Illegal Share Transfer Annulled; Directorship Revoked; Financial Irregularities Dismissed

The transfer of 117 shares of M/s. Kalicharan Das Trust was deemed illegal due to procedural irregularities, leading to its annulment. Mr. Anup Kumar Khemani's directorship was revoked unless he held additional shares beyond those from the trust. The appointments of other directors were upheld. The petitioners' claims of financial irregularities were dismissed for lack of substantial evidence, except for the share transfer issue. Both parties were instructed to bear their own costs.

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Issues Involved:
1. Legality of the transfer of 117 shares of M/s. Kalicharan Das Trust.
2. Entitlement of petitioners to the reliefs claimed.
3. Appointment of new directors.

Detailed Analysis:

Issue 1: Legality of the transfer of 117 shares of M/s. Kalicharan Das Trust

The petitioners contended that the transfer of 117 shares of M/s. Kalicharan Das Trust to respondents Nos. 4, 6, 12, 13, and 14 was illegal and against the articles of association of respondent No. 1-company. Article 15 of the articles of association specifies the procedure for the transfer of shares, which requires the Board to act as an agent for the sale of shares to members at an agreed price or a price certified by the company's auditor. The respondents failed to provide evidence that they followed this procedure. The minutes of the board meeting on January 24, 2018, recorded the petitioners' objections but did not document any explanation that satisfied the petitioner. The Tribunal found that the shares were transferred in a routine manner, taking advantage of the Board's majority, and without observing the necessary legal formalities. Therefore, the transfer of 117 shares of M/s. Kalicharan Das Trust was set aside.

Issue 2: Entitlement of petitioners to the reliefs claimed

The petitioners sought numerous reliefs, including interim and permanent reliefs, alleging financial irregularities and mismanagement. However, the respondents argued that the petitioners' claims were based on mere suspicion without substantial evidence. The Tribunal noted that granting all the reliefs would halt the smooth functioning of respondent No. 1-company. The petitioners failed to provide substantial evidence to warrant the reliefs claimed. Therefore, the Tribunal rejected all other reliefs claimed by the petitioners except for the setting aside of the transfer of 117 shares of M/s. Kalicharan Das Trust.

Issue 3: Appointment of new directors

The petitioners challenged the appointment of Mr. Sunil Agarwal, CA Bal Kishan Bansal, Mr. Anup Kumar Khemani, and CA Saloni Bansal as directors. The Tribunal noted that the appointment of directors and auditors is the exclusive domain of the Board unless serious prejudice to the public interest or the affairs of the company is shown. Since Mr. Anup Kumar Khemani's directorship was based on the invalid transfer of shares from M/s. Kalicharan Das Trust, his directorship was automatically canceled unless he possessed other shares. The appointments of Mr. Sunil Agarwal, CA Bal Kishan Bansal, and CA Saloni Bansal were confirmed as directors.

Conclusion:

(i) The transfer of 117 shares of M/s. Kalicharan Das Trust in the board meeting dated January 24, 2018, was set aside as illegal.

(ii) Mr. Anup Kumar Khemani ceased to be a director unless he possesses other shares apart from the 30 shares of M/s. Kalicharan Das Trust.

(iii) The appointments of Mr. Sunil Agarwal, CA Bal Kishan Bansal, and CA Saloni Bansal as directors were confirmed.

(iv) All other reliefs claimed by the petitioners were rejected.

(v) Both parties were directed to bear their own costs.

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