2020 (12) TMI 760 - Tri - Companies Law

Tribunal denies stay on AGMs, orders abeyance of decisions. Respondents eligible for Fresh Start Scheme.

The Tribunal denied the application for a stay on the Annual General Meetings (AGMs) of the company but ordered that decisions and resolutions made during ... Seeking a stay of conduct of the Annual General Meetings of the R1 Company proposed to be held on 11.12.2020 - HELD THAT:- Upon hearing of the parties and on perusal of the materials on record, this Tribunal is of the opinion that the relief to stay the AGMs to be held on 11.12.2020 cannot be granted. However, the respondents are directed that the decisions/resolutions/business taken in the ensuing AGMs be kept in abeyance until further orders. It is made clear that respondents are at liberty to take recourse to avail the benefit of “Companies Fresh Start Scheme 2020” if such a course is necessary. Application disposed off. Issues:Application for stay of Annual General Meetings (AGMs) of a company due to alleged illegal and fraudulent actions by certain directors.Analysis:The Applicant filed an application seeking a stay on the conduct of the AGMs of the company, alleging illegal and fraudulent actions by the Respondents, including attempts to remove the Petitioner as the Managing Director through forged signatures and mismanagement of company affairs. It was contended that the Respondents had been illegally infused as directors without proper election, causing prejudice to the Petitioner and shareholders. The Registrar of Companies had also highlighted the illegalities committed by the Respondents, further supporting the Applicant's claims.The Applicant argued for the appointment of an interim administrator to manage the company's affairs and requested the AGMs to be conducted under the supervision of an Independent Observer. It was emphasized that allowing the AGMs to proceed as scheduled would result in serious prejudice to the Applicant, while no harm would be caused to the Respondents if the AGMs were postponed pending the adjudication of the Company Petition.In response, the counsel for the Respondents contended that the Company Petition was not maintainable and that holding multiple AGMs simultaneously was permissible under the law, especially in light of the Companies Fresh Start Scheme 2020. They argued that there was no requirement to provide annexures or documents along with the AGM notices to members. The Respondents sought to proceed with the AGMs and keep the decisions pending.After hearing both parties and examining the evidence, the Tribunal ruled that while the stay on the AGMs was not granted, the decisions and resolutions made during the AGMs were to be kept in abeyance until further orders. The Respondents were permitted to avail the benefits of the Companies Fresh Start Scheme 2020 if necessary. The Tribunal disposed of the application with these directions on the 10th of December, 2020.