TaxTMI 
TaxTMI 
2017 (3) TMI 2
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.... well as Respondents. We have perused all the pleadings including written submissions made by both the parties and thus we are deciding the case. 3. The Company Petition No. 59 of 2011 (which is referred to as 'Petition' hereunder) was filed by Mr. Vangala Niranjan Reddy under Sections 397, 398, 402, 409 of the Companies Act, 1956, by inter-alia seeking a declaration to declare the resolutions passed on 11.03.2011 and 05.04.2011 as null and void; to direct the respondents to issue due notice of the meetings of the first respondent-company to the petitioner and, he should be permitted to run the business affairs of the Company etc. 4. The brief facts leading to the filing of present petition, as set out in the petition, are as follows:- a. Breezy Farms and Resorts Limited was incorporated on 24.06.2005 as a Private Limited Company (Which is referred to as Company hereinafter) as per the provisions of Companies Act, 1956. The main object of the company is to purchase, acquire, take on lease any kind of land and develop the same. The authorized share capital of the Company is Rs. 50,00,000/- divided into 5,00,000 equity shares of Rs. 10/- each out of which 2,50,000/- shares....
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....without any further orders. g. The petitioner submits that the Board Meeting was held on 11.03.2011 in which, the petitioner along with other directors have attended. The discussed agenda in this meeting is as follows:- i. To grant leave of absence ii. Confirmation of minutes of previous meeting held on 08.11.2011 iii. To consider on progress report for the quarter iv. To review the financial position of the company v. To discuss about the case filed by Mr. V. Niranjan Reddy, Director against the company and its other Directors vi. Any other business with the permission of the Chair. Hence, it is contended there was no other issue except the above was discussed in the above meeting. h. The petitioner states that he received the minutes of the board meeting dated 11.03.2011 along with copy of the requisition notice for convening EGM on 05.04.2011 regarding his removal as Director given by 5th Respondent. It is stated that he received the said notice only on 01.04.2011 and subsequent days i.e. 02.04.2011, 03.04.2011 & 04.04.2011 happens to be Government holidays. Even though, the suit was pending, the Respondents No. 2 to 4 want only received a complaint dated 08.03.20....
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.... The Board of Directors of the Company has engaged the petitioner to do and provide liaison services required for conducting business of the company and he was being paid Rs. 7,000/- p.m. for such service since November, 2010. He became the shareholder of the Company only on 20.03.2006; subsequently he was appointed as Non- Executive Director during the board meeting held on 26.11.2007. The remuneration being paid to the petitioner was also continued even after becoming a Director. iii. They further stated the Company has authorised the 2nd and 3rd Respondents to undertake all activities of the Company and, they have also purchased lands for the company even before the petitioner became shareholder of the Company. All the properties were purchased in the name of the company represented by the 2nd and 3rd respondents and they have also filed the supporting documents like sale deeds etc. iv. They have further stated that the petitioner was not at all involved in purchase and selling of the property. The Company has not distributed any dividends among the shareholders including Directors out of the profits of the company. v. They have further stated that the administrative office o....
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.... sum of rupees two lakhs as advance and Rupees twenty thousand as monthly rent by executing unregistered deed dated 01.02.2012. And it is alleged that he was not informed about it, even though the Board passed an interim order dated 05.08.2011 directing the respondents to intimate the decisions of the board during the interregnum. It is also alleged that the said lease was given for far lower than the market value. When the lease was made, it is necessary for the company to conduct a Board Meeting as decision was taken with ulterior motives. 7. The petitioner has filed his rejoinder dated 02.02.2013 to the counter filed by respondents to the Company Petition. The petitioner has denied all the allegation of the respondents. He has stated that the administrative office of the Company was started in the address No.6-3-906/B, Somajiguda, Hyderabad-500008. Subsequently, in the year 2008, it was shifted to the address, which was stated in the counter. However, the respondents are making false statements to mislead the Tribunal. It is stated that there was a joint account bearing account no. SB/01/00010222 in the name of petitioner, Respondent No.2 and 3 in Andhra Bank, Rajbhavan Road Br....
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....nded that the Company was Quasi-partnership concern and thus, the Directorship of the company goes with shareholding of the members. Since, he is still shareholder of the company; he is entitled to be continued as Director of the company. In support of this contention, he relied upon judgment of Apex Court in Sangramsinh P. Gaekwad v. Shanta Devi P. Gaekwad [2005] 57 SCL 476 and Dinesh Sharma v. Vardaan Agrotech (P.) Ltd. [2007] 73 SCL 338 (CLB - New Delhi) (d) Even when O.S No. 832 of 2010 was pending, petitioner was removed as Director of the company. He was served with a notice for an EGM to be held on 05.04.2011 on the requisition of a shareholder (Respondent No.5). Along with the notice of EGM, a special notice from 5th Respondent and alleged minutes of meetings of Board of Directors was also enclosed. (e) The Learned counsel for the petitioner further submitted that the petitioner attended the meeting of 11.03.2011 and there was no discussion about his removal as Director. The 5th Respondent, who had allegedly given the requisition for the removal of the petitioner as a Director had not attended the EGM and was present only through proxy. In the meeting, the petitioner was ....
