TaxTMI 
TaxTMI 
2022 (12) TMI 412
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....aw Tribunal, Hyderabad Bench in C.P. No. - 93/2013 in T.P. No. 106/241/HDB/2016, by which Order, NCLT has allowed the Company Petition observing that the Board Meeting held on 01.10.2012 is invalid in the eyes of law and therefore the appointment of Respondents 2 to 5 is Additional Directors is also invalid; that the allotment of shares made on 04.03.2013, 22.04.2013 to the second, third, sixth & seventh Respondents is also illegal and directed the Company to cancel the said allotment and rectify the register of Members in order to restore the original Shareholding pattern; and lastly that the removal of the Petitioners from the directorship of the Company under Section 284 of the Companies Act 1956 in the AGM held on 07.09.2013, is illegal and therefore null and void. 2. Submissions of the Learned Sr. Counsel appearing on behalf of the Appellant: * It is submitted by the Learned Counsel for the Appellant that on 23.11.2013, the first and the second Respondent filed an Application under Sections 397 & 398 of the Companies Act, 1956 (now Sections 241 & 242 of the Act) and under Section 59 of the Act before the NCLT against the Company seeking the Board Resolution dated 01.10.2....
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....llants, these Minutes were filed by the Respondents themselves before the CLB and never challenged any of the proceedings in their Company Petition by the time the Respondents have filed their original Company Petition it had become infructuous as the term of the Appellant as Additional Directors ended on 30.09.2019. * It is contended that the NCLT had decided the case based on assumptions ignoring the fact that all the Directors were present in the Meeting which is clearly evidenced by the Minutes of the Meeting prepared by the second Respondent which is uploaded on the MCA portal that two Directors were present and even assuming that only one Director was present, it means that their attendance was 50%. It is the case of the Appellants that as per Section 287(2) of the Act, which describes the quorum for Meetings, the quorum for the Meetings of the Board of Directors shall be 1/3rd of its total strength or two Directors whichever is higher. In terms of Section 287(2) the quorum is complete as in the present case, the total Directors are only two and even if one Director is present it comes to 50%. The question of interplay of sub-Section (2) does not arise when the total numbe....
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....irector to the Company. * It is argued that the consent letters of Appellant 3 and Respondent 4 accepting their appointment as Directors, are both dated 01.10.2012 reflecting their respective DIN numbers but they were allotted the said DIN numbers by MCA only on 26.12.2012 and 21.12.2012 respectively, which goes to show that these consent letters were backdated. * Learned Counsel drew our attention to the Complaint made to the Assistant Commissioner of Police ('ACP') with respect to the details of the DSC serial nos. of Sri Dhanada Laboratories Private Limited. It is submitted that 'Fraud vitiates everything' and the same was laid down by the Hon'ble Supreme Court in a catena of Judgements. A few of them are detailed as hereunder: 'Smt. Srisht Dhawan' Vs. 'M/s. Shaw Brothers' (1992) 1 SCC 534. 'Madhukar Sadbha Shivarkar' Vs. 'State of Maharashra' (2015) 6 SCC 557. 'Meghmala & Ors.' Vs. 'G. Narasimha Reddy & Ors.' (2010) 8 SCC 383. 'S.P. Chengalvaraya Naidu (Dead) by L.Rs.' Vs. 'Jagannath (Dead) by L.Rs. and Ors.' (1994) 1 SCC 1. * It is contended that a person who basis his case on falsehood has no right to approach any Court. It is ....
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....ing to the present proceedings." 6. Learned Counsel for the Appellant contended that there was no pleading regarding Oppression and Mismanagement, and that a bare perusal of the reliefs show that they are basically with respect to 'Allotment of Shares'. 7. It is the case of the Appellant that NCLT did not formulate any issues relating to Oppression and Mismanagement, and that there were no averments in the Petition regarding Oppression and Mismanagement and that this is a condition precedent for entertaining a Company Petition under Sections 241 and 242 of the Companies Act 2013. At this juncture, we find it relevant to reproduce Sections 241 & 242 of the Companies Act, 2013, (Sections 397 & 398 of the Companies Act, 1956) for ready reference: "241. (1) Any member of a company who complains that- (a) the affairs of the company have been or are being conducted in a manner prejudicial to public interest or in a manner prejudicial or oppressive to him or any other member or members or in a manner prejudicial to the interests of the company; or (b) the material change, not being a change brought about by, or in the interests of, any creditors, including....
