TaxTMI 
TaxTMI 
2013 (5) TMI 976
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....ion a/s 397 r/w 398 of the Act seeking various reliefs and the Applicant craves leave of this Hon'ble Bench to refer to the main company petition as part and parcel of this Application. It is submitted that the First Respondent Company is a family company wholly owned by the family in which the members of the family are the only directors of the Company and it is more akin to the nature of the family partnership and the Applicant being a 20% shareholder along with his wife has a legitimate expectation that he should be a part of the management Of the Company in relation to its day to day affairs with other family members. It is submitted that the Respondent Nos. 2 to 5. While having committed all acts Of gross mismanagement in relation to the affairs of the First Respondent Company, in defiance of the proceedings pending before this Hon'ble Bench have sought to convene an Extra Ordinary General Meeting (EGM) on 26.042013 seeking to remove the Applicant herein from the board of the First Respondent Company which in itself is per se perverse and in negation of the corporate principles as applicable to a family company like the First Respondent Company, solely made with a view....
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....missions and commissions which had culminated into confirmed orders being issued against the First Respondent Company having huge financial repercussions and consequences which are required to be mulcted on the Third Respondent individually. The orders issued by Central Excise in relation to the First Respondent Company clearly prove the allegation made by this Applicant is with substance and in alignment with truth. In these circumstances, the action Of the Third Respondent along With Other Respondents who are in the control and management Of the affairs of the First Respondent Company in CP Nos.57/2009 and 58/2009 is clearly under question and their interest is seriously affected. It is further submitted that being vitally interested and that too when the matter is sub judice, in the resolution of removal the board meeting suffers from the lack Of quorum and could not have passed the notice to be taken into consideration and hence On this Count also the proposed notice convening the EGM on 26.04.2013 is null and void. In support of his case, the learned counsel relied upon the following citations; (i) (2004) 63 CLA 1 18 (CLB) in the matter of D.V. "Thirumalai and Anr Vs. Be....
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....mpany, the Registrar of Companies, the Regional Director, the Reserve Bank of India etc., and some of such complaints are in the guise of applications under the Right to Information Act. 2005. It is solely due to the above reasons that the Applicant has been purposely delaying his own eases and he has directly contributed to the case being delayed for seVeral years now. In View Of the above, the Applicant is not entitled to any reliefs whatsoever even under the equitable jurisdiction of this Hon'ble Board. The sequence of events, leading to the proposed convening of the EGM of the Company on 26.04.2013, is as under: S. No. Date 1. 21.03.2013 The Notice of the Board Meeting to be held on 30.03.2013 was dispatched 2. 23.03.2013 Date on which the Applicant received the Notice of Board Meeting dated 30.03.2013 3. 30.03.2013 Date on which Board Meeting was held 4. 30.03.2013 The notice of the Extraordinary General Meeting to be held on 26.04.2013 5. 01.04.2013 Date on which the Applicant received the Notice of the Extraordinary General Meeting 6. 22.04.2013 Proposed date of moving of the present C.A, before the Hon'ble Company Law Board. It can be seen that ....
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.... the only/main Banker to the Company, by its letter dated 18.01.2013 has intimated the Company that the Company will have to look for alternate banking arrangements in view of the various difficulties posed by the Applicant to the said Bank from time to time. 5. It is submitted that the Assistant Commissioner of Central Excise, Chennai IV Division. had passed an Original-in-Order No.21 dated 14.11.2012 demanding which was imposed under Section 11 AC of Central Excise Act, 1994 r/w Rule 25 of Central Excise Rules, 2002. The Company has filed an appeal against the above order of the Assistant Commissioner with Commissioner of Central Excise (Appeals) under Section 35 of the Central Excise Act, 1944 on various grounds, and the most relevant of them are summarized below. (i) The order is Contrary to statutory provisions and has traversed beyond the show cause notice in violation of principles Of natural justice. It is submitted that all dues of ESIC have been paid by the Company as on date. 6. It is submitted that the Company had received a requisition notice from a shareholder, namely Mr. N. Balaji, which was a requisition for an EGM under Section 69 of the Act and a special notic....