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....nd before the petitioner became the Director of the Company. (4) They further contended only 2nd and 3rd Respondent undertook all activities of the Company. The Company never raised finances borrowing from the creditors except raising unsecured loans from directors and shareholders to acquire various properties in the name of the Company. The petitioner was never involved in the purchase and selling of the properties. (5) They further contended that on various occasions, the Board requested the Directors to invest Rs. 5 lakhs each in the initial stage but the petitioner expressed his inability to raise funds. In addition, the petitioner withdrew Rs. 2.20 Lakhs from the Company, which he has given to the Company as unsecured loan. (6) A notice of the board meeting along with agenda was sent to all Directors including the petitioner on 28.02.2011, calling for a meeting to be held on 11.03.2011. The Company received a notice under Section 284 r/w Section 190 of the Companies Act, 1956 vide letter dated 08.03.2011 from Smt. A.S. Lakshmi (5th Respondent), proposing a resolution for the removal of the petitioner as director of the Company. The said notice was discussed in the Board Me....
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.... Reddy and Mr. Ravikanth Gajula by threatening with legal consequences if they proceed with disputed land of the company. They have also filed a copy of the order dated 20.09.2011 passed in IA No. 90 of 2011 in OS 832 of 2010, in which the IA was dismissed against the plaintiff (petitioner here in) by holding that the petitioner failed to make out any case, balance of convenience. 12. We will examine the judgements/decisions relied upon by both parties in support of their respective cases. 13. The learned counsel for petitioner has relied upon the following judgements in support of his case: (a) M.S.D.C Radharamanan's case (supra). In this case, it is inter alia held that the Tribunal should not take the interest of applicant alone, but it should also take into consideration of the interest of the shareholders of the company as a whole and the Company, at the time of deciding the case of oppression and, also held it should pass such an order, which would be beneficial to the company and majority of shareholders. (b) The Company Law Board, Principal Bench, New Delhi in Dinesh Sharma's case (supra). The issue raised in the case is the oppression and mismanagement by the R....
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....com 137 (CLB - New Delhi) It is inter alia held equitable relief cannot be granted where a petitioner has not come with un- clean hands, that too after a delay of 3 years, without sufficient reasons given for delay in a case where petition was filed u/s 397, 398. In this case, the petitioner was removed from the post of Director, after giving him a proper notice. The allegation of petitioner therein was that he was not given proper notice as the notice was stated to be sent 'under the certificate of posting'. However, the Board, after taking into consideration of facts and circumstances of the case, has held that the petitioner was fully aware of his removal as Director. Ultimately, the petition was dismissed. The above case is relevant to the present case. As stated above, the petitioner was given proper notice and he was also given a copy of notice given by the 5th Respondent proposing a resolution to remove him as Director and he was also given opportunity to rebut the allegations. And top of it, he has attended the meeting and when the resolution for his removal was taken up, he has walked out. It is also on record that the petitioner has unsuccessfully filed IA....
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....f above discussion of the case, the main issues to be decided in the present case are: a. Whether he is entitled to be continued as Director for life on the contention that the Company is quasi partnership firm; b. Whether the petitioner was given due notices for meetings, which culminated into passing the impugned resolutions dated 11.03.2011 and 5.4.2011; c. Whether the petitioner has approached the Tribunal with clean hand; d. Whether removal of the petitioner from the Directorship is illegal. 15.1 Breezy Farms and Resorts was registered as Private Limited Company under the provisions of Companies Act, 1956 on 24th June, 2005. As per Article 3 of Articles of Association of the Company, it is stated that 'the Company is a Private Limited Company within the meaning of Section 3(1) (iii) of the Companies Act, 1956. So it cannot be called a quasi-partnership concern as contended by the petitioner. 16. It is noted that as par Article 27 of Articles of Association, a written notice of at least seven days (unless a shorter period consented to by all the members who are holder of equity shares) of every General Meeting. A General Meeting can be called by the Managing Director ....
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....lanation dated 4th April, 2011 by inter alia contending as follows: (i) that he was appointed as a Director for life and as such he cannot be removed; (ii) though the company is named as private limited company, it is being run as a quasi-partnership with equal shareholders; (iii) a suit bearing OS No. 832/2010 was still pending; (iv) that A.S. Laxmi has never raised any objection against him as a Director and she was not aware of what was going on in the Company etc. (v) Therefore, he has submitted that removing him from directorship would be disrespect to the court proceedings. 18. A notice dated 22.3.2011 was issued by the company to all the shareholders requisitioning ordinary general meeting of the shareholders of the company to be held on 5th Apr, 2011 at 11 am. The agenda for the meeting was removal of Mr. Niranjan Reddy as a Director of the Company. An explanatory statement in accordance with S. 173 (2) of the Companies Act, 1956 was also enclosed to the notice. Accordingly, the Ordinary General meeting of the shareholders of the company was held on 05.04.2011 at administrative office at Flat No. 304, C Block, Kanti Shikara Apartments, Somajiguda, and Hyderabad at 11 ....
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....ether the Petitioner has come to this Tribunal with clean hands in order to claim equitable relief under Section 397/398 of Companies Act, 1956. In this context, it is necessary to refer the legal notices dated 8th April, 2013 got issued by the petitioner through his Advocate Shri Govind Reddy Mandadi to D. Nitin Kumar Reddy and Ravikanth Gajula, who are purchasers of plots of the Company. The petitioner through the said notices has threatened them with legal consequences if they proceed with purchasing of the plots of the Company since a suit bearing OS No. 832 of 2010 and the present petition were pending. As stated above, OS No. 832 of 2010 was filed before IInd Addl. District Judge, RR District by seeking a judgement and Decree against the Defendants (against the Company and its Directors) permitting his to participate in day to day affairs of Company and to direct the defendants not to take any decision without participation of plaintiff( the petitioner herein). He has also filed IA No. 90 of 2011 in OS No. 832 of 2010 by seeking to grant an ad-interim injunction restraining the respondents/defendants from alienating, creating any charge or any 3rd party interest in the suit ....