TaxTMI 
TaxTMI 
2023 (10) TMI 896
X X X X Extracts X X X X
X X X X Extracts X X X X
...."NCLT") in MA No. 1449/2019 filed in Company Petition No. 47/2016. 2. In the Impugned Order, the Ld. NCLT has disposed of MA No. 1449/2019 holding that the Resolutions approved in the Extraordinary General Meeting ("EGM") held on 03.05.2019 were in accordance with law and therefore, no interference is required in the said decisions/resolutions. 3. In short, the facts of the case, as are relevant to this appeal, are that Pralhad P. Chhabria ("PPC") held majority shareholding in Orbit Electricals Pvt. Ltd. (Respondent No. 1, "R-1") and he, on account of old age and weak health, decided to create a trust by the name of Pralhad Chhabria Trust for the benefit of the beneficiaries namely Mrs. Aruna Katara (his daughter), Mr. Vijay Chhabria (his nephew), Mr. Deepak Chhabria (his nephew), and Mr. Prakash Chhabria (his son) who were all part of his extended family. On this basis, a Trust Deed was executed on 12.03.2012 whereby PPC, who held majority equity share capital in Orbit Electricals Pvt. Ltd., settled his shareholding in this trust which was to become effective after his death. He also named his daughter Aruna Katara and son Prakash Chhabria and nephew Deepak Chhabria as future Ch....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pection of the register of members and minute books of the Board of Directors meetings, committee meetings and shareholder meetings for a specified period and requested for staying the operation of the resolutions passed in Board Meeting dated 31.03.2016. 8. While CP No. 47/2016 was pending, PC & Orbit Electricals preferred MA No. 645/2017 challenging the maintainability of CP No. 47/2016 which was decided by the NCLT vide order dated 05.12.2018 by which CP No. 47/2016 filed by DC & VC was held to be maintainable. Thereafter, an appeal namely, CA (AT)No. 39/2019 was preferred against an order dated 05.12.2018 of NCLT which was disposed of by the NCLAT by order dated 13.03.2019. According to this order, the order of NCLT regarding maintainability of CP No. 47/2016 was upheld and further the NCLAT held that CP No. 47/2016 was pending since November, 2016, this petition may be disposed of without either parties asking for unnecessary adjournment. 9. The Company Petition CP No. 47/2016 has remained pending since then and in the meanwhile, DC & VC filed MA 1449/2019 which was disposed of by order dated 31.12.2019, whereby the NCLT held that the decision/resolutions approved in EGM dat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rther pointed out that as per the intention of PPC and Memorandum of Understanding (MoU) dated 11.10.2011, which was executed between FCL & FIL, which also supported and cemented the business interests of the next generation family members that PPC had in mind. He has further submitted that in order to ensure that the AoA of Orbit Electricals would also be in consonance with his intention as ingrained in the trust deed and MoU, amendments in the relevant articles were also made so that the Board of Orbit Electricals may not go against PPC's intention of providing a fair and just division of assets between his own children and nephews. 14. Mr. Srinivasan, Ld. Sr. Counsel has also argued that in the AoA of Orbit Electricals, Article 12 clearly states that the shares of Orbit Electricals shall be held exclusively by the PPC family and/or KPC family and/or by the trust formed by PPC for the exclusive benefit of PPC & KPC families. He has also pointed out that Articles 15A, 59 & 60 were amended to reflect the intention of PPC to affect a fair and just division of assets between the next generation of Chhabria family and, therefore, the intention of PPC was absolutely clear that the nex....
