TaxTMI 
TaxTMI 
2017 (6) TMI 1130
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....ed in Memorandum of Association are given in paragraph 1.3 of the petition. These include carrying on business as manufacturers, producers, spinners, weavers, knitters, twisters, seizers etc. in all kinds of yarns and fabrics whether cotton, synthetic, flax, blended, artificial/Ike nylon, polysters etc. and generally to carry on all kinds of operation in the contemporaneous description of textiles industry and to utilize any waste arising from any such manufacture, production or process. Annexure P-2 is the copy of Memorandum and Articles of Association of R-1 company. The present issued, subscribed and paid-up share capital of R-1 Company as per the balance sheet for the period ending 30.09.2011 is Rs. 1,68,75,41,720/- divided into 16,62,61,848 equity shares of Rs. 5/- each, 5,99,00,000 0.01 % cumulative, redeemable preference shares (New CRP- Series-1) of Rs. 5/- each, 9,58,86,496 0.01% cumulative, redeemable preference shares (New CRPS-Series-2) of Rs. 5 each and 1,54,60,000 0.01% Non-cumulative, redeemable preference shares (New NCRPS-Series-1) of Rs. 5/- each. 3. The Petitioner No.1 (P-1) was a private limited company, incorporated in the name and style of M/s Kanoria Plato....
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....new CRPS held Promoters 62,645,587 37.7 15.460.000 Investor (Adal Media Pvt. Ltd.) 73,893,580 444 Financial Institutions 22,497,057 13.5 CRPS 1 59 900,000 CRPS 2 95,886,496 Public/Others 7,225,624 43 R-4 to R-8 are allegedly appointed as Directors of R-1 company, nominated by R-3, vide nomination letters dated 23.09.2015. This was done without the consent of P-3 to P-5, the Nominee Directors of the promoters group. 7. Mr. LK, Singh respondent No.9 (R-9) is acting as Executive Director of R-1 company, but his term of appointment expired and not renewed in the shareholders meeting. 8. The Board pattern of R-1 company as on 23.09.2015 is detailed below:- Sr. No. Name of Director Representation 1 Mr. Jagdish Prasad Khemka (P-3) Promoter Group 2. Mr. V.S Suresh (P-4) Promoter Group 3. Mr Krishnadas Balan (P-5) Promoter Group 4. Mr. L.K. Singh (R-9) Whole Time Director 5. Mr. Arun Kumar Aggarwal (R-4) Investor Group (allegedly appointed) 6. Mr. Ashok Kumar Mittal (R-6) Investor Group (allegedly appointed) 7. Mr. Tejinder Parkash (R-5) Investor Gro....
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....and there were acts of oppression and harassment, the Promoters Nominee Directors resigned somewhere in the second nail of 2010. Even the Investor Nominee Directors resigned the sick company one after the other and conniving with HSBC to assign their debts in favour of Phoenix ARC. The remaining two Investor Nominees also resigned in May, 2012 leaving only R-9 as the Director of the company and therefore, there was no management to run the affairs of the company. The intention of the Investor group was to bring the functioning of the Company to a standstill. 12. P-1 rather requested Company Secretary of R-1 to convene a Board meeting in December 2012 so that the promoters could appoint their nominees on the Board, but that attempt was thwarted by R-9 and R-10 by cancelling the meeting at the last moment. Anyhow, no such meeting was called thereafter. P-1 thus approached the BIFR, which directed the parties to nominate their respective nominees as Directors vide order dated 18.04.2013, but the company failed to convene any meeting for the purpose. BIFR expressed its displeasure in the hearing held on 06.08.2013. P-1 was, therefore, constrained to move application No. 410 of 2013 ....
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....s, till the next date of hearing all the parties to the proceedings are directed to maintain status-quo. It was observed by the AAIFR that R-2 has already moved an application before BIFR for making certain corrections which was still pending. The prayer made by R-2 in the said application pending before BIFR was as below:- "(a) to direct that the record of this Hon'ble Board and the order dated January 8, 2014 passed in Miscellaneous Application No.410 of 2013 in Case No.50 of 2011 be corrected to reflect the proceedings before this Hon'ble Board on January 8, 2014 and the directions passed by this Hon'ble Board on such date; (b) direct that no further steps be taken by any party until the order dated January 8, 2014 is corrected to reflect the proceedings held on January 8, 2014; (c) pass any other or further orders as in the nature and circumstances of the case as it is considered fit and proper" 16. The appeal, however, was disposed of without considering the merits of the case as the application for making certain corrections in the order dated 08.01.2014 was already pending with the BIFR. While disposing of the appeal, AAIFR directed ....
