2017 (6) TMI 1128 - Tri - Companies Law

Acts of oppression and mismanagement - allotment of the increased 10,000 equity shares - Held that - When the petitioners have categorically stated that they were not served with any notice regarding the AGM meeting, dated 29.05.2008, it was duty of the respondents to place on record the documents to show that such notices were issued and also to place on record the copies of the minutes book of the said date. In the absence of such a material, the transfer of shares on the basis of meeting held on 29.05.2008 would be illegal and not binding upon the petitioners. The respondents should have placed on record the documents for showing the compliance of the aforesaid Articles of Association before accepting the transfer of shares in favour of Pawan Garg respondent and others, but such observations will not help the petitioners in the absence of impleading the other transferees of the shares as necessary parties. As already observed that in the absence of the necessary parties, this Tribunal would not be able to set aside the transfer made by R-2 to R-4. There is absolutely no reason forthcoming as to why all the transferees of the shares from R-2 to R-4 have not been impleaded as party despite the objections to this effect taken in the written reply filed in February, 2010 by R-1 and R-5 to R-9. List of the shareholders as on 29.05.2008 are given at page 65 and 66 of the reply of contesting respondents, which is in consonance with the plea taken in paragraph 6 (g) of the written statement. No merit in the instant petition, which is hereby dismissed

Issues Involved:
1. Alleged illegal transfer of shares.
2. Alleged illegal removal of petitioners as directors.
3. Alleged ultra vires lease agreement.
4. Alleged increase in share capital without notice.
5. Alleged non-compliance with statutory requirements.
6. Allegations of petitioners coming to the tribunal with unclean hands.
7. Delay and laches in filing the petition.

Detailed Analysis:

1. Alleged Illegal Transfer of Shares:
The petitioners alleged that 1000 equity shares each of P-1 and P-2, and 3500 equity shares of P-3 were transferred without their consent. The petitioners filed complaints with the Registrar of Companies (ROC) and the Ministry of Corporate Affairs. The respondents argued that the shares were transferred as agreed upon and provided transfer forms as evidence. However, the petitioners maintained possession of the original share certificates. The tribunal found that the petitioners failed to challenge the transfer within the statutory period, thus barring the claim due to delay and laches.

2. Alleged Illegal Removal of Petitioners as Directors:
The petitioners claimed their removal as directors was based on fake resignation letters and without their consent. The respondents argued that the resignations were genuine and filed due to allegations of misappropriation of funds by the petitioners. The tribunal noted discrepancies in the dates of resignation in various documents but emphasized that the petitioners had already sought relief through a civil suit, which they later withdrew. The tribunal concluded that the petitioners were barred from re-litigating the issue due to the principle of res judicata.

3. Alleged Ultra Vires Lease Agreement:
The petitioners contended that the lease agreement dated 14.07.2006, executed by R-2 on behalf of R-1 company, was ultra vires and without their consent. The respondents countered that the lease was never acted upon, as the consideration was not received. The tribunal found no concrete evidence that the lease agreement was executed with proper authorization and noted that the petitioners failed to provide substantial proof of their claims.

4. Alleged Increase in Share Capital Without Notice:
The petitioners alleged that the share capital was increased from ?70,00,000 to ?80,00,000 in an Extraordinary General Meeting (EOGM) held on 01.07.2006 without proper notice. The respondents argued that the increase was necessary due to financial difficulties and was executed following due process. The tribunal found that the petitioners did not receive notice for the EOGM, making the increase in share capital and subsequent allotment of shares to respondents' group invalid. However, the tribunal could not set aside the transfer due to the non-joinder of necessary parties.

5. Alleged Non-Compliance with Statutory Requirements:
The petitioners accused R-1 company of failing to hold Board/EOGM/AGM meetings and not filing balance sheets and annual returns for several years, violating Sections 159 and 220 of the Companies Act, 1956. The respondents admitted to some delays but attributed them to financial difficulties. The tribunal acknowledged the non-compliance but did not find it sufficient to grant the relief sought by the petitioners.

6. Allegations of Petitioners Coming to the Tribunal with Unclean Hands:
The tribunal emphasized that the petitioners concealed material facts, such as the filing and withdrawal of civil suits and a winding-up petition, which were relevant to the current proceedings. The tribunal cited legal precedents emphasizing the need for petitioners to come with clean hands. The concealment of these facts led the tribunal to conclude that the petitioners were not entitled to the relief sought.

7. Delay and Laches in Filing the Petition:
The tribunal noted that the petitioners filed the petition three years after the alleged acts of oppression and mismanagement. Citing legal precedents, the tribunal held that even void and illegal orders must be challenged within the statutory period. The delay in filing the petition rendered the claims time-barred.

Conclusion:
The tribunal dismissed the petition due to the petitioners' concealment of material facts, delay in filing the petition, and non-joinder of necessary parties. The tribunal found no merit in the allegations of oppression and mismanagement and left the parties to bear their own costs.

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