X X X X Extracts X X X X
X X X X Extracts X X X X
....oubtful and under cloud of suspicion. In this connection he has pointed out to a glaring deficiency in the 'Gift Deed' and the 'Securities Transfer Form' for transfer of shares by submitting that while the 'Gift Deed' and the 'Transfer Form' of shares were both executed on 28.03.2016, there is no mention in the Gift Deed of the 'Trust Deed' or the "Last Will" of PPC. He has further pointed out that in the Securities Transfer form (Form No. SH-4) dated 28.3.2016 it is mentioned that stamp affixed is Rs. 3,60,00,000/- whereas in fact the stamp was purchased only on 30.03.2016, i.e. two days after the Securities Transfer Form was signed and a statement of the value of stamp affixed was made in the Securities Transfer Form. 19. Mr. Srinivasan has further argued that since the 'Gift Deed' and the Securities Transfer Form were both purportedly executed on the same day i.e. 28.3.2016, no proper valuation of the stamp duty could be done and therefore the value of stamp affixed was much less than the required stamp duty. To further strengthen his argument of the hasty nature of the entire action regarding 'Gift Deed', he has pointed to the signature of PPC on all the three pages of the 'Gi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....bout the contention of the Respondent that explicit mention of approval under Section 5 was required in the notice, he has pointed out that a mention was made that action is being taken under Section 5 and other relevant provisions of the Companies Act, 2013. He has also pointed out that Section 184 of the Companies Act, 2013 stipulates that an 'interested party' should not vote in any matter where he has any interest but PC voted in the EGM held on 03.05.2019 in favour of the said resolutions. 23. Mr. Srinivasan, Ld. Sr. Counsel for the Appellants has also rebutted the arguments of the opposite party regarding the authenticity of the gift deed and transfer form of shares by stating that these are matters to be decided under the Companies Act, 2013 regarding which CP No. 47/2016 is still pending before the NCLT, Mumbai. He has argued that there is a prima facie case for grant of interim relief as prayed for in MA 1449/2019, particularly for the reason that the NCLT, Mumbai is still seized of the issue, and also the matters of balance of convenience and irreparable loss to the appellants makes it a fit case for grant of interim relief. 24. In reply on behalf of Respondents, Mr. Ra....
X X X X Extracts X X X X
X X X X Extracts X X X X
....guments, Mr. S.N. Mukherjee, Ld. Sr. Counsel has referred to a Civil Suit filed by Deepak Chhabria (DC) and Kishan Chhabria (KC) on 18.11.2016, and argued that as would be evident from the array of parties in the Civil Suit and the prayers made therein certain interim reliefs were prayed for and this application for interim relief was disposed of on 02.12.2020. An important interim relief sought was the exercise of voting rights in respect of disputed 100,300 shares and interfering or obstructing in the management of FCL, and amendment of AoA of Orbit Electricals (P) Ltd. He has further pointed out that these prayers were not acceded to by the Civil Court. He has therefore, claimed that this order operates as res-judicata with regard to the prayers for interim relief made in MA 1449/2019. He has further pointed out that the order of Joint Civil Judge (SD), Pune dated 02.12.2020 was appealed in the Hon'ble Bombay High Court and while it is still pending adjudication, no stay has been granted in the matter. 29. Mr. S.N. Mukherjee, Ld. Sr. Counsel, has cited the Judgment of Hon'ble Supreme Court in the matter of 'Vasudev Ramchandra Shelat vs. Pranlal Jayanand Thakar & Ors.' (1974 (2)....
