TMI Blog2022 (10) TMI 891X X X X Extracts X X X X X X X X Extracts X X X X ..... o find out the magnitude of misappropriation of funds. There was no case of Oppression Mismanagement as alleged out by the Appellant in present Appeal as well as in the Application filed before the Hon ble NCLT, New Delhi vide CP-219/241-242/ND/2018 and the Adjudicating Authority rightly passed the detailed order dated 03.09.2021 after going through the entire materials placed on records and as such no irregularities were found in convening an Extra-Ordinary General Meeting which was requisitioned at the instances of a shareholder and a Board Meeting is not a pre-requisite as settled principles under Companies Act, 2013 - the Board Meetings were convened and suggested appropriate actions including convening of Extraordinary General Meeting (EGM) based on requisition of shareholder to remove the Appellant from the Directorship of the company vide Special Notice dated 16.05.2018 and the Board has intimated vide letter dated 23.05.2018 to the concerned Director to defend the various allegations raised in the special notice but no cognizant explanation was offered against the discrepancies in the accounts of the Respondent No.1 company. There are no irregularity in the impugn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondent No.1/Company and to give effect to the said conspiracy. These Respondents have come together to oust the Appellant from the directorship of Respondent No. 1/Company by taking benefit of their collective shareholding against the letter and spirit of Corporate Democracy. It is further pertinent to mention here that the business evolved and growth attained in Respondent Company had accrued solely by the Appellant s technical and business acumen. (g) Appellant was served an undated notice of Extra Ordinary General Meeting ( EGM ) schedule on 16.06.2018 issued by Respondent No.3 at the behest of Respondent No.2 pursuant to a requisition in accordance with the provisions of Section 100 of the Companies Act, 2013. One of the agenda proposed to be taken up was to remove the Appellant from the directorship of the Respondent No.1/Company. (h) The said undated notice calling EGM on dated: 16..06.2018 is issued by Respondent No.3 pursuant to a requisition dated: 03.05.2018 purportedly marked to the Board of Directors calling for convening of EGM and proposing for the removal of the Appellant canvassing allegation of financial mismanagement, fraud and other vague allegations. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rehensively prejudice the interest of the Appellant who undisputedly held 33% of the issued capital in Respondent Company. It is settled that if removal proposed is for the purpose of attaining malafide objective especially in a quasi-partnership Company, the action of majority constitutes an oppressive against the minority, being the test of fairness superseded the legality and the procedural compliances. That is also a settled law where removal of director of a private limited Company which is in a nature of partnership, such removal constitutes an oppressive act, if the shareholders instrumental in proposing a resolution for removal are found to have acted in a malafide manner. (iii) That Section 102 of the Act, mandates to disclose in explanatory note that all material facts relating to the resolution before the general meeting to enable the shareholders to form a judgment on the business before them. Section 102 of the Companies Act, 2013 is reproduced hereunder for your ready reference: (1) A statement setting out the following material facts concerning each item of special business to be transacted at a general meeting, shall be annexed to the notice calling such mee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xtent of the benefit received by him. (5) Without prejudice to the provisions of Sub-Section (4), if any default is made in complying with the provisions of this section, every promoter, director, manager or other key managerial personnel who is in default shall be punishable with fine which may extend to fifty thousand rupees or five times the amount of benefit accruing to the promoter, director, manager or other key managerial personnel or any of his relatives, whichever is more. The explanatory notice as annexed do not provides for all material information as mandated in the said section, hence the notice as well as the explanatory statement annexed thereto are illegal and void. (m) They have also stated that they have made false, dishonest, malicious, baseless, frivolous and concocted allegations against the Appellant. (n) The Appellant therefore submits that being the alleged complaints are pending trial before the appropriate court, unless the allegation are proved, the Appellant cannot be prejudiced from his legitimate entitlement in Respondent Company. The facts reflecting the malign objectives of Respondent No.2 by hand in gloves with Respondent No.3 and fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the Respondents on event of removal of Appellant from the position of directorship in the Respondent no.1 Company vide an EOGM and such allegations are vague, baseless, concocted in fanciful manner and malafide without appreciating the true position of law, therefore the said Appeal is liable to be dismissed on this ground alone. (c) Respondent No.1 Company is engaged into the business of operation, maintenance and housekeeping of recovery coke over batteries of steel manufacturing companies and associated materials handling and by products at its four sites. (d) The Respondent No. 2 3 