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TMI Blog2021 (2) TMI 92X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 2013 (hereinafter referred as the 'Act') are inter connected, they are disposed of with this common order. 2. M/s. Forbes Ewart and Figgis Private Limited, was incorporated as a Private Limited company on 21th February, 1947 under the provisions of the Indian Companies Act, VII of 1913 (hereinafter referred as 'the Company') by foreigners and after independence, the company was taken over by Late Mr. Oommen Thomas. The Authorised Share Capital of the company at present is with equity share capital of Rs. 50,00,000 comprising of 1,00,000 shares at Rs. 50 each. The paid-up share capital is Rs. 10,00,000 comprising of 20,000 equity shares of Rs. 50 each. The Registered Office of the Company is at Sebrof House, PB No. 545, Subramaniam Road, Willingdon Island, Ernakulam, Kerala - 682 003. The facts of the cases in brief are as under: - CP/117/KOB/2019 3. On 22.10.2019, the petitioner filed this Company Petition (C.P No. 117/KOB of 2019) before this Tribunal under Section 241 of the Companies Act, 2013 challenging the Board meeting held on 14.10.2019 and its resolutions. The main reliefs sought for by the petitioner are as follows: i. To declare that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ears from 01.10.2019. iv. Appointment of Mrs Annu Kurien as Independent Director of the company for a period of 2 years from 01.10.2019. AGM passed the said resolution. However, the following resolutions were not passed in the 72nd AGM of the Company held on 30.09.2019: i. Re- appointment of Mr. Paulose Joseph as Managing Director of the Company u/s 196[3] of the Companies Act, 2013 for a period of two years from 01.10.2019. ii. Appointment of Mr Mohan Thomas as Joint Managing Director for a period of 2 years from 01.10.2019. Since Mr Mohan Thomas has already been appointed as Joint Managing Director in AGM held in September 2018 for a period of 3 years, the said proposal was unwarranted and illegal and the same was objected iii. Reappointment of W C Thomas as Whole Time Director of the Company u/s 196[3) of the Companies Act, 2013 for a period of two years from 01.10.2019. iv. Appointment of Mr. Oommen Thomas as the Whole Time Director of the company for a period of 2 years from 01.10.2019. 6. It is further stated that to circumvent the decision of the shareholders of the Company, the 2nd respondent issued a circular Resolution on 01.10.2019 which was received by the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Chairperson of the meeting at the place it was convened and transacted the resolutions. The Meeting was chaired by Respondent No. 3, an Independent Director and that on 01.11.2019 another Board Meeting was held and chaired by Respondent No.3. This meeting was attended by two out of three Directors, i.e., Respondent No. 2 through physical presence at the Registered office and Respondent No. 3 chaired the Meeting through Video conferencing from Delhi when the meeting place is shown as Registered Office at Kochi, which is contrary to the settled position of law. It is further submitted that the said Meeting was conducted on 01.11.2019 in the same way by which it was conducted on 18.10.2019 and hence the said meeting is also contrary to Section 173 (2) of the Act and hence not legally valid. 9. It is the further contended that on 27.01.2020, the 2nd respondent issued a Notice for convening a meeting of Board of Directors of the Company on 04.02.2020 at the Registered Office of the company. The petitioner attended the said Meeting. Respondent No.3 was again appointed as the Chairperson and chaired the meeting through Video conferencing, sitting at Delhi. The contention of the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sued by the Ministry of Corporate Affairs. While so, on 08.09.2020, the Respondent No. 6, the Registrar of Companies, Kerala issued an order extending the time to hold the AGM. Based on the above orders of Respondent No.6, the adjourned meeting of Board which was scheduled on 14.09.2020 was cancelled and the communication to that effect has been sent to the Directors of the Respondent No. 1 Company. 14. Concluding the arguments, the learned counsel for the petitioner submitted that the Respondent No. 2 and 3, after their induction into the Board of Directors started their attempt to weaken the company's financial strength and even suggested to liquidate the Company which itself is a clear case of mismanagement of the affairs of the company. 15. It is further stated that on 29.06.2020, the Respondent No. 2 and 3 and one Dr. Lalitha Thomas, wife of Respondent No. 5 filed another Company Petition - CP/19/KOB/2020 before this Tribunal as a counter blast to the CP (CP/117/KOB/2019). 16. To substantiate their above averments, the Petitioners' Counsel relied the following case laws: 1. V. S. Krishnan & Others V. Westfort Hi-tech Hospital Ltd & others [2008] 3 SCC 363. 