TaxTMI 
TaxTMI 
2014 (3) TMI 1070
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....80 015. 2.2 The Petitioner claims to hold 24,880 equity shares of Rs. 10/- each, in the paid share capital of the company constituting 62.36% of the total shareholding of the Respondent No. l Company. 2.3 The Respondent No.2, holding only two shares of the Company, is the brother of the Respondent No.3 and he is alleged to be a Director of the Respondent No. l Company. The Respondent No.3 is the husband of the Respondent No.4, and he holds four shares of the company and is also shown as a Director. Respondent No.4 is the wife of the Respondent No. 3 holding 14,920 equity shares. She is stated to have resigned as a Director of the Company with effect from 16/08/2010. That as on date on the website of the Ministry of Corporate Affairs, Respondent Nos.2 and 3 are thus currently shown as Directors. 2.4 It appears that certain disputes arose between the Petitioner on the one side and the Respondent Nos.2 to 4 on the other side relating to conduct of the affairs of the Company and this led to filing of the present Company Petition. The Petitioner has levelled the following charges upon the Respondents alleging them as acts of oppression and mismanagement in the affairs of the Re....
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....itioner who was admittedly a shareholder and Director of the Company during the relevant time. Therefore, the alleged Board Meeting, if at all held is bad in law due to want of quorum, as only one Director i.e. Respondent No.4 was present and no meeting could be held in absence of the Petitioner and second the EOGM under challenge purportedly held on 24/04/2010 and decision taken thereat is also bad in law and liable to be set aside being non-est, void, ultravires and illegal. Fourth Charge : Siphoning of the Funds 2.8 The next complaint made by the Petitioner is that the Respondent Nos.2 and 3 in collusion with each other have siphoned of the fund belonging to the company to the extent of Rs. 25,57,517/- to their personal benefit and they diverted the said amount in their personal account or to their other group firms in which they are directly or indirectly interested. 2.9 Based on the above the Petitioner has sought the following reliefs :- a. That the Petitioner be restored to the office of Director of the Company as she is removed wrongfully. b. That the Respondent Nos.2 and 3 be directed to vacate the office of Director for their appointment being ultra vires a....
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....matter came up for hearing before me. I have heard the ld. PCS representing the Petitioner and the Respondent No.3 in person. Both of them have filed their respective written submissions. I have also gone through the written arguments. 8. The first issue that arises for my consideration is whether the appointment of the Respondent Nos.2 and 3 allegedly made at the EOGM purportedly held on 20/02/2010 by the Company, is non-est, Illegal and liable to be cancelled as contended by the Petitioner. 9. Mr. Rajguroo, the ld, PCS representing the Petitioner submits that after incorporation of the Company there were only two Directors, i.e. the Petitioner and the Respondent No.4. According to him, no notice was ever served upon the Petitioner for holding any Board Meeting either held on 12/12/2007 or on any date subsequent thereto where appointment of the Respondent Nos.2 and 3 came to be considered as the Directors of the Company. Therefore, the question of attending such meeting by him does not arise. 10. It is further contended that the Board Meeting if held at all is invalid for want of quorum in terms of the Articles of Association in her absence. He further contends that the R....
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.... to the Petitioner. The Respondent No.3 then invited my attention to Annexure TFJ filed along with the reply to show that since the Board of Directors of the Company failed to proceed within 21 days of the service of the said notice to hold an EOGM as required by law therefore, the requisitionist, pursuant to Section 169(6) and (7) of the Companies Act was constrained to call an Extraordinary Meeting of the company to transact the business narrated in the requisition i.e. "Appointment of Director". According to him, notices in this regard were issued to all the shareholders and were dispatched Under Certificate of Posting. Thereafter, the Respondent No.3 pointed Annexure 'G' filed along with the Reply i.e. copy of the Minutes of EOGM dated 20/2/2010 whereat Mr. Janakkumar I. Vyas and Shri Upendra I. Vyas, the Respondent Nos.2 and 3 were appointed as Directors. He, therefore, contends that all the necessary legal formalities were complied with for appointment of respondent No.3 and Respondent No.4 and hence their appointment cannot be held illegal. 13. I have considered the rival submissions and examined the relevant documents, referred to and relied upon by the Responden....
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.... the fact that certificates of posting are produced fur notices dated May 12, 2006 and for dispatch of mails sent on April 4, 2006 and April 12, 2006, under annexures R14 and R15, respectively, do not come to support the case of the appellant in the face of express denials of receipts by the Amrik Singh, I therefore, find that there have been no service of notices to the alleged meetings purported to have been held, on May 9, 2006, as regards the subject of appointment additional directors, on May 11, 2006. as regards the subject of increase of share capital and on May 19, 2006, as regards the subject of removal of the petitioner and his son from the board of directors. b. In the case of M.S Madhoosudan (supra) the Hon'ble Supreme Court made a distinction with reference to service by certificate of posting and observed that evidence by certificate of posting was not reliable when relationship between the parties are already embittered. However, it stated that a rebuttable presumption would be raised if the basic fact regarding due posting of the document is proved. While stating that the onus of proving that a notice addressed to the addressee was not received by him, it cau....
