Tribunal rules in favor of petitioners, deems company petition maintainable despite delay. Directors' actions found invalid.

The Tribunal found in favor of the petitioners, declaring the company petition maintainable despite a 4-year delay. It ruled that the directors did not comply with fiduciary duties in expelling the petitioners, deeming the expulsion invalid. Additionally, the increase in share capital and its apportionment among certain respondents were deemed illegal and oppressive. The Tribunal ordered the reversal of the share capital increase, set aside the share allotment, directed rectification of the register of members, declared the removal of petitioners as directors void, mandated revised filings with the Registrar of Companies, and ordered an independent accountant to verify the company's accounts.

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Issues Involved:
1. Maintainability of the company petition after a delay of 4 years.
2. Compliance with fiduciary duties by the directors in expelling the petitioners.
3. Legality of the increase in share capital and its apportionment among certain respondents.

Issue-wise Detailed Analysis:

Issue (i): Maintainability of the Company Petition After a Delay of 4 Years

The respondents argued that the petition should be dismissed due to the delay in filing, citing various judgments that emphasize the importance of timely filing. The petitioners countered by stating that the Companies Act does not prescribe a time limit for filing petitions under sections 397 and 398. They also mentioned that they had been pursuing legal remedies continuously since 2010. The Tribunal noted that there is no specific limitation period for filing such petitions and cited the Supreme Court judgment in V. S. Krishnan v. Westfort Hi-Tech Hospital Ltd., which emphasizes that continuous acts of oppression and mismanagement can negate the impact of delay. The Tribunal concluded that the petition is maintainable, considering the continuous nature of the alleged acts of oppression and mismanagement.

Issue (ii): Compliance with Fiduciary Duties by the Directors in Expelling the Petitioners

The respondents claimed that the petitioners were removed as directors for not attending consecutive board meetings, with notices sent through "certificate of posting." The petitioners argued that they did not receive any such notices and questioned the proximity of the board meetings. The Tribunal found discrepancies in the minutes and Form No. 32 filed with the Registrar of Companies, raising doubts about the genuineness of the board meetings. The Tribunal concluded that the proper procedure was not followed in removing the petitioners from the directorship, rendering their expulsion invalid.

Issue (iii): Legality of the Increase in Share Capital and Its Apportionment Among Certain Respondents

The respondents contended that the increase in share capital was done in accordance with the Companies Act, citing various case laws. The petitioners argued that the increase was not done properly, as it required a special resolution, and the apportionment was done fraudulently to favor certain respondents. The Tribunal found that the company had not followed the proper procedure for increasing the share capital and that the apportionment was done without offering the increased shares to all shareholders. This act was deemed oppressive and amounted to mismanagement.

Final Findings and Orders:

1. The increase of authorized share capital from Rs. 1,00,000 to Rs. 3,00,000 is declared illegal, null, and invalid.
2. The allotment of 2,000 shares to respondents Nos. 2 and 7 is set aside.
3. The company is directed to rectify its register of members to reflect the shareholding pattern prior to September 26, 2009.
4. The removal of the petitioners as directors is declared illegal and void.
5. The company is directed to file revised forms/returns/reports with the Registrar of Companies within one month.
6. An independent chartered accountant is to be appointed to verify the company's books of account, and the report should be shared with all shareholders.

The Tribunal allowed the company petition and ordered the necessary rectifications and investigations to address the acts of oppression and mismanagement.

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