2. Rajamu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpliances conducted by Respondent No 2 and 3 as detailed in the CP, stating that this should be put to an end, in the interest of the Company and its shareholders. A summary of the oppressive acts, continuing mismanagement, malafide acts causing loss to shareholders are as follows: i. The appointment of Respondent No 2 is not valid as a prior Board approval as per the substantive requirement u/s 203 has not been obtained, Respondent No 2 is continuing in the Joint Managing Director position in Respondent No 1 Company without applicable Board authority. ii. The appointment of Respondent No 3 does not have Board sanction u/s 188 and Respondent No 2 is providing multiple monetary allowances, benefits and perquisites inconsistent with Respondent No 3's employment contract resulting in personal profit for Respondent No 3 without any Board sanction. The provision of such allowances unilaterally and solely decided by Respondent No 2 is a clear conflict of interest and is causing financial loss to Respondent No 1 company. iii. Post October 1, 2019, the Respondent No 2 is not permitting the Board to function. The Respondent No 2 is adopting a position or convenience on the one han ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eral actions on his own despite the other Board members trying to intervene constitutes mismanagement by Respondent No 3, which is continuing as on date. vi. In the Annual General Meeting dated September 30, 2019, the shareholders did not even approve a nominal salary increase of Rs. 5,000/- per month to Respondent No 2, which was being drawn from April 1, 2019. Despite knowing this, Respondent No 2 recently purchased a car for Rs. 15,00,000/-, which is a perquisite compensation on his own without any consultation with the Board of Directors, or the shareholders in the General Meeting. As per the past practice of the company, any compensation provided as interim compensation to a Director should be only with prior consultation of the Board and also needs to be ratified by the members in the next General Meeting of the Company. vii. The Company has incurred the largest loss of approx. Rs. 15,00,00,000 (Rupees Fifteen Crores) in the history of the Respondent No 1 Company under Respondent No 2. Respondent No 2 operating alone with his son, Respondent 3 without any supervision or direction from the Board or members which is causing irreparable financial loss to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd & Ors [1985] 57 Comp Case 453. 2. M Moorthy V Drivers and Conductors Bus service P Ltd [1991] 71 Comp Case 136. 3. Killick Nixon Ltd & Others V. Bank of India & Others [1985] 57 Comp Case 831. 4. Lalitha Rajya Lakshmi M P V. Indian Motor Co (Hazaribagh) Ltd & Others AIR 1962 Cal 127. 5. Shanti Prasad Jain V. Kalinga Tubes Ltd AIR 1965 SC 1535 6. Palghat Exports P Ltd & Others V. T V Chandran & Others [1994] 79 Comp Case 213. 7. Suresh Kumar Sanghi V. Supreme Motors Ltd. [1983] 54 Comp Case 235. 8. Hind Overseas Pvt Ltd. V. Raghunath Prasad Jhunjhunwalla & Others [1976] 3 SCC 259 9. Needle Industries (India) Ltd & Others V. Needle Industries Newey (India) Holding Ltd & Others [1981] 3 SCC 333. 10. In Re: Chandigarh Tourist Syndicate (P) Ltd & Others [1978] 48 Comp Case 267 11. Ionic Metalliks V. Union Of India [2014] SCC Online (Guj) 10066. 12. Firestone Tyre & Rubber Co. V. Synthetics and Chemicals Ltd & Others [1971] 41 Comp Cas 377. Objections raised in CP/117/KOB/2019 22. The respondents filed a counter affidavit opposing the Company Petition. The respondents submitted that all processes for the conduct of the Board Meeting dated October 14, 2019 in w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Respondents are also willing to hold a general meeting to ratify such appointment through an ordinary resolution and clarification that Respondent No 4/5 shall not perform the role of Manager as defined u/s 2(53) of the Act. 24. The learned counsel for the respondents argued that Respondent Nos. 4 and 5 have not been appointed or re-appointed as Managing Director or Whole Time Director or Manager, which requires approval from the members through a special resolution under Section 196(3) of the Act. The term Manager under Section 2(53), Managing Director under Section 2(54), Whole Time Director under Section 2(94), and CEO under Section 2(18) of the Companies Act, 2013 are each separate categories of Managerial Personnel. A CEO cannot be said to be a Manager, as it is a separate category of managerial personnel, as defined under Section 2(18) of the Companies Act, 2013. It is further stated that even though Section 203 is not applicable to Respondent No 1 Company, the Companies Act clearly recognizes different classes of managerial personnel. As per Section 196(3) of the Act, for persons who have attained the age of 70, a special resolution is required for the appointment of Mana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act. 27. The Respondents stated that the Petitioner does not have the support of the majority of the shareholders and he has mismanaged the Respondent No 1 Company since 01.10.2019 and that whether he should be removed / his powers taken over should be left to internal corporate democracy of R 1 Company. The shareholders have the right to remove any Director by ordinary resolution, under Section 169 of the Act. Further, the Respondents 2 and 3 stated that CP No 19/KOB/2020 is also to be considered while determining this prayer. 