TaxTMI 
TaxTMI 
2021 (1) TMI 765
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.... 2019 - -<br>Corporate Laws<br>(Justice Jarat Kumar Jain) Member (Judicial), (Mr. Balvinder Singh) Member (Technical) And (Dr. Ashok Kumar Mishra) Member(Technical) For the Appellants : Mr. Rana Mukherjee, Sr. Advocate alongwith Mr. Shantanu Singh & Mr. L. Muralikrishnan. For the Respondents : Mr. Nikhil Nayyar, Sr. Advocate alongwith Mr. Ravi Raghunath & Mr. Ramesh Kumar, for R-1 & 2. JUDGMENT PER : DR. ASHOK KUMAR MISHRA, TECHNICAL MEMBER These two appeals have been filed under Section 421 of the Companies Act, 2013 against the impugned order dated 26.06.2019 passed by National Company Law Tribunal, Chennai Bench (for short 'Tribunal') in Transferred Company Petition in TCP/159/2016 in CP/15/2015 under Sections 111A, 397 an....
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....ubmission made by the Appellants that they convened AGM on 30.09.2011 after due approval and issued further 4,50,000 equity shares for which the Respondent No.1 &2 have a grievance. The Appellants have mentioned that with the withdrawal of personal guarantee of Respondent no.1 & 2, the Bank has started pressing to the company for increasing the share capital. As a result of which the Appellants, who were running the business, have increased the share capital which they are claiming has been done in accordance with law. 4. AGM held on 07.07.2007 stands as follows: Name No. of Equity shares L.Balaji (A2) 35,000 R.Lenin(R7) 10,000 R.Srinivasan(R1) 60,000- (17.6%) L.Saravanan (R5) 27,500 M.Venkatesh Kumar (R6....
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....t No.1 & 2 has gone down from 21.27% to 9.2 %. The Appellants have submitted that there is ongoing family feud. As a result of this Respondent No.1 & 2 has challenged increased in share capital. 6. The following relief is prayed by the Petitioners (Respondent No.1 & 2 herein): "(i) Declare that the increase in authorized share capital of the Company from 3,40,000 shares to 7,90,000 shares in 2011-12 as illegal and void. (ii) Direct the rectification of the Register of Members of the Company to reflect the issued and paid up capital of the company as 3,40,000 shares of Rs. 10/- each as held by the original subscribers to the Memorandum of the Company. Learned Tribunal, while passing the impugned order framed fol....
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....e impugned order of the Tribunal dated 26.06.2019. Through Oral and Written submissions, the Appellants assuming (on a demurrer) that even if the Respondents are granted relief in their favour, instead of the company going back by 9 years, let the allotment of shares be made to the Respondents in a way that their shareholding as on 30.12.2011 remain unchanged. This will save the Company from Financial and Administrative crisis. 9. While the Respondent No.1 and 2 have alleged that certain new facts have brought in an appeal which should not be considered. They are also shocked to know that their shareholding was diluted heavily without any intimation. They came to know about these irregularities after inspection of documents with RoC. The....
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....of valuation and buyout of the shares of the Respondents no.1 and 2 by the Appellants in both the Appeals." 11. After hearing learned counsel for the parties, we have considered their submissions and judgments cited by them. 12. The Appellants have submitted that Respondent No.1 even after resignation from Directorship continues as Shareholders of the Appellant Company although with disassociation from the affairs of the company since 2008, they withdraw their personal guarantee at the time of distress of the company. While the Appellants have issued shares following the laid down procedure. There seems to be irregularities by the Appellants in dispatch of the notices for the AGM and the operation and mismanagement, the Respondents ar....
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..... 30.09.2011 to till date to the RoC will also involve unnecessary correction cost and refiling cost to the company. The interest of the company is of paramount importance as far as Section 397 & 398 of the Companies Act, 1956 as also Section 241 & 242 of the Companies Act, 2013 is concerned. The same purpose in "just and equitable" manner can be served, if additional shares are issued to the Respondent No.1 & 2 to bring to their shareholding level to the same level as it was existing as on 07.07.2007 / 30.09.2011 and it will not hurt the company either in the form of additional financial burden or health of their overall business or to the Members/Shareholders for the relief they have sought. 15. The purpose of Section 397 and 398 of th....