Tribunal cancels entry of shares converted without cause.

The Tribunal set aside the Impugned Judgment, directing the cancellation of the entry of the Appellant's name in the Register of Members for 906599 equity shares purportedly converted from CCDs. The conversion was found to be done without sufficient cause, in violation of the Articles of Association and the Investment Agreement. The appeal was allowed, and no orders were made as to costs.

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Issues Involved:
1. Rectification of the Register of Members under Section 59 of the Companies Act, 2013.
2. Validity of the conversion of Compulsory Convertible Debentures (CCDs) into equity shares.
3. Compliance with the Articles of Association and Investment Agreement.
4. Jurisdiction of NCLT in matters involving arbitration clauses and complex issues.
5. Quorum requirements for Board Meetings and validity of Board Resolutions.

Detailed Analysis:

1. Rectification of the Register of Members under Section 59 of the Companies Act, 2013:
The Appellant filed a Company Petition seeking rectification in the Register of Members of Respondent No.2, alleging wrongful conversion of CCDs into equity shares without sufficient cause. The Tribunal emphasized that the primary question was whether the entry of the Appellant's name in the Register of Members was made "without sufficient cause" as stipulated under Section 59 of the Act.

2. Validity of the conversion of Compulsory Convertible Debentures (CCDs) into equity shares:
The Appellant argued that the conversion of CCDs into equity shares was ultra vires the Articles of Association and the Investment Agreement. The Tribunal noted that the Appellant had initially sought conversion but later withdrew consent due to prolonged litigation initiated by Respondents. The conversion was argued to be done without the Appellant's affirmative consent, making it illegal.

3. Compliance with the Articles of Association and Investment Agreement:
The Articles of Association and the Investment Agreement were crucial in determining the legality of the conversion. The Tribunal highlighted specific Articles, such as Article 59.1, which mandated the presence of Company Investor Directors for quorum and decision-making. The Appellant contended that the Board Meeting held on 26th March 2018 lacked quorum as the Investor Directors had resigned, rendering any resolutions passed as invalid.

4. Jurisdiction of NCLT in matters involving arbitration clauses and complex issues:
The Respondents argued that the issues raised required detailed trial and interpretation of agreements, suggesting arbitration as the appropriate forum. However, the Tribunal referred to Section 430 of the Companies Act, 2013, which bars civil court jurisdiction in matters that the Tribunal is empowered to determine. The Tribunal concluded that NCLT could address all questions, including incidental and peripheral ones, related to rectification under Section 59.

5. Quorum requirements for Board Meetings and validity of Board Resolutions:
The Tribunal found that the Board Meeting held on 26th March 2018 was not in compliance with the quorum requirements stipulated in the Articles of Association. The absence of Company Investor Directors invalidated any resolutions passed during the meeting. The Tribunal emphasized that the Articles of Association are binding and must be adhered to by the Company and its Directors.

Conclusion:
The Tribunal set aside the Impugned Judgment, directing the cancellation of the entry of the Appellant's name in the Register of Members for 906599 equity shares purportedly converted from CCDs. The Tribunal concluded that the conversion was done without sufficient cause, in violation of the Articles of Association and the Investment Agreement. The appeal was allowed, and no orders were made as to costs.

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