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.... that no intimation of the transfer was given to R-1 company nor to the Promoters Nominee Directors; (iii) that the said transfer of the shares by R-2 in favour of R-3 is in violation of status-quo order passed by AAIFR on 08.09.2014. Even the appointment of the Directors could not have been made by R-3 being in violation of the status-quo order; (iv) that the respondents have not provided the details of the documents/record with regard to the alleged transfer to the petitioners and this transfer is in violation of the provisions of Companies Act, 2013 (fort short '2013 Act) and Companies Act, 1956 (for brevity '1956 Act'); (v) that R-3 did not apprise the petitioners or promoters nominee group in the meeting of the Board held on 21.09.2015 nor such transfer could be made to the exclusion of petitioners. 19. The petitioners have also challenged the appointment of five nominee directors by R-3 on the ground that no Board meeting was held for such appointment. The petitioners have also challenged the Board Meeting dated 08.10.2015 called by the respondents' group on the grounds inter alia:- (a) that the notice of the proposed mee....
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.....12.2015. R-11 Scrutinizer was acting on the instructions of the Investors. There is a specific attack to his report. It is stated that R-11 did not chose to record the votes cast by the Bodies Corporate. Moreover, R-11 wrongly reported that the agenda for re-appointment of R-9 was withdrawn by the company vide circular dated 08.12.2015 and no record of e-voting was available on the site of NSDL. 22 shareholders are said to have cast their votes against the resolution by e-voting and the said record available on the web portal of NSDL is Annexure P-23 and therefore, R-11 was quite wrong in reporting that no record of e-voting data was available. The circular dated 08.12.2015 was issued during the course of e-voting with a mala fide intention as the respondents knew that this resolution will not be passed. 22. The next challenge by the petitioners is to the resolution of the meeting of the Board dated 30.04.2016, which was also attended by Promoters Nominees. The petitioners had specifically asked, whether R-3 was an affiliate of R-2 and also demanded the details of Directors, Shareholders, Capital Structure of R-3. The Promoter Nominees also re-iterated the aforesaid objections ....
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....in the said civil suit is Annexure R-3/2 attached by the respondents with the reply. 26. There is a reference to the matter going upto the Hon'ble Supreme Court, but how the matter went to the Hon'ble Supreme Court, is not clarified. In paragraph 6.35, it is however stated that the withdrawal of SLP can in no way be taken as an acknowledgement of the validity of appointment of Investors Nominee Directors. 27. In the written statement of respondents No.1 and 3 to 8, various preliminary objections have been raised. It is stated that the "petitioners have concealed the factum of declining the prayer for grant of interim injunction by the Civil Court at Alipur and dismissal of the revision by the Hon'ble Kolkata High Court vide order dated 16.10.2015 and the order of Hon'ble Supreme Court in the SLP (Civil) No.1829 of 2016. The petitioners have even concealed the factum of the order dated 30.08.2016 Annexure R-3/7 passed by the AAIFR (New Delhi) in contempt application filed by R-9 against them. It is stated that counsel for petitioners No.1, 3, 4 and 5 made a submission before the AAIFR that R-9 continues to be the Executive Director of R-1 company and there was ....
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....ne time settlement (OTS) with the Financial institutions/Banks and R-2 arranged a sum of Rs. 150 crores out of which, Rs. 130 crores was arranged as term loan from ICICI Bank, which was subsequently swapped with HSBC. The remainder amount of Rs. 20 crores was paid as equity investment by R-2. Consequent thereupon, R-2 acquired shares of the Financial Institutions. In addition thereto some shareholding of petitioners was transferred and fresh equity shares of Rs. 20 crores were allotted to R-2, which, therefore, held 44.44% equity shares, whereas the shareholding of promoter group is 37,68%, It was agreed vide clauses 7A.1 and 7A.2 of SNA that R-2 company shall always have majority of directors until certain conditions laid down in the aforesaid clauses of SHA, are fulfilled Admittedly, the promoter group has not satisfied the conditions, especially the creation of pledge by the promoters over their shareholding in favour of the Investor with the approval of RBI. Therefore, R-2 company always had its majority on the Board of Directors. 30. It is highlighted that after initiation of various litigations, at the instance of promoter group, the Promoter Directors resigned in the year....
