TaxTMI 
TaxTMI 
2017 (6) TMI 188
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....d dealing in High Voltage Isolator (A.B switches) Control panel. Terminal Power Connectors, distribution board, knife switches Motor Control Centres etc. The authorised share capital of the Company is Rs. 2,00,000/- (Rupees Two lacs only) divided into 2000 shares of Rs. 100/- each. Subsequently, as on 31-03-2010, the authorised share capital of the said company has been increased to Rs. 5,00,000/-(Rupees Five lacs only) as on 31-03-2010 and the holding of shares by the petitioner is 1000 shares of Rs. 100/- each. 1. The petitioner was the Promoter Director of the respondent no. 1, Company and the Respondent nos. 2,3 and 4 are directors and shareholders of the respondent company and on or before 15.12.2010 shareholding of the respondent nos. 2, 3 and 4 was 1000 shares of Rs. 100 each. 1.1 The case of the petitioner, as pleaded, is that, on or about February, 2010, the petitioner suddenly fell sick with unknown ailments which compelled the petitioner to take bed rest as advised by the physician, (the petitioner has not filed any medical documents in support thereof). After 8 months, on partial recovery from his ailment, the petitioner joined duties on 25.10.10 but the petitioner d....
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.... & co. Chartered Accountant as per para (xv). The petitioner stated that the first meeting for settlement of claims of the petitioner, was held on 9-7-2011 wherein, his son was also present. Again, the petitioner submitted in para XVII "that on 16-01-2012, the second meeting with the respondent(s) No. 2, 3 and 4 was held and accordingly, on 9-2-2012, Shri A Chatterjee, the Bank approved Valuer, made valuation of the properties". The petitioner further alleged that the Respondent Nos. 2, 3 and 4 instead of accepting the valuation of Bank's Valuer, appointed one Mr. KN Kumar & Associates Pvt. Limited, who submitted the report on 3-3-2012 at the dictates and direction of Respondent Nos. 2, 3 and 4. The petitioner further stated that, thereafter, negotiations were going on but the respondent(s), maintained a deceptive silence. 5. It is further alleged, after long waiting, the petitioner, on enquiry in the website source of the Registrar of Companies, came to know that the petitioner was removed vide resolution dated 5th January 2011 under section 283(1)(g) of the Companies Act, 1956 with effect from 16.12.2010 due to absence in three consecutive Board Meeting held within the con....
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....ession and mismanagement. 7. It is further submitted by the respondent(s) that the petitioner did not attend the Board meeting because the petitioner was not interested to continue in the Company. The petitioner, all along wanted to exit from the Company. The petitioner has deliberately written various false letters to statutory authorities (as also admitted by the petitioner) which resulted in reduction of repute and goodwill of the Company. The petitioner filed the petition with collateral purpose so as to pressurize the company and/or to destabilise the company for wrongful gain. On the other hand, the minutes of the meeting dated 09.07.2011, reflects that his son (Dibyendu Guha) was present in the meeting, which was held to discuss the mode of final settlement of outgoing directors including Shri Asim Guha (Petitioner), who was also willing to retire from the organisation and during the said discussion, Shri Sanjay Banerjee (R4); Prabha Das Sarkar, (R2); and Smt. Shukla Mitra as director and CA, PC Jana, Company Auditor and Saroj Babu, Company law and Tax Consultant, CA K.N Chatterjee and P.C Dey both were appointed by the petitioner, (Asim Guha) and his son Debendu Guha were ....
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.... (viii) Hanuman Prasad Bagri v. Bagress Cereals (P.) Ltd. [2001] 33 SCL 78 (SC). (ix) Gulabchand Chhotalal Parikh v. State of Gujarat [1965] 2 SCR 547 (x) Union of India v. Nanak Singh [1968] 2 SCR 887 (xi) State of Punjab v. Bua Das Kaushal [1970] 3 SCC 656 (xii) State of Tamil Nadu v. State of Kerala [2014] 12 SCC 696. 9-10. Heard the learned counsel appeared for the respective parties, perused the pleading, documents and citations relied upon by them. There is no dispute with the case law cited but each case turns on its own fact. After analysing the pleadings, the following issues are felt for consideration and the same need to be addressed : (a) Whether the Petitioner No. 1 remained absent in the meeting and ceased to continue as director as stated by the respondent? (b) Whether it is a directorial complaint and no act of oppression and mismanagement is observed? In view of above, my finding on issue No. 1, is as follows: The vacation of the petitioner as director of the company under section 283(1)(g) of the Companies Act, 1956, on the ground that the petitioner remained absent consecutively for three meetings, the petitioner alleged that he came to know of it, only....
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....e to leave/retire from the Company and for the said purpose, negotiating with the Company. Under such situation, it will be wrong to say that the petitioner has been wrongfully removed under Section 283(1)(g) of the Companies Act, when admittedly, the petitioner has not taken any leave even after receipt of letter from the respondent(s). It is needless to mention herein that the settled proposition of law is that in fiduciary capacity within which the Directors have to act, enjoins upon them a duty to act on behalf of the company with outmost care and skill and due diligence and in the interest of the company. They have a duty to make full and honest disclosure to the Company. 12. Further with regard to issue no 2 i.e. the Directorial Complaint, it is found that the main issue of the petitioner, in the petition, is his removal from the Board of Directors. There is no such allegation of hampering the shareholding. Thus a directorial complaint no way forms a basis of the petition under sections 397 and 398 of the Companies Act, 1956. Directors right cannot be equivalent to right of shareholder. The removal of director cannot solely constitute an act of oppression for want of leave ....
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....h mala fide intention when the allegation is purely directorial in nature. Furthermore, the allegation in the pleading and prayer made in the petition is only in respect of meeting of Board of Directors held on 8.9.2010, 29.09.2010 and 15.12.2010 whereby a resolution was taken on 15.12.2010 to remove the petitioner but the same cannot be tenable in as much as, even after the receipt of letter from the Respondent No. l, Company, as admitted, the petitioner has failed to give any reply showing the cause of absence and thereafter several negotiation/settlement meetings held between the petitioner and respondent(s) wherein his son and wife were also present in the meeting and the matter was discussed with regard to the mode of final settlement of outgoing director which also includes the petitioner along with others. 15. It has been unequivocally established principle that while exercising the power under Sections 397 and 402 of the Companies Act, 1956, the Court has to consider not only the relief that is sought for, but it has also to consider as to what is the nature of the complaint and how the same has to be rectified. It is the interest of the Company that is being considered ....
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....ust and confidence. When the mutual trust and confidence is eroded, it triggers dispute and tug of war begins. When the internecine squabbles reach the peak, the living together becomes almost impossible which in most cases affects functioning of the company. In this scenario, often the majority shareholder acts in a high handed manner, in relation to any matter touching upon or affecting the 4 company and all shareholders, perfectly consistent with law or the company's articles of association and there leaves no flaw in regard to compliance with the law or the articles with regard to that act; however, underneath the act lies some ulterior motive and the act is designed to grab some benefit for the majority (mostly control over the company) which implicitly causes a reciprocal prejudice to the minority. In other words, in the carrying out of the act, there is some hidden motive of garnering a benefit with equal loss to the minority which loss may be either pecuniary or some other material loss such as loss or dilution of share in the shareholding or in the directorate or a loss of directorship. It may also sometimes cause an indirect loss that would be discernible only in the....