X X X X Extracts X X X X
X X X X Extracts X X X X
....therefore the appellants are now trying their luck in the present case to get interim relief which is not lawful. 34. Mr. Mukherjee, Ld. Sr. Counsel has also adverted to the Civil Suit No. 1372/2017 filed by Vijay Kishan Chhabria on 24.10.2017 wherein similar prayers, as made in MA 1449/2019, were made and since he could not get required relief, his brother DC later filed an application asking for the same relief. 35. Mr. Mukherjee, Ld. Sr. Counsel, has also brought to our attention the MoU dated 11.10.2011 executed between FIL & FCL and contended that since both the parties are not before this Tribunal, this MoU does not have any relevance in so far as MA 1449/2019 is concerned and any reliance placed by the Appellants regarding their rights in management of FCL should be disregarded. 36. Mr. Mukherjee, Ld. Senior Counsel has also pointed out that Article 23(a) of the AoA comes into play when a transfer of shares is to take place on account of sale, whereas in the present case since the transfer is on account of gift deed no notice in writing was required to be given to the Board of PPC's intention to transfer by way of a Gift Deed to his son PC. Mr. Mukherjee has further argue....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... dated 03.05.2019 included Items no. 1 & 2 in 'Special Business' relating to the amendment/deletion of Articles 59 & 60. 40. Mr. Mukherjee, Ld. Sr. Counsel has rebutted the contention of the appellants that Articles 59 & 60 were 'entrenched articles' and, therefore, such resolutions were approved in the EGM. He has further rebutted the argument of the Appellants that in view of Section 184 of the Companies Act, 2013, Prakash Chhabria could not have chaired the EGM by pointing out that Section 184 only applies to a Board meeting and not EGM, and moreover this provision would not apply to a private/family company. He has adverted to notification dated 05.06.2015 of the Ministry of Corporate Affairs, Government of India where it is clearly indicated that Chapter XII, Sub-Section (2) of Section 184 would not apply to a private company like Orbit Electricals. He has cited the Judgment of Hon'ble Delhi High Court in the matter of 'Ravi Raj Gupta & Ors. Vs. Hans Raj Gupta & Ors.' (2009) SCC Online DEL 381 in support of his contention. 41. Mr. Mukherjee, Ld. Sr. Counsel has adverted to Section 14 of the Companies Act, 2013 to point out that a power has been given to a Company to alter it....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of all the members to agree with the special resolution. He has further argued that since there is a valid gift deed executed by PPC in favour of his son PC, the transfer of shares has to be effected by a procedural process which is defined in law, which is what has happened. Mr. Povvayya, Ld. Sr. Counsel has further argued with regard to the holding of Board meeting dated 31.03.2016, it may be pointed out that DC signed the attendance register and accepted the sitting fee, and furthermore in the same Board meeting FCL was paid about Rs. 9.15 Crores for sale of 61,00,000 shares of I2IT Pvt. Ltd. which was accepted by DC on behalf of FCL. In such a situation, he has argued, DC cannot now turn around to say that the Board meeting on 31.03.2016 did not take place. He has further argued that the prayer in CP 47/2016 filed by DC is confined to the issue whether the Board meeting on 31.03.2016 was held or not and that no challenge to the transfer of shares is made and, therefore, the EGM which is the subject matter of the present MA 1449/2017 which is about the shareholding of PC as a result of transfer of shares is a different matter is dependent. The shareholding of PC which should be....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n "Said Shares" in the trust deed in Definitions Clause 4(c) to claim that the shares of Orbit Electricals were to be 'settled, donated or gifted by the settlor or by any other trustee or by any other person to the trust in the future' and therefore, the shares would have to accrue to the trust only in the future by way of settling, donating or gifting. 48. On the issue of Articles 59 and 60 being 'entrenched articles', Mr. Krishnendu Datta, Ld. Sr. Counsel has pointed out that on 30.09.2014 the AoA of Orbit Electricals were amended and at that time only four of the thirteen members attended. He has made this argument in connection with the argument of the Appellant that all the members of R-1 Company Orbit Electricals should have voted for Amending articles 59 and 60 since they were 'entrenched articles'. 49. Mr. Krishnendu Datta, Ld. Sr. Counsel has further re-iterated the argument that Deepak Chhabria has signed the attendance register for the BOD meeting held on 31.03.2016 and accepted the sitting fee along with accepting Rs. 9.15 Crores for sale of 61,00,000 shares of I2IT Pvt. Ltd. to FCL which were all connected with the holding of Board meeting on 31.03.2016. He has furth....
X X X X Extracts X X X X
X X X X Extracts X X X X
....by an order in SLP (Cr) No. 6814 of 2023 Hon'ble Supreme Court has also not shown any inclination that the criminal complaint be pursued further. 53. In rejoinder, Mr. Ramji Srinivasan, Ld. Sr. Counsel for Appellant has rebutted the argument of Ld. Sr. Counsels for Respondents that since the Appellants have failed to obtain any interim relief from the Ld. Civil Court in Pune, they are trying to get a similar relief in the company court proceedings by arguing that the reliefs sought in the civil proceedings were very different from those prayed for in the company court proceedings. The fact is that in the company court proceedings the appellants have raised the issue that the Board meeting dated 31.03.2016 did not take place, and on that basis, prayed that the actions taken in that purported meeting be declared as null and void. He has further argued that, in MA 1449/2017, the issue is regarding the holding of EGM on 03.05.2017 and the resolutions approved therein, and therefore such a relief cannot be denied on the basis of any judgment/ order of Ld. Civil Court. 54. Mr. Ramji Srinivasan, Ld. Sr. Counsel has also rebutted the argument that by signing the attendance register for B....
