2023 (2) TMI 443 - AT - Companies Law

Tribunal orders share allotment to Petitioners, sets aside EGM, appoints new Director. Appeal dismissed for violation.

The Tribunal upheld the NCLT's order directing the allotment of 51% shares to the Petitioners, set aside the EGM held on 23rd February 2012, and ... Maintainability of appeal - time limitation - Direction to respondent to allot shares equivalent to 51% in the Company to the Petitioners - HELD THAT:- It is seen from the record that a Certified Copy of the Impugned Order dated 17.03.2019 was received by the Appellant on 26.03.2019 and therefore this Appeal is not barred by Limitation as the Appeal was filed on 09.05.2019. However, the Appellant had subsequently applied for Certified Copies again. However, it is the first date of receipt of Certified Copy is what is relevant for counting the period of Limitation and it is seen that the present Appeal is filed within 45 days from the date of receipt of Certified Copy of the Order. A perusal of the material on record establishes that there is no documentary evidence inasmuch as the relevant Minutes of the Board Meeting or any other significant documents establishing that any allotment or transfer of shares were made with the consent of the 1st Respondent or the legal heirs of Late Shri S.M. Mohan Lal. There is no Balance Sheet which has been filed by the 1st Appellant Company with the ROC and neither is there any record produced for having called any Annual General Meeting after issuance of notice to the Respondents about the purported sale - As per the Articles of Association of the Company, no person can become a shareholder in the 1st Appellant Company without the consent of the existing shareholders. A perusal of the documentary evidence on record establishes that the Respondents are entitled for ₹ 51% Shareholding, in the Company and the Memorandum of Understanding’s in question, specifies that the above percentage, is to be maintained and the initial lease period of 11 years in question will not have any bearing. This ₹ 51% Shareholding, has to be maintained and without the Consent of the Respondent, who are holding ₹ 51% Shareholding, no Transaction, can be entered into by the Company, which would effectively dilute the Shareholding of the Respondents. At the cost of repetition, this Tribunal, is of the earnest view that the Appellants, had acted in Violation of the Articles of Association of the Company and have not approached the Tribunal with clean hands. This Tribunal, does not find any illegality or infirmity, in the well reasoned order of the Tribunal. Application dismissed. Issues Involved:1. Validity of the NCLT's order directing the allotment of 51% shares to the Petitioners.2. Legality of the EGM held on 23rd February 2012 and the resolution passed therein.3. Recognition of Mrs. Vineeta Lal as a Director of the Company.4. Compliance with the Articles of Association and the Memorandum of Understanding.5. Timeliness and admissibility of the appeal.Issue-wise Detailed Analysis:1. Validity of the NCLT's order directing the allotment of 51% shares to the Petitioners:The NCLT directed the Respondents to allot shares equivalent to 51% in the Company to the Petitioners. The Appellants argued that the shareholding pattern and the related Chartered Accountant's Certificate were fabricated and unreliable. The Respondents contended that the shareholding was as per the Memorandum of Understanding (MoU) and the conditions imposed by KIADB. The Tribunal found that the documentary evidence, including the MoU and the Chartered Accountant's Certificate, supported the Respondents' claim of holding 51% shareholding. The Tribunal upheld the NCLT's order, stating that the Appellants violated the Articles of Association by not maintaining the agreed shareholding pattern.2. Legality of the EGM held on 23rd February 2012 and the resolution passed therein:The NCLT set aside the EGM held on 23rd February 2012, where a resolution for the sale of the Company's property was passed. The Appellants argued that the EGM was valid and the resolution was passed by 91% of the voting. The Respondents claimed that the EGM was conducted without proper notice and in contravention of the Articles of Association. The Tribunal found that there was no documentary evidence, such as minutes of the Board Meeting or other significant documents, to establish that the EGM was conducted with the consent of the Respondents. Therefore, the Tribunal upheld the NCLT's decision to set aside the EGM and the resolution passed therein.3. Recognition of Mrs. Vineeta Lal as a Director of the Company:The NCLT declared Mrs. Vineeta Lal as one of the Directors of the Company as per the Sale Deed dated 27.07.2011 executed by KIADB. The Appellants contended that the NCLT had wrongly recognized Mrs. Vineeta Lal as a Director. The Respondents argued that the recognition was in line with the MoU and the conditions imposed by KIADB. The Tribunal found that the recognition of Mrs. Vineeta Lal as a Director was consistent with the documentary evidence and the conditions set by KIADB. Therefore, the Tribunal upheld the NCLT's decision to recognize Mrs. Vineeta Lal as a Director.4. Compliance with the Articles of Association and the Memorandum of Understanding:The Tribunal emphasized that the Appellants acted in violation of the Articles of Association by not maintaining the agreed shareholding pattern. The MoU specified that the Respondents were entitled to 51% shareholding, and any transaction diluting this shareholding required their consent. The Tribunal found that the Appellants did not approach the Tribunal with clean hands and violated the Articles of Association and the MoU. Therefore, the Tribunal upheld the NCLT's order directing the allotment of 51% shares to the Petitioners.5. Timeliness and admissibility of the appeal:The Appellants argued that the appeal was filed within the limitation period as the certified copy of the impugned order was received on 26.03.2019, and the appeal was filed on 09.05.2019. The Respondents contended that the appeal was barred by limitation and that the Appellants obtained successive certified copies to cover the delay. The Tribunal found that the appeal was filed within 45 days from the date of receipt of the certified copy of the order and was not barred by limitation. Therefore, the Tribunal admitted the appeal but dismissed it on merits.Conclusion:The Tribunal upheld the NCLT's order directing the allotment of 51% shares to the Petitioners, setting aside the EGM held on 23rd February 2012, and recognizing Mrs. Vineeta Lal as a Director of the Company. The Tribunal found that the Appellants acted in violation of the Articles of Association and the MoU and did not approach the Tribunal with clean hands. The appeal was dismissed on merits, and no order as to costs was made.