28. Regarding the prayer of the petitioner to appoint an independent chartered accountant to conduct special audit on the affairs of the company, the respondents stated that the Petitioner has ignored that the Respondent No 1 Company has made steady profits over the last 30 years and has consistently distributed dividends. The Respondents also submit that R 1 Company does not have any pending disputes with any regulator including the Tea Board, which is the Factory's regulator, Income-tax, indirect tax laws, etc. 29. As to the allegation regarding the manipulation of the minutes of the meeting and non-filing of returns before the Registrar of Compani ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ociated with operation of the Company's bank accounts does not constitute oppression or mismanagement. In this respect, the learned counsel has relied on the following decisions to support his submissions: i. K. Varadan vs Ambattur Saswatha Nidhi Ltd [2007] 135 CompCas 332 (CLB). ii. Madras Medical Care & Health P Ltd v. Devaki Hospitals Ltd (2008) 83 CLA 47 (CLB) : (2009) 147 CompCas 245 (CLB)) 32. The Respondent No 2 stated that as a Director she has not handed over the keys of the Bungalows because she maintains the premises and that the Petitioner can at any time inspect the premises to verify the upkeep of the Bungalows. The allegation that Respondent No 4 is using 4 Bungalows and 4 cars is patently false, as Respondents 2 and 4 use only 1 Bungalow allocated to Respondent No 4, as part of his employment contract. It is further submitted that Respondent No 2 took the property papers from the office in order to perform the valuation of land owned by Forbes Brokers Private Limited. 33. The Respondents stated that the Petitioner is very well aware that his sisters Respondent 2 and 3 cannot be independent directors and the word "independent" was included in the notice by an i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any Director with majority vote can be elected as the Chairman of the Meeting. 36. While concluding the argument, the learned counsel for the Respondents vehemently argued that the Petitioner has not approached this Tribunal with clean hands and he has filed this petition to assume 100% control over R 1 Company by trying to oust the Respondents by stating the following points: * Recruitment of senior personnel as in the case of" Head-Accounts" in early May 2020, which requires Board approval, as per the mandate of the Board. * Absurd, unreasonable and totally impractical transfer orders issued to Senior Managers as in the case of Mr Poduval (Cochin to Ettumanoor with 1-day notice) and Mr Ramachandran (Chennai to Ettumanoor). * Cheques exceeding 5 lakhs as per existing mandate with Bank require two signatories. This stipulation is being overcome by issue of several cheques of 5 lakhs each with one signature, for a single transaction, as in the recent purchase of a car for own use by the Joint Managing Director costing approx. Rs. 15 lakhs. General Body approval through special resolution is required to approve additional compensation to Director * Respondent No 4 presently ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibed to be in the ordinary course of business. As per Section 188 of the Companies Act, the appointment of an employee (Executive staff) in the ordinary course of business needs no approval of the Board. There were no such allegations raised by anybody from 2017 to till the date of filing of this petition. 40. Regarding the allegation of not disclosing the interest in other companies in violation of Section 184(1), the Respondent No.2 stated that he has disclosed the mandatory information to the Company from time to time. He has never committed any serious non- compliance and contraventions of law. It is further stated that Annexures R2(14), R2(15) and R2(16) would substantiate that the Respondent No.2 is not a Director in M/s Acsah Organics Pvt Ltd, M/s Anaihta Gardens Pvt Ltd, and M/s Etham Floriex Ltd at the time of filing of this Company Petition. Respondent No. 2 resigned from these companies in the year 2018, 2019 and 2019 respectively. It is also settled law that past acts which have come to an end would not be taken for the purpose of invoking the court's jurisdiction under Section 241 of the Companies Act, 2013. There must be continuous acts on the part of shareholders, u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Companies Act can be invoked only when the wrongful holding with property or possession of cash by an employee or an officer of a Company. 45. The Respondents further stated that Respondent No. 2 was appointed as Joint Managing Director on 28.09.2018 for a period of 3 years. At that point Mr. Paulose Joseph was also the Managing Director of the Company. The Articles of Association of the Company as well as the legal provisions of the Companies Act permit one or more Managing Directors/ Wholetime Directors in the Company. With effect from 01.10.2019, the re-appointment of Mr. Paulose Joseph as Managing Director was rejected by the shareholders of the Company in its 72nd AGM held on 30.09.2019. Thus, Respondent No 2 became the only Managing Director of the Company. The term Joint Managing Director is used only to show that there is another Managing Director in the Company. 46. Hence, these issues form the foundation of the present Petitions, which seeks to invoke the oppression and mismanagement jurisdiction of this Tribunal. 