X X X X Extracts X X X X X X X X Extracts X X X X ..... s issue. We are of the considered opinion that where the option to purchase the shares is given to the existing management to avoid prejudice to the interest of the respondent (original petitioners) for various reasons such as diversion of funds/siphoning of funds etc then valuation is done on the date of filing of the company petition. On the other hand, where the first option to purchase the shares is given to who were not in management and who have been oppressed to avoid prejudice to either of the parties the date of valuation should be the date of decision of the company petition. Even the appellant has asked that the valuation should be the date of decision of the company petition. In this case the appellants have been in the management of the company who have been found by the Tribunal to have oppressed the respondent (petitioners), therefore, valuation of shares to be done on the date of decision of the company petition. In view of the above observations and discussions we direct that:- In last un-numbered paragraph of the operative order in para 34 of the impugned order dated 7.12.2017 for words:- “shall determine true and fair value of the shares of 1st re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appeal K.J. Paul 25000 26% 1st appellant Bindu Paul 10000 11% 2nd appellant P.M. Johny 59000 62% 2nd respondent K.P. Augustine 1000 1% 3rd respondent The above share holding pattern continued upto 31.03.2008 and constituted the base shareholding. As per the above shareholding pattern, 1st and 2nd appellant (who are husband and wife) hold 37% shareholding and 2nd and 3rd respondents collectively hold 63% shareholding. 4. It was alleged that majority capital has been contributed by 2nd and 3rd respondent but the majority of directors on the Board viz., 1st and 2nd appellant resorted to various dubious ways and methods to keep away the 2nd respondent, who was the single largest shareholder and 3rd respondent, who was a director, from the affairs and management of the company despite their having a collective shareholdings of 63% in the 1st respondent. It was further alleged that the Minutes o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et aside. The Board Meetings purportedly held on 25.4.2008 and 11.8.2010 are not tenable in the eye of law, the same are declared as illegal and all decisions taken there at are set aside. The EOGMs dated 22.01.2011 and rights offer dated 01.02.2011 are declared illegal, null and void and hence, are set aside. The continuance of Respondent No.3 and appointment of Respondent No.4 are declared as illegal, null and void, and hence, set aside. The 1st Petitioner is appointed as Managing Director of 1st respondent company and Mr. K.J. Paul is removed from the position of Managing Director, but he shall perform the duties as Director of the 1st respondent company. Consequently, the said Board of Directors is directed to rectify the Register of Members by restoring the shareholding patter as on 30.09.2005 as shown under para 6(a) of the Petition. Keeping in view the totality of circumstances and intention of the parties, it is proposed to appoint an independent Auditor within three weeks of passing this order, with the consensus of the Board of Directors comprising of 1st Petitioner and the 2nd Respondent, failing which, this Bench on mention by any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any AGM of the company and nor has 2nd respondent made any enquiry with regard to the convening, conducting and holding of any AGM. The appellant stated that 3rd respondent was aware of what was happening in the company till 2008 and in spite of the matter alleged, made no enquiries till January, 2011. The appellant further stated that before filing of petition no complaint had been made by 2nd and 3rd respondent about not receiving any notices for any general meetings of the company or by 3rd respondent of not receiving any board meeting of the company or not having knowledge of the same. 10. The appellant stated that the NCLT has not given reasons for giving first option to 2nd and 3rd respondent. The appellant stated that there is no evidence on record to show that the company would benefit if 2nd and 3rd respondents are put in management. However, it is stated that it is an admitted fact that under the management of appellant the company has prospered as even according to 2nd and 3rd respondent the asset size of the company has increased manifold times. The appellant stated that there is no finding of mismanagement against 1st to 3rd appellant vis a vis the affairs of the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nds and such funds have been utilised by 1st respondent. The appellants reiterated that there is no finding that 1st respondent was not in need of funds when such issue and allotment was made. 15. The appellant stated that the order requiring 2nd appellant not to continue as a director of the 1st respondent cannot be sustained. The appellant stated that if, however, the reasoning in the impugned order to the effect that because 2nd appellant was not a director on 25th April, 2008 and 11th August, 2010 when shares were allotted would result in such allotment being invalid then in that event, the transfers of shares from Susha Denny to 3rd respondent in 2001 and transfer of 59000 shares by 3rd respondent to 2nd respondent on 21.2.2005 would also be struck down as 3rd respondent and 2nd appellant had been appointed directors on 2nd January, 1995 itself and thereafter had never faced the General Body of shareholders and were not first directors. The appellant stated that there was no challenge to the 2nd appellant continuation even in the meeting of the Board of Directors dated 17.3.2005. 16. The appellant stated that the NCLT s order setting aside appointment of 3rd appellant as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espondents further stated that the postal stamp of filmmaker Satyajit Ray was only released by the Postal Department on 1.3.2009, thus could not have been utilised on the certificate of posting purported to be dated 11.4.2008 (Annexure R-1A and R-1B, Pages 37 to 38). 