AI Drafter 
TaxTMI 
TaxTMI 
2017 (12) TMI 238
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....curities Limited was incorporated on 07.03.2012 with Registrar of Companies, Kerala, Ernakulam. The 1st Respondent Company is an unlisted public limited company. The Registered Office of the company was situated at Jayashree Castle, Room No. 27/7 C, Karunakaran Nambiar Road, Thrissur-680 020. The Board of the 1st Respondent company Shifted the Registered Office to the Ashwini Hospital premises with effect from 15.07.2015. The authorised capital of the 1st Respondent company is Rs. 45,00,00,000/- divided into 45,00,000 equity shares of Rs. 100 each. The present issued, subscribed and paid up capital of the 1st Respondent company is Rs. 43,43,50,000/- divided into 43,43,500 equity shares of Rs. 100 each. The main obiect of the company is to carry on business of buying, selling, and dealing in all types of shares, debentures, stock, Government securities and to act as investment consultants, share brokers subject to obtaining such permissions as may be required. The 1st respondent company is the holding company of two subsidiaries viz., M/s. Ashwini Hospital Limited and M/s. Ashwini Health Care Limited. The Petitioners are collectively holding 7,57,110 equity shares of Rs. 100 each am....
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.... a total of 190 proxies voted. 4. The Petitioners in relation to 34 proxy forms lodged by the Respondents 2 to 11 with the independent chairman has complained that the proxy forms were attested by one Shri Naresh Kumar being Vice Consul, Consulate General of India, Dubai UAE, who was not employed in Dubai Consulate, and hence, the attestation was fake. With regard to which the independent chairman sent an e-mail to Mr. K. Muraleedharan, Deputy Consul General of India, Dubai seeking his comments duly attaching scanned copies of the proxy forms said to be attested by Shri Naresh Kumar for verification along with a scanned copy of the attested proxy by another official of Consulate Shri Pradeep Kumar. The Deputy Consul General informed that Shri Naresh Kumar had left Dubai Consulate on 02.11.2013 on transfer basis as second secretary in the Embassy of Kathmandu and informed that all the documents said to be attested by Shri Naresh Kumar were totally fake. 5. However, the CLB vide its Order dated 07.07.2015 disposed of the Petition No. 34/2015 by recognising the Petitioners and Respondent Nos. 2, 3 and 12 as Directors of the 1st Respondent company. Consequently, the Petitioners h....
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....of Rs. 100 each amounting to Rs. 13,53,55,500/- belonging to as many as 73 shareholders is also null and void. 7. The Petitioners specifically stated that in the notice of removal, the agenda in relation to the appointment of directors is missing and in the notice to the appointment of directors, the agenda in relation to removal of directors and forfeiture of shares are missing. Moreover, the Respondents in the extract of resolution electing the Respondent Nos. 2 to 11 as Directors forged the signature of the 1st Petitioner for certifying the resolution when, according to them, the 1st Petitioner is removed from the office of the director by item No. 1 of the EOGM purportedly held on 27.07.2015. 8. The Petitioners plead that in the notice attached in relation to the appointment of Respondent Nos. 4 to 11 as directors of the 1st Respondent company, the said Respondents are being appointed by a single resolution which itself is in violation of Section 162 of the Companies Act, 2013. It has further been submitted by the Petitioners that the Respondent Nos. 2 and 3 have withdrawn a sum of Rs. 30 Lakhs and Rs. 35 Lakhs respectively from the accounts of the 1st Respondent company ....
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....heir residential status, illegally acquired the shares in the 1st Respondent company. It is further averred that the Petitioners are not the shareholders at the time of filing the Petition since their shares have been cancelled due to non-disclosure of their residential status at the time of subscription, and thereby, are not entitled to file the present Petition. It is also alleged that the Petitioners in order to control and take over the management of M/s. Ashwini Hospital Limited, has invested the equity share capital of the 1st Respondent company. The 1st Respondent company has no other activity other than the investments made in the subsidiary company i.e. M/s. Ashwini Hospital Limited and M/s. Ashwini Health Care Limited. It has also been admitted by the Respondents that the then CLB appointed an independent Chairman for convening a meeting for the purpose of election of Directors on 15.06.2015. It is submitted by the answering Respondents that had it been disclosed to the independent Chairman appointed by the then CLB, the 1st Petitioner and other NRIs would have not been elected as Directors of the 1st Respondent company, due to which the meeting and election of the 1st Re....
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....ount of the 1st Respondent company thereby there is no sufficient compliance for caning the nominations and hence the proceedings of the election held on 15.06.2015 are not in accordance with the provisions of the Act. It has further been mentioned that the independent Chairman omitted to mention the share/percentage of votes of both the panels got. On the contrary, he reported that the voting percentage is 99.68% which resulted in misleading the CLB. Because, the Chairman ought to have mentioned as to how much percentage of voting each panel got. 10. The answering respondents stated in the counter that a criminal complaint has been made by the respondents against the Petitioner and his daughters and apprehended the consequences of facing the criminal complaint and consolidation of shares due to the non-disclosure of the residential status. The Petitioner approached the 2nd Respondent for settlement of the matter and the 1st Petitioner promised and assured to restore the Directors who were removed earlier and wanted to take back his investments in the 1st respondent company and the holding company. Therefore, upon the consensus arrived at, the 1st petitioner called for a Board m....
