Tribunal reinstates appellant as director, invalidates 3rd respondent's position, and orders decisions in company's best interest.

The tribunal partly allowed the appeal, reinstating the appellant as a director and declaring the continuation of the 3rd respondent as a director invalid. All decisions involving the 3rd respondent, including share allotments, were overturned. The tribunal directed the appellant and the 2nd respondent to make decisions in the company's best interest, set aside the penalty on the appellant, and ordered the respondents to cover the appellant's costs.

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Issues Involved:

1. Validity of the cessation of directorship of the appellant.
2. Legality of the allotment of shares to the respondents.
3. Validity of the meetings held and notices issued.
4. Allegations of oppression and mismanagement by the respondents.
5. Validity of the continuation of the third respondent as a director.
6. Allegations of fraudulent activities by the appellant.
7. Appropriateness of the NCLT's decision and the imposed penalty.

Detailed Analysis:

1. Validity of the cessation of directorship of the appellant:
The appellant argued that his cessation from directorship was oppressive, illegal, and invalid, asserting that no notices were issued for the meetings and no proof was produced despite sufficient opportunity. The respondents contended that the appellant vacated his office under Section 283(1)(g) of the Companies Act, 1956, for not attending three consecutive meetings. The tribunal concluded that the appellant's cessation was not legal, noting that the appellant had signed the extract of the meeting dated 20.5.2010, implying a cooperative attitude and de facto leave of absence.

2. Legality of the allotment of shares to the respondents:
The appellant claimed that the allotment of shares to the respondents was done with malicious intent to reduce his shareholding. The tribunal observed that the allotment of 40,000 shares to the 2nd, 3rd, and 4th respondents on 27.10.2011, and subsequent allotments to the 5th respondent, were not as per law since the continuation of the 3rd respondent as a director was invalid. The tribunal held that the board meetings where these decisions were taken lacked the necessary quorum and were thus illegal.

3. Validity of the meetings held and notices issued:
The appellant argued that he did not receive proper notices for the meetings. The tribunal noted that the respondents were aware of the appellant's residence in the UK and should have sent notices via email or to his foreign address. The tribunal found that the notices were not properly served, and the meetings held without proper notice were invalid.

4. Allegations of oppression and mismanagement by the respondents:
The appellant alleged that the respondents engaged in oppressive acts to reduce his shareholding and control over the company. The tribunal agreed with the appellant, noting that the actions of the respondents, including the hurried allotment of shares, were done to reduce the appellant's stake to a hopeless minority, constituting oppression.

5. Validity of the continuation of the third respondent as a director:
The tribunal found that the continuation of the 3rd respondent as a director after 26.9.2010 was not as per law, as his appointment was not regularized in the AGM. Consequently, all decisions taken with his participation, including the allotment of shares and appointment of directors, were invalid.

6. Allegations of fraudulent activities by the appellant:
The respondents alleged that the appellant had a fraudulent track record, including obtaining a visa with fake educational documents. The tribunal opined that such matters were not within its jurisdiction to adjudicate.

7. Appropriateness of the NCLT's decision and the imposed penalty:
The tribunal found that the NCLT failed to appreciate the facts and circumstances and did not apply ordinary rules to adjudicate the issues and evidence. The tribunal set aside the penalty imposed on the appellant and directed the respondents to pay costs to the appellant.

Conclusion:
The tribunal partly allowed the appeal, restoring the appellant as a director and invalidating the continuation of the 3rd respondent as a director. It set aside all decisions taken with the participation of the 3rd respondent, including the allotment of shares. The tribunal directed the appellant and the 2nd respondent to take appropriate decisions in the interest of the company and set aside the penalty imposed on the appellant. The respondents were ordered to pay costs to the appellant.

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