TMI Blog2020 (10) TMI 740X X X X Extracts X X X X X X X X Extracts X X X X ..... discloses that Respondent Nos. 2 to 4 were appointed as the Directors by the Board of Directors in meeting dated 27-03-2015. However, the official record reflects their appointment as the independent Directors and not as the additional Directors. Article of Association of Respondent No. 1 Company is on record at Annexure P-1(Page 101 of the Petition). It confers right of Board of Directors to appoint fit and proper person as the Director. Section 161 of the Companies Act, 2013 says that if a person appointed as the Director by the Board of Directors, his appointment shall be presumed to be appointment as the additional Directors till next AGM. In next AGM, his appointment as the additional Directors can be ratified. In this case, the appointment letters of Respondent Nos. 2 to 4 show that they were appointed as Directors. The public record show that they were appointed as the independent Directors and not additional Directors. On the basis of evidence in form of public record, the inference has to be drawn that appointment of Respondent Nos. 2 to 4 was made as the Directors - It is not in dispute that on 27-03-2015, the Petitioners were only shareholders as well as Directors of Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... HELD THAT:- There is material on record indicating that the loan account of Respondent No. 1, Company was declared NPA by Punjab National Bank in the year 2017. It is seen from the evidence on record that during that time, only Respondent Nos. 2 to 4 were controlling the affairs of the Company. If it is so, it has to be held that they mismanaged the affairs of the Company. Be that as it may, while considering the Petition under Section 241 and 242 of the Companies Act, 2013, it has to be endeavor of this Tribunal to see that the affairs of the Company are being conducted smoothly, in future at least - It is brought to our notice that Respondent No. 4, Mr. Shanker Ghosh has resigned as the Director on the ground of ill health. He has already been relieved from his post. Now, the Petitioner No. 1 and 2 and the Respondent No. 2 and 3 are the Directors of the Company. Accordingly, we decided that the Petitioners and the Respondent No. 2 and Respondent No. 3 are the Directors of Respondent No. 1, Company. In short, two persons from Petitioners group and two persons from the Respondents group are the Directors. We also hold that Respondent Nos. 5 to 37 are not shareholders of the Respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ii) It is also not in dispute that on 16-08-2003, the State of Jharkhand allotted plot of land through Jharkhand Industrial Area Development Authority on lease for a period of 30 years to Mr. Ajay Sinha. He established the Respondent No. 1 Company therein. The lease is still continued. iii) On 27-03-2015, the Board of Directors of the Company appointed three persons as the Directors, Mr. Jogendra Tiwari, Respondent No. 2, Mr. Amit Kumar Singh, Respondent No. 3 and Mr. Shanker Ghosh, Respondent No. 4 respectively. 2. It is alleged by the Petitioners that on 19-09-2017, these added Directors without any authority and without serving notice to the Petitioners held Extra Ordinary General meeting of shareholders for enhancing shareholding by allotting those shares to the Respondent Nos. 5 to 37, illegally reducing the Petitioners as minority shareholders. 3. On 05-10-2017 again, the EOGM was held, thereby the Company's registered Office was shifted from Petitioners' residence to elsewhere illegally. 4. On 13-11-2017 again, the Respondents called EOGM and passed resolution to remove the Petitioners as Directors of the Respondent No. 1 Company. They ousted the Petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) What should be final order so that the affairs of the Respondent No. 1 Company can run smoothly. Our findings are Point No. 1 2 in the affirmative and Point No. 3 as per the final Order. Reasons : Point No. 1 : 10. Both the Parties to the proceeding pleaded number of facts. Some of them are not relevant to decide the controversy and tried to make the proceeding too complicated. But for just decision of the case, we have formed above points of controversy in view of the pleadings, evidence and submissions made by the Ld. FCS for the Petitioners and the Ld. Counsel appearing for the Respondent Nos. 2 to 4. 11. The Petitioners and the Respondents stated in detail as to how since 2011 onwards either of them have brought investments in the Company. There was serious dispute that had arisen in between them. It is also seen from the material record that Parties had filed criminal cases against each other. But the fact remained on record to be admitted that they settled disputes amicably and in the year 2014. Thereafter, the Respondent No. 4 was appointed as the Director of the Company as the representative of the Respondent Nos. 2 to 4. 