X X X X Extracts X X X X
X X X X Extracts X X X X
....de in the Securities Transfer Form. He has thus argued that Gift Deed as well as the Securities Transfer Form were executed in suspicious circumstances and further reinforces that the fact that they were approved in a purported Board meeting on 31.03.2016 whose purpose was to approve these sham documents, and the meeting actually did not take place. He has also argued that it was possible for a short notice to be issued regarding the items of resignation of PPC as Chairman of Orbit Electricals and approval of the Gift Deed but it was not done. 57. Mr. Ramji Srinivasan, Ld. Sr. Counsel has also pointed out that Articles 59 & 60 are 'entrenched articles' by the very nature of is contained in them and, therefore, in accordance with sub-sections 3 & 4 of Section 5 all the members present and voting in the general meeting should pass the resolutions for the amendment of these articles. He has stated that the appellant Deepak Chhabria dissented on the related resolution in the General Meeting held on 03.05.2019, and thus the amendment to these 'entrenched articles' was not lawfully carried out. 58. We have carefully considered the pleadings and oral arguments of the rival parties in th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....;ble Tribunal be pleased to direct the Board of Respondent No. 1 not to hold any meeting till transfer of 16,619 undisputed shares lying in PPC's name to the Pralhad Chhabria Trust". 62. We also reproduce the prayers made in CP 47/2016 to appreciate the context in which MA 1449/2019 was filed. The relevant prayers are reproduced as here under:- "In view of the facts mentioned hereinabove, the Petitioners pray for the following reliefs: a) That this Hon'ble Tribunal be pleased to declare that there was no meeting of the Board of Directors on 31st March 2016 and in view thereof, be also pleased to declare that all the resolutions allegedly passed at such meeting are null and void; b) That this Hon'ble Tribunal be pleased to declare that the Resolutions passed during the alleged Board Meeting on 31st March 2016 is illegal and contrary to the provisions of the Companies Act, 1956 and Articles of Association; c) That this Hon'ble Tribunal be pleased to declare that all the resolutions allegedly passed at the meetings held on 21st June 2016, 24th September 2016 and 28th October 2016 are null and void contrary to the provisions of the Companies Act, 1956 and Artic....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s, servants or any other officer of Respondent No. I be retrained by an order of injunction to directly and/or indirectly deal with transfer, alienate, encumber and/or dispose off the assets, both movable and immovable of Respondent No.1 to any person/entity whatsoever. f) That an Administrator(s) and/or Special Officer(s) and/or Independent Committee of Management be appointed to carry on the business of and to manage the affairs of the Respondent No.1 for such period and on such terms and conditions as this Hon'ble Tribunal may deem fit;" 63. On the basis of the above-extracted prayers, we note that the appellants Deepak K Chhabria and Vini Deepak Chhabria have prayed for restraining the Respondents from acting in furtherance to the Requisition Notice dated 18th March 2019 issued by Respondent No. 2, the illegal Board Resolution passed on 3rd April 2019 and the Notice dated 9th April, 2019 calling for Extra-ordinary General Meeting of Respondent No. 1. We further note that, in the alternate, the appellants have prayed in MA 1449/2019 to stay the implementation of the resolutions passed in the EGM held on 03.05.2019, in case the EGM takes place, till the final hearing and d....