47. The petitioners in CP/117/KOB/2019 and CP/19/KOB/2020 have filed rejoinder reiterating more or less the same facts that they canvassed in the Petitions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as a preliminary issue in Maintainability Application. If the Bench analyse the legal as well as technical question of maintainability at first, then there is no necessity to proceed with the main Petition. It is evident that it is based upon a pure question of law but it revolves primarily around the facts and several family circumstances of the case as depicted in the main petition. 50. From the records submitted before us, we observe that there was an effort made by both the groups to come to an amicable settlement of the matter and several adjournments were taken indicating that the talks are going on. However, both parties stated that the efforts of the parties have not fructified to arrive at an amicable settlement. 51. Therefore, this Tribunal decided to take up CP/117/KOB/2019 as the lead case, considering the facts and circumstances mentioned in CP/19/KOB/2020 also for taking a decision in both C.Ps. 52. As far as the facts of the case is concerned, which has been narrated above, the admitted position is that the prayer sought and relief sought by the Petitioner Mr. Mohan Thomas (CP/117/KOB/2020) is revolving around the validity of the impugned Board meeting claimed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ether the issue of oppression and/ or mis-management on the part of the Respondents herein in running the affairs of the Company towards the Petitioners No. 1 had been proved or not? 55. After going through the factual matrix in the case, let us examine the allegations in detail from the records produced by the parties before us vis-a-vis the issues framed. Point (i): Board of Directors Meeting dated 14.10.2019: 56. Going through the previous AGMs, it is found that in the Notice dated September 6, 2018 of the 71st AGM, under the head Explanatory Statement under Section 102 of the Companies Act, 2013, item no. 3(a) states "Mr. Paulose Joseph (Respondent No 4), (Aged 71 years), Director of the Company for more than 3 decades, with his vast knowledge and expertise on all aspects of Management has greatly contributed to the growth of the Company. The Board recommends continuation of his appointment as Managing Director." Item 3(c) states "Mr WC Thomas (Respondent No 5) (Age 77 years), Whole-time Director of the Company for more than 2 decades, with his vast knowledge and expertise on all aspects of Tea industry such as production, quality, tasting, pricing etc. has greatly contrib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he period for which he is to hold office. 60. From the above-mentioned Articles, it is clear that the processes for the conduct of the Board Meeting dated October 14, 2019 had been fully complied with by the respondents such as providing due notice for the meeting, quorum and conduct of the meeting at the place as stated in the notice in accordance with law. R3 was properly appointed as the Chairman of the meeting. The Petitioner also attended the meeting and thus he cannot contend that the meeting was not properly called or convened. 61. Now the discussion is to be concentrated towards the resolutions passed in the said Board Meeting. As regards the appointment of R4 and R5 in the said Board Meeting dated 14.10.2019, the question arise here is whether the decisions were taken in the meeting of the Board of Directors of the R1 company to circumvent the decision taken by the members in the AGM? 62. On an analysation of the issue, it is true that Respondent 4 was holding the position of Managing Director for the last three decades, i.e., upto 30.09.2019 and R5 was in the position of the Whole Time Director upto 30.09.2019. The contention of the petitioner is that Section 196 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reholders have not consented to a special resolution. They are no longer Directors of the Company and their last date as Directors was September 30, 2019. They are not also responsible for the day-to-day operations, which are in your control now and you have the power to conduct the affairs of the Company in your role as Managing Director / Whole Time Director. I want to again reiterate for your reference and benefit the difference between strategic management and control (a function performed by the Board) and operational control (a function performed by leaders of the Company). Paulose and W.C will perform the latter and will work as per the direction, management and supervision of the Board and there is no question or circumventing the rights of shareholders. Paulose and WC are bound by their employment contracts where they report to the Board. For the avoidance of doubt, on the operation and signing of applicable accounts, please can you formulate a Board policy on this and send it to us for our review. After you prepare this, Annu and I review, and we will place this policy at our next Board meeting so that the accounts are operated, as per the directions of the Board. I can&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 97 and 398. It prescribes certain minimum qualifications which members should possess such as their numerical strength or the extent of their share capital. Under these provisions, therefore, any personal prejudice to the members for coming before the court is not required. Looked at form a slightly different point of view, even assuming that some personal prejudice is required and even assuming that only these persons will come before the court under these provisions as are personally prejudiced." 