TaxTMI 
TaxTMI 
TaxTMI 
2020 (9) TMI 224
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....gned order dated 21st February, 2020 passed by National Company Law Tribunal, Kolkata Bench, Kolkata (hereinafter referred to as 'the Tribunal') on C.A. No. 131/KB/2020 in CP No. 264/KB/2020 declining grant of interim relief across the ambit of Section 242(4) of the Companies Act, 2013 (hereinafter referred to as 'the Act'). Vide impugned order the Tribunal declined to record findings on the factual controversy as regards serving of notices of AGM dated 24th September, 2019 and EoGM dated 4th January, 2020 to the Appellant before trying the main petition though at the same time it observed that there was prima facie evidence on record indicating that the notices of both the meetings were given to the Appellant. The Tribunal further observed that allowing interim relief as claimed in the Company Petition would tantamount to allowing the main petition. Resultantly C.A. No. 131/KB/2020 pending inquiry in main petition stands rejected. 2. To have a conspectus of the controversy involving allegations of oppression and mismanagement as regards the affairs of the Company emanating from the Appellant, it would be appropriate to briefly advert to the factual matrix of the case setup before....
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....ouster of Appellant from Board of Directors and appointing Respondents No. 4 to 6 as Directors of the Company. It is submitted that Respondents 2 and 3 adopted a modus operandi creating an impression that Respondent No. 4 to 6 were appointed at a meeting of the Company held on 24th September, 2019 and subsequent to this alleged AGM an EoGM was held on 4th January, 2020 wherein Appellant was removed from Board of Directors. It is submitted that neither the alleged AGM nor the alleged EoGM were held. It is submitted that while the Tribunal observed that the factual controversy in regard to holding of such meetings required the parties to lead evidence, the Tribunal relied on prima facie evidence without even taking into account that no evidence documentary or otherwise would even indicate that such meetings were held. It is submitted that the finding as regards prima facie case is based on no evidence and manufactured and fraudulent documents have been relied upon by the Tribunal. It is pointed out that there is no resolution nor any minutes of the alleged Board Meeting dated 22nd June, 2019 to show that the two Directors of the Company decided to hold AGM on 24th September, 2019. It....
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.... Chairperson of the Board or a Director. It is only the Appellant who could have authorized Mr. Parimal Ajmera to Chair any such meeting. Such authorization not being there, it cannot be said that the meeting was held on 24th September, 2019. It is accordingly submitted that all actions pursuant to an alleged AGM dated 24th September, 2019 are non-est. As regards, EoGM dated 4th January, 2020, it is submitted that there is not even a single document to show that the removal of Appellant as Director of Company was discussed. It is submitted that the case setup in regard to holding of EoGM is fraudulent. It is further submitted that the only purported ground for removal of the Appellant as a Director from the Board of the Company is in relation to the affairs of a Foreign Company - 'M/s Indocean Developers Pvt. Ltd.' incorporated in Sri Lanka. However, the Act does not permit the affairs of a foreign company to be taken into consideration for any such decision to be taken by the shareholders of the Company. The affairs of a foreign company cannot be relevant for the purpose of convening a meeting of Members of any Company under the Act. It is submitted that Section 102 of the Act doe....
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....has not been explained. It is submitted that the Appellant has cooked up the story only to cover up his own misdeeds and belated disputing of AGM is a step in the same direction. In any case convening of AGM on 24th September, 2019 is the principal issue in the Company Petition and no interim relief can be granted in the nature of final relief claimed in the Company Petition. It is submitted that the Appellant has not challenged EoGM dated 4th January, 2020 and the resolution passed therein for his removal from the Board of Directors. Appellant cannot be permitted to make such a prayer by way of his affidavit dated 6th February, 2020. It is submitted that the EoGM was convened in accordance with law for which requisition was made by Respondent No. 2 on 25th November, 2019 and Board Meeting was held on 12th December, 2019 in respect whereof notice was received by the Appellant at his residence. The Board Meeting was held on 12th December, 2019 convening the EoGM on 4th January, 2020 and notice in this regard was duly served on the Appellant. It is further submitted that the Appellant has acted against the interests of the Company by purporting to reduce Company's shareholding from 1....