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.... the Investor to freely transfer its equity shareholdings, though there are restrictions so far as the Promoters are concerned. Therefore, the contention of the respondents would be that on execution of Deed of Adherence, there cannot be any challenge to the transfer of the shares by R-2 to a third party. Regarding cancellation of meeting of the Board proposed for December, 2012. it is stated that the meeting was not permissible in the absence of the quorum as R-9 was left as a sole director at the relevant time. It is further averred that there is rather a violation by the petitioners of the order of status-quo passed by the AAIFR as B.K. Nath, who was appointed as Director in the meeting of EOGM held on 21.03.2014, had resigned even after the order of status-quo and P-5 was appointed in his place. 32. It is alleged that petitioners made fraudulent and mala fide attempts to obstruct the revival of R-1 company. The Company Secretary R-10 issued email dated 10.08.2011 to the Promoters to furnish the personal guarantee with regard to the loan facility of Rs. 16 crores with State Bank of India, but no response was received, SBI also sent letters dated 19.07.2013 and 05.10.2013 requ....
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....tioners' claim about appointment of Sukesh Kumar Aggarwal as President and re-designation of L.K. Singh as Director instead of Executive Director by referring to the minutes of the meeting dated 21.09.2015 attached as Annexure P-12, but perusal of the document would reveal that no such resolution was passed. It is, therefore, stated that the petitioners have come up on the basis of false averments in the petition. 36. It is pertinent to mention that the resolution Annexure P-12 dated 21.09.2015 contains agenda item No.60.14 as miscellaneous item i.e. any other matter and reference is made to the proposal to appoint Sukesh Kumar Aggarwal as President and re-designation of L.K. Singh as Director instead of Executive Director, but it is recorded that no decision was taken and the matter was adjourned for the next Board meeting after considering all legal and operational aspects in this regard. This aspect has, however, been clarified by the petitioners in the rejoinder. It is stated by petitioners that in fact Annexure P-12 are the draft minutes prepared by R-10, Company Secretary, whereas the minutes of the meeting dated 21.09.2015 actually finalised are at Annexure P-3 contai....
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....lant on 10.12.2015, the date of EOGM and for the Board meeting held on 2016 at the registered office of the company and no such controversy was raised. It is stated that R-3 has supported R-1 company by way of arranging/guaranteeing the working capital for smooth running of the company. A reference is also made to another resolution dated 08.10.2015 of the Board Meeting Annexure P-18 containing agenda item No.61.06 re-calling of appointment of Sukesh Kumar Aggarwal as President and re-appointment of L.K. Singh as Executive Director retrospectively for a period of 3 years from 12.09.2014 to 11.09.2017. 38. With regard to the allegations against R-11, the Scrutinizer nominated for preparing the data of e-voting for EOGM dated 10.12.2015. It is stated that no data was available on the portal of NSDL relating to item No.6 regarding re-appointment of R-9 as Executive Director. Copy of the notice of EOGM to be held on 10.12.2015 along with e-voting guidelines were also sent to all the shareholders including the petitioners. In view of the aforesaid guidelines, it is averred that the report Annexure P-22, dated 11.12.2015 submitted by the Scrutinizer cannot be faulted. 39. It is fur....
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.... EOGM proposed to be held on 10th December, 2015, but due to the order of status-quo already passed by AAIFR, R-9 filed contempt petition before the AAIFR, upon which R-1 company sought legal opinion and pursuant to the order of AAIFR, the item was withdrawn. Therefore, R-11 down loaded the report from NSDL site on 11th October, 2015 i.e. after the date of EOGM, where item No.6 was not reflected and, therefore, R-11 correctly made the report. 42. Respondent No.11, the Scrutinizer claimed that he is a full time Company Secretary and was appointed as such, for the EOGM scheduled for 10.12.2015. It is stated that the report Annexure A-11/1 is true copy of e-voting data downloaded from the web portal of NSDL and, therefore, the consolidated report Annexure P-22 furnished by this respondent is in consonance with Annexure R-11/1. This respondent is stated to have been impleaded as respondent to tarnish his dean and ethical professional image. It is stated that Annexure P-23 relied upon by the petitioners is not the copy of e-voting final data available on NSDL web portal. According to the respondent, final data on e-voting could only be accessed by R-1 being Scrutinizer of the email v....