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....its earned has been transferred to the reserves and surplus in the best interest of the company and its shareholders thereby there is no act of oppression and mismanagement in relation to the affairs of the 1st Respondent company and prays to dismiss the petition. 11. The petitioners 1 to 3 filed a rejoinder denying the allegations made in the counter filed by the answering respondents and reiterated the averments made in the petition stating that the Respondent Nos. 1 to 11 are usurpers of the office of the Directors against the will of the shareholders who have overwhelmingly voted in the EoGM held on 15.06.2015 under the independent Chairman appointed by the then CLB and stated that the digital signatures of the 1st petitioner was forged by the Respondents by hijacking the website of ROC, Kerala, Ernakulam in filing the E-forms DIR-12 in Ashwini Hospitals Ltd. and also forged the signatures of Vice Consul and seal of the Consulate of India, Dubai in proxy forms and trespassed into Ashwini Hospitals Ltd. along with Goondas and forcibly took away all the documents, records and manhandled the Directors and staff with regard to which FIRs have been filed and the same were under i....
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.... the counter that the petitioner intended to take over control and management of M/s. Ashwini Hospitals Ltd., is highly misplaced. 13. It has also been submitted that the Respondents are making allegations against the independent Chairman appointed by the then CLB as a measure of afterthought and indulging in mud-slinging and if the Chairman did not consider their representation, nothing prevented the respondents from approaching the CLB before the conduct of the meeting held on 15.06.2015 and the cancellation of shares of these 73 shareholders/members are also challenging the petition as the cancellation of shares can only be done by the Hon'ble court under section 100 of the Companies Act by way of reduction of capital of by this Hon'ble Board under section 402 of the Companies Act, 1956 by way of buy back of shares. Therefore, it is obvious that the company did not buy back the shares of the 73 shareholders under section 77A of the Companies Act, 1956 or section 68 of the Companies Act, 2013. Thus, the respondents did not follow the principles of natural justice before cancelling the shares of 73 members in the EoGM purportedly held on 27.07.2015. The Petitioner had a....
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....ter. 15. From the factual details noted above, there emerge two issues which are as follows:- (a) Whether the EoGM purportedly held on 27.07.2015 is in accordance with the law and legally tenable? (b) Whether the forfeiture of the shares of the Petitioners and the Respondent No. 12, including 73 shareholders, on 27.07.2015 is in accordance with the law and legally tenable? (c) Relief. 16. In relation to the issue No. (a), it is on record that an EoGM was held and conducted for the purpose of election of the Directors on 15.06.2015 under the supervision of an independent chairman appointed by the then CLB. After fulfilment of the legal requirements, the Petitioners along with the Respondent Nos. 2, 3 and 12 were elected as Directors of the 1st Respondent Company in the said EoGM. The detailed report of the chairman was submitted to the then CLB. The CLB on 07.07.2015 disposed of the Petition No. 34/2015 by recognising the Petitioners and the Respondent Nos. 2, 3 and 12 as Directors of the 1st Respondent Company pursuant to which the Petitioners have filed e-forms, DIN 12 with the Registrar of Companies, Kerala, Ernakulam. If Respondent Nos. 2 to 11 h....
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....eited, and then the same person will sign DIN 12 and file with the ROC. This is not only improbable but contrary to the human nature. Further, the Respondent Nos. 2 to 11 stated in the counter that the Petitioner has issued notice dated 01.07.2015 to call for the Board Meeting on 27.07.2015 at 10.30 A.M. But, the Petitioner left for Dubai on 26.06.2015 and returned to India only on 02.07.2015, this fact has been proved by showing the entries of his travel in his passport during argument. Further, the shareholders have not received notice of EoGM purportedly held on 27.07.2015 as the 1st Respondent Company has received 76 complaints from the shareholders stating that they did not receive any notice of said EoGM. Moreover, the Respondent failed to produce the proof of service of notice dated 01.07.2015 on 344 shareholders pertaining to the EoGM purportedly held on 27.07.2015. Therefore, the defence taken by the Respondent Nos. 2 to 11 is highly improbable and full of fallacy. 19. Besides the above, no material has been shown to demonstrate the fulfilment of the requirements of Section 284(1) and (2) of the Companies Act, 1956, before removing the Petitioners and the Respondent No.....
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....s of Association along with the procedure for forfeiting the shares only when the shares have already been allotted and not paid-up to the full extent of the face value and premium, if any. In this case, the Respondent Nos. 2 to 11 failed to show any of the provisions of the Articles of the Association which could have authorised the Directors to forfeit the shares for non-disclosure of the residential status by the members. 22. Assuming that the Respondent Nos. 2 to 11 were Directors at the time of forfeiture of the said shares on 27.07.2015, and were authorised to cancel the shares. But legally, the Directors of the Company cannot utilise their fiduciary powers over the shares purely for the purpose of cancellation of the shares of the minority shareholders to improve their voting power. The court cannot allow to exercise such powers which might have been delegated by the company to the Board of Directors. Therefore, there was no authority with Respondent Nos. 2 to 11 to forfeit the shares of the Petitioner Nos. 1, 2 and 5 including 73 shareholders. The whole action is patently illegal, perverse and is declared as null and void. This view is fortified by the ruling given in Ra....