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng brevity in mind and the urgency, legal points are not discussed in detail. After due consideration of the pleadings of both the sides, I am of the considered opinion that the urgency with which this Petition is mentioned today is justifiable because the AGM is called on 21st November, 2016 i.e. on coming Monday. In this forthcoming Meeting, certain major decisions are listed in the Agenda. Before an Order is pronounced, it is worth mentioning at this juncture that the arguments related to the Meetings held in the past of Respondent No.1 Company or the conduct of the Respondents, being a subject matter of the main Petition, it is not justifiable to take any decision or comment in any manner unless and until the pleadings are completed. As a result, the decision on the Interim Injunction shall confine to the reliefs now shortlisted during the proceedings. The Interim Order follows as under: i) Keeping in mind the consent given by the Respondent No. 1 and other Respondents, an inspection can be granted to the Petitioner No.1 on or before 30th November, 2016 at the place of business of the Respondent No.1 Company during working hours any day barring holidays. Inspection shall be c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ticing relevant facts and arguments of the parties, allowed the EGM dated 21.11.2016 to be conducted to only discuss the 'ordinary business' and take necessary approvals connected with the filing of the statutory compliances. The ad-interim injunction also restrained the Respondents from alienating the moveable assets to those that were enlisted in the agenda of the EGM to be held on 21.11.2016. All this points to the fact that the NCLT, while granting ad-interim injunction did not, prima facie, consider the case of the petitioners strong enough to give them a free hand in holding the Board meeting to discuss various issues including alienation of movable properties. 68. At this stage, it is also worth mentioning that a Miscellaneous Application MA 645/2017 was filed by Orbit Electricals and Prakash Pralhad Chhabria in CP 47/2016 primarily challenging the maintainability of CP 47/2016. In the order dated 05.12.2018 in the said MA 645/2017 the Ld. NCLT held the following regarding maintainability of the said petition CP 47/2016:- "6.7. On the question of maintainability of a "Maintainability Application" so far law pronounced by several Hon'ble Courts is unambiguous and unive....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e conscientious view that the Petition CP 47/241, 242, 243(b), 244/(MB)/2016 is maintainable for due adjudication under the provisions of Companies Act, 2013, hence listed for hearing on 27.03.2019. This Miscellaneous Application is, in the result, 'dismissed'. A cost of 25,000/- Imposed on the Applicants to be paid to the other side". 69. The above order of Ld. NCLT was challenged by Prakash Pralhad Chhabria and Orbit Electricals before NCLAT in CA (AT) No. 39/2019 wherein the following was observed and held in the NCLAT order dated 13.03.2019. "3. Learned counsel appearing on behalf of the respondents (appellants herein) referred different pleading to suggest that it is a family dispute and do not relate to oppression and mismanagement. However, as the question of oppression and mismanagement is pending before the Tribunal, we are not inclined to deliberate on such issues which are required to be determined by the Tribunal on the basis of the pleadings and other evidences on record. Therefore, we are not inclined to interfere with the impugned order dated 5.12.2018. 4. However, taking into consideration the fact that the company petition is pending since November, 20....
X X X X Extracts X X X X
X X X X Extracts X X X X
....happen till now. Therefore, if the respondents in this appeal, taking advantage of the pendency of the CP No. 47/2016, start effecting some very basic and fundamental changes in the AoA of the company Orbit Electricals, moreso when the proposed changes are not aligned with the intention of the family patriarch PPC in how the entire family business may be managed as exhibited in documents like the Trust Deed, MoU, it would result in making permanent changes in the management of the family - run companies, to the complete and permanent detriment and disadvantage of the appellants. Thus the crucial thing would be early adjudication of CP No. 47/2016 which would settle the issues of contention allowing the company Orbit Electricals. Thus, we are of the view that till orders in CP No. 1449/2019 are issued, prima facie, the case in MA 1449/2019 would lie in favour of the appellants. 72. Additionally, in order to look at the issue whether, prima facie, the case of the appellants in obtaining an interim stay order on the holding of EGM dated 3.5.2019 and implementation of resolutions passed therein if it was held we also peruse the other orders that have a direct bearing on the matter. In....