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.... stated that the provisions of Sections 241, 242 and 244 of 2013 Act are complete Code in itself and the only appropriate remedy against mismanagement and oppression lies with the Tribunal. The illegal appointment of R-9 is also stated to be an act of oppression and mismanagement. 45. Regarding the transfer of the equity share of R-2 in favour of R-3, the same is alleged to be in violation of Articles of Association of R-1 company, which provides for execution of appropriate instrument duly stamped and executed by and on behalf of transferor and by and on behalf of transferee and specifying various other requirements to be delivered to the company. Neither any such instrument was executed nor it was delivered to the company. This transfer is said to be illegal, null and void. It is re-iterated that EOGM dated 21.03.2014 was duly convened and appropriate resolutions passed. The said meeting was convened consequent upon the order dated 08.01.2014 passed by the BIFR. R-10 rather informed the members in the said meeting about the receipt of letter dated 20.03.2014 from R-2 raising objections to the said meeting. It is also reiterated that R-2 in fact was never interested in revival ....
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....eds an Investor, who has the requisite expertise in the field of textile industry and also holds sufficient capital, so that such Investor may infuse capital and its expertise for the revival and augmentation of R-1 company. Most of the shareholders are not even aware of the credentials of R-3 which now claims to hold majority shareholding. The respondents have withheld the relevant information pertaining to R-3 and this itself would be a ground of oppression and mismanagement. 51. R-1 and R-3 to R-8 also filed sur rejoinder reiterating the support provided to R-1 by R-2. As a result of the facts already discussed, the accumulated losses were significantly reduced from 370 crores to 150 crores as reflected in the Annual Report for the financial year ending 31.03.2008. Further support by R-2 for swapping of the high cost debt of Rs. 12.902 lacs from ICICI Bank Limited with. The Hong Kong and Shanghai Banking Corporation (HSBC) was also the contribution mace in April, 2009. R-1 company paid non-refundable processing fees @ 2 ½ % out of which 50% was funded by R-2. The swap of the loan resulted in saving interest rate from 13.75% per annum (fluctuating) to 11% per annum (fix....
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....E REFERENCE HAVING ALREADY SEEN MADE TO BIFR. 54. Mr. Aman Bahri, Advocate learned counsel for R-1 & R-3 to R-8 submitted that the instant petition was filed in the month of September, 2016, while the R-1 company was still undergoing the proceedings before the BIFR. The learned counsel contends that in view of the aforesaid fact, the instant company petition under Sections 241 and 242 of the Companies Act, 2013 was not maintainable. In Tata Motors Ltd. v. Pharmaceutical Products of India Ltd. JT 2008 (9) SC 227, it was held by the Hon'ble Supreme Court that Board or AAIFR has primacy over the Companies Act. 55. The other judgment relied upon by the learned counsel is Pasupati Fabrics Ltd. v. Priyanka Overseas (P.) Ltd. [2006] 132 Comp. Cas. 113 of the Hon'ble Delhi High Court. It was held that once a reference is made to BIFR under Section 15 of SICA, BIFR assumes major role thereafter. After discussing, the task to be performed by the BIFR is to see the practicability of such company to make its net worth exceed accumulated losses within reasonable time or to appoint operating agency and direct it to prepare a scheme for providing such measures in relation to such co....
