2015 (5) TMI 522 - Board - Companies Law

Notice of Termination - Allegations of various related party transactions - Demand of appointment of an Independent Expert Committee to look into allegations - Matter of perjury liable to be punished u/s 448 & 449 of the Companies Act 2013, r/w 195 & 340 of Cr. P.C. - Held that - On hearing the submissions of either side, it appears the petitioner entered into a Special Agreement called 'Employment Agreement' on 27.3.2014 with the company, with a condition that the company is at liberty to give termination of his employment at any time giving a notice granting 90 days time to remedy the allegations raised against him, as mentioned in the Employment Agreement. When the petitioner consecutively failed to meet the assurances he had given from time to time, the Board unanimously has come to a conclusion that the petitioner failed to achieve and fulfil the objectives, milestones, targets and roles approved by the Board of Directors and agreed by the petitioner. Since the Board felt that he was indulged in related party transactions and failed to remain transparent in financial transactions, the Board was driven to take a decision to issue notice for termination of the petitioner as MD of the company giving 90 days time. In the backdrop of this factual scenario, in the interest of the company, the petitioner will have to abide by the decision taken by the Board. He cannot take a cover of generalised provisions earmarked as rights of promoters to say that he is not bound by the employment agreement dated 27.3.2014. Since he himself agreed to get terminated by the company on notice with 90 days time, he is now estopped to say that he is not bound by the agreement he entered into.For the reasons mentioned above, this Bench observes that Board has not violated any of the provisions of Articles of Association or the Agreements entered in between the petitioner and the company in issuing Notice of Termination. Matter of Perjury - I believe that the deponent did not make any false statement causing other side or court believe such statement assumed as false statement to give false evidence, unless such antedating is material alteration to the facts in issue. An affidavit with incorrect date at the most could be considered as carelessness or mistake unknowingly crept, therefore this cannot be stretched to an extent to say it perjury. Here in the present case, mentioning ante-date or incorrect date is no way related to the subject in the case, no false statement is made to give false evidence against rival party, or to make this court to believe something that is not true therefore there is no merit in the application saying mentioning wrong date amounts to perjury. It could be understood that wrong mentioning of date amounts to perjury provided it is made with an intention to make the court to believe the same so as to turn down the truth. It is not the case here. - Decided against the appellant.

Issues:
1. Stay and setting aside of Notice of Termination
2. Reinstatement of managerial powers pending disposal of CP
3. Appointment of an independent Expert Committee for allegations of harassment
4. Appointment of an independent Expert Committee for related party transactions
5. Declaration of Termination Notice as void and illegal
6. Violation of Articles of Association and agreements
7. Transfer of financial and executive powers
8. Grounds for termination: Cause, Incapacitation, Non-Performance
9. Compliance with Employment Agreement
10. Board's decision to keep financial powers with Committee
11. Allegations of non-performance, related party transactions, and harassment
12. Prima facie conclusion leading to suspension
13. Failure to meet performance targets
14. Termination notice based on failure to fulfill objectives
15. Compliance with Employment Agreement terms
16. Allegations of perjury against respondents
17. False statements in affidavits
18. Incorrect date in affidavits and perjury allegations

Analysis:
1. The petitioner sought relief against the Notice of Termination, alleging violation of Articles of Association and agreements. The respondents transferred powers and issued the notice based on non-performance and related party transaction allegations, leading to the petitioner's suspension and subsequent termination notice.

2. The petitioner argued that the termination notice was invalid as it breached the Employment Agreement terms. The respondents contended that the petitioner failed to meet targets, engaged in related party transactions, and behaved high-handedly, justifying the termination notice and transfer of powers to a Committee.

3. The Board found that the petitioner's failure to improve performance and address concerns led to the unanimous decision for termination. The Employment Agreement allowed termination with a 90-day notice, and the Board's decision was deemed valid in the interest of the company.

4. The petitioner also raised allegations of perjury against respondents for false statements in affidavits. The respondents defended the affidavits, citing no intention to deceive and attributing the incorrect dates to carelessness rather than perjury.

5. The Board dismissed the petitioner's claims of perjury, emphasizing the lack of false statements causing belief in incorrect information. The incorrect dates in affidavits were deemed as mistakes rather than intentional misrepresentation, leading to the dismissal of the application.

6. The judgment highlighted the importance of verifying pleadings and documents before filing them in court, underscoring the need for accuracy and diligence in legal proceedings to avoid misunderstandings and misinterpretations.

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