TMI Blog2017 (12) TMI 1770X X X X Extracts X X X X X X X X Extracts X X X X ..... en, the acts could not have been questioned branding them as undue haste. Such considerations of the board cannot be found fault with being matters of company affairs. If the petitioner had difficulty, he should have participated in the meetings to say whatever he wanted. In the facts of present matter, we find ourselves unable to agree with the learned National Company Law Tribunal. When the National Company Law Tribunal could not record finding of oppression or mismanagement and there was material to show that the petitioner had not come with clean hands, it was not open for the learned National Company Law Tribunal to still go on to set aside the appointment of respondent No. 3 and set aside shares issued as per the resolution passed on December 26, 2016 or give direction that the respondents will purchase the shares of the petitioner. For the above reasons, the appeal is allowed. The impugned order of the National Company Law Tribunal is quashed and set aside - petition dismissed. - Company Appeal (AT) No. 231 of 2017 - - - Dated:- 13-12-2017 - A.I.S. Cheema, Bansi Lal Bhat, J. (Members (J)) and Balvinder Singh, Member (T) For Appellant: Suryanarayan, Garima Baja ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd meetings or shareholders' meetings since 2012. The petitioner put up further case before the National Company Law Tribunal claiming that he came to know about suspicious activities in the company from a client in April, 2016 and then he verified the activities of the company on the webportal of the Ministry of Corporate Affairs and came to know of resolution dated October 8, 2013 appointing respondent No. 3 as director and the resolution that anyone of the existing directors could sign Form 32 to give effect to the appointment of respondent No. 3 as director. The petitioner claimed that he did not get any notice for the meeting dated October 8, 2013. The petitioner further claimed that there was another board of directors' meeting held on January 23, 2014 regarding which also he was not given any notice. In this meeting, the decision to permit any director to file requisite e-Forms was taken. There was yet another meeting dated September 27, 2014 without giving notice to the petitioner in which balance-sheet, statement of profit and loss, cash flow statements and directors' report for year ending March 31, 2014 was approved and Mitul P. Shah and Associates were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titioner. It was agreed that after incorporation, respondent No. 3 also would be inducted as director and shareholder. Respondents Nos. 2 and 3 invested their money in the bank. The assets and liabilities, which were taken over as per balance-sheet made available by the petitioner, later on showed that there was no physical stock with the firm as per the balance-sheet and the petitioner has cheated the respondents to the extent of having stock of ₹ 66.67 lakhs. The respondents gave particulars as to how there was negative value of the proprietary concern which affected the business of the company also. It was claimed that there were fictitious stocks and big debts. The respondents and other shareholders pumped funds by way of unsecured loans between 2010-11 and 2015-16. The company released personal property of the petitioner from the bank in September, 2012-November, 2012 by mortgaging personal property of respondents Nos. 2 and 3. Respondent No. 3 was appointed as director on October 8, 2013. Respondents claimed that the petitioner himself chose not to attend the day-to-day management of the affairs of the company. They have given details of the meetings of the board ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in earlier correspondences of-2016. In fact, he signed the balance-sheets of 2014 and 2015. According to the respondents, the petitioner as a director was himself also bound to take steps to conduct meeting of the board as per the requirement of the Act but he took no steps after 2012. On September 30, 2014 it was an annual general meeting which was held and not extraordinary general meeting. The respondents claimed that notice of the annual general meeting dated September 30, 2016 was posted to the petitioner and as the petitioner was complaining that he had not received notices, respondent No. 2 visited the given residential address of the petitioner but came to know that the petitioner was not staying there. Respondent No. 2 then went to the clinic of the petitioner and dropped the notice of the meeting at the premises which the petitioner is claiming to have later on received on October 7, 2016. Even SMS was sent to the petitioner and replies were sent via e-mail ID of the petitioner. Pending the company petition, to arrange finance, board meeting was held on December 7, 2016 and it was decided that the petitioner should contribute to the shortfalls of unsecured loans to tid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on the recorded address and it was an admitted fact that the petitioner himself had chosen not to take part in the day-to-day affairs of the company since 2012. The impugned order itself mentioned that the petitioner had himself kept away from the affairs of the company from 2012 and that he was changing his residence which was recorded with the Registrar of Companies. Reference was made to paragraph 15 of the impugned order. The National Company Law Tribunal itself recorded in paragraph 16 of its judgment, that it was the duty of the petitioner to inform about change of his address and it was not for the company or other shareholders to find out the change in residential address of the petitioner. According to counsel for the appellants/respondents, the National Company Law Tribunal with regard to delay and laches on the part of the petitioner observed in paragraph 17 of the impugned order as under (page 88 of 203 Comp Cas): Delay and laches on the part of the petitioner: 17. It is a fact that the petitioner himself kept away from the affairs of the company from 2012. Again in the year 2016, the petitioner started inquiring about affairs of the company. Thereafter, he fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were not shown in the accounts of the first respondent-company. 9. From the above, it is clear that the learned National Company Law Tribunal could see from the record that the original petitioner was not with clean hands. Rather, the last paragraph of the impugned order shows that the National Company Law Tribunal was not in a position to give a finding on oppression and mismanagement but strained itself to pass orders for setting aside appointment of respondent No. 3 and cancelled the allotment of shares on December 26, 2016 (which development had occurred pending the company petition). When it is on record that the petitioner himself opted not to oversee affairs of the company since 2012 to 2016 and failed to discharge statutory duties, equity should hardly stand in his favour. It is also on record that he was changing addresses without bringing the same on record. It is also held against him that he illegally diverted money due to the company to his account. It is surprising that the National Company Law Tribunal should still have given any relief to such petitioner. 10. Learned counsel for the appellants-original respondents referred to annual return for financial yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... calling for a meeting on December 7, 2016 and resolving that the petitioner should contribute ₹ 14.54 lakhs to tide over the financial crunch, failing which, rights shares of ₹ 5 lakhs should be issued. These developments are pending matter before the National Company Law Tribunal. Counsel for the appellants referred to notice dated December 7, 2016 which was sent to the original petitioner (copy at page 816 in Volume-IV of paper book). It is submitted that the petitioner was given notice regarding the meeting to be held on December 7, 2016 and after the meeting of December 7, 2016 this offer was sent to the original petitioner offering him 25,000 equity shares of ₹ 10 each at par to subscribe to the additional share capital of the company. The offer was kept open for 15 days but the petitioner did not avail of the same. In this regard, the learned National Company Law Tribunal observed in paragraph 20 of the impugned order as under (page 89 of 203 Comp Cas): 20. Subsequent to filing of this petition, the first respondent-company called for a meeting on December 7, 2016 and resolved that the petitioner should contribute ₹ 14.54 lakhs to tide over the fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. Learned counsel of the respondents was asked at the time of arguments as to why the petition was not amended to claim setting aside such shares issued. Learned counsel accepted that the petition was not amended but submitted referring to the minutes dated December 7, 2016 (page 844 in Volume-V of paper book) to show that there were no bona fide in the decisions taken by the respondents. He claimed that there was urgency to the extent of ₹ 5 lakhs but still 50,000 shares were issued although the funds were available with the company as can be seen from the statement of accounts from Surat People's Co-operative Bank Ltd., which have been filed (page 881 in Volume-V of paper book). Thus, according to counsel, the National Company Law Tribunal rightly held that the respondents had proceeded with undue haste. Counsel however agreed that he cannot show how the issue of right shares was contra to the articles of association. 16. After going through the material on record and the minutes dated December 7, 2016 we find that notice had been issued to the petitioner regarding the meeting to be held on December 7, 2016 and he submitted detailed comments which the board of dir ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