64. On-going through the above case law regarding point no. (i), this Tribunal came to a conclusion that as per Section 241 and 242 of the Companies Act, every member who comes before the court must have a grievance, either that he has been oppressed or that the company is being conducted in a manner prejudicial to public interest or in a manner prejudicial to the interests of the company. This grievance must be a personal grievance of member who comes before the court. It cannot be a vicarious grievance, a grievance of his beneficiary. In the present case, it has not been proved that the appointment of R4 as CEO can be attributed as an act oppressive against the petitioner or prejudici ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the law was violated with a malafide intention or that such violation was burdensome, harsh and wrongful. The designation of an employee need not to give much importance and what was important is the nature of duties. Even if the appointment of R5 as Executive Director- Tea Operations, is no way prejudicial to the public interest or affairs of the Company, the designation 'Executive' can be removed, so that it should not be confused as to Manager/ Whole Time Director of the Company. 67. Regarding the declaration of interim dividend on equity shares in the Board Meeting held on 14.10.2019, it is profitable to refer the clauses 141 and 142 of the Articles of Association in relation to the dividend declaration, in order to settle the issue. Clause 141 and 142 of the Articles of Association reads as under: "Interim Dividend 141. The Board may from time to time pay to the members such interim dividends as appear to them as justified by the profits of the company. Dividend to be paid out of profits only 142. No dividend shall be payable except out of the profits of the year or any other undistributed profits except as provided by Section 205 of the Act" 68. Section 123 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lared or out of profits generated in the financial year till the quarter preceding the date of declaration of the interim dividend: Provided that in case the company has incurred loss during the current financial year up to the end of the quarter immediately preceding the date of declaration of interim dividend, such interim dividend shall not be declared at a rate higher than the average dividends declared by the company during the immediately preceding three financial years.] [(4) The amount of the dividend, including interim dividend, shall be deposited in a scheduled bank in a separate account within five days from the date of declaration of such dividend.] [(5) No dividend shall be paid by a company in respect of any share therein except to the registered shareholder of such share or to his order or to his banker and shall not be payable except in cash: Provided that nothing in this sub-section shall be deemed to prohibit the capitalisation of profits or reserves of a company for the purpose of issuing fully paid-up bonus shares or paying up any amount for the time being unpaid on any shares held by the members of the company: Provided further that any dividend payab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a valid meeting. The resolutions passed in the said meeting are as follows: i. Declaration of interim dividend: Invalid. ii. Appointment of R4 as CEO: Valid. iii. Appointment of R5 as Executive Director: Invalid. iv. Sole signatory powers to R4 and R5: Invalid. Point No. ii. The Board Meetings held on 18.10.2019, 01.11.2019, 04.02.2020 and 21.08.2020. 73. The points to be discussed in the aforesaid Board of Directors Meeting were regarding the issue of notice, quorum of the meeting, meeting attended and chaired through video conferencing and the validity of resolutions passed therein. To arrive at a conclusion whether the above Board Meetings were valid in law, this Tribunal gone through the following provisions and Articles of Association of the Company. Meetings of Board. 114, The directors may meet together as a board for the dispatch of business from time to time, and they may adjourn and otherwise regulate their meetings as they think fit; provided that meeting of the Board shall be held at least once in every there calendar months and not more than two months in all intervene between the last day of the calendar month in which such meeting is held and the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot present within five minutes after time appointed for holding the meeting, the members present may choose one of their number to be the Chairman of the meeting. (2) The quorum of a committee may be fixed by the Board of Directors and until so fixed if the committee is of a single member or two members, shall be one and if more than two members shall be two. 74. As per Section 173 & 174 of the Companies Act, 2013: 173. Meetings of Board (1) ... xxxx (2) The participation of directors in a meeting