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2018 (6) TMI 678
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....the allotment of 90,000 shares solely to the 2nd Respondent at the purported board meeting dated 03.09.2014 as void and illegal, and declare the Form No.PAS-3 filed by the Respondents as null and void; c. Order the Respondents 1 and 2 to convene and conduct the AGM for the year 31.03.2014 immediately as per the approved Annual Accounts at the board meeting held on 03.09.2014; 2. The case was initially filed before the then Company Law Board, Chennai Bench, and subsequently transferred to this Bench. Accordingly, the case is listed before this Bench for hearing on various dates viz: 27.07.2016, 11.11.2016, 18.11.2016, 08.12.2016, 20.12.2016, 20.01.2017, 06.02.2017, 27.02.2017, 01.03.2017, 01.06.2017, 02.06.2017, 07.06.2017 & 23.10.2017. After hearing the case, the parties requested time to file their respective gist of arguments. Accordingly, they have filed their written arguments subsequently. 3. The brief facts of the case, which are relevant to the issue in question, are as follows: (1) Zetatek Engineering Systems Pvt. Ltd.,(which is herein after referred to as Company) is a private limited Company incorporated under the provisions of the Companies Act, 1956 on the 18th Ja....
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....er reducing his shareholding from 50% to 5%. This is a serious act of oppression and mismanagement and seriously prejudicial to the interests of the petitioner. (8) The 2nd Respondent failed to convene and conduct mandatory AGM and violated the provisions of the Companies Act, 1956/2013 in this regard. The petitioner has questioned the Board Meetings dated 25.08.2014, 03.09.2014 & 14.10.2014 in the present petition. 4. The Respondent Nos. 2 & 3 have filed a counter dated 12.11.2016. The following are their main contentions in the counter: (1) The Petitioner has come to the Tribunal with unclean hands by suppressing several material facts: The 2nd respondent is a Founder Director and shareholder of the Company and he is currently holding 94,500 equity shares of Rs. 10/- each. He is an eminent technocrat turned industrialist and is considered as one of the most respected figures in the defence and aerospace industries in India and Abroad and he is also associated with several prestigious projects in the Science and Technology. He has played a pivotal role in Defence Research and Development of the various aerospace systems for various missiles, aircrafts and sub-marine systems. ....
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....r, who have committed offence U/s 340 of Cr PC as he has filed fabricated and fake documents. They have also pointed out that shareholding of the Petitioner was not at all disturbed or diluted in any way since the transfer of shares in question admittedly doesn't belongs to the petitioner. (6) It is stated that between the years 2007-08 to 2013-14, 2nd respondent has contributed Rs. 16,455,000 through banking channels towards the share application money, while at the same time, the petitioner has sold assets that were purported to be valued at Rs. 2,86,00,000 and the same was treated as share application money in the books of the Company. However by the end of 2013-14, the entire share application money was converted into unsecured loan and the unsecured amount from the 2nd Respondent was Rs. 18,753,530/- However, Petitioner's unsecured loan has come down to Rs. 23,100/-. Therefore, it is contended that the petitioner was well aware that there was share application money/unsecured loan to the credit of 2nd Respondent, which was pending allotment, and that the same would be allotted at any time. The allegation of the petitioner that the allotment took place behind his back....
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....nts were not finalized, not audited and not got approved by the Board of Directors and the Shareholders of the 1st Respondent Company. Therefore, he has alleged that 2nd Respondent is solely liable for the violations in conducting AGMs. iv. Allotment and Transfer of shares is a fraud committed by the second respondent and the same is violation of Articles No. 17 to 22 of Articles of Association of the Company. The second respondent has created fake transfer and fabricated documents and thus uploaded into ROC/MCA web portal, which is violation of provisions of Sections 447 & 448 of the Companies Act, 2013. It is further alleged that the Rs. 9,00,000/- shown as "share application money pending allotment' was withdrawn by the 2nd respondent himself and only Rs. 1,00,000/-continued to be shown as "paid up capital" as on 31.03.2014. 6. We have heard Mr. S. Chidambaram, learned PCS for the petitioner and Mr. Y. Suryanarayana, and learned counsel for the respondents. After transfer from the then CLB, Chennai, this Bench disposed of petition by an order dated 1st March, 2017. Aggrieved by this order, the petitioner has filed an appeal before the Hon'ble NCLAT vide Company Appeal....
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....nd 03.09.14, which are enclosed as page No. 41 (Annexure P 3 ) and page No. 59 & 60 (Annexure P6) with the Company petition. By bare reading of those documents, those documents do not bear signatures of Chairman of the Board meeting. Admittedly, the second respondent is chairman of the Board meeting. It is also relevant to point out that the petitioner has not filed copies of agenda, which he has received for the above meetings. It is also not in dispute that the petitioner has attended both the above meetings. Therefore, the contention rather the allegation that the impugned minutes of Board meetings are tampered with and uploaded illegally with MCA contrary to extant rules, is not at all tenable and it is baseless and thus it is rejected. 10. It not in dispute that the Company is governed by provisions Companies Act, 1956/2013, Article -18 of the Company says that no shares in the Company shall be transferred unless and until rights of preemption as per rules have been exhausted In pursuance to above resolutions, Forms (DIR-12) regarding appointment of 3rd Respondent as Additional Director and Form No.MGT-14 showing transfer of 500 shares from Respondent No.2 to 3 were duly upl....
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....allegations of acts of oppression and mismanagement as made by him prior to his resignation holds no water. Therefore, it is to be held that the petition is not at all maintainable on this score also. 12. So far as reducing the shareholders of the petitioner is concerned, it is not in dispute that the shareholdings of the petitioner in the Company was not at all touched upon by transfer and issue of further shares. As per Article-18 of Association of the Company, right of preemption is available to the existing shareholder. When the petitioner is admittedly participated in the impugned Board meetings held on 25.08.14 &03.09.2014, he did not raise any objection or expressed his willingness to purchase the shares of the 2nd Respondent. Even otherwise, there is no absolute bar to transfer shares in the Company, but it is only a condition to offer the shares to the existing shareholders before offering to others. Therefore the contention of petitioner that the impugned share transfers are illegal and contrary to AOA is not correct and the same is baseless. Moreover the transfer of shares itself without directly affecting shareholding pattern of the petitioner cannot be called as an ac....
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....ndent as per Board Resolution 25.08.2014. So far as the issue of Board of Directors is concerned, Articles 29- 47 of Articles of Association of the Company dealt with the constitution of the Board of Directors, appointment, retirement, etc., as per Article 30 Mr. R. Shiv Kumar (Petitioner) and Dr. Subba Rao P (Respondent No.2) of the First Directors of the Company. As per the Article-29 the member of Director should not be less than two and not more than 12 including Managing Director or nominated Director and other Directors if any. As per Article 34 Board of Directors shall have power to appoint Additional Directors subject to the maximum mentioned as sated above. As per Article-38: the quorum for a meeting of the Board of Directors shall be 1 /3rd of its total strength (any fraction contained in that 1/3rd being rounded off as one) or two Directors whichever As stated supra the petitioner as well as the 2nd respondent are admittedly present during Board Meeting in question to transact the business of the Company. Accordingly the business of the Company was conducted duly following the above articles of Association of the Company. It is also relevant to point out here that the p....