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2023 (2) TMI 1047
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....e its predecessor Company Law Board under Companies Act, 1956, wherein Respondent No. 1 herein filed petition for mismanagement of the Respondent Nos. 2 and 3 herein company (hereinafter referred as "Company") and oppression at the hands of Appellant and Respondent No. 3 herein on various grounds, primarily being dilution of his equity, illegal appointment of Appellant herein as the Director on the Board of the Company, illegal sale of the Company's properties and other acts detrimental to the interest of the Company as well as being oppressive to the Respondent No. 1 herein. By which the Tribunal set aside the appointment of Appellant as Director and passed the following orders: "8. As per the aforesaid facts we find that the act of respondents in diluting the share of the petitioner and including R3 as member of the Board of Director is oppressive to the petitioner. The respondents are liable to render accounts to the petitioner. All financial statements w.e.f. financial year 2012-13, along with the books of accounts be placed before the petitioner for due inspection. Necessary legal steps to set aside sale transactions of immovable properties done by the illegally c....
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....e made by the requisite quorum as required by the articles of association of the Company. iii) In the year 2008, the company appointed appellant as a non-executive director in the category of promoter w.e.f. 15.06.2008 and Form-32 to that effect was filed with the RoC. In this regard, notice dated 13.05.2008 calling for said meeting with agenda to appoint Appellant as a Director was issued. The company then increased its authorized share capital from Rs. 1,00,000 to Rs. 2,00,000 and the increased capital was allotted to the Appellant vide issuance of 1000 additional shares therein raising his holding in the company to 50% while the Respondent No. 3 and the Respondent No. 1 held 25% each in Respondent No.2. iv) The Respondent No. 1, apparently with the motive to profiteer, got into various agreements to sell with some land-holders of Tehsil Sanganer, District- Jaipur, Rajasthan in his personal capacity and also became their GPA holder permitted to sell their land, among other things, to the company. It now appears and seems clear that the motive of the Respondent No. 1 was to profit from both ends i.e. by selling said land at high rates to the company and keeping t....
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.... in the preceding paragraphs while the registered office of Respondent No. 2 which is residence of the Appellant and his wife the Respondent No. 3, thus they were managing the affairs of the company all along much to the knowledge, consent and acquiescence of the Respondent No. 1. The petition being CP-118(ND)/2013 clearly seems an after-thought to build a case for the company petition which was filed 2-3 months after said counter-claim in the suit lest it becomes hit by bar of limitation if directly raised for the first time in the company petition. vii) The Respondent No. 1 then approached the Ld. CLB, Delhi vide company petition under Section 397 and 398 of the Companies Act, 1956 being CP-118(ND)/2013 and concealed the above mentioned facts from the Ld. Tribunal and the Tribunal, instead of appreciating the factum of the petitioner being complicit in the so-called and alleged 'mismanagement' and having acquiesced with the appointment and functioning of the Appellant as a Director for a period of almost five years from 2008, overlooked the said aspects and countenanced the indiscretions and delay and laches on the part of the Respondent No. 1 herein and refused ....
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....ous and self-serving means of running the company for his own benefit and did not 'pierce the corporate veil' to understand the real conduct of the Respondent No. l in the background as was required in a case of this nature especially when the same were brought before it by the Appellant vide his pleadings. Further, the Tribunal, instead of appreciating the factum of the petitioner being complicit in the so-called and alleged 'mismanagement' and having acquiesced with the appointment and functioning of the Appellant as a Director for a period of almost five years from 2008, overlooked the said aspects and countenanced the indiscretions and delay and laches on the part of the Respondent No. l herein and refused to use its ample discretionary powers as provided in the act to lift the corporate veil and investigate into the real affairs of the company vide appointment of an administrator or order any other independent investigation, but instead it chose to simpliciter partly allow the said petition on hyper-technical considerations. In doing so, it fell in error in allowing technicalities to prevail over substantial justice. 5. It is further submitted that the Appellant in view....
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....ndent No. 3 have indulged into several illegal functions without any authorisation, board resolution and against the interest of the company which are interalia summarised as below: * Illegal appointment of Appellant as Director in the company. * Increase of Authorised Share Capital of company from Rs. 1 Lakh to Rs. 2 lakhs and allotment of entire increased share capital to appellant thereby reducing the Share Capital of the Respondent No. 1 to minority. * Appointment of Divya Aggarwal as C.A. of company without any board resolution and further authorising him to submit and file any documents, Form/s with the ROC on behalf of company. * Opening of Additional/New Account in the name of company to siphon off the money. * Fraudulent sale and purchase of immovable properties in the name of company. * Appellant and the Respondent No. 3 vide Extra Ordinary General Meeting dated 05.11.2016 passed resolution thereby removing Respondent No. 1 from the Directorship of the Respondent No. 2/Company. Removal from Directorship during the pendency of proceedings before NCLT clearly shows the arbitrary act of mismanagement of affairs of the com....
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....ing further shares, the Board of Directors discharge their fiduciary responsibilities. If the shares are issued with the sole object of creating a new majority or with the view to convert a majority into a minority, then the action of the Board is not only in breach of the fiduciary responsibilities but also a grave act of oppression against the existing majority. Reliance placed on "Mrs. Uma Pathak and Shri Rajat Pathak Vs. Eurasian Choice International Pvt. Ltd. : (2004) 122 Comp. Case 922 (CLB) and Puneet Goel Vs. Khelgaon Resorts Ltd., C.P. No. 6/1999 decided on 17.04.2000 (Principal Bench New Delhi). In view of the facts and circumstances stated as above and documents placed on record, the instant Appeal may be dismissed. 12. The Section 286 of the Act provides that notices for Board meetings should be given to every director in writing. The requirements of Section 286 of the Act, being mandatory, notice to all the directors of meeting is essential for the validity of resolution passed at the Board meeting. Any Board meeting or general meeting held without quorum is illegal. In this regard the judgments of "D.K. Chatterjee Vs. Rapti Supertronics (P) Ltd. : (2003) 114 Com....
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.... or authorization. The issue was then taken up on 28.4.2010 by the board of Respondent No.2 company and through cognizance of the matter legal action was initiated in this regard. The Respondent No.1 was to initiate civil and criminal legal actions against Sh. Suresh Sharan. The resolution passed in the Extraordinary General Meeting for the same dated 28.4.2010 authorising Respondent No.1 for action against Sh. Suresh Sharan is already annexed by Respondent No.3 in the reply filed. The Respondent No.1 then sought an emergency of the board of directors of Respondent No.2 company vide notice dated 14.6.2010 to discuss the annual report of the last two years Respondent No.2 company regarding management of its affairs. 15. It is further submitted that at the Extra Ordinary Meeting dated 21.6.2010 it was noted that Respondent No.1 failed to initiate any legal-civil or criminal action against Sh. Suresh Sharan. The appellant was then authorized to initiate action against Sh. Suresh Sharan at the said Extra Ordinary Meeting dated 21.6.2010. The resolution passed at the Extra Ordinary Meeting dated 21.6.2010 with regard to the above said context. The Respondent No.2 company then filed a....