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2019 (5) TMI 1874 - Tri - Insolvency and BankruptcyOppression and Mismanagement - arrangement of transfer of shares - time limitation - appointment of directors in the board of the Company - increase of authorized capital - allotment of further capital by way of allotment of shares. Time Limitation - HELD THAT - It is on record that the petitioners have issued the requisition under 169 of the Act, 1956 to the Company on 15.09.2012 and upon the rejection of the requisition of the petitioners by the Company vide its letter dated 28.09.2012, the petitioners have filed a civil suit in OS No. 183 of 2013 before Civil Court and it is on record that the Civil Court returned the plaint stating lack of jurisdiction in view of the amendments to the Companies Act and the final order was passed on 27.11.2017. Since this petition is filed in the year 2018, the petition is not barred by limitation - the issue answered in favor of petitioners. Transfer of Shares - HELD THAT - It is on record that in the present petition, neither the R1 company nor the R14 and R15 have not filed the copy of the transfer deed and share certificates or the copy of the resolution passed in accordance with clause 14 of the AOA before the Tribunal to show that the shares were transferred according to the provisions of the AOA and Act. It is a fact that the original share certificates are with the petitioners and the same was produced before this Tribunal by the petitioners. Therefore, there are no hesitation to say that the petitioners have not executed any transfer deeds to R14 and R15 and Petitioner's remained as shareholders of the R1 Company. The deletion of names of Petitioner's from the Register of members is illegal, null and void - the issue is answered in favour of Petitioners. Appointment of directors - HELD THAT - It is a fact that the board of the directors can appoint additional directors. However, their directorship should be confirmed in the next AGM. It is held that the petitioners are only the shareholders, in case, the appointment of directors and their confirmation is brought before the AGM that comprise of the Petitioner's, there was likely hood of rejecting the same by the petitioners. It is also on record that the balance sheet and the annual Return except for the year 2011 were filed in the year 2018 and therefore it creates a suspicion as to whether the AGMs have been conducted properly - the appointment of directors is made in violation of the provisions of the Act, Hence, their appointment is illegal, null and void - Issue is answered in favor of petitioners. Increase of authorized capital - HELD THAT - It is on record that the same was done behind back of the Petitioners. The resolution to increase the share capital was passed without the participation of the petitioners, who are declared as shareholders of the Company, Therefore, the increase of authorized capital is also illegal and invalid. In this circumstances, the issue is answered in favour of Petitioners. Allotment of shares - HELD THAT - When the company is not carrying on any business, the need of the further capital is also not needed. It is a well settled principle of law that in case of private limited companies under the Indian law, existence of right to issue shares to one director may technically be there, but the question whether the right has been exercised bona fide and in the interest of the company has to be considered in the fact of each case - the issue of shares is also answered in favour of Petitioners. The petitioners have made out a case for the interference of this Tribunal. Accordingly this Tribunal orders for the rectification of register of members with a direction to the Respondent No. 1 Company to incorporate the names of the petitioners in the Register of Members in the place of R14 and R15 - Petition disposed off.
Issues Involved:
1. Limitation 2. Transfer of Shares 3. Appointment of Directors 4. Increase of Authorized Capital 5. Allotment of Shares Detailed Analysis: 1. Limitation: The petitioners issued a requisition under Section 169 of the Companies Act, 1956 on 15.09.2012. Upon rejection by the company on 28.09.2012, they filed a civil suit (OS No. 183 of 2013). Due to amendments in the Companies Act, the civil court returned the plaint on 27.11.2017, citing NCLT's exclusive jurisdiction. The petition was filed in 2018, thus not barred by limitation. The issue is answered in favor of the petitioners. 2. Transfer of Shares: The petitioners argued they did not transfer their shares to R14 and R15. The respondents contended that the shares were transferred for ?1,08,98,000/-. However, no proper instrument of transfer, as required by Section 108 of the Companies Act, 1956, was produced. The original share certificates remained with the petitioners. Therefore, the deletion of the petitioners' names from the register of members is deemed illegal, null, and void. The issue is answered in favor of the petitioners. 3. Appointment of Directors: The board can appoint additional directors, but their appointment must be confirmed in the next AGM. Given that the petitioners were the only shareholders, their likely rejection of the appointments raises doubts about the legitimacy of the AGMs. The balance sheets and annual returns (except for 2011) were filed only in 2018, creating further suspicion. The appointments are thus declared illegal, null, and void. The issue is answered in favor of the petitioners. 4. Increase of Authorized Capital: The increase in authorized capital from ?5,00,000/- to ?30,00,000/- was done without the petitioners' participation. As the declared shareholders, their exclusion renders the resolution invalid. The issue is answered in favor of the petitioners. 5. Allotment of Shares: The company was not conducting any business, thus negating the need for further capital. The allotment of shares to R2 alone lacks bona fide reasons and is not in the company's interest. This principle is supported by the precedent set in Dale & Carrington Investment Private Limited vs. P.K. Prathapan. The allotment is set aside. The issue is answered in favor of the petitioners. Conclusion: The petitioners have established a case for interference. The Tribunal orders the rectification of the register of members to reinstate the petitioners' names. The appointments of directors and the allotment of shares to R2, including the increase in share capital, are set aside. The petitioners are directed to file a copy of this order with the ROC. The petition is disposed of with no order as to costs.
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