2019 (10) TMI 1471 - Tri - Companies Law

Mis-management and oppression by the respondents - seeking removal of the Petitioner Amit Kumar Gupta from the Board of Directors of the Company - HELD THAT - The parties have given their respective versions of the story and levelled allegations and counter allegations but, one thing common in their argument is that neither of the parties has any objection if an EOGM is allowed to be held by the Board of Directors under the Chairmanship of Special Officer to be appointed by this Tribunal. What is challenged on the side of the respondent/ petitioner in the CP is that no resolution is to be passed removing the director/petitioner. That objection is devoid of any merit in view of the power of the Company u/s.169 of the Act. There is no harm if the holding up of EOGM is allowed to be held as prayed in the present application. It is the right of the shareholders to convene EOGM and pass any resolution inclusive of removal of a director, if the resolution is passed by majority shareholders of a company - The Board of Directors of the Company are directed to convene a fresh EOGM of the Company on the basis of the notices and documents annexed as Annexure 'G' under the Chairmanship of Mr. S.M.Gupta, who is appointed as the Special Officer by this Tribunal and is permitted to take all the necessary steps which are required to hold this EOGM in accordance with the provisions of the Companies Act, 2013 and place before this Tribunal a report about the manner in conducting the EOGM along with copies of minutes and the Resolutions if any passed/adopted by the Board of Directors. Application allowed.

Summary

Issues:
1. Oppression and mismanagement in a company under Sections 241 & 242 of the Companies Act, 2013.
2. Removal of a director from the board of directors.
3. Appointment of a Special Officer/Administrator over company affairs.
4. Dispute over convening an Extra Ordinary General Meeting (EOGM).
5. Shareholding disputes within a family-owned company.
6. Validity of resolutions passed in EOGM.
7. Legal challenge against the removal of a director.

Analysis:
1. The main issue in this case revolves around allegations of oppression and mismanagement under Sections 241 & 242 of the Companies Act, 2013. The petitioner, alleging mismanagement by the respondents, sought relief against the removal of the petitioner as a director.

2. A significant aspect of the case is the dispute over the removal of a director from the board of directors. The petitioner, a shareholder and director, challenged his removal, arguing that it was illegal and sought protection against it.

3. The application also raised the question of appointing a Special Officer/Administrator to oversee the company's affairs. The applicant requested the appointment of a Special Officer to take custody of company records, books of accounts, and operate the bank account to resolve the issues of oppression and mismanagement.

4. Another issue highlighted in the judgment is the dispute over the convening of an Extra Ordinary General Meeting (EOGM). The EOGM was scheduled for the removal of the petitioner as a director, leading to legal challenges and interim orders restraining the resolution from being implemented.

5. The case also involved disputes over shareholding within a family-owned company. The petitioner, a promoter director and shareholder, faced conflicts with majority shareholders, leading to allegations of detrimental actions against the company's interest.

6. The judgment addressed the validity of resolutions passed in the EOGM and the actions taken by the petitioner, who represented himself as a director and allegedly acted against the company's interests, causing hindrances in the company's operations.

7. Lastly, the legal challenge against the removal of a director emphasized the provisions of the Companies Act, 2013, regarding the removal of directors and the rights of shareholders to convene meetings and pass resolutions, including the removal of a director.

In conclusion, the Tribunal allowed the application, directing the Board of Directors to convene a fresh EOGM under the Chairmanship of a Special Officer appointed by the Tribunal. The judgment aimed to resolve the disputes and issues raised by the parties, ensuring compliance with the Companies Act, 2013, and providing a mechanism for addressing the concerns related to oppression, mismanagement, and directorial disputes within the company.