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....properly implemented. In the present case, however, the scheme had not been yet framed and the matter was still pending with the BIFR. WHETHER DEED OF ADHERENCE DATED 05.06.2015 EXECUTED BETWEEN R-2 AND R-3. WHEREUNDER SHAREHOLDING OF R-2 WAS TRANSFERRED IN FAVOUR OF R-3, IS NULL AND VOID AND NOT BINDING ON R-1 COMPANY. 57. Annexure R-3/2 is copy of the Civil Suit No.59 of 2015 filed in the Civil Court at Alipur. Plaintiffs are Parmod Mittal and Vinod Kumar Mittal, who are from the promoters group of R-1 company. A specific challenge was made in the said suit to declare that the transfer of the shares by R-2 in favour of R-3 is unlawful and void, with an alternative relief of declaration that the agreement entered into between the promoters group and R-2, dated 23.03.2007 stands terminated. Rest of the prayers in the civil suit are for declaration that Deed of Adherence (DOA) executed between R-2 and R-3 and the nomination of R-4 to R-8 as Directors of R-1 company to be illegal. The plaint is dated 05.10.2015. Annexure R-3/1 is the order passed by the Civil Judge (Senior Division), dated 09.10.2015 declining the prayer made for temporary injunction, mainly on the ground....
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....oter group and R-2, under which, later became investor in R-1 company. Annexure P-5 is the SHA, in which R-2 is described as an 'Investor'. SHA was executed by Parmod Mittal and Vinod Kumar Mittal, who are the plaintiffs in the civil suit at Alipur. They executed SHA on behalf of the Promoters group whose list is at Annexure A of the SHA. This list contains the names of six individual Investor Promoters and 16 Promoter Companies. The list is titled List of Promoters and Associates'. Two of the Promoters are Parmod Mittal and Vinod Kumar Mittal. In the said list, two of Promoters companies are Kanoria Platokem Pvt. Ltd. (now P-1) and Mudra Ispat Ltd. (now P-2). 62. As per terms of SHA (Annexure A-5), the Promoters shall be deemed to include their legal heirs, successors and permitted assigns and the promoters were represented by Mr. Vinod Kumar Mittal by execution of Representation Agreement, which is part of Annexure-5. Representation Agreement has been defined as meaning, the representation agreement in the form attached as Annexure H along with the irrevocable power of attorney annexed thereto, to be executed by all the promoters to appoint and exclusively authoriz....
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....lenge the transfer of shareholding by R-2 in favour of R-3. In the written submissions filed on behalf of the petitioners, the challenge to the transfer of shareholding was mainly on the strength of the status-quo order passed by AAIFR and that R-3 is a shell company. It was contended that as per the Memorandum and Articles of Association of R-3 company uploaded from the MCA Portal, this is a media company and has no expertise in the field of textile and finance and as such, it is difficult to understand, how such a company can play the role in R-1 company which has authorised share capital of over 400 crores. Learned counsel for the petitioners further contend that the authorised share capital of R-3 company was only Rs. 1,00,000/- as on 31.03.2016 which has been reduced to Rs. 40,000/- due to the monetary losses in the particular year The relevant documents in respect of R-3 company are at Annexure P-25. 66. It is pertinent to mention that the status-quo order was passed by AAIFR on 24.03.2014 on the appeal filed by R-2 against the order of BIFR. The appeal was filed to challenge the directions issued by BIFR in the order dated 08.01.2014 asking the petitioners and R-2 to nomi....
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....e is not an affiliate of the original Investor. This is in reference to clause 28.3.3 of the SHA, which reads as under:- "28.3.3 Notwithstanding anything contained herein the investor shall have the right to assign its rights under this agreement to any of its affiliate(s), provided such affiliate shall sign the deed of adherence in the form and manner set out in Annexure 13.2, confirming that it shall comply with the terms of this agreement. Upon assignment, such affiliate shall have all the rights provided under this agreement." Even the Hon'ble Calcutta High Court observed in the order Annexure R-3/4 passed in revision against the order of the trial Court declining the prayer for ad-interim stay, that the reasonable interpretation which can be assigned to the different sub clauses under the assignment clause is that the right to assign the rights under the agreement can be exercised by the investor subject, however, to signing the Deed of Adherence in the prescribed form. Sub clause 28.3.1 of the assignment clause put a fetter on the part of the company and the promoter to assign any right or obligation under the agreement without prior consent of the Investor. S....
