TMI Blog2020 (10) TMI 446X X X X Extracts X X X X X X X X Extracts X X X X ..... avour of the petitioner. Therefore, the transfer of 53,69,520 + 11,50,000 (65,19,520) can only be approved. The contention of the respondent that the petitioner did not clear the whole of the loan amount would not have any consequence since as per the declaration dated November 6, 2011 the petitioner was entitled to transfer of share in his favour on clearing of 50 per cent. of the outstanding dues of the bank. There is no dispute that the petitioner has cleared more than 50 per cent. of the bank dues. As against 1,85,00,000 shares, the petitioner is held to have owned 65,19,520 shares. The petitioner accordingly is share- holder of the company holding 35.24 per cent. of the paid-up share capital - Issue is answered in the affirmative. Whether his name deserved to be entered into the registers of members? - HELD THAT:- The name of the petitioner ought to have been entered in the register of members of the company in terms of section 2(55) read with section 88 of the Act - answered in the affirmative. Whether the conduct of the board meetings on December 10, 2014, January 6, 2015 and January 16, 2015 is valid? - HELD THAT:- Admittedly the annual general meeting of the comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rectified. The annual general meeting dated February 21, 2015 is held to be invalid. Appeal allowed in part. - T. C. P. No. 119/241/AMR/2019 And C. P. No. 84/241/HDB/2017 - - - Dated:- 8-6-2020 - Janab Mohammed Ajmal (Judicial Member) For the Applicant : Y. Suryanarayana For the Respondent : 1 to 9 : N. Harinath, D. V. S. Ravi Prasad, K. Prashant and K. V. Raman ORDER JANAB MOHAMMED AJMAL (JUDICIAL MEMBER). - 1. The company petition, inter alia, under section 241 of the Companies Act, 2013 ( the Act for short) seeks redressal from oppression and mismanagement allegedly at the hands of the respondents. 2. The factual matrix associated with the genesis of the discord between the parties may briefly be stated thus. Respondent No. 1-company (here-in-after referred to as the company) incorporated as Mouli Creations P. Ltd., on October 31, 1994 was a private limited company in the State of Andhra Pradesh under then prevalent Companies Act, 1956. The name underwent a couple of modifications and became the present company on May 24, 2002 as a private limited company. It became a public limited company with effect from May 27, 2005 the present name (CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs and those of Ammana Equity Fund P. Ltd., and also to facilitate transfer of shares held by respondent No. 3 in favour of the petitioner, upon repayment of at least 50 per cent. of the outstanding loan amount by the latter. With the understanding and hope that the petitioner would own substantial stake in the company, he commenced payment to the bank from December 22, 2011. And by July 18, 2014 he paid a total of ₹ 7,93,54,000 to the bank towards repayment of the loan of the company. By March 7, 2014 an amount of ₹ 7,65,29,000 had been paid which under the one-time settlement proposal cleared the principal due. On March 15, 2014 the petitioner, a new director of the company and respondent No. 2 addressed a letter to the bank's (the sole secured creditor) Stressed Assets Management Branch at Secunderabad to grant them some time for remittance of security deposit for the interest waiver under the one-time settlement. They also requested to handover the original documents of the company's properties once the liabilities were settled. Upon payment of the other amounts by July 18, 2014 as indicated earlier, the bank on September 4, 2014 issued a no dues certificat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... randum of understandings. On being inducted as additional directors the petitioner and his son spent ₹ 2,04,90,000 after March 7, 2014. Despite physical and legal possession and control of the company and its assets, the books of account, statutory records and minutes books, etc., were not handed over to the petitioner (and his son). Respondents Nos. 2 and 3 continued to be the custodians of such records. Respondents Nos. 2 and 3 managed not to hold the annual general meeting for 2013-14 before the statutory time limit of September 30, 2014. Consequently, appointment of the petitioner and his son as additional directors could not be ratified. The petitioner and his son, gullible as they were, could not fathom that their status as directors of the company could be under jeopardy unless ratified by the annual general meeting on or before September 30, 2014. Respondents Nos. 2 and 3 failed to reflect the loan repayments (by the petitioner), in the audited balance-sheets of the company for the financial years 2012, 2013 and 2014. The audited balance-sheets were thus fraught with misleading and false statements, with the intention of defrauding the petitioner and depriving him of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 's movable and immovable assets. The learned civil court at Puttur has prima facie accepted the shareholding of the petitioner in the company. The petitioner having invested substantial amount has been the victim of oppression and mismanagement at the hands of respondents Nos. 2 and 3. Hence he came up with the following prayers : (i) Pass an order declaring that respondents Nos. 2 to 8 have been guilty of several acts of oppression and mismanagement of respondent No. 1-company. (ii) Declare that the annual general meeting for the year 2013-14 is illegal, unlawful, void and non est and all the resolutions passed thereat are void ab initio and inoperative. (iii) Pass an order that the petitioner is the absolute owner of 88,45,000 shares of respondent No. 1-company and his name be entered in the register of members by rectifying the same. (iv) Pass an order that the impugned annual return filed for the year 2014-15 on February 28, 2015 by respondents Nos. 5 and 6 is illegal, null and void and direct the Registrar of Companies to delete the