TaxTMI 
TaxTMI 
2023 (12) TMI 1013
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....ences (a limited liability company), Kiran Reddy Pendri & Ms. Swarnalatha Mannam filed a Petition under Section 241 & 242 of the Companies Act, 2013 (in short 'Act') seeking the following 'main reliefs' and 'interim reliefs' which are reproduced as under:- "Main Reliefs A. Declaring that Respondent Nos. 2 to 9 have acted in a manner prejudicial and oppressive to the interests of the Petitioner and Respondent No. 1 Company; B. Quashing the proposal of Respondent No. 4 for appointment of a Chief Operating Officer and declare the same null and void, and restraining Respondent Nos. 2 to 4 from making any other appointment with similar powers; C. Declaring that Article 69 of the Articles of Association of the Respondent No. 1 Company requires unanimous consent of all directors of the Respondent No. 1 Company for any resolution to be passed. D. Directing that the Respondent No.2 Company shall not be entitled to appoint more than 1 (one) director on the board of Respondent No. 1 Company; E. Appointing an independent director on the board of Respondent No. 1 Company; F. Removing Respondent Nos. 4 to 6 from the Board of Directors of t....
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....from interfering with the day-to-day management of the affairs of Respondent No. 1 Company; G. Restraining Respondent Nos. 2 to 9 from taking any further action for and on behalf of the Respondent No.1 Company till such time as a shareholder agreement is not entered into between all the shareholders of Respondent No.1. L. For ad interim reliefs in terms of all the prayers above; M. Such order and further relief(s) as this Hon'ble Tribunal may deem fit and proper in the circumstances of the case." 3. Although, no separate application for stay was filed as the interim reliefs were prayed for in the main petition itself, the Tribunal vide its order dated 04.09.2023 passed the following order:- "1. The Petitioners herein, have filed the above Company Petition under Section 241 R/w Section 242 of the Companies Act, 2013, seeking appropriate remedies alleging various acts of oppression and mismanagement by Respondents 2-9, which are narrated in the Company Petition. 2. By way of ad-interim relief, Petitioners have also prayed for an interim order restraining Respondents 2-9 from calling the meeting of the Board of Directors scheduled on....
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....are seeking personal gain and pecuniary benefits at the expense of 1st Respondent Company and the answering respondent, hence, this ground alone is sufficient to conclude that the petition is not maintainable. 7. Ld. Senior Counsel further submitted that the allegations as made in the Petition cannot be projected as something that would "trigger the just and equitable cause for winding up or to grant relief u/s 241-242 of the Companies Act, 2013" and "no case is made out for winding up". Therefore, according to the Ld. Senior Counsel, the CP itself is liable to be dismissed. 8. Ld. Senior Counsel further stated that the proposed resolutions of today'sBoard Meeting are yet to be discussed and deliberated and may be passed with or without modifications after the views of the Directors present and voting are taken into consideration. Therefore, according to the Ld. Senior Counsel, when the Directors at the meeting can freely express their views before the proposed resolutions are passed, it is premature to come to any conclusion on the outcome of the proceedings and to pass restraint order. 9. Ld. Senior Counsel also submitted that mere summoning of the ....
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....is order is pronounced at 5.30 pm in the open court. Ld. Counsels for both sides present physically and also through VC. Registry is directed to upload the order forthwith." 4. The Appellant filed the application bearing I.A. (CA) No. 263 of 2023 invoking Rule 11 of the NCLT Rules, 2016 (in short 'Rules') for the following two prayers:- "extending the directions passed vide order dated 04.09.2023; and any other order(s) that this Hon'ble Tribunal may deem fit to pass in the facts and circumstances of the present case and in the interests of justice" 5. This application dated 17.10.2023 was contested by the Respondents on various grounds. The Tribunal framed following issues in the impugned order (1) whether the role of the Respondents is only passive and no involvement in the day to day management? (2) whether the word 'both directors' in Article 69 of the AoA, now means 'all directors' if so, the impugned board resolution passed only by the majority directors is sustainable? (3) whether the appointment of Dr. MSM Mujbur Rehuman, as COO, is mala fide, unwarranted, unsustainable and oppressive? (4) The Respondent No. 4 to 6 have actively involved themselves in the aff....
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.... an end on 30.11.2023. 9. The Respondent has urged that Dr. MSM Mujbur Rehuman was appointed as Chief Operating Officer (COO) on 01.12.2023 after the expiry of three days period counted from 28.11.2023 and no appeal was filed by that time by the Appellant before the Appellate Tribunal as according to them the appeal was e filed on 01.12.2023 itself. According to the Appellant, second and third December, 2023 was the Saturday and Sunday and the Court was closed and on Fourth and fifth December, 2023 the Chennai Bench did not function because of incessant rainfall and cyclonic storm and said days were declared as holiday. It is submitted that on 06.12.2023 the appeal was mentioned which was immediately listed for hearing on 07.12.2023. 10. It is further submitted by the Respondents that the Tribunal gave the date for the main petition to be heard on 05.12.2023 and in terms of the para 49 of the impugned order, the parties were to argue the main petition without fail but at that time the Appellant made a statement that there is no urgency in the Company Petition because the Appellant has already filed an appeal against the order passed in I.A. No. 263 of 2023 but in case of any ....
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....our from the time fixed for holding the adjourned meeting, the meeting shall stand adjourned to the same day in the next week, at the same time and venue. At no point in time shall a board meeting be quorate unless both directors are present throughout the meeting. 68. The quorum necessary for a meeting of the board of directors shall be 1/3rd of its strength (any fraction contained in that 1/3rd being rounded off as one) or two directors whichever is less and the provisions as stated in Section 174 of the Companies Act, 2013. *Clause 68 has been altered by passing special resolution at the 8th Annual General Meeting held on 26.10.2021. 69. Each director shall have one vote on the board and all decisions of the board including in respect of a resolution by circulation shall be taken only if both directors have voted in favour of it" 13. It is submitted that the Tribunal has committed an error in not referring to Article 69 of the AoA while recording a finding to the effect that "therefore in the light of our discussion, supra, we are of the view that, at this stage of the proceedings, we should not embark upon an exercise of what the word 'both directo....
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.... order in abeyance which was naturally asked for by the Appellant to challenge the impugned order but the appeal was filed after the expiry of that period. It is also submitted that while parting with the impugned order, the Court itself had observed that it would hear the main petition on the next date of hearing i.e. 05.12.2023 but instead of arguing the main petition, they pursue this appeal against the dismissal of the application for stay and got the matter adjourned for 01.02.2024. It is further submitted that the Tribunal has rightly not made any observation on the interpretation of the AoA at the interim stage and the matter was fixed for final argument of the main petition. 16. We have heard Counsel for the parties and perused the record. 17. It is needless to mention that the main petition filed under Section 241 and 242 of the Act is pending for hearing on 01.02.2024. It is also borne out from the record that initially when stay was granted on 04.09.2023 it was observed that if the board of directors takes a decision to appoint Shri MSM Mujeebur Rahuman as COO, the said decision shall be kept in abeyance till 12.09.2023 and then the Appellant chose to file the appl....