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....t to the expiry of the aforesaid tenure of R-9, his continuation as Executive Director was never put to test in the shareholders meeting for further period, but he continues to function as such, on the basis of the order passed by AAIFR. 73. I am of the considered view that continuation of R-9 as Executive Director requires approval of the shareholders, because he is withdrawing salary and perks despite the absence of such approval, Admittedly R-9 continues to be the Executive Director on the basis of the status-quo order passed by AAIFR, but the proceedings under the SICA have since abated because of its repeal by virtue of SICA Repeal Act, 2003 coming inforce w.e.f. 01.12.2016 as already observed. It is quite clear that this notification came into force during pendency of the instant petition, but the Tribunal cannot allow continuation of the Executive Director, which carries pay and perks without further approval of the shareholders meeting. The Tribunal must take notice of the latest state of the law on the issue for passing appropriate directions. 74. Learned counsel for the petitioners vehemently contended that in fact the agenda for shareholders' approval for conti....
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....the order of AAIFR dated 08.09.2014, the Board of Directors had no authority to put his appointment/re-appointment for approval of shareholders in the meeting scheduled for 10.12.2015 and the agenda item in this regard be treated as withdrawn and any action taken pursuant to such item be and be hereby declared null and void. It is contended that the company made this statement before AAIFR to purge itself from the contempt proceedings. 77. So the above are the circumstances under which R-9 continues to be the Executive Director. His tenure is thus required to be tested in the shareholders meeting under the Companies Act as his term cannot be for an indefinite period, but it should be in accordance with law. 78. Sub-section (2) of Section 152 of the Act says that save as otherwise expressly provided in the Act, every director shall be appointed by the company in general meeting. Learned counsel for respondent No.9, Mr. Amit Jhanji, Advocate even submitted during arguments that R-9 was ready to face the general house, but all the allegations against his conduct as a Director are absolutely incorrect. The petitioners have made serious allegations on the conduct of R-9 in draftin....
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....bove. The appropriate directions in this regard shall be issued in the concluding paragraph of this order. CHALLENGE TO THE APPOINTMENT OF R-5 TO R-8 AS DIRECTORS OF R-1 COMPANY 80. It is pertinent to mention that two of the promoters having already raised this issue in the civil suit Annexure R-3/2 and for the reasons stated while disposing of the issue about transfer of shareholding of R-2 in favour of R-3, I find that it would not be permissible to accept even this challenge. 81. Anyhow, the petitioners have assailed the calling of the Board meeting dated 08.10.2015 for appointment of R-5 to R-8 as the Directors of R-1 company and putting up the resolution for approval in the general meeting, it is admitted proposition of fact that Annexure P-5, the Shareholders Agreement executed by promoters and R-2 in the year 2007 would be the Articles of Association of the Company. As per clause 7A.I of the SHA, it was agreed that the Investor Directors shall constitute majority on the Board and any committee thereto until the completion of certain events out of which, the main condition was pledge of shareholding of the Promoters in the Company in favour of Investors pursuan....
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....s or documents with respect to the items to be discussed at the meeting. 85. So far as the objection regarding 14 days notice is concerned. I am of the view that the provisions of the Act will prevail over the Articles of Association. Section 173 of the Act refers to the meetings of the Board and sub-section (3) says that the meeting of the Board shall be called by giving not less than seven days' notice in writing to every "director at his address registered with the company and such notice shall be sent by hand delivery or by post or by electronic means. So far as service of notice upon P-3 to P-6 is concerned, there is no challenge by the petitioners. Admittedly, this was a seven days prior notice for the Board meeting scheduled for 08.10.2015. 86. Even no such issue of 14 days notice was raised by the petitioners in the written objection to the said notice. The said objection is at Annexure P-17 and sent by P-3 and P-5. The only objection for the meeting was relating to the transfer of shareholding of R-2 in favour of R-3, on the ground that two of the promotors have already filed a civil suit in that regard and that the matter is sub-judice. Even no such objection wa....
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.... place and in the event, that is no other Promoter Director is present at the meeting, any of the Directors present shall be nominated with the majority consent of the shareholders present at that meeting, to preside over the meeting in his place. It is also specifically provided that the Chairman shall not have a casting vote. 91. Mr. Aman Bahri, Advocate for R-1 and R-3 to R-8 contended that above Article would indicate that the Chairman of the last meeting of the Board which in this case was 08.10.2015 should be the Chairman of the Shareholders meeting, who was none other than R-5. The learned counsel further submitted that this issue also cropped up in the Meeting held on 10.12.2015. However, to sort out the controversy, R-9 was made temporarily to chair the house and after R-9 sought consent of the members present by show of hands declared R-5 as chairman. All the members gave their consent in favour of R-5 except P-3 and P-4. 92. On a minute perusal the relevant Articles of SHA, I am of the firm view that the intention of the parties was always that the promoter director should be the Chairman of the meeting of the Board as well as the 'general house. It cannot be i....