X X X X Extracts X X X X
X X X X Extracts X X X X
....anies Act, 2013 is reproduced below:- "5. Articles.- (1) The articles of a company shall contain the regulations for management of the company. (2) The articles shall also contain such matters, as may be prescribed: Provided that nothing prescribed in this sub-section shall be deemed to prevent a company from including such additional matters in its articles as may be considered necessary for its management. (3) The articles may contain provisions for entrenchment to the effect that specified provisions of the articles may be altered only if conditions or procedures as that are more restrictive than those applicable in the case of a special resolution, are met or complied with. (4) The provisions for entrenchment referred to in sub-section (3) shall only be made either on formation of a company, or by an amendment in the articles agreed to by all the members of the company in the case of a private company and by a special resolution in the case of a public company. (5) Where the articles contain provisions for entrenchment, whether made on formation or by amendment, the company shall give notice to the Registrar of such provisions in such form and manner as may be presc....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of Association and Articles of Association of Orbit Electricals Pvt. Ltd. approved by the Company in its General Meeting held on September 8, 2012 and as altered and amended in general meeting held on November 23, 2013 and as finally altered and amended in general meeting held on September 30, 2014, shall hereinafter not be amended through alteration, addition or deletion of any clauses herein, during the life of 60 years of the Pralhad Chhabria Trust or any further extension of 60 years or such longer period as may be permitted under the laws then prevailing in the country. For this purpose, the present Chairman of the Company, Mr. Pralhad Parsram Chhabria, has deposited copy of the Memorandum of Association and Articles of Association duly signed/initialed by him in original and as updated from time to time, for identification with four members of the Company i.e. Mr. Prakash P. Chhabria, Mr. Deepak K. Chhabria, Mr. Vijay K. Chhabria and Mrs. Aruna M. Katara". 75. It is evident from the above extracted articles that they include the names of Mr. Deepak K Chhabria as Authorized Representative of Finolex Cables, Mr. Prakash P Chhabria as AR of Finolex Industries FIL, Mr. KP Chh....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s Act, 2013 by a unanimous vote of all the members present and voting in a General Meeting. 78. The Learned Senior Counsel for Respondents has argued that the Articles 59 and 60 were not designated as 'entrenched articles' as neither a specific notice under section 5(5) was given and moreover, only four out of thirteen members attended the EGM of Orbit Electricals Pvt. Ltd. held on 30.9.2014, which does not fulfil the requirement of section 5(4). On the other hand, the Learned Senior Counsel for Appellants has stated that an article similar to the present Article 60 was first introduced in the year 2012 and when the Articles were amended on 30.9.2014 in the AGM of Orbit Electricals Pvt. Ltd., section 5 of the Companies Act, 2013 had already come into being and notice for amendment of article 60 was given under section 14 and other provisions of the Companies Act, 2013 which includes section 5 also. He has further contended that in the AGM dated 30.9.2014, the resolution to amend the articles was passed unanimously by all the members present and voting in the said meeting and therefore, the requirement of sub-sections (3) and (4) of Section 5 is fully satisfied in that it was a una....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt of transfer of 116922 shares on 13.2.2013, much before the board meeting dated 31.3.2016 held, and therefore, any adjudication in the Civil Suit will not have any bearing on the application for Interim Relief in connection with EGM dated 3.5.2019 wherein the basic issue of shareholding of Prakash P. Chhabria in Orbit Electricals is an important. 81. Further, we note that, in the Special Civil Suit No. 1372/2017 it has been held that the merits of the Appellant's case pending before NCLT, Mumbai (which is CP NO. 47/2016) and District Court, Pune in Special Civil Suit 1418/2016 agitate different causes of actions and therefore, they shall be decided on their own merit. We are, therefore, of the view that the case of Appellants in the Special Civil Suit is different from that of the Appellant before Hon'ble NCLT in CP 47/2016 and therefore, civil proceedings which either seek to challenge the validity of the gift deed or transfer of 116922 shares on 13.2.2013 in favour of Pralhad Chhabria Trust are issues different from the one which is the subject of MA 1499/2019 and also CP 47/2016. 82. We also note that MA 1499/2019 is an application for interim order in CP 47/2016, when this ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d 5.12.2018, which has been further upheld by Hon'ble NCLAT vide order dated 13.3.2019. In such a situation, we do not think it is necessary to get into the issue of whether an AR of a company can exercise proprietary rights as a shareholder as against the rights of the company, which may be a shareholder since CP 47/2016 has been held to be maintainable. 87. The Learned Senior Counsel for Appellants has cited the judgment of Hon'ble Supreme Court in the matter of S.P. Jain v. Kalinga Tubes Ltd (supra). wherein also it is held that the right to member of the company to comply with the conditions of the erstwhile Companies Act, 1956 in section 399 for applying to the court for relief under the Companies Act, 2013 as may be appropriate in the circumstances of the case. We are of the view that since Hon'ble NCLT in CA 39 of 2019 was upheld by the order dated 5.12.2018 in MA 645/2017 that the present application by the Appellants is maintainable, the judgment in the matter of S.P. Jain v. Kalinga Tubes Ltd. (supra) may be noted. 88. The Learned Senior Counsel for Respondents has referred to the judgment of Hon'ble Supreme Court in the matter of Vasudev Ramchandra Shelat versus Pranla....
