Tribunal Affirms Director Appointments, Deems Removal Illegal. Petitioners Reinstated. Shareholder Status Disputed.

The Tribunal affirmed the appointment of Respondent Nos. 2 to 4 as independent Directors, declaring their directorship valid. The removal of Petitioners from Director positions was deemed illegal due to lack of proper notice and violation of the Articles of Association. To ensure smooth company affairs, Petitioners were reinstated as Directors, along with Respondent Nos. 2 and 3. Respondent Nos. 5 to 37 were not recognized as shareholders, and the company's bank account was ordered to be operated jointly by Petitioner No. 1 and Respondent No. 2. These orders were to be recorded in the ROC's records within one month.

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Issues Involved:
1. Appointment and confirmation of Respondent Nos. 2 to 4 as Directors.
2. Legality of the removal of Petitioners from the posts of Directors/Managing Director.
3. Final order to ensure smooth conduct of the affairs of Respondent No. 1 Company.

Detailed Analysis:

Issue 1: Appointment and Confirmation of Respondent Nos. 2 to 4 as Directors
The Tribunal examined whether Respondent Nos. 2 to 4 were duly appointed and confirmed as Directors. The Petitioners argued that these Respondents were appointed as additional Directors and their appointments were never ratified in the subsequent AGM, as required under Section 161 of the Companies Act, 2013. Contrarily, the Respondents contended that they were appointed as independent Directors, not additional Directors, and provided evidence such as Form DIR-12 and Form MGT-7 to support their claim. The Tribunal concluded that the official records indicated the Respondents were appointed as independent Directors and not additional Directors, thus affirming their directorship.

Issue 2: Legality of the Removal of Petitioners from the Posts of Directors/Managing Director
The Petitioners challenged their removal, alleging that no proper notice was served for the meetings held on 19-09-2017 and 06-12-2017, and that the removal violated Article 26 of the Articles of Association, which designates Mr. Ajay Sinha as a permanent Director. The Tribunal found that there was no evidence of notice being served to the Petitioners for these meetings, rendering the resolutions passed therein invalid. Furthermore, Article 26 explicitly states that Mr. Ajay Sinha cannot be removed unless he resigns voluntarily. Consequently, the Tribunal declared the removal of the Petitioners as illegal and void ab initio.

Issue 3: Final Order to Ensure Smooth Conduct of the Affairs of Respondent No. 1 Company
The Tribunal noted that the company's loan account was declared NPA in 2017, during which time Respondent Nos. 2 to 4 were managing the company's affairs, indicating mismanagement. To ensure the smooth conduct of the company's affairs, the Tribunal reinstated the Petitioners as Directors and confirmed Respondent Nos. 2 and 3 as Directors. It also declared that Respondent Nos. 5 to 37 were not shareholders, as there was no evidence of proper share allotment procedures being followed. To prevent future embezzlement, the Tribunal ordered that the company's bank account be operated under the joint signatures of Petitioner No. 1 and Respondent No. 2.

Final Order:
1. The Petitioners are reinstated as Directors of Respondent No. 1 Company, with Petitioner No. 1 as the Managing Director.
2. Respondent Nos. 2 and 3 are also declared as Directors of the company.
3. The bank account of the company shall be operated under the joint signatures of Petitioner No. 1 and Respondent No. 2.
4. Respondent Nos. 5 to 37 are not recognized as shareholders of the company.

The Tribunal directed that the above orders be reflected in the ROC's records within one month, under the joint signatures of Petitioner No. 1 and Respondent No. 2, and disposed of the proceedings accordingly.

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