along with the Appellant were involved in Respondent No.1 Company incorporated on 2012 after diversion from previously known two firms M/s. Tech Synergy operating site at Wardha, Maharashtra and another namely M/s. Thermotech Synergy Pvt. Ltd. Operating management of Dhenkanal Odhisha site. (e) On or around FY 2016-2017, huge disparities and unaccountability in the income expenses maintained at the active site of the Respondent No. 1 Company had came to the light and the Appellant being in the position of management refused to give information on the account of disputes in finance of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y which in turn adversely impact the core existence of the Company s business. (V) Service tax: no service tax liability paid and no return filed for FY 2016-17. (h) A copy of the Notice and Agenda notes of the Board Meeting called to be held on 7th March, 2018 and 21st March, 2018 to consider the following business: Agenda for 07.03.2018 Item No. 1: Grant Leave of Absence to Directors: To consider the grant of leave of absence to Directors who have requested for the same. Item No. 2: To take not on the statutory compliances till the quarter ended 31st December 2017: To consider the pending statutory dues payable to Govt. Authorities in respect of Service Tax, GST, TDS, EPF and ESI and filing of return thereof till the quarter ended 31st December 2017. Item No.3: To take on record of financial irregularities reported by Special Auditors. The Special Audit Report containing observations and findings of the Special Auditor regarding financial irregularities in the books of accounts and misappropriation of funds of the Company. The Board will consider the Special Audit Report conducted and individually discussed in 2017 and take rectification measures. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and ESI and filing of return thereof till the quarter ended 31st December 2017 and records to be submitted by the staff/site personnel. Item No. 4: To take note on the books of accounts till the quarter ended 31st December. To consider the books of accounts drafted by the management till the quarter ended 31st December 2017. Item No. 5: To discuss and finalise the financials for filing of ITR of the Company. Due to the financial irregularities reported in the special audit report and the irregularities reported therein there has been an inordinate delay in filing of statutory documents of the company. This has been further delayed as the documents are being perused by the Hon ble High Court of Jharkhand. However, with a change in law that delayed returns cannot be field after 31st March, 2018, it is imperative to take a call as to what needs to be done. Item No. 6: To consider and discuss any item, if any, with the permission of the chair. (i) Ld. Counsel of the Respondents also further submitted as follows: A Special Notice dated 16.05.2018 was issued by the Respondents specifying the Appellant, the reasons for removal and also served with requisition dated 0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isappropriation of funds, it cannot be said that the petitioner was totally unaware of the allegations against him. The petitioner was granted opportunity to repudiate the allegations and explain the discrepancies in the accounts of the respondent company which were clearly pointed out and brought to his notice upon the Forensic Audit Report being received and is a subject matter of criminal prosecution under the FIR lodged against him. No cogent explanation was offered to the allegation of siphoning off the funds. It is further submitted that the petitioner has guilty of forging signatures of the other Directors on the cheques for withdrawing amounts from the bank to which he was one of the joint signatories, which is primarily the subject matter of criminal investigation. 7. In view of the submission made, this Bench does not find any irregularity in convening an EGM for removal of a Director. The same can be requisitioned by a shareholder and a Board meeting is not a prerequisite. The removal of a Director is best left to the respondent company and its shareholder. Directorial complaints should not be entertained by courts and therefore interference of the tribunal in such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecial audit has also recommended to carry an extensive forensic audit to find out the magnitude of misappropriation of funds. e) All this reveal that there was no case of Oppression Mismanagement as alleged out by the Appellant in present Appeal as well as in the Application filed before the Hon ble NCLT, New Delhi vide CP-219/241-242/ND/2018 and the Adjudicating Authority rightly passed the detailed order dated 03.09.2021 after going through the entire materials placed on records and as such no irregularities were found in convening an Extra-Ordinary General Meeting which was requisitioned at the instances of a shareholder and a Board Meeting is not a pre-requisite as settled principles under Companies Act, 2013. This Tribunal ought to appreciate the fact that the allegations of siphoning of funds and fraud purported against the Appellant as per the Special Audit Report are grave and the Appellant were given ample opportunities to represent himself after issuance of Special Notice to repudiate the allegations but no cogent explanation was offered against the discrepancies in the accounts of the Respondent No. 1 Company. f) The contention of Appellant that collection of fun ..... X X X X Extracts X X X X X X X X Extracts X X X X
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