said annual return from the MCA Portal. (v) To direct respondent No. 9, i. e,. Regional Director, Ministry of Corporate Affairs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry who certified the e-filings, i. e., annual returns of respondent No. 1-company and direct the Institute of Company Secretaries of India to punish him for professional misconduct. (xiv) And to pass such other order or orders in the facts and circumstances of the case. 6. Respondents Nos. 1 to 9 appeared through common counsel, who represented them during the hearing. Respondent No. 2 alone however filed the counter refuting the petition averments. It is contended that the petitioner is neither a shareholder nor a director of the company. Thus, the petition as constituted is not maintainable. It is further contended that the company had availed a loan of ₹ 11,67,00,000 from the State Bank of India in the year 2003. The recession of 2007-11 adversely affected the company's financial and trade prospects and it had failed to keep its commitment of repaying the instalments against the loan. The loan account hence was declared as NPA in the year 2010. The promoters of the company roped in the petitioner as an investor to resuscitate the faltering company. Respondents Nos. 2 and 3 entered into separate memorandum of understanding with the petitioner on March 7, 2014. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us deserves to be dismissed. 7. The rival pleadings give rise to the following issues : (I) Whether the company petition is maintainable ? (II) Whether the petitioner is a shareholder of the company ? (III) Whether his name deserved to be entered into the registers of members ? (IV) Whether the conduct of the board meetings on December 10, 2014, January 6, 2015 and January 16, 2015 is valid ? (V) Whether appointment of respondents Nos. 4 to 7 as directors of the company is valid ? (VI) To what relief(s), the petitioner is entitled to ? Issue Nos. I and II : 8. It is not in dispute that respondents Nos. 2 and 3 sought infusion of funds from the petitioner in the nature of repayment of loans of the company with the State Bank of India. Respondent No. 2 executed a deed of declaration on November 6, 2011 to the following effect : Where I am the main promoter director and shareholder of M/s. Ammana Biopharma Ltd. (hereinafter referred to as company) holding 22,75,480 shares of ₹ 10 each in my name and 53,69,520 share of ₹ 10 each in the name of Ammana Equity Funds P. Ltd., another 12,00,000 shares of ₹ 10 each are held by Mr. K. Sreedhar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Whereas the first party is desirous or further assisting and continuing in the project and proposes to purchase the shares of the other shareholders in the company. Whereas the second party has infused capital into the company with such assurances from the first party. Now this memorandum of understanding agreed to as follows : The second party agrees to clear to loan liabilities of the company M/s. Ammana Bio Pharma Ltd., with SBI on this date. The first party agrees to buy out the shares of the following share-holders after negotiating with the respective parties 15 days from this date : Prem Goyal 2,70,000 shares Anadi Goyal 50,000 shares B. G. K. Murthy 1,00,000 shares Chandrashekar 25,000 shares Damu 8,000 shares C. S. Pani 40,000 shares A. Srinivas 7,000 shares V. V. K. Prasad 5,000 shares The first party agrees to bring in further amount of ₹ 2, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 and 37 to 38 and executed Form 7B. Share Certificate No. 92 (55,90,000 shares) belonged to KML Data Pro. Share Certificate No. 38 (25,000 shares) also stood in the name of KML Data Pro. Share Certificate No. 37 (25,000) has not been filed. It is not in dispute that K. Sreedhar Reddy (respondent No. 3) held 11,50,000 shares in the company. Though the petitioner has not been able to provide the nexus between KML Data Pro and either respondent No. 2 or 3. The transfer of shares aggregating to 12,00,000 from by respondent No. 3 to the petitioner has been recognised by the company's board by board resolution dated March 7, 2014. 12. It also approved transfer of 53,69,520 shares of Ammana Equity Fund P. Ltd., in favour of the petitioner. The allegation that the petitioner utilised blank transfer form to his advantage has not been substantiated. Moreover on the face of board resolution dated March 7, 2014. The respondents in their counter have filed transfer forms duly signed by respondents Nos. 2 and 3. Since, respondent No. 3 held 11,50,000 shared in the company transfer of 50,000 shares more under Share Certificate Nos. 37 and 38 cannot be reckoned in favour of the petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral meeting of the company ought to have been held on or before September 3, 2014 as per the proviso to section 96(1) of the Act. Admittedly the annual general meeting of the company was not held within that date. The petitioner as an additional director of the company did not take any steps to see and ensure that the annual general meeting was held on or before September 30, 2014. The plea that he was ignorant of legal provisions to that effect would not come to his rescue. Directorship having not been ratified by the annual general meeting on or before September 30, 2014 he cannot claim to hold the office of the director of the company beyond that date. Therefore, the petitioner was not required to be notified of any subsequent meetings. His absence or lack of notice in the board meetings dated February 1, 2014, January 6, 2015 and January 16, 2015 would accordingly have no consequence. The board meetings could not be invalidated on that score. Issue No. IV is answered in the negative. Issue No. V : 15. Respondents Nos. 4 to 7 were appointed as directors of the company in the annual general meeting held on February 21, 2015. Notice of the annual general meeting was required ..... X X X X Extracts X X X X X X X X Extracts X X X X
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