2019 (1) TMI 1915 - HC - Insolvency and Bankruptcy

Validity of minutes of the meeting - allegations of possible misappropriation of amounts with regard to the job works assigned to sub-contractors - HELD THAT - Instructions are sought from the learned Central Government Counsel with regard to the possible date on which the NCLT, Kochi Bench is likely to commence sitting. It is submitted by the learned CGC that though the NCLT Kochi Bench has been notified and all employees and officers necessary have been appointed, the Members have not been selected and there is some delay in commencement of sitting. It is stated that the NCLT, Chennai Bench is hearing urgent matters and in case a direction is issued, the Chennai Bench will consider the instant case as well. Since what is agitated is admittedly a matter which is to be considered by NCLT, Kochi Bench and in view of the fact that the NCLT Chennai Bench is considering matters arising from Kerala as well, the parties are to approach the NCLT, Chennai Bench for appropriate reliefs - Petition disposed off.

Summary

Issues:
Challenge to the legality of meeting minutes, oppression and mismanagement by majority directors, maintainability of writ petition before the High Court, jurisdiction of the National Company Law Tribunal (NCLT) Kochi Bench.

Detailed Analysis:

Challenge to Meeting Minutes:
The petitioners challenged the legality of meeting minutes held by the 2nd respondent company on 3.11.2018, alleging possible misappropriation of amounts related to job works assigned to sub-contractors. A forensic audit implicated certain employees and directors, leading to a difference of opinion among the directors. The petitioners contended that the majority directors were acting against the company's interest, amounting to oppression and mismanagement under the Companies Act. They sought to annul the decisions taken in the board meetings and requested a deferment of further meetings pending resolution.

Maintainability of Writ Petition:
The 2nd respondent and respondents 3 to 7 argued that the writ petition challenging the board's resolution was not maintainable before the High Court, as the company is a private limited company. Detailed counter affidavits were filed, raising factual contentions and questioning the jurisdiction of the court in entertaining the petition.

Jurisdiction of NCLT Kochi Bench:
The petitioners highlighted the absence of the National Company Law Tribunal (NCLT) at Kochi, stating that the NCLT Chennai Bench had been divested of jurisdiction over matters from Kerala and Lakshadweep. The delay in the commencement of the NCLT Kochi Bench's sitting was noted, with the NCLT Chennai Bench handling urgent matters in the interim. An order dated 31.10.2018 by the NCLT Chennai Bench concerning a Kerala-registered company was presented. The court acknowledged that the matter fell within the NCLT's jurisdiction and directed the parties to approach the NCLT Chennai Bench for appropriate reliefs. The court ordered a stay on further proceedings related to the disputed meeting minutes for one month to allow the petitioners to seek remedies from the NCLT, emphasizing that no opinion on the merits was expressed, leaving the decision to the NCLT Chennai Bench.

This comprehensive analysis covers the issues raised in the judgment, including the challenge to meeting minutes, questions of oppression and mismanagement, the maintainability of the writ petition, and the jurisdiction of the NCLT Kochi Bench, providing a detailed breakdown of the court's decision and reasoning.