19. The respondents further stated that the Form 2 for the said share allocation dated 25.4.2008 was filed before the ROC after 26 months on 25.6.2010 (Annexure R-7, Page 47) in violation of Section 75(1) of Companies Act, 1956. The appellants illegally allotted shares to themselves and forged Minutes of Board Meeting dated 25.4.2008 to legitimize this share allocation. 20. The respondents further submitted that the Board Meetings dated 25.4.2008 and 11.8.2010 were convened, for the sake of arguments, as the continuance of 2nd appellant as a director of 1st respondent. It is stated that the said Board Meetings are invalid for lack of quorum as only 1st appellant was validly present in the said Board Meeting. The respondents further stated that Article 28(iii) of Articles of Association (Page 127 of Appeal) of 1st respondent stipulates that Directors appointed at AGM shall retired at the second AGM held after thei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments and Board Meetings Minutes, the appellants have immediately unloaded several documents with ROC (Annexure R-15, Page 150) including Annual Returns for FY ending 2006 to 2010 which show that all these documents were forged and filed together belatedly. 26. We have heard the learned counsel for both the parties and perused the record. 27. The first issue argued by the Learned counsel for appellant is that the respondents were not interested in running of the 1st respondent and only in 2011 with mala fide intentions to extort money from the appellants filed the company petition before the Tribunal in 2011. 28. Learned counsel for the respondents argued that the respondents were shocked and surprised when they observed after their letter dated 1.1.2011 and 12.1.2011 that 2 illegal share allotments had been purportedly shown to have taken place on 25.4.2008 and 11.8.2010. The respondents further argued that the appellants filed the annual accounts and annual returns for the years ranging from 2005 to 2010 in January 2011 after enormous delay, therefore, seeing the oppressive acts on the part of the appellants that the Respondents No.2 and 3 were constrained to approach th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s there and bears the same postal stamp of filmmaker Satyajit Ray. Learned counsel for the respondents further argued that the postal stamp of filmmaker Satyajit Ray was only released by the Post Department on 1.3.2009, thus could not have been used on the certificate of posting purported to be dated 11.4.2008 (Annexure R-1A and AnnexureR-1B, Page 37 and 38). Learned counsel for the respondents further argued that the Form 2 for the said share allocation dated 25.4.2008 was filed with ROC after 26 months on 25.6.2010(Annexure R-7 Pages 47 to 49). 32. We have seen the letter dated 7.11.2012 (Annexure R-1B, Page 38) issued by the Department of Posts, India thereby intimating that Department of Post has released stamp on Satyajit Ray (Denomination -300P as part of 10th Definitive series stamp release on 01.03.2009 . This establishes that the proof of certificate of posting filed by the appellants is a fabricated one and cannot be accepted. It puts serious question mark on the bona fides of the Appellants. We have also perused the Form 2 at Pages 47 to 49 of reply and are satisfied that the Form 2 was filed with ROC on 25.6.2010 belatedly in violation of Section 75(1) of the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . It is noted that the remedy of Section would be dealing with the matter which are normally to be done by the Board on which no application for oppression and mismanagement can be made. Hence the plea of ignoring Section 290 of Act is devoid of any logic. We are in agreement with the NCLT on this issue. 36. The other issue raised by the appellants that the orders setting aside appointment of 3rd appellant (original 4th respondent) is erroneous. The appellants argued that Article 28 of the Articles of Association of 1st respondent does not say that every appointment of a director has to be appointed at an Annual General Meeting. The appellants further argued that there is no requirement that a director appointed at a Board Meeting has to be described as an additional director in the form filed with the ROC. 37. Learned counsel appearing on before of 2nd and 3rd respondent argued that 3rd appellant was appointed as a Director of 1st respondent at the Board Meeting dated 22.1.2011. Learned counsel further argued that Form 32 filed with the ROC shows 3rd appellant to be appointed as a Director. Learned counsel argued that this appointment is invalid and illegal as in terms of Ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to pass any other or further order in the interest of the company, if it is of the opinion that the same would protect the interest of the company, must be held to be existing and the CLB is not powerless in this regard. 41. On the question of relief, reliefs depend on a particular facts of the case. Such an order should not amount to rewarding the wrong doers and penalise the oppressed party. NCLT, seeing the totality of circumstances, interest of the company and the intention of the parties, has rightly given first opportunity for purchase of shares of appellants to 2nd and 3rd respondent failing which the appellant shall purchase the shares of the respondents. We are of the considered opinion that where the option to purchase the shares is given to the existing management to avoid prejudice to the interest of the respondent (original petitioners) for various reasons such as diversion of funds/siphoning of funds etc then valuation is done on the date of filing of the company petition. On the other hand, where the first option to purchase the shares is given to who were not in management and who have been oppressed to avoid prejudice to either of the parties the date of va ..... X X X X Extracts X X X X X X X X Extracts X X X X
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