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TMI Blog2023 (4) TMI 1202X X X X Extracts X X X X X X X X Extracts X X X X ..... nsel for the Parties and perused the records made available including cited judgments. 3. It is the case of the 'Appellants' that Appellant No. 1 Company was incorporated on 03.05.1989 by late Shri Shivlan Chawla along with other family member who were the first directors and the promoters and involved in business of coil winding machines. The 'Respondent' was appointed as Director in Appellant No. 1 Company on 13.01.1990. 4. The 'Appellants' alleged that Respondent never took any interest in managing Appellant No. 1 Company and was made Director and Shareholder only because he was related by blood. The 'Appellants' further alleged that in March 2017, the Respondent with wrong intentions for making personal gains got in touch with its competitor M/s Synthesis and the cost of Appellant No. 1 Company, started virtually acting as trading agent of M/s Synthesis and its sister concern M/s Samyukta from April, 2017. It is a further case of the Appellant that due to detrimental activities of the 'Respondent', the Appellant No. 1 Company had to close down its business in Kundli Unit. 5. The 'Appellants' submitted that in view of above developments, Appellant No. 3- Mrs. Neha Chawla in c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Respondent who is involved in siphoning of money and taking action against the interest of Appellant No. 1 Company including breach of trust and therefore the 'Respondent' is not entitled for such inspections of the record which will be used by the 'Respondent' to collide with its competitor M/s Synthesis to cause harm to the 'Appellant'. 9. The 'Appellants' further submitted that the 'Tribunal' has heard in the 'impugned order' ignoring conflict of rights of the director and his obligation towards the company and further the 'Tribunal' overlooked documentary evidence placed by the 'Appellants'. The 'Appellants' further assailed the 'impugned order' 20.02.2019 which did not take into account the mala-fide intent and the conduct of the 'Respondent' requesting for inspection who is working in tandem with its competitor M/s Synthesis to divert the business and clints to M/s Synthesis. The 'Appellants' also cited the law laid down by Hon'ble High Court of Delhi in case of 'D. Ross Porter vs. Pioneer Seed Co. Ltd.' [(1990) 68 Camp Cas 145 ] , whereby the Hon'ble High Court of Delhi held that the right for inspection etc. which petitioner want to enforce is a discretionary relie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o specific examinations of the issues raised by the 'Appellants' herein, it would be necessary to refer to the relevant law in Companies Act, 2013 and Rules thereunder as referred to by the parties during averments, which reads as under :- "94. Place of keeping and inspection of registers, returns, etc. - (1) The registers required to be kept and maintained by a company under section 88 and copies of the annual return filed under section 92 shall be kept at the registered office of the company: Provided that such registers or copies of return may also be kept at any other place in India in which more than one-tenth of the total number of members entered in the register of members reside, if approved by a special resolution passed at a general meeting of the company. [***] Provided further that the period for which the registers, returns and records are required to be kept shall be such as may be prescribed. (2) The registers and their indices, except when they are closed under the provisions of this Act, and the copies of all the returns shall be open for inspection by any member, debenture-holder, other security holder or beneficial owner, during business hours without pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... If any inspection under sub-section (1) is refused, or if any copy required under sub-section (2) is not furnished within the time specified therein, the company shall be liable to a penalty of twenty-five thousand rupees and every officer of the company who is in default shall be liable to a penalty of five thousand rupees for each such refusal or default, as the case may be. (4) In the case of any such refusal or default, the Tribunal may, without prejudice to any action being taken under sub-section (3), by order, direct an immediate inspection of the minute-books or direct that the copy required shall forthwith be sent to the person requiring it. 128. Books of account, etc., to be kept by company - (1) Every company shall prepare and keep at its registered office books of account and other relevant books and papers and financial statement for every financial year which give a true and fair view of the state of the affairs of the company, including that of its branch office or offices, if any, and explain the transactions effected both at the registered office and its branches and such books shall be kept on accrual basis and according to the double entry system of accounti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... naging director, the whole-time director in charge of finance, the Chief Financial Officer or any other person of a company charged by the Board with the duty of complying with the provisions of this section, contravenes such provisions, such managing director, whole-time director in charge of finance, Chief Financial officer or such other person of the company shall be punishable [***] with imprisonment for a term which may extend to one year or with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees [***]. 169. Removal of directors. - (1) A company may, by ordinary resolution, remove a director, not being a director appointed by the Tribunal under section 242, before the expiry of the period of his office after giving him a reasonable opportunity of being heard: [Provided that an independent director re-appointed for second term under sub-section (10) of section 149 shall be removed by the company only by passing a special resolution and after giving him a reasonable opportunity of being heard:] [Provided further that ] nothing contained in this sub-section shall apply where the company has availed itself of the option given to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ill the date up to which his predecessor would have held office if he had not been removed. (7) If the vacancy is not filled under sub-section (5), it may be filled as a casual vacancy in accordance with the provisions of this Act: Provided that the director who was removed from office shall not be re-appointed as a director by the Board of Directors. (8) Nothing in this section shall be taken- (a) as depriving a person removed under this section of any compensation or damages payable to him in respect of the termination of his appointment as director as per the terms of contract or terms of his appointment as director, or of any other appointment terminating with that as director; or (b) as derogating from any power to remove a director under other provisions of this Act". (emphasis supplied) Rule 17 of the Companies (Management & Administration) Rules 2014 is herein under:- "17. Calling of Extraordinary general meeting by requistionists. - (1) The members may requisition convening of an extraordinary general meeting in accordance with sub-section (4) of section 100, by providing such requisition in writing or through electronic mode at least clear twenty-one days p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and therefore the Respondent -Mr. Gulshan Kumar Chawla continue to be both Shareholder and Director. 17. It is also a fact that the Companies Act, 2013 provide for specific rights to the Shareholders and the Directors for inspection. 18. The original petition no. CA/390/ND/2018 in CP-220/PB/2018 is still pending adjudication before the 'Tribunal' under Section 241 & 242 of the Companies Act, 2013, whereby both the parties have used allegation and counter allegation against each other. 19. Since, the main petition is yet to be finally decided on merits, this 'Appellant Tribunal' is not required to look into the various other issues raised by the Appellant herein. The only issue which requires to be examined is whether there was any error in the 'impugned order' dated 20.02.2019 which allowed the 'Respondent' to examin the statutory records of the Appellant No. 1 Company taking help of the Chartered Accountant/ Company Sectary, if so desired, and also directing the 'Appellants' herein to provide conducive environment. The relevant paragraph of the 'impugned order' dated 20.02.2019 is reproduced as under:- "15. On perusal of the provisions mentioned above, it is established that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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