2013 (9) TMI 779 - HC - Companies Law

Court dismisses contempt petition, upholds directorship validity, and validates company actions during disputed period.

The court dismissed the contempt petition and related application, finding no merit in the petitioner's claims. It concluded that the respondents had made ... Proper Compliance of order - Appointment of Director - Oppression and Mismanagement u/s 397 and 398 of the Companies Act – Held that:- The delay in filing the Form was condoned by the order of the Court and the ROC was directed to accept the uploading of the digital version of Form 21. 20 - Having regard to the above circumstances, I am unable to see any wilful or intentional disobedience of the orders of the Court on the part of the respondents - Moreover, even the allotment of 3,333 shares was done in the meeting of the Board of Directors which took place on 20.8.2005 about which due notice was given to the petitioner - In its order dated 31.5.2005, the allotment was made amongst 6 shareholders of the company including the petitioner - In its order the Court had granted liberty to the respondent company to make allotment of these shares in accordance with law. There was no disobedience of the orders of the Court - The compliance with the orders of the court took some time on account of technical problems which were beyond the company’s control - It was therefore not possible to impute any contumacious conduct on the part of the respondents - They have made all efforts, bonafide to comply with the orders of the court. There were a few other allegations by the petitioner - He had objected to the appointment of Lt. Col. Rajiv Kohli - He was an ex-serviceman who was inducted as an additional director only with the permission of the Director Resettlement, Ministry of Defence - His appointment was confirmed in the annual general meeting. The petitioner’s claim that all actions of the respondent company prior to the judgment of this Court on 31.5.2005 should be recalled and that inasmuch as they were not recalled there was disobedience, was without any force - There was no such direction in the judgment - Even otherwise, section 290 of the Companies Act takes care of the situation - It says that all acts done by a director shall be valid, notwithstanding that his appointment was afterwards discovered or declared to be invalid - The actions of Satish K Thapar, civilian director, cannot therefore be held invalid - Those actions cannot therefore be recalled - there was no merit in the contempt petition – Decided against Petitioner. Issues Involved:1. Alleged contempt of court by respondents for non-compliance with court orders.2. Validity of the appointment and removal of directors.3. Compliance with filing requirements with the Registrar of Companies (ROC).4. Validity of actions taken by the company during the contested period.Issue-wise Detailed Analysis:1. Alleged Contempt of Court by Respondents for Non-compliance with Court Orders:The petitioner, Col. (Retd.) Dalip Singh Sachar, filed a contempt petition alleging that the respondents violated the court's directions issued on 31.5.2005. The petitioner argued that the respondents failed to comply with the orders of various judges, including Sikri, J., Manmohan, J., and Indermeet Kaur, J., and that the delay in compliance was unjustified and intentional. However, the court found that the respondents had made bona fide efforts to comply with the orders and faced technical difficulties with the electronic filing system. The court concluded that there was no willful or intentional disobedience on the part of the respondents.2. Validity of the Appointment and Removal of Directors:The court examined the validity of the appointment of Satish K. Thappar as an Additional Director and his subsequent removal, as well as the reinstatement of the petitioner as a director. The court noted that the removal of the petitioner was held illegal, and thus he continued to be a director on all relevant dates. The appointment of Satish Thappar was found to be null and void, ceasing to have effect from the date of his appointment. The court also addressed the petitioner's objection to the appointment of Lt. Col. Rajiv Kohli, confirming that his appointment was valid as it was done with the permission of the Director Resettlement, Ministry of Defence.3. Compliance with Filing Requirements with the Registrar of Companies (ROC):The respondents filed Form No.32 with the ROC on 5.10.2005, showing the petitioner as appointed and Satish Thappar as resigned. However, the court pointed out inaccuracies in the form, leading to further directions for filing a fresh Form 32. The court observed that the respondents faced difficulties due to the transition to an electronic filing system but eventually complied by filing Form 21 and later Form 32 as directed. The court condoned the delay in filing and directed the ROC to accept the digital version of the form.4. Validity of Actions Taken by the Company During the Contested Period:The petitioner claimed that all actions taken by the respondent company prior to the court's judgment on 31.5.2005 should be recalled. The court rejected this claim, citing Section 290 of the Companies Act, which validates acts done by a director even if their appointment is later found invalid. The court held that the actions of Satish K. Thappar could not be invalidated and did not need to be recalled.Conclusion:The court dismissed the contempt petition and the connected application, finding no merit in the petitioner's claims. The court determined that the respondents had made genuine efforts to comply with the court's orders and that there was no intentional defiance. The actions of the company and its directors during the contested period were upheld as valid.