Tribunal rules for petitioners in oppression case, nullifying board decisions and awarding costs.

Hari Prakash Poddar and Ors. Versus  Shree Shree Radha Swamy Plastics Ltd. and Ors.

Hari Prakash Poddar and Ors. Versus  Shree Shree Radha Swamy Plastics Ltd. and Ors. - TMI Issues Involved:
1. Allegations of oppression and mismanagement under Sections 397, 398, and 402 of the Companies Act, 1956.
2. Unauthorized opening of a separate bank account and diversion of funds.
3. Removal and sale of company assets without proper authorization.
4. Validity of Board and Extra-Ordinary General Meetings (EOGM).
5. Validity of resolutions passed in Board and EOGM.
6. Legality of the agreement to sell the company's immovable property.
7. Compliance with statutory requirements for finalization and audit of accounts.
8. Change of registered office without proper authorization.

Detailed Analysis:

1. Allegations of Oppression and Mismanagement:
The petitioners, holding 10.91% of the company's equity, alleged oppression and mismanagement by respondents who held 36.20% of the equity. The petitioners claimed that respondents No. 2 and 3 mismanaged the company, leading to a recall notice under Section 13(2) of the SARFESI Act from SBI due to a loan default. The tribunal found a pattern of exclusion of the petitioners from the company's affairs, particularly in decisions related to the sale of the company's immovable property.

2. Unauthorized Opening of a Separate Bank Account and Diversion of Funds:
The petitioners alleged that respondents No. 2 and 3 opened a separate bank account with HDFC Bank without their knowledge and diverted Rs. 1,50,92,145/- belonging to the company. The tribunal noted that this act was contrary to the understanding with SBI, which provided the credit facilities.

3. Removal and Sale of Company Assets Without Proper Authorization:
The petitioners accused respondents No. 2 and 3 of removing raw materials, stocks, and electronic equipment from the factory premises. The tribunal found that these actions were part of a broader pattern of mismanagement and asset stripping by the respondents.

4. Validity of Board and Extra-Ordinary General Meetings (EOGM):
The petitioners contended that they were not given proper notice of the Board meetings held on 02.11.2010 and 10.12.2010 and the EOGM on 17.03.2011. The tribunal found that the notices were sent to an address in Darjeeling, West Bengal, despite the petitioners residing at the registered office address. This deliberate act of sending notices to an incorrect address was seen as an attempt to exclude the petitioners from the meetings.

5. Validity of Resolutions Passed in Board and EOGM:
The resolutions passed in the Board meetings held on 02.11.2010 and 10.12.2010 and the EOGM on 17.03.2011 were declared null and void by the tribunal. The tribunal held that these meetings were not held in accordance with the law due to the lack of proper notice to the petitioners.

6. Legality of the Agreement to Sell the Company's Immovable Property:
The agreement to sell the company's property to M/s. Aero Industries for Rs. 5.95 crores was declared non-est (not in existence) in the eyes of the law. The tribunal noted that the sale was conducted without proper authorization and excluded the petitioners from the decision-making process. However, the tribunal allowed the third-party purchaser, M/s. Aero Industries, to seek appropriate legal remedies.

7. Compliance with Statutory Requirements for Finalization and Audit of Accounts:
The tribunal directed the parties to finalize and audit the company's accounts for the year ended 31.03.2011 and subsequent years within eight weeks. The accounts for the year ended 31.03.2010 were to be used as the base for this purpose. The tribunal emphasized the need for compliance with the statutory requirements under the Companies Act, 1956, and the 2013 Act.

8. Change of Registered Office Without Proper Authorization:
The change of the registered office from 'KU-160, Pitampura, Delhi-110034' to 'A-4/18, First Floor, Shiv Mandir Mohalla, Main Rithala Road, Badli Village, Delhi-110042' was declared null and void by the tribunal. The change was made without proper authorization and was part of the broader pattern of exclusion of the petitioners from the company's affairs.

Conclusion:
The tribunal concluded that the acts of respondents No. 2 and 3 were deliberate and willful in excluding the petitioners from the company's affairs. The Board meetings held on 02.11.2010 and 10.12.2010, and the EOGM on 17.03.2011, were declared null and void. The agreement to sell the company's property was also declared non-est. The tribunal directed the parties to comply with statutory requirements for finalization and audit of accounts and declared the change of the registered office null and void. The petitioners were awarded costs of Rs. 20,000/- to be realized from respondents No. 2 and 3.