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....iew to suit his purpose. It is further submitted that Section 21 of the Right to Information Act states that no •suit', •prosecution' or •other legal proceedings' shall lie against any person for anything which is in good faith done or intended to be done under the said Act or any representation made thereunder. Assuming without admitting that Section 21 applies to the Applicant herein, it is submitted that the present proposal of the Company to convene an EGM ofits shareholders to consider the passing of a Resolution under Section 284 of the Act does not in any manner amount to either a •suit', 'prosecution'. or •other legal proceedings' and the Applicant is put to strict proof in this regard. It is further submitted that the Applicant is most welcome to attend the EGM and voice out his stand and further explain his stand in detail. For the reasons stated above, it is just and necessary that the present Application be dismissed with costs and justice thereby be rendered. In support of his case, the learned counsel relied upon the following citations: (a) AIR 1986 (SC) 1370 in the matter of Life Insurance Corporation of India Vs....
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....as a right to move the resolution removing a director of the Company in the said EOGM in accordance with Section 284 of the Act. In this regard. the relevant provisions are extracted for better appreciation. Section 169 Of the Companies Act, 1956 specifies the calling of EOGM on requisition. Sub-section (l) of Section 169 reads thus. "The board of directors Of a Company, Shan on the requisition of such number Of members Of the Comp«ny as is specified in Sub- section (4) forth with proceed duly to call an EOGM of the Company. As per Sub-section(4) of Section 169, the number of members entitled to requisition a meeting in regard to any matter shall be (a) in the case ofa company having a share capital, such number of them as hold at the date of the deposit of the requisition, not less than l/ of such of the paid- up capital of the company as at that time carries the right of voting in regard to that matter. In compliance thereof, a shareholder of the company i.e. Shri N Balaji, the 2nd Respondent herein issued a notice under the above provisions of the Act to the board of director-s of the RI Company to call EOGM of the Company. The requisitionist clearly stated that he is....
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.... at 4:00 P.M., amongst Other agenda. to convene an EOGM of the Company to transact the business as stated in that notice. The Company issued notice dated 30.03,2013 to all the shareholders including the Applicant stating that an EOGM of the Company will be held on Friday, the 26th April, 2013 at 10.00 AM, at the Registered Office ofthe Company to transact the following business. (l) to consider and if thought fit to pass, with or without modification the following resolution as an ordinary resolution "RESOLVED THAT pursuant to Section 284 Of the Coinpanies Act, 1956 and Other applicable provisions, if any, Mr. Narayanamurthy Thirumurthy, director be and is hereby re;noved from the Office Of director Of the company with immediate effect." Along With the notice dated 30.03.2013, an explanatory statement pursuant to Section 173 of the Companies Act, 1956 was also enclosed. The Applicant acknowledged the receipt of the notice dated 30.03.2013 on 01.04.2013. Further the Company, vide their letter dated 30.03.2013 issued to all the shareholders stated that the notice regarding convening of EOGM On 26.04.2013 has already been dispatched and in this connection representation rece....
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....and he has legitimate expectation that he should be a parl of the management is concerned, the Applicant even though may be a family member. cannot claim as a matter of right to continue as a director of the Company. It is important to note that there is no relief sought by the Applicant in this Application to the extent that this Bench Should decide the issue that R I Company is family company and the principles of quasi-partnership are applicable to it. Applicant has no right to scuttle the democratic process of the shareholders of the Company who alone have the right to lect/remove the directors to/from the board in the best interests of the Company. The learned counsel for the Applicant has relied upon certain decisions on the point that removal of director from the board in family companies will be oppressive. In (i) supra, this Bench was ofthe view that "removal ofpetitioner from directorship offamily company When he has been a director since inception of company, equitable jurisdiction Of Company Law Board to grant in the case Of a family company and companies in guise Of quasi-partnership, though removal of petitioner from directorship though legally valid will be oppr....
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....public company, nevertheless. it is family company identifiable groups of shareholders and as per Article 40, the pelitioners as the first directors, are no' liable for retirement by rotation. In other Words, all are permanent directors and therefore, if One is removed from the management then he isjustified in claiming that his removal is an act of oppression. However. such removal could be considered as an act Of oppression only if it is established that the same done either with a malafide intention Or With some ulterior motive. In this case, it has been established that the petitioner had acted against the interests Of the company by writing complaints to various government authorities resulting in their eonducfing raids on the company. NO doubt, these authorities have given a clean chif to the company, yet, such raids do affect the reputation Of the company justifying the shareholders fo view the act of the petitioner as prejudicial to the interests Of the company. As explained above, the Applicant by way of this Application seeking direction to restrain the company from holding the proposed EOGM to be held on 2604.2013 on the pretext that the shareholders may take a deci....