2013 (6) TMI 839 - Board - Companies Law

Court reinstates petitioner as director, cancels appointments, orders investigation.

The court set aside the petitioner's illegal removal from directorship, canceled the appointments of R-2 and R-3 as directors, and directed the newly ... - Issues Involved:1. Illegal removal of the petitioner from directorship.2. Illegal appointment of R-2 and R-3 as directors.3. Alleged siphoning of funds by the respondents.4. Discrepancies in the change of registered office.5. Maintainability of the company petition.Summary:1. Illegal Removal of the Petitioner from Directorship:The petitioner claimed she was illegally removed from her directorship without proper reasons, violating natural justice principles. She did not attend the EGM due to a threat to her life. The court found her removal improper as no Board meeting was held to approve the EGM notice, and she did not receive any notice for such a meeting. The court held that the removal was an oppressive act to gain illegal control of the company, setting aside her removal and restoring status quo ante.2. Illegal Appointment of R-2 and R-3 as Directors:The petitioner argued that R-2 and R-3 were appointed as directors without necessity and due procedure, as the company had no business activity. The court found the appointments were made to gain control of a defunct company, amounting to oppression. The appointments were canceled, restoring status quo ante.3. Alleged Siphoning of Funds by the Respondents:The petitioner alleged that the respondents siphoned off Rs. 25.57 lakh from the company. The respondents contended the payments were made to creditors in the due course of business. The court noted that the company had no activity since 2007, making the petitioner's claim tenable. The newly constituted Board was directed to appoint a chartered accountant to ascertain the siphoned amounts and recover them.4. Discrepancies in the Change of Registered Office:The petitioner contended that the registered office was shifted without proper notice and quorum. The respondents argued that the petitioner had admitted the new address in her petition. The court found discrepancies in the change of the registered office but left the issue to be sorted out by the newly constituted Board.5. Maintainability of the Company Petition:The respondents argued that the petition was not maintainable as no case for winding up was pleaded. The court held that the justification for winding up on just and equitable grounds could only be considered after examining the merits. The court found that the petitioner made a case for winding up but decided that winding up would be unfairly prejudicial to the petitioner.Conclusion:The court disposed of Company Petition No. 80 of 2011, setting aside the petitioner's removal from directorship, canceling the appointments of R-2 and R-3, and directing the newly constituted Board to address the siphoning of funds and discrepancies in the registered office change. All interim orders were vacated, and no order as to costs was made.