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of <h1>CLB declines to order AGMs, advises seeking direction post civil court decision.</h1> The Company Law Board (CLB) declined to order the company to convene Annual General Meetings (AGMs) for the disputed years due to serious disputes and a ... - Issues Involved:1. Non-convening of Annual General Meetings (AGMs) from 1998-99 to 2003-04.2. Validity of notices and certificates of posting for AGMs.3. Shifting of the registered office without informing shareholders.4. Appointment of new auditors and related compliance issues.5. Alleged fabrication of documents and fraud by certain respondents.6. Non-cooperation among directors leading to statutory non-compliance.7. Jurisdiction of Company Law Board (CLB) under Section 167 of the Companies Act, 1956.Issue-wise Detailed Analysis:1. Non-convening of Annual General Meetings (AGMs) from 1998-99 to 2003-04:The applicant claimed that the company failed to hold AGMs from 1998-99 to 2003-04, leading to statutory non-compliance. The respondents 6 & 7 argued that AGMs were held and notices were sent to shareholders. The CLB noted that the issue of whether AGMs were held is under serious dispute and falls outside the scope of Section 167, which only allows the CLB to direct the calling of AGMs in case of default.2. Validity of notices and certificates of posting for AGMs:The applicant and supporting respondents contended that the notices and certificates of posting provided by respondents 6 & 7 were fabricated and contradictory. They highlighted discrepancies such as notices indicating different dates and venues, and certificates of posting showing implausible dates. The respondents 6 & 7 maintained that notices were duly sent under certificates of posting, and any errors were accidental and did not invalidate the meetings.3. Shifting of the registered office without informing shareholders:The applicant argued that the registered office was shifted without informing shareholders, making it impossible for them to attend AGMs. The respondents 6 & 7 admitted the shift but claimed it was due to the sale of the old office building and that notices were sent before the shift. The CLB noted the manipulation of records regarding the registered office's location and the lack of proper communication to shareholders.4. Appointment of new auditors and related compliance issues:The applicant pointed out that no new auditors were appointed in compliance with Sections 224 and 225 of the Act, and no forms were filed with the Registrar of Companies. The respondents 6 & 7 claimed that the board decided on a new auditor and completed the formalities. The CLB noted discrepancies in the appointment process and the lack of proper notice to the auditors.5. Alleged fabrication of documents and fraud by certain respondents:The applicant alleged that respondents 6 & 7 fabricated documents, including notices and certificates of posting, to commit fraud on the company and its shareholders. The respondents denied the allegations, asserting that all actions were taken in the company's interest. The CLB highlighted the serious nature of these allegations and the need for a civil court to adjudicate the validity of the AGMs and related documents.6. Non-cooperation among directors leading to statutory non-compliance:The respondents argued that non-cooperation among directors, particularly the absence of the managing director, led to statutory non-compliance. The applicant and supporting respondents acknowledged faction-fighting but maintained that this did not justify the failure to hold AGMs. The CLB recognized the internal conflicts but emphasized the need for statutory compliance.7. Jurisdiction of Company Law Board (CLB) under Section 167 of the Companies Act, 1956:The CLB clarified that its jurisdiction under Section 167 is limited to directing the calling of AGMs in case of default. It cannot adjudicate disputes regarding the validity of AGMs. Given the serious dispute over whether AGMs were held, the CLB deferred to the pending civil suit to resolve these issues. The CLB noted that any finding on the validity of AGMs could result in conflicting decisions with the civil court.Conclusion:The CLB declined to make any order directing the company to convene AGMs for the disputed years, given the serious disputes and the pending civil suit. The applicant was advised to seek appropriate directions from the CLB after the civil court adjudicates the validity of the AGMs. The CLB emphasized the need for statutory compliance and proper communication with shareholders.
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