2020 (9) TMI 224 - AT - Companies Law

Appellate Tribunal Grants Appeal, Stays Director Appointment & Removal Pending Main Petition

Jaideep Halwasiya Versus AA Infraproperties Private Limited, South City Projects (Kolkata) Limited, Man Mohan Bagree, Jugal Kishore Khetawat, Rajendra Kumar Bachhawat, Pradeep Kumar Sureka

Jaideep Halwasiya Versus AA Infraproperties Private Limited, South City Projects (Kolkata) Limited, Man Mohan Bagree, Jugal Kishore Khetawat, Rajendra ... Issues Involved:1. Allegations of oppression and mismanagement.2. Validity of the Annual General Meeting (AGM) dated 24th September 2019.3. Validity of the Extraordinary General Meeting (EoGM) dated 4th January 2020.4. Grant of interim relief under Section 242(4) of the Companies Act, 2013.Detailed Analysis:Allegations of Oppression and Mismanagement:The appellant, a minority shareholder holding 12.5% shares, alleged that the majority shareholders (holding 87.5%) were conducting the affairs of the company in a manner prejudicial to his interests. Specific instances include the alleged illegal appointment of new directors and the appellant's removal from the Board without proper notice. The appellant sought interim relief to prevent the majority shareholders from hijacking the company's affairs.Validity of the AGM dated 24th September 2019:The appellant contended that no AGM was held on 24th September 2019, and that no notices or agendas were served to him. He argued that the documents presented by the respondents were fabricated and did not meet statutory requirements under Section 118 of the Companies Act. The Tribunal noted the factual controversy regarding the serving of notices and observed prima facie evidence indicating that notices were given, but did not provide a detailed basis for this observation. The appellant pointed out that the AGM could not have been validly held as the required quorum was not present, and the alleged meeting was attended by an unauthorized person.Validity of the EoGM dated 4th January 2020:The appellant argued that the EoGM, which resulted in his removal from the Board, was based on issues related to a foreign company, which is not permissible under Section 102 of the Companies Act. He claimed that no proper notice was served for the EoGM, and the grounds for his removal were fraudulent. The respondents, however, maintained that all statutory compliances were met and that the removal was justified due to the appellant's actions against the company's interests.Grant of Interim Relief under Section 242(4):The Tribunal declined to grant interim relief, stating that allowing such relief would be tantamount to granting the main petition. However, the Appellate Tribunal found that the Tribunal's approach was flawed, as it relied solely on disputed documents without considering other substantive evidence. The Appellate Tribunal emphasized that the appellant had made out a prima facie case, showing that the company's affairs were not being conducted according to law and the Articles of Association. Given the serious consequences of the alleged meetings, the balance of convenience lay with the appellant.Conclusion:The Appellate Tribunal allowed the appeal, set aside the impugned order, and stayed the appointment of new directors and the removal of the appellant until the main petition is decided by the Tribunal. The Tribunal was instructed to arrive at its findings based on evidence without being influenced by observations made in this judgment.