X X X X Extracts X X X X
X X X X Extracts X X X X
....is noted that the shareholding of Prakash Pralhad Chhabria in R-1 company became 70.1% resulting in his having achieved majority shareholding in R-1 Company, was due to the fact that a Gift Deed was executed in his favour by his father Pralhad P. Chhabria on 28.3.2019, and subsequently, the Securities Transfer Form was also signed and executed on the same date i.e. 28.3.2019. 92. Further, the gift of shares by PPC to PC and the share transfer on account of the Gift Deed and the Securities Transfer Form were approved in the Board meeting dated 31.3.2019, whereafter Prakash P. Chhabria became 70.1% shareholder in Orbit Electricals Pvt. Ltd. The Learned Senior Counsel for Appellants has pointed to some grave and serious deficiencies in the execution of the Gift Deed and the Securities Transfer Form, and the manner in which these were approved to argue they were highly suspicious documents, and only in order to give effect to the gift deed and the share transfer the said Board meeting was held on paper but it actually did not take place on 31.3.2019. 93. The Learned Senior Counsel for Appellants has brought to our attention transcript of telephone conversation between Deepak Kishan C....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... It is not clear as to why there was such secrecy about the Gift Deed and Transfer Form approval being taken up in the Board meeting and further why incorrect mention regarding affixing of stamp duty was made in the Transfer Form. We further note that the amount of stamp duty required to be paid for the said transfer of shares was in the range of Rs. 30 crores which is evidenced by a later Interlocutory Application filed before NCLT regarding the deficient value of stamp duty affixed on the Securities Transfer Form. These facts too, raise doubt whether the Board meeting actually took place or just the papers to show the Board meeting were created to transfer shares in the name of Prakash P. Chhabria as is alleged by the Appellants. 97. In such a scenario, as discussed in detail above, we hold the prima facie view that the Gift Deed, Securities Transfer Form and the holding of Board meeting on 31.3.2016 are all under a cloud of suspicion, especially since they sought to override the stated view and intention of PPC to apportion the business of the Finolex Group companies between his own children and nephews. Of course, the non-holding of Board Meeting on 31.3.2016 will be decided ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....entioned paragraphs, we are of the clear opinion that the Learned NCLT has not been able to appreciate the facts insofar as they relate to the reliefs claimed in MA 1449/2019, and therefore, have arrived at an incorrect conclusion by allowing the holding of EGM dated 3.5.2019 resulting in the decisions taken therein. 102. We are, therefore inclined to pass an order in favour of the Appellants by directing that, since EGM dated 3.5.2019 has taken place, the resolutions passed in the said EGM may not be acted upon and such an interim order should continue till the time CP No. 47/2016 is finally decided. 103. We also want to mention that while reserving this judgment after conclusion of arguments of all the parties, this bench gave the following order on 21.09.2023:- "ORDER Hearing resumed. Mr. Ramji Srinivasan, learned senior counsel appearing for the appellant resumed his argument in rejoinder and concluded the same. It is noted that hearing in the present appeal has taken place continuously on number of days and considering the voluminous nature of the appeal and detailed arguments advanced by learned senior counsel from all the side it is difficult to immediately deliver jud....