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....over the minority without adequate notices under Section 173 of the Companies Act." 17. Further, it has been held in the case of Mahindra Sahai and Others Vs Dhruv Theatres and Productions Pvt. Ltde. And Ors (2005) Vol 126 CC 164 that a Notice to a Director for holding Board Meeting is necessary. Further in the case of Cine and Supply Corporation Private Limited, in re Palak Kumar Mondal & Ors Vs. Satyabrata Jana and Ors. (2003) Vol 115 cc 481, it has been observed that where a shareholder complains of lack of service of notice of an Extraordinary General Meeting, the burden of proof lies on the majority to prove the service of notice was effected in accordance with law in the absence of which the minority shareholders are entitled to obtain relief from oppression under Section 397 of the Act. In the case of Lt. Cdr. D.K.Chatterjee Vs. Rapti Supertronics Private Limited and Anr. (2003) Vol 114 CC 265, it has been laid down that to show the provisions relating to quorum for meeting are mandatory and the resolution if any passed at a meeting where there is no quorum, could ipso facto void. The same View has been taken in Rohit Churamani Vs. Disha Research and Marketing Services Pr....
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....ty denies having received the notice, the burden lies upon the other Party to prove that such notice was delivered to the Addressee. In catena of decision, it has been held that service through UPC is a rebuttable presumption and unless it is proved by other corroborative piece of evidence, the service of notice cannot be presumed sufficiently. 22. In the present case, there is no corroborative material on record to show that the notice was duly served upon the Petitioner either by hand delivery or through UPC. The Respondent has failed to produce dispatch register or the proof of purchasing the stamps or any other reliable document connected therewith. From the perusal of notice and the address given in the postal certificate receipt at page 229, even the name of the road of the Petitioner's address is written different. Though, according to the Respondents the Board Meeting was purportedly held on 12/12/2009 the Respondents have failed to produce any Minutes to show that such Board Meeting was held in the presence of the Petitioner. It appears that the Respondents did not hold any Board Meeting and directly proceeded to hold the alleged EOGM for appointment of Respondent N....
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....ient to attend the meeting at scheduled date, time and place. Yours Faithfully, All Requisitionists as signed below: Sr No. Name of shareholder Nos. of shares held Signature 1. Vyas Jay Shree Janakbhai 14920 Sd/- 2. Vyas Janak Indulal 04 Sd/- 3. Vyas Upendra Indulal 02 Sd/- 4. Vyas Uday Indulal 02 Sd/- Place Ahmedabad Date: 02.02.2010 Note: 1. A Member entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and vote for himself and Proxy need not to be a member of the company. 2. Members are requested to inform the change of their registered address to the company at its Registered office. Minutes of the Extraordinary General Meeting of members of Shree Sadguru Switchgoars Private Limited held on 20-02-2010 at 19.00 hours at 10, Sakan Twins, Opp. Satellite Center, Nehru Park, Vastrapurf Ahmedabad-15 An Extraordinary General Meeting of members of Shree Sadguru Switchgears Private Limited held on 20-02-2010 at 19.00 hours at 10, Sakan Twins, Opp, Satellite Center, Nehru Park, Vastrapur, Ahmedabad - 15 Where the following members were present: - Name Numbers ....
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....kkumar Vyas was passed unanimously "Resolved that Shri Upendra 1 Vyas DIN No 02847112 be and is hereby appointed as a director of the Company" There being no other business the meeting was terminated with vote of thanks to the Chair. Place: Ahmedabad Sd/- Smt. Jayshree J. Vyas Chairman Date 22-02-2010 24. From the bare perusal of the aforesaid notice and the minutes, they appear false and concocted and it is proved that the said documents were prepared as an afterthought, to cook-up a false defence by the Respondents in their favour. The Respondent No.3 failed to satisfy me as to what was the necessity to appoint the new Directors, particularly when a Company was not carrying any activity for the last many years and the Respondent No. 4 had even applied for cancellation of Tax Registration etc. The contention of the Respondent No. 3 that the new Directors were appointed to strengthen the Board of Directors of the Company is without any basis and lacks merit. Therefore, it is rejected. Furthermore, from the perusal of the Form No.32 relating to appointment of the Respondent Nos. 2 and 3, it is noted that it does not contain their Consent Letters and the Resoluti....
