AI Drafter 
TaxTMI 
TaxTMI 
1997 (11) TMI 537
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....ompany, and they were the only two directors, we passed an ex parte order, inter alia, including appointment of a Commissioner to authenticate the statutory records of the company and directing the service copies of the petition and application on all the respondents so that they could be heard before considering the other interim reliefs. Unfortunately, for some reasons, the Commissioner could not authenticate the records as they were not made available to him during his visit to the registered office of the company. 2. In the reply to the application, the respondents raised the issue relating to the entitlement of the petitioner to file the petition on the ground that the petitioner did not satisfy the requirements of section 399 of the Act. According to the respondents, even though there were only two share-holders initially at the time of incorporation in May 95 with 10 shares each, the company later allotted further 760 shares to 9 other shareholders in November 1995, many days before the filing of this instant petition. Therefore, according to the respondents, the petitioner is not qualified to maintain the petition. Even though there is no allegation about this issue of s....
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....oard meetings on 24-5-1995 and 1-9-1995, in the rejoinder he has questioned the validity as well as the factum of holding the alleged meeting on 25-10-1995. He has particularly sought for declaring the resolution on the appointment of 2nd respondent as the Managing Director, appointment of 3rd respondent as a director - both these resolutions alleged to have been passed on 1-9-1995 and the appointment of 4th respondent as the Company Secretary by an alleged resolution on 24-5-1995 as null and void. Other reliefs sought are: Appointment of an administrator in place of the Board, restraining the respondents from removing the petitioner from the Board, amendment to the articles to provide for keeping the books of accounts in the hotel premises, directions to ensure that the petitioner has access to the books of accounts and for participation of the petitioner in the management of the affairs of the company including operation of the bank accounts. 6. The respondents have filed replies, on the applications filed by the petitioner and also on the petition and other affidavits. According to them, the petitioner was never authorised to manage the hotel in his capacity as a director of ....
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....0 per cent of the original shares, is entitled to maintain the petition. He contested the claim of the respon- dents that notice for the meeting was sent by certificate of posting and alleged that the copy of the postal certificate at Annex R 1/15 is a fabricated document. 8. Shri Gopal Subramanium, the counsel for the respondents submitted that the certificate of posting at Annex R 1/15 was obtained on the date of posting of the notice and the petitioner should have received the notice. The petitioner had been appointed as the President, Northern Region in HRH which is under the control of the 2nd respondent and that HRH had decided to terminate the services of the petitioner. Perhaps, apprehend- ing that the termination order would be served on him during the Board meeting, the petitioner did not attend the meeting on 26-10-1995. He further submitted that even in the absence of the petitioner, there was quorum to transact business in the meeting, as the 3rd respondent had already been inducted into the board in the meeting held on 1-9-1995 which was attended by the petitioner. Since, both the 2nd and 3rd respondents were present in the meeting held on 26-10-1995, there was a v....
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....sustained. 10. Shri Dholakia questioned the claim of the respondents that there was a meeting on 24-5-1995 and that the petitioner attended that meeting and that it was on his suggestion that the next board meeting was fixed for 1-9-1995. According to him, there had been no meeting of the board at any time and as a matter of fact all requests of the petitioner to convene a Board meeting went unheaded. He submitted that the company itself was incorporated only on 24-5-1995 and it is inconceivable that a board meeting on that date at Udaipur could have taken on record the incorporation certificate which was issued by the Registrar of Companies at Jaipur on that date only considering the distance between Jaipur and Udaipur and the time involved in covering the distance. According to him, no board meeting of the company was ever held on any date and in fact, it was the petitioner's grievance that the 2nd respondent never attended to various letters written by the petitioner in this regard. Only after the present petition was filed by the petitioner that records have been created to show as if board meetings were held on the 3 days and various decisions taken in these meetings. ....