of the Board may be either in person or through video conferencing or other audio-visual means, as may be prescribed, which are capable of recording and recognising the participation of the directors and of recording and storing the proceedings of such meetings along with date and time: Provided that the Central Government may, by notification, specify such matters which shall not be dealt with in a meeting through video conferencing or other audio-visual means. (3) A meeting of the Board shall be called by giving not less than seven days' notice in writing to every director at his address registered with the company and such notice shall be sent by hand delivery or by post ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered Office of the Company and R3 attended the Meeting through video conferencing from Delhi, when the meeting place is shown as Registered Office at Kochi. The petitioner stated that there should be atleast 2 Directors present physically in the Registered Office to comply with the provision regarding quorum as per the Act. 77. For considering the issue, we have gone through the following Rules: 3. Meetings of Board through video conferencing or other audio-visual means. - A company shall comply with the following procedure, for convening and conducting the Board meetings through video conferencing or other audio-visual means. (1) Every Company shall make necessary arrangements to avoid failure of video or audio-visual connection. (2) The Chairperson of the meeting and the company secretary, if any, shall take due and reasonable care- (a) to safeguard the integrity of the meeting by ensuring sufficient security and identification procedures; (b) to ensure availability of proper video conferencing or other audio-visual equipment or facilities for providing transmission of the communications for effective participation of the directors and other authorised participants at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the meeting; and (d) that no one other than the concerned director is attending or having access to the proceedings of the meeting at the location mentioned in clause (b); (5) (a) After the roll call, the Chairperson or the Company Secretary shall inform the Board about the names of persons other than the directors who are present for the said meeting at the request or with the permission of the Chairperson and confirm that the required quorum is complete. Explanation. - A director participating in a meeting through video conferencing or other audio-visual means shall be counted for the purpose of quorum, unless he is to be excluded for any items of business under any provisions of the Act or the rules. (b) The Chairperson shall ensure that the required quorum is present throughout the meeting. (6) With respect to every meeting conducted through video conferencing or other audio-visual means authorised under these rules, the scheduled venue of the meeting as set forth in the notice convening the meeting, which shall be in India, shall be deemed to be the place of the said meeting and all recordings of the proceedings at the meeting shall be deemed to be made at such place ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e meeting, the minutes shall be entered in the minute book as specified under section 118 of the Act and signed by the Chairperson. Explanation. -For the purposes of this rule, "video conferencing or other audio-visual means" means audio- visual electronic communication facility employed which enables all the persons participating in a meeting to communicate concurrently with each other without an intermediary and to participate effectively in the meeting. 8. Powers of Board.-In addition to the powers specified under sub-section (3) of section 179 of the Act, the following powers shall also be exercised by the Board of Directors only by means of resolutions passed at meetings of the Board.- (1) to make political contributions; (2) to appoint or remove key managerial personnel (KMP); *** (4) to appoint internal auditors and secretarial auditor; *** 78. On a careful reading of the above-mentioned Articles and provisions of Companies Act, 2013, this Tribunal is of the view that Directors present through video conferencing or other audio-visual means would suffice for the quorum requirement as their presence shall be counted for the purpose of quorum. Section 173 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not overtly responsible for contravention, if he had knowledge of such contravention, or contravention was committed with his consent, he is liable for penalty or punishment. Insertion of Section 2(60) of the Act illustrates the commitment of the statute in protecting parties who have been wronged and acts a deterrent from committing such wrongs as contravention of provisions attracts penalty or punishment. However, independent directors and non-executive directors are saved from being ''officers in default'' under Section 149(12) of the Act. 83. Under Section 166 of the Act, the following duties and liabilities have been imposed on the directors of the companies, by the Indian Companies Act of 2013,: 166. Duties of directors (1) Subject to the provisions of this Act, a director of a company shall act in accordance with the articles of the company. (2) A director of a company shall act in good faith in order to promote the objects of the company for the benefit of its members as a whole, and in the best interests of the company, its employees, the shareholders, the community and for the protection of environment. (3) A director of a company shall exercise his duties with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Joint Managing Director in 1st Respondent Company, which is a clear breach of the fiduciary duty, where he had deliberately misled both his fellow Directors and the members of Respondent No 1 Company. 