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....eof by the Answering Respondents, they do not seem worthy to relay upon. I am, therefore, inclined to accept the contention of the Petitioner that the Board Meeting held on 22/02/2010 whereat the resolution for shifting of the registered office of the company was passed at the back of the petition is null and void and amounts to an act of oppression as defined in the provisions contained in Section 397 of the Companies Act, 1956. 29. Now, coming to the next challenge made by the Petitioner relating to the validity of the Extraordinary General Meeting held on 24/4/2010, whereat the Petitioner was removed under Section 284 of the Indian Companies Act, 1956. 30. It is argued by the ld. Counsel by the Petitioner is that she has been illegally removed from the Directorship of the Company, Taking me through the petition and the Annexures filed along with it to substantiate the said allegation, the ld. Counsel submitted that the notice do not indicate any reason for her removal as a Director. It was contended that she was a majority shareholder and founder Director of the Company and therefore, her removal without giving any cogent and convincing reason is improper illegal and again....
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.... to convene an EOGM of the members of the Company on 24/4/2010, whereat the Resolution removing the Petitioner from the office of the Director of the Company was passed unanimously and therefore, the EOGM was held as per law. 33. Having considered the arguments advanced by the ld. Counsel and the Respondent No.3 and upon a careful examination of the material available on record, I have come to the conclusion that the Petitioner has been illegally removed from the Directorship without following the due procedure of law and without giving any proper convincing and cogent reason for her removal. The case of the Petitioner regarding non-receipt of notice for any Board Meeting is Found to be correct. The statement of the Petitioner that due to apprehension and threat to her life she did not attend the EOGM in my view appears true. 34. It is settled proposition of law that the provision contained in Section 284 of the Act applies to private company also. The right conferred by virtue of the provisions contained in Section 284 of the Act upon a Director is a statutory right which cannot be taken away by the private contract either in the form of Articles of Association or any other ....
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....ed by the Respondent No.3 that the alleged amount of Rs. 25,57,517/- was paid to Satguru Ceramics and Electro Insulators in the due course of business against their respective outstanding dues as already reflected in the books of the company as also in the balance sheet of the Company. The Respondent No.3 has also made counter-allegation upon the Petitioner that while the Petitioner was looking after the business of the Company all these creditors had supplied goods and therefore, they were asking their payment of dues. According to him, all these payments were made by cheques and are duly accounted for in the books of account of the company. It was further alleged that the Petitioner has failed to give any explanation with respect to payment of Rs. 90,97,086/- made to the proprietorship firm viz. Fuse Sales belonging to her husband. 37. In my opinion, looking into the allegations and counter-allegations, it would be just and proper to leave it to the Board of Directors of the Company to get the accounts of the Company audited to ascertain the siphoned of alleged diverted funds and on the basis of such report the company will be entitled to get back such amounts to its own accou....
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....or members of the company and that to wind up the Company would unfairly prejudice such member or members but that otherwise the facts would justify the making of a winding up order on the ground that it was just and equitable that the Company should be wound up. (C) Because, the Petitioner had already filed a winding up petition being C.P.No.58 of 2010, in the Gujarat High Court, against the Respondent No. l Company which had already been withdrawn by her for the reason best known to her. 41. Record further reveals that reply to the said application was filed by the Petitioner controverting the above grounds challenging the maintainability of the petition. In the reply, it is averred that the allegations made in the petition itself show as to how the acts of Respondents are prejudicial to the company and the Petitioner in general. 42. It is a matter of record that the said application was heard by the then ld. Member on 19/11/2012. After hearing both the Parties, the application came to be dismissed on merits, No appeal was preferred against the said order. Therefore, in my considered view, this order has become final and binding upon the Parties and the Respondents are e....
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....pondents is accordingly, rejected. 46. Based upon the above discussion, I have come to the conclusion that the sequence of events narrated above, thus go to prove that the conduct of the Respondents towards the Petitioner has been consistently harsh, burdensome, unfair and lacks in probity. The Petitioner has therefore, succeeded to prove the allegations relating to acts of oppression and mismanagement in the affairs of the Respondent No.l Company as defined under section 397/398 of the Act, and the petition therefore, deserve to be allowed. Therefore to bring an end to the acts of oppression and mismanagement complained of and to do substantial justice between the Parties, the C.P is disposed of in the following manner. ORDER 1. The impugned EOGM purportedly held on 20/02/2010 and 24/04/2010 by the Company are declared as non-est, invalid and illegal. 2. The Resolution passed in the EOGM dated 20/02/2010 appointing the Respondent Nos.2 and 3 are declared as ultra vires, null and void and the same are hereby set aside. The appointments of Respondent Nos. 2 and 3 as Directors of the Respondent No. l Company are quashed. The Company is directed to file appropriate forms s....