2016 (12) TMI 1359 - Tri - Companies Law

Permission to hold a Board Meeting on an urgent basis - Held that - Application merits acceptance. It has already come on record by virtue of order dated September 5, 2016 passed in CA No.85/PB/2016 that applicant-petitioner holds 0.06% shares and there is a serious preliminary objection raised under section 244(1) of the Companies Act, 2013 with regard to maintainability of the petition. Even otherwise objections on some of the items raised by the non applicant-petitioner pertains to the appointment of Mr. Prakash Mishra as a director who is proposed to be given special charge to finalize the remuneration of statutory auditor of the company and Mr. Sandeep Vats, who was another director appointed by the company. He is sought to be given by draft agenda charge of asset of the company although his appointment is under challenge in the Company petition. Objections have also been raised with regard to the preferential shares amounting to ₹ 3440891 and confirmation of the minutes of the meeting held on 4.5.2016, 14.5.2016, 20.5.2016 and 16.6.2016; also in respect of some other items. Merely because the non applicant-petitioner has challenged the appointment of directors and some other actions of Respondent No.1-company could not be suffice to refuse permission to hold to a meeting to facilitate day to day affairs of the applicant-Respondent No.1-company. The activities and functions of the company cannot be stifled by passing a gag order especially to perform statutory compliance. However interest of the non applicant-petitioner could be protected by passing an order that passing of any resolution from the list of draft agenda would not cause any prejudice to the right of the non applicant-petitioner pending consideration in C.P. No. 122(ND)/2016

Summary

Issues:
1. Permission to hold an urgent Board Meeting.
2. Allegations of financial crises, resignations, and cessation of operations.
3. Opposition to the application and concerns regarding the legitimacy of actions.
4. Objections raised by the non-applicant-petitioner regarding specific agenda items.
5. Consideration of objections and decision on the application's merit.

Analysis:

1. The application sought permission for an urgent Board Meeting due to a previous Tribunal order preventing such meetings without permission. The company faced financial crises, resignations of key personnel, and ceased operations due to lack of funds, necessitating the meeting to address critical issues.

2. Allegations were made against the company's conduct, including forcing the non-applicant-petitioner to resign and conducting affairs under the control of another entity. Creditors and employees were allegedly misled, and concerns were raised about the misuse of funds amounting to ?41 crores. The company's actions were seen as attempts to frustrate the petitioner's cause before the Tribunal.

3. The non-applicant-petitioner opposed the application, raising objections to specific agenda items and the legitimacy of the proposed meeting. While not objecting to the meeting in general, objections were made to certain items and a request for periodic bank account statements was put forth to ensure transparency.

4. The Tribunal considered objections regarding the appointment of directors, preferential shares, and confirmation of meeting minutes. Despite challenges to these actions, the Tribunal deemed it necessary to allow the meeting to proceed to facilitate the company's day-to-day operations, ensuring that resolutions passed would not prejudice the non-applicant-petitioner's rights pending adjudication.

5. Ultimately, the Tribunal granted permission for the company to hold the meeting, emphasizing that resolutions passed would not impact the non-applicant-petitioner's pending rights. The decision aimed to balance the company's operational needs with the protection of the non-applicant-petitioner's interests, ensuring a fair resolution to the issues raised in the application.