Tribunal voids illegal meeting, reinstates petitioners, orders costs.

The tribunal ruled in favor of the petitioners, declaring the Extraordinary General Meeting (EoGM) held on 27.07.2015 and the forfeiture of 5415 equity shares as illegal and void. The removal of the petitioners and other directors, as well as the election of Respondents 2 to 11, were deemed null and void. The petitioners and another shareholder were reinstated as members of the company, and Respondents 2 to 11 were ordered to pay costs to the petitioners.

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Issues Involved:
1. Legality of the EoGM held on 27.07.2015.
2. Legality of the forfeiture of 5415 equity shares on 27.07.2015.
3. Relief sought by the petitioners.

Detailed Analysis:

Issue (a): Legality of the EoGM held on 27.07.2015

The EoGM held on 18.06.2015, supervised by an independent chairman appointed by the CLB, resulted in the election of Petitioner No.1 and Respondents 12 to 22 as Directors. The CLB recognized this election on 07.07.2015. Respondents 2 to 11 did not object to this EoGM before the CLB, making their subsequent objections an afterthought. The EoGM on 27.07.2015, convened by Respondents 2 to 11, disregarded established procedures and was a betrayal of legal protocols. The respondents' participation in the 18.06.2015 election without raising objections amounts to acquiescence, barring them from contesting it later.

The respondents' claim that the petitioners did not disclose their residential status is legally untenable. It was the competent authority's responsibility to verify the DIN numbers. The respondents had no authority to remove the petitioners and Respondents 12 to 22, who were duly elected. The alleged understanding between Petitioner No.1 and Respondent No.2 lacks credibility, as no rational person would agree to their own removal and forfeiture of shares. The petitioner's travel records further disprove the respondents' claims about the 01.07.2015 notice.

The respondents failed to comply with Section 284 of the Companies Act, 1956, before removing the petitioners and Respondents 12 to 22. The absence of a 'special notice' invalidates the removal resolution. The appointment of Respondents 2 to 11 violated Section 162 of the Companies Act, 2013, making the 27.07.2015 election void ab initio.

Issue (b): Legality of the forfeiture of 5415 equity shares on 27.07.2015

The Companies Act, 1956, does not provide for share forfeiture. The respondents failed to show any Articles of Association provisions authorizing share forfeiture for non-disclosure of residential status. Even if authorized, directors cannot use their powers to cancel minority shareholders' shares to increase their voting power. The respondents' action was illegal and is declared null and void, supported by the ruling in Rashmi Seth Vs. Chemon (I) Private Limited & Ors., Re. 1995.

Relief

The EoGM held on 27.07.2015 is declared illegal and void. The removal of Petitioner No.1 and Respondents 12 to 22 as Directors and the forfeiture of 5415 shares are declared null and void. The petitioners and another shareholder continue as members of the 1st Respondent Company. The election of Respondents 2 to 11 as Directors is also null and void. The 1st Respondent Company is directed to restore the names of the petitioners and another shareholder in the Register of Members. Respondents 2 to 11 are ordered to pay costs of Rs. 50,000 to the petitioners within three weeks.

Conclusion

The tribunal ruled in favor of the petitioners, declaring the EoGM and subsequent actions by Respondents 2 to 11 illegal, null, and void. The petitioners and Respondents 12 to 22 are reinstated as Directors, and the forfeited shares are restored. Respondents 2 to 11 are required to bear the costs.

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