TaxTMI 
TaxTMI 
2023 (4) TMI 1202
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....order' dated 20.02.2019. 2. Heard the Counsel for the Parties and perused the records made available including cited judgments. 3. It is the case of the 'Appellants' that Appellant No. 1 Company was incorporated on 03.05.1989 by late Shri Shivlan Chawla along with other family member who were the first directors and the promoters and involved in business of coil winding machines. The 'Respondent' was appointed as Director in Appellant No. 1 Company on 13.01.1990. 4. The 'Appellants' alleged that Respondent never took any interest in managing Appellant No. 1 Company and was made Director and Shareholder only because he was related by blood. The 'Appellants' further alleged that in March 2017, the Respondent with wrong intentions for making personal gains got in touch with its competitor M/s Synthesis and the cost of Appellant No. 1 Company, started virtually acting as trading agent of M/s Synthesis and its sister concern M/s Samyukta from April, 2017. It is a further case of the Appellant that due to detrimental activities of the 'Respondent', the Appellant No. 1 Company had to close down its business in Kundli Unit. 5. The 'Appellants' submitted that in view of above de....
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.... early date. 8. The 'Appellants' assailed the conduct of the Respondent who is involved in siphoning of money and taking action against the interest of Appellant No. 1 Company including breach of trust and therefore the 'Respondent' is not entitled for such inspections of the record which will be used by the 'Respondent' to collide with its competitor M/s Synthesis to cause harm to the 'Appellant'. 9. The 'Appellants' further submitted that the 'Tribunal' has heard in the 'impugned order' ignoring conflict of rights of the director and his obligation towards the company and further the 'Tribunal' overlooked documentary evidence placed by the 'Appellants'. The 'Appellants' further assailed the 'impugned order' 20.02.2019 which did not take into account the mala-fide intent and the conduct of the 'Respondent' requesting for inspection who is working in tandem with its competitor M/s Synthesis to divert the business and clints to M/s Synthesis. The 'Appellants' also cited the law laid down by Hon'ble High Court of Delhi in case of 'D. Ross Porter vs. Pioneer Seed Co. Ltd.' [(1990) 68 Camp Cas 145 ] , whereby the Hon'ble High Court of Delhi held that the right for inspection etc.....
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....older/ director of inspection of the document. 15. Before going into specific examinations of the issues raised by the 'Appellants' herein, it would be necessary to refer to the relevant law in Companies Act, 2013 and Rules thereunder as referred to by the parties during averments, which reads as under :- "94. Place of keeping and inspection of registers, returns, etc. - (1) The registers required to be kept and maintained by a company under section 88 and copies of the annual return filed under section 92 shall be kept at the registered office of the company: Provided that such registers or copies of return may also be kept at any other place in India in which more than one-tenth of the total number of members entered in the register of members reside, if approved by a special resolution passed at a general meeting of the company. [***] Provided further that the period for which the registers, returns and records are required to be kept shall be such as may be prescribed. (2) The registers and their indices, except when they are closed under the provisions of this Act, and the copies of all the returns shall be open for inspection by any memb....
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....ing days after he has made a request in that behalf to the company, and on payment of such fees as may be prescribed, with a copy of any minutes referred to in sub-section (1). (3) If any inspection under sub-section (1) is refused, or if any copy required under sub-section (2) is not furnished within the time specified therein, the company shall be liable to a penalty of twenty-five thousand rupees and every officer of the company who is in default shall be liable to a penalty of five thousand rupees for each such refusal or default, as the case may be. (4) In the case of any such refusal or default, the Tribunal may, without prejudice to any action being taken under sub-section (3), by order, direct an immediate inspection of the minute-books or direct that the copy required shall forthwith be sent to the person requiring it. 128. Books of account, etc., to be kept by company - (1) Every company shall prepare and keep at its registered office books of account and other relevant books and papers and financial statement for every financial year which give a true and fair view of the state of the affairs of the company, including that of its branch office ....
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.... kept in good order: Provided that where an investigation has been ordered in respect of the company under Chapter XIV, the Central Government may direct that the books of account may be kept for such longer period as it may deem fit. (6) If the managing director, the whole-time director in charge of finance, the Chief Financial Officer or any other person of a company charged by the Board with the duty of complying with the provisions of this section, contravenes such provisions, such managing director, whole-time director in charge of finance, Chief Financial officer or such other person of the company shall be punishable [***] with imprisonment for a term which may extend to one year or with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees [***]. 169. Removal of directors. - (1) A company may, by ordinary resolution, remove a director, not being a director appointed by the Tribunal under section 242, before the expiry of the period of his office after giving him a reasonable opportunity of being heard: [Provided that an independent director re-appointed for second term under sub-section (10) of s....
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....r this section may, if he had been appointed by the company in general meeting or by the Board, be filled by the appointment of another director in his place at the meeting at which he is removed, provided special notice of the intended appointment has been given under sub-section (2). (6) A director so appointed shall hold office till the date up to which his predecessor would have held office if he had not been removed. (7) If the vacancy is not filled under sub-section (5), it may be filled as a casual vacancy in accordance with the provisions of this Act: Provided that the director who was removed from office shall not be re-appointed as a director by the Board of Directors. (8) Nothing in this section shall be taken- (a) as depriving a person removed under this section of any compensation or damages payable to him in respect of the termination of his appointment as director as per the terms of contract or terms of his appointment as director, or of any other appointment terminating with that as director; or (b) as derogating from any power to remove a director under other provisions of this Act". (emphasis supplied....
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....gistered post or through electronic mode. Any accidental omission to give notice to, or the non-receipt of such notice by, any member shall not invalidate the proceedings of the meeting." (emphasis supplied) 16. It is a fact that the 'Tribunal' has stayed convening the 'EGM' of the Appellant No. 1 Company and has also ordered for the status-quo to be maintained both regarding directorship of the 'Respondent' as well as the shareholding pattern and therefore the Respondent -Mr. Gulshan Kumar Chawla continue to be both Shareholder and Director. 17. It is also a fact that the Companies Act, 2013 provide for specific rights to the Shareholders and the Directors for inspection. 18. The original petition no. CA/390/ND/2018 in CP-220/PB/2018 is still pending adjudication before the 'Tribunal' under Section 241 & 242 of the Companies Act, 2013, whereby both the parties have used allegation and counter allegation against each other. 19. Since, the main petition is yet to be finally decided on merits, this 'Appellant Tribunal' is not required to look into the various other issues raised by the Appellant herein. The only issue which requires to be examined is whether ther....