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....rum. Therefore, it becomes necessary to examine whether there was a valid quorum on 26-10-1995. 13. The issue relating to the validity of the quorum for the meeting on 25-10-1995 cannot be decided without first ascertaining whether there was a board meeting on 1-9-1995 as it is in this meeting that the 3rd respondent was purported to have been inducted into the Board. The main contention of the petitioner is that he had no knowledge of convening of the meeting and that no such meeting ever took place and that the minutes of the meeting were fabricated. While he furnished no material in the petition or in the rejoinder regarding his non-attendance in the meeting on 1-9-1995, other than asserting so, on 5-8-1997, the last date of hearing, he filed certain affidavits from some employees of Kami Hotel, where, according to the respondents the meeting was held to the effect, that neither the 2nd nor the 3rd respondent was staying in that hotel on that date, nor any meeting took place in that hotel on that date. These affidavits are dated some time in January 1996 and were filed before us on 5-8-1995. It is to be pointed out that after filing of the petition on 29-11-1995 the petitione....
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....s early as in January 1996, were filed before us only on 5-8-1997 and that in none of the affidavits there is any averment that these employees personally knew either the 2nd or the 3rd respondent to affirm that these respondents did not hold a meeting on that date. 14. According to the respondents, in addition to the notice given for the meeting on 1-9-1995, the convening of the meeting on that date was decided in the meeting held on 24-5-1995 and this was done at the suggestion of the petitioner who was present on that date. The petitioner contradicts the same. In the petition, there is no prayer for declaring this meeting on 24-5-1995 as null and void except to seek a declaration that the 4th respondent was not legally/validly appointed as the company secretary as this appointment was purportedly made in the board meeting held on 24-5-1995. 15. Even though the petitioner has averred in the petition, rejoinder as well in the other affidavits filed by him that he had not attended the meeting on 24-5-1995, for the first time in the affidavit filed on 5-8-1997, he has stated that on that date he was at Jaipur and as such on no account he could have been present at Udaipur to a....
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.... it is also relevant to point out to the last para at page 8 of the draft lease deed annexed to the petition. In this para it is stated that the Board of the company approved the draft lease deed in its meeting held on....... at Udaipur. The date of the meeting is kept blank. Therefore, before registering the lease deed, this date should have been filled in. If the meeting on 24-5-1995 had not taken place as contended by the petitioner, why the petitioner did not raise the issue when the lease deed was executed, has not been explained. (b) Approval of Agreement with HRH: According to the petitioner, there was only an informal marketing agreement with HRH and the claim of the company that an operating agreement was entered into is incorrect. One of the terms of the lease agreement with the Palace Trust is that a sum of Rs. 15 lakhs is to be paid by the company to the trust by way of deposit on the execution of the lease. The agreement with HRH provides for HRH lending this amount to the company. To the knowledge of the petitioner, the company did not have any funds of its own for this purpose. He never asked for details from the company as to how this deposit was made. Seco....
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....ng a director should know at least as to who was working as the secretarial officer. 17. From the above, even though the petitioner has thrown some seeds of doubt about his attendance in the meeting by the documents produced during the last date of hearing, we find that there are overwhelming evidence to show that most of the decisions in that meeting have been acted upon within the knowledge of the petitioner without any protest whatsoever. Therefore, we are inclined to believe the version of the respondents that there was a meeting on 24-5-1995 and that the petitioner did attend that meeting. If it is so, then, implementation of other decisions taken in that meeting, inter alia, including the decision to induct the 3rd respondent as a director in the subsequent meeting cannot be said to be without the knowledge of the petitioner as also the convening of the next Board meeting on 1-9-1995. 18. The petitioner's locus standi to file the petition depends on the validity of the allotment of further shares in the meeting held on 25-10-1995, in view of his assertion that there was no quorum in that meeting due to his non-attendance. It is a fact that the petitioner did not att....
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....-1995 and Board of directors meeting was shown to have held on 24-5-1995 for which..." This annexure is referred in para (q) of the petition. There is no indication as to how and when he learnt of the meeting held on 24-5-1995 before he penned this letter. According to his own version, he started all his verification about the company only subsequently, i.e., after writing this letter. (We also note the doubt raised by the respondents regarding the date of this letter) . (g) In paras (e) and (f ) of the petition it is averred that there was an agreement between the petitioner and the 2nd respondent that the share capital of the company will be 50 per cent each and that the company will be managed as a quasi-partnership. There is no documentary or other evidence placed in this regard. (h) In para (t) of the petition, there is an averment that the petitioner was operating account Nos. 181 and 190 in the Vijaya Bank along with the 2nd respondent, and that without any board authority the petitioner had been relieved of this responsibility. This shows that the petitioner was aware that board's authority is required for operating a bank account. How and when he was ....