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....mplaints started pouring in as according to Appellant Respondent No. 6 had taken poor decisions regarding the Sri Lankan Project which led to delay and cost overrun. Respondent No. 6 and other Directors, on the other hand, complained of moneys being siphoned off by the Appellant from IDPL and started insisting on removing the Appellant from management and control of Sri Lankan Project and from the Board of Directors of Respondent No. 1. It is submitted that a settlement was worked out in terms whereof new nominee directors of Respondent No. 2 were to be inducted in Respondent No. 1 Company and its subsidiary IDPL. Some developments are said to have taken place with full knowledge of the Board and consent of both sides for completion of Sri Lankan Project. It is submitted that in November, 2019 Appellant had filed returns in Sri Lanka in the name of IDPL reducing 100% shareholding of R-1 to only 13.84% and removing Respondent No. 6 and another nominee Director Shri R. K. Agarwal from the Board of IDPL. It is thereafter that the Appellant was removed from the Board of Respondent No.1 in terms of the Board Resolution and the resolution passed at the EoGM. 7. Heard Learned counsels fo....
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....nd on just and equitable ground winding up order would be justified but such winding up would unfairly prejudice such member(s). Subsection (2) of Section 242 deals with the nature of substantive relief that can be granted though same is only illustrative and not exhaustive. Section 242(4) of the Act provides for interim relief which the Tribunal may grant for regulating the conduct of the company's affairs. Such interim relief can be granted by virtue of an order passed on the application of any party to the proceeding and such order can be subjected to terms and conditions which appear to the Tribunal to be just and equitable. On a plain reading of these provisions, it is abundantly clear that pending consideration of application by a member or member(s) of a Company alleging oppression or mismanagement, the Tribunal is vested with wide discretion to make any interim order on the application of any party to the proceedings, which it thinks fit for regulating the conduct of company's affairs. Such interim order can be subjected to terms and conditions which appear to the Tribunal to be just and equitable. The nature of interim order would depend upon the nature of complaint allegi....
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....llant has made specific allegations of oppression and mismanagement against Respondents and made strenuous efforts to demonstrate that the affairs of the Company have been conducted in a manner which seriously jeopardize his interests. While it is not permissible to return findings of fact qua such allegations of oppression and mismanagement across the ambit of interlocutory application under Section 242(4) of the Act as also within the limited scope of instant appeal, the Appellant is required to make out a prima facie case warranting grant of interim relief. To demonstrate that the affairs of the Company were not being conducted in accordance with the provisions of law and the Articles of Association, the Appellant has raised the issue of not being served with notice of AGM dated 24th September, 2019 and EoGM dated 4th January, 2020 which were crucial in so far as his interests as a stakeholder in the Company were concerned. It is not in dispute that such meetings were purportedly held to induct Respondents No. 4 to 6 as Directors and remove the Appellant from the Directorship of the Company. The Tribunal has observed that the notices of AGM and EoGM were given to the Appellant. ....
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....nts making all efforts to usurp control over the Respondent No. 1 Company through all means, fair or foul, emanating from the Appellant, it is demonstrated by the Appellant that no resolution or any minutes of Board Meeting dated 22nd June, 2019, stated to be the edifice of the alleged AGM, is in existence to even suggest that the two Directors decided to hold AGM on 24th September, 2019. It is contended on behalf of Appellant that adherence to the statutory requirement under Section 118 of the Companies Act has not been established by Respondents which justifies drawing of an inference that neither any such Board Meeting was conducted nor any minutes were recorded of such Board Meeting. It is also pointed out that no notice or agenda was circulated in the prescribed manner and bearing signatures of Appellant. As regards notice said to have been issued on 5th August, 2019, similar contentions have been raised, it being further pointed out that the prevalent modes of service have not been resorted to. It has been pointed out that though Form No. MGT 7 was filed even without holding AGM, the Annual Report falsely declared that the AGM had been attended by both by Appellant as well as....