TaxTMI 
TaxTMI 
2020 (10) TMI 740
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....dra Pradhan and Anil Dubey established Respondent No. 1, Company. All of them were holding 300 equity shares of face value of Rs. 100/- each. Article 26 of the Articles of Association of the Company provides that Mr. Ajay Sinha shall be permanent Director unless he vacates the Office at his own and other Directors were to retire by rotation. Article 30 provides that Mr. Ajay Sinha shall be the first Managing Director of the Company. ii) It is also not in dispute that on 16-08-2003, the State of Jharkhand allotted plot of land through Jharkhand Industrial Area Development Authority on lease for a period of 30 years to Mr. Ajay Sinha. He established the Respondent No. 1 Company therein. The lease is still continued. iii) On 27-03-2015, the Board of Directors of the Company appointed three persons as the Directors, Mr. Jogendra Tiwari, Respondent No. 2, Mr. Amit Kumar Singh, Respondent No. 3 and Mr. Shanker Ghosh, Respondent No. 4 respectively. 2. It is alleged by the Petitioners that on 19-09-2017, these added Directors without any authority and without serving notice to the Petitioners held Extra Ordinary General meeting of shareholders for enhancing shareholdin....
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.... 9. From the evidence and materials on record and the submissions made at the bar, we form the following points of controversy. We record our findings against the reasons stated below i) Whether the Respondent Nos. 2 to 4 were appointed as the additional Directors and their appointments as Directors have been confirmed? ii) Whether the Petitioners were illegally removed from the posts of Directors/Managing Director by the Respondents? iii) What should be final order so that the affairs of the Respondent No. 1 Company can run smoothly. Our findings are Point No. 1 & 2 in the affirmative and Point No. 3 as per the final Order. Reasons : Point No. 1 : 10. Both the Parties to the proceeding pleaded number of facts. Some of them are not relevant to decide the controversy and tried to make the proceeding too complicated. But for just decision of the case, we have formed above points of controversy in view of the pleadings, evidence and submissions made by the Ld. FCS for the Petitioners and the Ld. Counsel appearing for the Respondent Nos. 2 to 4. 11. The Petitioners and the Respondents stated in detail as to how since 2011 onwards either of the....
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....held but appointments of Respondent Nos. 2 to 4 were not ratified etc., but minutes of that AGM are not produced on record. On the other hand the Respondents produced Form MGT-7(Page 174 of the Petition) which discloses that Respondent Nos. 2 to 4 are the Directors appointed on 15-03-2017. According to Ld. Counsel, all the above evidence clearly established that Respondent Nos. 2 to 4 are the Directors of Respondent No. 1 Company even on today. 14. Section 161 of the Companies Act, 2013 speaks about procedure of appointment of Directors in following words : Section 161 : Appointment of additional director, alternate director and nominee director. 161. (1) The articles of a company may confer on its Board of Directors the power to appoint any person, other than a person who fails to get appointed as a director in a general meeting, as an additional director at any time who shall hold office up to the date of the next annual general meeting or the last date on which the annual general meeting should have been held, whichever is earlier. (2) The Board of Directors of a company may, if so authorized by its articles or by a resolution passed by the....
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....the independent Directors and not as the additional Directors. Article of Association of Respondent No. 1 Company is on record at Annexure P-1(Page 101 of the Petition). It confers right of Board of Directors to appoint fit and proper person as the Director. Section 161 of the Companies Act, 2013 says that if a person appointed as the Director by the Board of Directors, his appointment shall be presumed to be appointment as the additional Directors till next AGM. In next AGM, his appointment as the additional Directors can be ratified. In this case, the appointment letters of Respondent Nos. 2 to 4 show that they were appointed as Directors. The public record show that they were appointed as the independent Directors and not additional Directors. On the basis of evidence in form of public record, the inference has to be drawn that appointment of Respondent Nos. 2 to 4 was made as the Directors. 16. It is not in dispute that on 27-03-2015, the Petitioners were only shareholders as well as Directors of Respondent No. 1, Company. On 27-03-2015, the Petitioners as the Directors appears to have been issued appointment letters to Respondent Nos. 2 to 4 appointing them as the Directors....
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....ADHAN 4. MR. SUNIL KEJRIWAL" 19. Above Article states that Mr. Ajay Sinha shall be the permanent Director, unless and until he vacates the Office by virtue of resignation or otherwise and all other Directors will retire by rotation. He submits that in view of above provision in Articles of Association of Respondent No. 1 Company, no one has authority to remove Mr. Ajay Sinha from the post of Director. He further pointed out that as per Article 30 of the Articles of Association, Petitioner No. 1 was appointed as the Managing Director. The Petitioners did not have notice of so called meeting dated 19-09-2017 as contended by the Respondents. In fact, such meeting had not been held at all. Hence, the action of the Respondent Nos. 2 to 4 to remove the Petitioners from the Board of Directors is illegal and void. 20. The Ld. Advocate, Mr. Jishnu Chowdhury, appearing for the Respondent Nos. 2 to 4, submitted that there is ample evidence on record to show that the Petitioners had siphoned the Company's account. He brought to our notice entries in statement of account of the Company maintained in Punjab National Bank, Ranchi Branch(Annexure - R-7) and pointed out that in b....
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....and he cannot be removed unless he quits the Office of the Director at his own volition. There is nothing on record to show that the Articles of Association was amended giving authority to other Directors to remove Mr. Ajay Sinha from the Board of Directors. 25. We make it clear that we are not entering into the controversy as to who has siphoned the Company's funds because we are of the firm opinion that the act of Respondent Nos. 2 to 4, removing the Petitioners from the post of Directors, is completely illegal and void ab initio. The Petitioners could not have been removed as the Directors in such manner. 26. The Respondents state that they have allotted shares of the Company to Respondent Nos. 5 to 37. However, they did not produce any evidence to prove this point. The Respondent Nos. 5 to 37 did not appear in this case stating that they are shareholders of the Company. There is no record in evidence to show that the Respondent Nos. 5 to 37 had paid any amount towards purchase of the shares. Article 15 of the Articles of Association of the Respondent No. 1 Company, states the procedure in detail as to how the shares of the Company are to be allotted or to be transferr....