86. Other allegation raised was that Petitioner in CP/117/KOB/2019 mis-used his position as Joint Managing Director and provided numerous benefits to his son without any Board sanction. It is found that his son's employment does not have Board sanction but, he was provided with furnished accommodation and numerous allowances / perquisites etc. There was no Board Resolution submitted by the petitioner to overcome these facts, which is clearly violation of Section 188 (f) of the Act. 87. Another issue raised is that Petitioner used the Respondent No 1 Bungalow for the purpose of Business, as evidenced by meetings held in the Bungalow, and supported by the RoC. Despite Petitioner moving out of the Bungalow in 2012, he did not return the Bungalow to the Company because he was using this for his other business purposes. This is also in violation of Section 452 of the Companies Act,2013. 88. It is a well settled principle that if the Directors exercise their powers for the purposes o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oppression. It is settled law that isolated act of oppression or stray illegal acts would not amount to oppression or mismanagement unless the stray illegal acts may have continuing or lasting consequences and in such cases the power may be invoked. In this respect, the following decisions of the court may be referred to: * Suresh Kumar Sanghi Vs. Supreme Motors Limited and Ors. (1981 SCC Online Del 199). * Chander Krishan Gupta v. Pannalal Girdhari Lal Pvt. Ltd. [1984]55CompCas702(Delhi). 92. However, from the allegations and counter allegations traded by the close relatives of the family against each other, it is evident that the conduct of the affairs of the 1st Respondent Company is seriously prejudiced as well as that of its shareholders due to internecine disputes and a dead lock exists to consider the invocation of winding up on just and equitable grounds. The remedy provided under Section 241-242 being an equitable remedy, calls for the Petitioner to come with clean hands, since a person who seeks equity must come with clean hands. NCLT exercising the equity jurisdiction, cannot ignore the well-known maxims of equity i.e., he who seeks equity, must do equity and he wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act, which is contrary to law, may not necessarily and by itself support the inference that the law was violated with a mala fide intention or that such violation was burdensome, harsh and wrongful. It was also pointed out that a series of illegal acts following upon one another can, in the context, lead justifiably to the conclusion that they are part of the same transaction, of which, the object is to cause or commit the oppression of persons against whom those acts are directed." 96. The judgement of Needle Industries (India) Ltd vs. Needle Industries Newey (India) Holding Ltd (Supra) and Shanti Prasad Jain vs. Kalinga Tubes Ltd (Supra) makes it clear that: "the person complaining of oppression must show that they have been constrained to submit a conduct which lacks probity, conduct which is unfair to them and which cause prejudice to them in exercise of their legal and proprietary rights as shareholders. It was further held oppression should be a continuous act continuing till the date of filing the petition.' 97. In the instant cases (CP/117/KOB/2019 and CP/19/KOB/2020), the petitioners failed to prove the continuing oppressive acts conclusively and this Tribunal cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perations and signatory powers to Mr. Paulose Joseph & Mr. W. C. Thomas are hereby declared as invalid. Since there is no error in the appointment of Mr. Paulose Joseph as CEO, it should be treated as a valid appointment. ii. The appointment of Mrs. Meera Joseph and Mrs. Annu Kurien as Independent Directors in the 72nd AGM held on 30.09.2019 is hereby declared as invalid. iii. Board of Directors are directed to convene an EGM/ AGM within 30 days from date of receipt of this order to appoint Ms. Meera Joseph and Ms. Annu Kurien as non-Executive Directors and Appointment of Mohan Thomas as Managing Director of the Company. The Board is also directed to appoint an internal auditor for the financial year 2019-20 and to file the Annual Financial Statements and Annual Returns upto 31.03.2020 with RoC within 60 days from the date of receipt of this order. iv. Board Meetings held on 18.10.2019, 01.11.2019,04.02.2020 and 21.08.2020 are hereby declared as invalid. Therefore, a separate Board Meeting of the Company is to be conducted within 30 days with the physical presence of all the three directors by complying with the provisions of the Companies Act, 2013 for deciding on the follow ..... 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