TaxTMI 
TaxTMI 
2016 (1) TMI 421
X X X X Extracts X X X X
X X X X Extracts X X X X
....ly stated thus: Respondent nos. 1 and 2 had invested a sum of Rs. 40 crores in Appellant No.2 Company ("Company"), under a Share Subscription cum Shareholders Agreement ("SSSA") dated 24 March 2008 entered into between promoters of the Company who are represented by Appellant no.1, Respondent nos. 1 to 3 and the Company. After acquiring land and setting up a new factory, the Company commenced production around 10 October 2009. Purportedly due to a world-wide recession and market crash around that time and withdrawal of several orders placed on the Company by its prospective customers, the business of the Company was severely affected. Respondent Nos. 1 to 3 offered to invest a further sum of Rs. 10 crores in the Company and called a meeting on 5 March 2010 for discussions on the terms and conditions of the proposed investment. This meeting, which was treated as a board meeting followed by a general meeting, purported to pass resolutions approving amendments to the SSSA as well as Articles of Association of the Company to give effect to the amendments inter alia allowing Respondent nos. 1 to 3 to convert their preference shares (Series A) into equity shares in the manner provided i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....utions passed therein were valid and binding upon the parties. (iii) The contention of the Appellants that the petition was filed for a collateral purpose (i.e. for recovery of their money under the SSSA) had no merit. (iv) All the meetings held after 5 March 2010 by the Appellants were illegal and void, and the decisions taken thereat were liable to be set aside. (v) Holding of Board Meetings as well as General Body Meetings without notice to the nominated directors of Respondent Nos. 1 to 3 (Original Petitioners) was a clear violation of the Articles and showed lack of probity and unfairness, seriously jeopardizing the interest of the original Petitioners. (vi) The Appellants (original Respondents) had assumed control over the Company by illegal means, including manipulation of records. (vii) Having regard to the facts of the case, it would have been just and equitable to wind up the Company, but such winding up would be unfairly prejudicial to the interests of the Petitioners who are genuinely entitled to participate in the management of the Company. On these findings, CLB granted various reliefs including setting aside of the various resolutions passed at the Board ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ntion is that the general meeting of 5 March 2010 and decisions taken thereat, on the basis of which the original Petitioners claim to be entitled to conversion of their preference shares (Series A) to equity shares, are subject matters of dispute; that there is no entry made in the register of members in respect of equity shareholding of 69.38% of the Petitioners; and that in the premises, no relief could be claimed on the basis of the Petitioners actually being members in respect of those shares. The Appellants rely on the decision of the Supreme Court in the case of Balkrishan Gupta & Ors. Vs. Swadesh Polytex Ltd. & Ors. 1985 (Vol. 58) Company Cases Page 563 and of the Kerala High Court in the case of Lalithamba Bai Vs. Harrisons Malayalam Ltd. 1988 (Vol. 63) Company Cases Page 662 and the decisions of Company Law Board in Satish Chand Sanwalka & Ors. Vs. Tinplate Dealers Association Pvt. Ltd., & Ors. (1998) 93 Comp Cas 70 (CLB) T.N.K Govindaraju Chetty & Co. Vs. Kadri Mills (CBE) Limited (1999) 96 Comp Cas 871 (CLB) and Navin Ramji Shah & Ors. Vs. Simplex Engineering and Foundry Works Pvt. Ltd., (2007) 136 Comp Cas 770 (CLB) in support of their contentions. 7. The Supreme Cour....
X X X X Extracts X X X X
X X X X Extracts X X X X
....SA (approved in the Board meeting and General meeting of the Company held on 5 March 2010) provided for conversion price. The relevant Articles of Association of the Company were also, accordingly, amended by a resolution passed on 5 March 2010, providing for conversion of preference shares into equity shares at a stated ratio. The Petitioners, accordingly, exercised their right of conversion and on 31 March 2010, the Company allotted 1,58,64,074 equity shares equal to 69.38% of the issued, subscribed and paid up equity shares of the Company to the Petitioners. The share certificates were produced by the Petitioners before CLB. After such conversion, according to the relevant Article, Article14(a), the Board of the Company was to comprise of four directors to be nominated and appointed, three by the Petitioners and one by the promoter. The Petitioners called upon the Company to do so. That was not heeded. These allegations form part of the Petitioner's case of oppression. It cannot possibly be suggested that on these allegations, the Petitioners cannot seek reliefs such as reconstitution of the Board or setting aside resolutions passed in meetings, urging their entitlement to 6....
X X X X Extracts X X X X
X X X X Extracts X X X X
....V. Chandran 1993 SCC OnLine Ker 441 : (1994) 79 Comp Cas 213. Bellador Silk case was a case where a contributory had presented a petition alleging oppression, but during the evidence it transpired that the real object of presenting the petition was to get repayment of a loan owed by the company to the petitioner's group of companies. In other words, though petitioner was a member of the company and entitled as such to present a petition, the petition itself was to seek reliefs otherwise than as such member. That was clearly a collateral purpose. This ratio cannot be invoked in the present case, where the petitioners are claiming reliefs in respect of their membership. Besides, the real purpose as opposed to the ostensible purpose of the petition is a matter of fact and the finding of CLB in that behalf cannot be faulted on a question of law. 11. The questions as to whether the EOGM of 5 March 2010 did take place and whether the resolutions passed thereat and documents executed in pursuance thereof were validly passed and executed, are examined by CLB in the light of the respective pleadings of the parties and documents placed on record before CLB. The extracts of minutes of th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....a reply filed by original Respondent No.3 (i.e. Appellant in Company Appeal (Lodging) No. 46 of 2013) to claim want of notice. In his reply to the petition, original Respondent no.3 had averred about want of notice to himself and not to others including Appellant in Company Appeal (Lodging) No. 45 of 2013. In any event, there is no submission in this appeal that the case of want of notice to him was argued before CLB and yet it failed to consider such case. What his appeal contends is that the pleading in this behalf was not considered by CLB. So also in the case of the Appellant in Company Appeal (Lodging) No. 46 of 2013, though he was represented at the hearing before CLB, there is nothing to show that his case on want of notice was argued before CLB or that despite such argument, CLB failed to address itself to the issue. Parties take various positions in their pleadings. What is considered at the hearing by any Court or tribunal is the submissions advanced before it at the hearing. Without advancing submissions on a particular issue, and that too on an issue of fact, a party cannot fault an order of the Court or the tribunal relying on its case on the issue pleaded in its plead....