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2022 (9) TMI 1565 - AT - Companies LawDeclining to stay holding of EGM - It is the case of the Appellant that the Respondents had resorted to this Act by force as they could not do so by way of any judicial proceedings and hence fall within the provisions of section 242 (4) of Companies Act - HELD THAT - The EGM was convened by majority shareholders of the Company and the requisition of the meeting per se cannot be said to be at fault. We have also taken into consideration the reliefs sought for in I.A. No. 3084 of 2022 whereunder, the Applicant/Appellant sought for stay of the operation of the effect of the resolution passed during the EGM dated 20.07.2022 and also stayed of the removal of the independent Directors. A perusal of the impugned order shows that the matter is posted on 07.09.2022. The instant Appeal disposed off with a request to the National Company Law Tribunal (Kolkata Bench, Kolkata) to take up the matter on the fixed date i.e. 07th September, 2022 and decide the matter at the earliest and consider all these points raised by the parties.
Issues Involved:
1. Stay of holding of EGM on 20th July, 2022. 2. Removal and appointment of directors during EGM. 3. Compliance with Companies Act, 2013. 4. Appointment of an Administrator for the company's affairs. 5. Corporate democracy and majority shareholder rights. Issue 1: Stay of holding of EGM on 20th July, 2022: The Appellant challenged the order of the National Company Law Tribunal (Kolkata Bench, Kolkata) declining to stay the holding of the Extraordinary General Meeting (EGM) on 20th July, 2022. The Appellant filed an application seeking a stay on the operation of the resolution passed during the EGM, which resulted in the reconstitution of the board of directors. The Appellant argued that the removal of existing independent directors was against the Articles of Association. The Respondents, including the Solicitor General of India, defended the EGM as a decision made by majority shareholders, emphasizing corporate democracy and majority shareholder rights. Issue 2: Removal and appointment of directors during EGM: The Appellant sought a stay on the removal of certain independent directors and the appointment of new directors during the EGM. The Appellant argued that the removal of directors and the subsequent appointments were in violation of the Companies Act, specifically Section 169. The Respondents justified the actions taken during the EGM as legitimate decisions made by the majority shareholders, highlighting that no person has a vested right to continue as a director. Issue 3: Compliance with Companies Act, 2013: The Appellant raised concerns regarding the compliance with the Companies Act, 2013, particularly highlighting the alleged non-compliance with Section 169 related to the removal of directors. The absence of a Reply Affidavit from certain Respondents was noted, indicating potential procedural irregularities. Issue 4: Appointment of an Administrator for the company's affairs: The Appellant requested the appointment of an Administrator, preferably a retired High Court or Supreme Court Judge, to administer the affairs of the company. This request was made to ensure the protection of the company's interests amidst the ongoing disputes and changes in the board of directors. Issue 5: Corporate democracy and majority shareholder rights: The arguments presented by the Respondents, including the Solicitor General of India, emphasized the principles of corporate democracy and majority shareholder rights. They contended that the decisions made during the EGM, including the reconstitution of the board of directors, were valid exercises of majority shareholder power and were essential for the company's functioning. In conclusion, the National Company Law Appellate Tribunal disposed of the appeal, requesting the National Company Law Tribunal (Kolkata Bench, Kolkata) to decide the matter at the earliest, taking into account all the points raised by the parties. The implementation of the resolutions passed during the EGM was made subject to the outcome of the decision by the NCLT after hearing all parties involved.
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