12. It is the Petitioners' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Companies Act, 2013 speaks about procedure of appointment of Directors in following words : Section 161 : Appointment of additional director, alternate director and nominee director. 161. (1) The articles of a company may confer on its Board of Directors the power to appoint any person, other than a person who fails to get appointed as a director in a general meeting, as an additional director at any time who shall hold office up to the date of the next annual general meeting or the last date on which the annual general meeting should have been held, whichever is earlier. (2) The Board of Directors of a company may, if so authorized by its articles or by a resolution passed by the company in general meeting, appoint a person, not being a person holding any alternate directorship for any other director in the company, to act as an alternate director for a director during his absence for a period of not less than three months from India : Provided that no person shall be appointed as an alternate director for an independent director unless he is qualified to be appointed as an independent director under the provisions of this Act: Provided further th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onal Directors can be ratified. In this case, the appointment letters of Respondent Nos. 2 to 4 show that they were appointed as Directors. The public record show that they were appointed as the independent Directors and not additional Directors. On the basis of evidence in form of public record, the inference has to be drawn that appointment of Respondent Nos. 2 to 4 was made as the Directors. 16. It is not in dispute that on 27-03-2015, the Petitioners were only shareholders as well as Directors of Respondent No. 1, Company. On 27-03-2015, the Petitioners as the Directors appears to have been issued appointment letters to Respondent Nos. 2 to 4 appointing them as the Directors. It can safely be inferred that on 27-03-2015, the Petitioners being only shareholders might have held AGM and appointed Respondent Nos. 2 to 4 as the Directors and issued the appointment letters in the capacity as the Directors. In fact, the Respondents produced on record minutes of EOGM dated 05-10-2017 in which Respondent Nos. 2 to 4 had attended the meeting as the Directors. Those minutes were confirmed by Petitioner No. 1 on behalf of the Board of Directors. This entire evidence show that Respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anaging Director. The Petitioners did not have notice of so called meeting dated 19-09-2017 as contended by the Respondents. In fact, such meeting had not been held at all. Hence, the action of the Respondent Nos. 2 to 4 to remove the Petitioners from the Board of Directors is illegal and void. 20. The Ld. Advocate, Mr. Jishnu Chowdhury, appearing for the Respondent Nos. 2 to 4, submitted that there is ample evidence on record to show that the Petitioners had siphoned the Company's account. He brought to our notice entries in statement of account of the Company maintained in Punjab National Bank, Ranchi Branch(Annexure - R-7) and pointed out that in between 06-05-2017 to 23-10-2017, the Petitioners got transferred to their personal account a sum of ₹ 37,90,000/- (Rupees Thirty seven Lac Ninety thousand only). According to the Ld. Counsel, this was the reason that the Petitioners were removed from the post of Directors. He submitted that the notices of the meeting dated 19-09-2017 were served on the Petitioners at their residential address. It was the registered address of the Respondent No. 1 Company. The Petitioners denied having received the notice for some ulterior ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... void ab initio. The Petitioners could not have been removed as the Directors in such manner. 26. The Respondents state that they have allotted shares of the Company to Respondent Nos. 5 to 37. However, they did not produce any evidence to prove this point. The Respondent Nos. 5 to 37 did not appear in this case stating that they are shareholders of the Company. There is no record in evidence to show that the Respondent Nos. 5 to 37 had paid any amount towards purchase of the shares. Article 15 of the Articles of Association of the Respondent No. 1 Company, states the procedure in detail as to how the shares of the Company are to be allotted or to be transferred. That procedure has not been followed. We hold that Respondent Nos. 5 to 37 are not the shareholders of the Respondent No. 1, Company. 27. In considering the entire evidence on record, we hold that the Petitioners are still the Directors of the Respondent No. 1, Company even today. We answered Point No. 2 in the affirmative. Point No. 3 : 28. There is material on record indicating that the loan account of Respondent No. 1, Company was declared NPA by Punjab National Bank in the year 2017. It is seen from the ev ..... 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