Tribunal upholds petitioner's EGM requisition, deems respondent's changes illegal. Board to convene EGM within 30 days.

The Tribunal found the petitioner's requisition notice for an Extraordinary General Meeting (EGM) valid under Section 100 of the Companies Act, 2013, and held that the respondent company's modifications were illegal. The Tribunal allowed the petitioner's company petition, set aside the respondent's notice, and directed the Board to convene the EGM within 30 days as per the original requisition notice. An observer and a permanent invitee were appointed to oversee the EGM and protect minority shareholders' interests, emphasizing shareholders' supremacy in corporate governance.

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Issues Involved:
1. Validity of the requisition notice for convening an Extraordinary General Meeting (EGM).
2. Alleged oppression and mismanagement by the respondent company.
3. Adherence to the provisions of Section 100 of the Companies Act, 2013.
4. Impact of the Joint Venture Agreement (JVA) on the requisition notice and EGM.
5. Rights of shareholders to convene an EGM and pass resolutions.
6. Legality of the respondent company’s modifications to the requisition notice.

Detailed Analysis:

1. Validity of the Requisition Notice for Convening an EGM:
The petitioner, holding 66% of the paid-up share capital of the respondent company, sent a requisition notice under Section 100(2)(a) of the Companies Act, 2013, to convene an EGM for the appointment of four directors. The Tribunal examined Section 100 of the Companies Act, 2013, which mandates that the Board of Directors must call an EGM upon receiving a valid requisition from shareholders holding at least 10% of the paid-up share capital. The Tribunal found that the petitioner’s requisition notice was valid and that the Board had a statutory obligation to convene the EGM without modifying the proposed agenda.

2. Alleged Oppression and Mismanagement by the Respondent Company:
The petitioner alleged that SBPL, the respondent group, engaged in acts of mismanagement and oppression by sidelining the petitioner from the Board of Directors despite holding a majority share. The Tribunal noted that the petitioner had provided significant financial support to the company, including collateral security for loans, and was entitled to representation in the Board proportionate to its shareholding. The Tribunal found that the respondent’s actions in modifying the requisition notice and proposing a different agenda constituted oppression and mismanagement.

3. Adherence to the Provisions of Section 100 of the Companies Act, 2013:
The Tribunal emphasized that Section 100 of the Companies Act, 2013, grants shareholders holding more than 10% of the paid-up capital the right to requisition and convene an EGM. The Board of Directors must call the EGM solely for the matters specified in the requisition notice without alterations. The Tribunal cited the Supreme Court’s ruling in LIC vs. Escorts Limited, which affirmed the shareholders’ supremacy in convening EGMs and passing resolutions.

4. Impact of the Joint Venture Agreement (JVA) on the Requisition Notice and EGM:
The respondent argued that the petitioner’s requisition notice contravened the JVA, which stipulated equal shareholding and Board representation. However, the Tribunal found that the JVA had been effectively modified or novated by the parties’ conduct, as the petitioner had made additional financial contributions, increasing its shareholding to 66%. The Tribunal held that the JVA could not override statutory provisions granting shareholders the right to convene EGMs and appoint directors.

5. Rights of Shareholders to Convene an EGM and Pass Resolutions:
The Tribunal reaffirmed the shareholders’ right to requisition and convene EGMs, as established in the Supreme Court’s ruling in LIC vs. Escorts Limited. Shareholders cannot be restrained from calling a meeting or proposing resolutions, and the Board of Directors must adhere to the requisition notice without modifications. The Tribunal also cited the Madras High Court’s ruling in S. Varadarajan vs. Venkateswara Solvent Extraction Pvt. Ltd., which upheld shareholders’ statutory rights to convene EGMs.

6. Legality of the Respondent Company’s Modifications to the Requisition Notice:
The Tribunal found that the respondent company’s modifications to the requisition notice, including changing the mode of resolution and proposing additional resolutions, were illegal and contrary to Section 100 of the Companies Act, 2013. The Tribunal held that the Board of Directors must convene the EGM solely for the matters specified in the requisition notice and could not alter the proposed agenda.

Conclusion:
The Tribunal allowed the petitioner’s company petition, set aside the respondent company’s notice dated 12.01.2018, and directed the Board of Directors to convene an EGM within 30 days to consider the matters specified in the requisition notice dated 20.12.2017. The Tribunal appointed an observer and a permanent invitee from the secured creditors to ensure the EGM’s smooth conduct and protect the minority shareholders’ interests. The Tribunal emphasized the supremacy of shareholders in corporate governance and upheld their statutory rights to convene EGMs and pass resolutions.

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