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....undant in view of the resolution passed in the EOGM dated 10.12.2015 cancelling the resolution adopted by the petitioners group appointing Sukesh Kumar as such. The petitioners did lodge a complaint with the police, but it is not shown that the police found any truth in the same. Anyhow, the police may not have been able to interfere in such kind of dispute. The fact, however, is that in the EOGM, dated 10.12.2015 and subsequent Board meetings, the company, representative (s) of the petitioners did attend the same and there is no grievance raised that they were ever prevented. 97. It was vehemently contended by the learned counsel for petitioners that R-2 paid back Rs. 80 crores to HSBC Bank out of Rs. 130 crores of the debt, but the same is not reflected in the Accounts of the company and Phoenix ARC is still showing this amount as the outstanding debt. If it be correct, that would be a serious issue, which the respondents can and may raise whenever the future meetings are held. With these observations, the issue is disposed of. WHETHER THE PETITIONERS SHOULD BE MADE TO EXIT 98. Mr. Anand Chhibbar, learned senior counsel for respondents No.1 and 3 to 8, vehemently c....
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....it. This, however by itself would not mean that the Company Law Board would refuse to exercise its jurisdiction, although the statute confers such a power on it. 18. It is now a well settled principle of law that the Courts should lean in favour of such construction of statute, whereby its jurisdiction is retained enabling it to mould the relief, subject of course, to the applicability of law in the fact situation obtaining in each case. In Pearson Education Inc. (formerly Prentice Hall Inc.) v. Prentice Hall India (P) Ltd. and Ore. MANU/DE/1157/2005: 134 (2006) DLT 450, as regards the jurisdiction of the Company Law Board and the High Court under Sections 397/398 and 402, a learned single judge of the Delhi High Court held: Jurisdiction of the CLB (and ultimately of this Court in appeal) under Sections 397/398 and 402 is much wider and direction can be given even contrary to the provisions of the Articles of Association. It has even right to terminate, set aside or modify the contractual arrangement between the company and any person [see Section 402(d) and (e)]. Section 397 specifically provides that once the oppression is established, the Court may, wi....
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....rector to test and approval of the remunerations to him. 103. The present is not a case, where functioning of the company has come to a standstill as it is noticed that various decisions were taken by the company from time to time though the said decisions may be subject matter of challenge before this Tribunal. I am also of the view that simply because minority has been voted out on certain decisions, that cannot be considered to be the ground to order exit. Even the Investor cannot shirk from the responsibility of making all out efforts to make the business of the Company profitable. It was with this objective that the 'Investor' was inducted in the company's affairs by executing SHA. Thus, the Investor cannot be permitted to wholly replace the original shareholders/Promoters. In view of the above observations, I hold that the exit is not the appropriate course in this case. RELIEF 104. In view of my above findings on various issues, the instant petition is partly allowed to the extent that agenda of continuation of L.K. Singh respondent No.9 as Director/Executive Director be placed in the meeting of the shareholders for approval along with his pay/emol....
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....ement as required by law be also annexed with the notice. The meeting be convened by giving not less than clear 21 days notice either in writing through registered post or speed post or through courier service or email or the electronic mode in the manner as prescribed especially Rule 18 of the Companies (Management and Administration) Rules, 2014. The voting shall also be in accordance with the requirement of Companies Act, 2013, the applicable rules, more specifically Rule 19 and 20 of the aforesaid Rules. 107. The quorum of the meeting shall be 30 members present in person. It is directed that if the required quorum is not present at the commencement of the meeting, the meeting shall be adjourned for 30 minutes and thereafter the persons present in meeting, either in person or through proxy would be treated as the quorum. The appointment of proxy shall be as per rule 19 of the said Rules and in Form No.11 of the Rules. Voting by proxy shall be permitted provided the proxy is in the prescribed form duly signed by the shareholder/member to attend and vote at the meeting is filed with the company at its registered office, not less than 48 hours before the meeting and where a bod....