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....(f) the termination, setting aside or modification of any agreement between the company and any person other than those referred to in clause (e): Provided that no such agreement shall be terminated, set aside or modified except after due notice and after obtaining the consent of the party concerned; (g) the setting aside of any transfer, delivery of goods, payment, execution or other act relating to property made or done by or against the company within three months before the date of the application under this section, which would, if made or done by or against an individual, be deemed in his insolvency to be a fraudulent preference; (h) removal of the managing director, manager or any of the directors of the company; (i) recovery of undue gains made by any managing director, manager or director during the period of his appointment as such and the manner of utilisation of the recovery including transfer to Investor Education and Protection Fund or repayment to identifiable victims; (j) the manner in which the managing director or manager of the company may be appointed subsequent to an order removing the existing managing director or m....
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....iance on the ratio of the Hon'ble Apex Court in 'Needle Industries (India) Ltd. & Ors.' Vs. 'Needle Industries Newey (India) Holding Ltd. & Ors.' (1981) 3 SCC 333 and in 'V.S. Krishnan & Ors.' Vs. 'Westfort Hi-tech Hospital Ltd. & Ors.' (2008) 3 SCC 363, in support of his submissions that no relief was claimed with regard to Oppression and Mismanagement which is required under Sections 397 & 398 of the Companies Act 1956. 9. The Learned Counsel for the Respondent relied on the ratio of the Hon'ble Supreme Court in 'Shashi Prakash Khemka (Dead) Through Legal Representatives & Anr.' Vs. 'NEPC MICON (Now NEPC India Limited) & Ors.' (2019) 18 SCC 569, wherein the Hon'ble Apex Court has laid down as follows: "6. It is not in dispute that were a dispute to arise today, the civil suit remedy would be completely barred and the powers would be vested with the National Company Law Tribunal (NCLT) under Section 59 of the said Act. We are conscious of the fact that in the present case, the cause of action has arisen at a stage prior to this enactment. However, we are of the view that relegating the parties to civil suit now would not be the appropriate remedy, especially considerin....
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....were inducted as an Additional Directors in the Board Meeting alleged to have been held on 01.10.2012. It is the case of the Appellants that the Tribunal cannot go into the aspect of forgery and disputed questions of fact and also that NCLT had wrongly relied on the statement recorded under Section 164 which is not admissible and that the matter is still pending before the Criminal Court. It is also contended by the Learned Counsel for the Appellants that these Witness Statements filed before the Criminal Court, were filed by Respondents 1 & 2 by way of Rejoinder before NCLT, but not when the Company Petition was filed before the CLB. This argument that the material papers were filed before NCLT and not before the CLB has no legs to stand as a Witness Statement itself is not denied and moreover when the matter is transferred from CLB to NCLT, the proceedings continued before NCLT, which has been laid down by the Hon'ble Supreme Court, in a catena of Judgements. At this juncture, we find it relevant to reproduce the Report of Truth Labs relied upon by NCLT in giving a finding that the Meeting dated 01.10.2012 never took place and that the documents were fabricated. The final opinion....
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....ird Appellant and the fourth Respondent accepting their appointments as Directors is dated 01.10.2012, reflecting from respective DIN Nos., whereas they were allotted the said DIN Nos. by the Ministry of Corporate Affairs only on 26.12.2012 and on 21.12.2012 respectively, which shows that the consent letters were backdated to establish that the Board Meeting had indeed not taken place on 01.10.2012. 14. We are also conscious of the fact that the Board Meeting supposed to have been held on 01.10.2012 was held immediately on the next working day after the AGM in which the tenure of the second Appellant as Additional Director had come to an end. The issue of quorum and the attendance of the second Respondent is not being gone into, though it is the case of the Appellant that an error had crept into the pleadings that the second Respondent had not attended the Meeting, when he had actually been present and attended the Meeting. R2, has categorically denied having attended any such Meeting. This aspect is not being gone into at this stage as the other documents on record have clearly established that the Meeting on 01.10.2012, never took place whereby and whereunder a Resolution is s....
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....s 'Q1 to Q4' are identified as traced forgeries. 2. The signatures 'Q5 to Q8' exhibit shaky, tremorous line quality, slow writing, finger movement, inferior skill, drawing and 'attention to detail'; lack of freedom in execution - which are all symptoms of copied (simulated) forgery. The above defects are accrued due to copying the signatures from a model genuine signature. 3. The standard signatures on the other hand, exhibit freedom in execution of strokes, with no defects in line quality (as seen in 'Q5 to Q8), speedy writing, superior skill, and also exhibit natural variations inter-se (no dubious identity as in Q1 to Q4'). 4. The length of signatures, nature of characters and connecting strokes are all differently executed in questioned and standard signatures. (J. S. Siva Kumar) 6.5-14 Director, Documents Division Truth Labs, Hyderabad & Former Joint Director, APFSL N.B:- The remaining standard signatures are not marked, as the above standards (S1 to $14) are sufficient and suitable for comparison and to give definite opinion. Document 2 Supply for GRAMS: COMPANY REG. Website: www.mca.gov.in 48 10 Phone No. 010-2465....