2017 (9) TMI 536 - Tri - Companies Law

Acts of oppression and mismanagement - validity of EOGM - Held that - Petitioner having signed several statutory documents along with respondent No. 2 as Director, after lapse of nearly three years raised the plea that respondent No.2 ceased to be Director with effect from 01.10.2010. This issue was raised by petitioner No. 1 for the first time only after steps were taken by respondent No. 2 to get the plots transferred in the name of respondent No. 3 from respondent No. 10. Moreover, it is for petitioner No. 1 who is a regular Director of the first respondent company to have another Director in order to manage affairs of the first respondent company which is the mandate of provisions of the Companies Act, 1956 as well as the Companies Act, 2013. But, petitioner No. 1 did not take any initiative even after expiry of the term of respondent No. 2. On the other hand, petitioner No. 1 along with respondent No. 2 having signed several documents as Directors, raised the dispute regarding continuation of respondent No. 2 as Director of the first respondent company only with a view to defeat transfer of plots made by respondent No. 10 in favour of respondent No. 3. Therefore, this issue raised by petitioner No. 1 may not help him in any way in a petition under section 397 and 398 of Companies Act, 1956. It is settled law that when there is a plea of forgery of signatures, there is need for taking evidence and decide the issue either by Civil Court or by Criminal Court. Petitioner has already filed Civil Suit before Sr. Civil Judge, Surat wherein also he has raised the issue that his signature was forged on the resolution dated 01.08.2012. Therefore, it is not proper for this Tribunal to decide whether the signature of the petitioner on the resolution dated 01.08.2012 is forged signature or not and it is left to the Civil Court to give a finding on it. Plea of the petitioner that notice of EOGM was not sent to him do not merit acceptance. In order to hold EOGM it is necessary to call for a meeting of the Board of Directors to decide the holding of EOGM. Respondents did not place any material on record to state that Board meeting took place on 11.12.2012 and notice of such Board Meeting was given to petitioner No. 1. Therefore, resolution passed in the EOGM dated 17.12.2012 cannot be held to be legal. Petitioners failed to place material on record to establish the alleged acts of oppression and mismanagement. The allegation of syphoning of funds by respondent No. 2 has also not been established. Moreover, respondent No. 2 gave explanation stating that Income Tax refund amount of ₹ 15 Lakhs has been credited to the loan account of Benani Polychem Ltd. Further, petitioner No. 1 at more than one place reiterated that plot Nos. 263 to 266 are the only property of the first respondent company after the machinery etc. was sold by the first respondent company. The said plots were also transferred to respondent No. 3. The first respondent company ceased to operate. In these circumstances there is no point in appointing Managing Committee to manage affairs of the first respondent company. There is also no need to order for auditing the accounts of the first respondent company. In view of the above discussions it is held that EOGM of the first respondent company conducted on 17.12.2012 is not a valid EOGM. The issues relating to resolutions dated 01.08.2012 and 15.10.2013 and MOU dated 15.02.2012 and the final order passed by respondent No. 10 on 25/28th March, 2013 can only be decided in the civil suit. In view of the finding that there are no acts of oppression or mismanagement and the only property of company i.e. plots No. 263 to 266 are subjudice in Civil Court, no relief need be granted in this petition.

Summary

Issues Involved:
1. Legality of continuation of respondent No. 2 as director.
2. Allegation of forgery in the Board resolution dated 01.08.2012.
3. Validity of the Extraordinary General Meeting (EOGM) held on 17.12.2012.
4. Validity of the Memorandum of Understanding (MoU) dated 15.02.2013.
5. Validity of the deed of conveyance and agreement dated 04.03.2013.
6. Validity of actions by respondent No. 10 regarding transfer of plots.

Detailed Analysis:

Point No. 1: Legality of Continuation of Respondent No. 2 as Director

Petitioner argued that respondent No. 2’s continuation as Director after 30.09.2010 was illegal under Section 260 of the Companies Act, 1956. Respondent No. 2 was appointed as Additional Director on 29.07.2010, but there was no agenda for his regular appointment in the AGM held on 30.09.2010. However, petitioner No. 1 and respondent No. 2 signed several statutory documents post 30.09.2010, acknowledging respondent No. 2 as Director. These included annual returns, financial accounts, and various resolutions. Given this, the tribunal found that petitioner No. 1’s challenge was raised only after steps were taken to transfer plots to respondent No. 3, indicating a motive to defeat this transfer. Thus, this issue did not support the petitioner’s case under Sections 397 and 398 of the Companies Act, 1956.

Point No. 2: Allegation of Forgery in Board Resolution Dated 01.08.2012

Petitioner claimed his signature on the Board Resolution dated 01.08.2012 was forged. The tribunal noted that a forensic expert confirmed the genuineness of the signatures. Additionally, the Gujarat High Court had already ruled that issues of forgery are not amenable to writ jurisdiction and should be decided in civil or criminal courts. Since the petitioner had already raised this issue in a civil suit, the tribunal deferred to the civil court’s jurisdiction to resolve this matter.

Point No. 3: Validity of EOGM Held on 17.12.2012

Petitioner argued that no Board meeting was held to convene the EOGM on 17.12.2012 and that he did not receive notice. The tribunal found that while notice of the EOGM was sent via speed post, there was no evidence of a Board meeting held on 11.12.2012 to authorize the EOGM. Therefore, the resolution passed in the EOGM was deemed illegal.

Point No. 4: Validity of MoU Dated 15.02.2013

The MoU dated 15.02.2013 was based on the Board Resolution dated 01.08.2012, which authorized respondent No. 2 to act on behalf of the company. Given the unresolved issue of forgery, the tribunal stated that the validity of the MoU could only be determined once the forgery issue was resolved by a civil court. The tribunal noted that the MoU gave the guarantor (respondent No. 3) the right to pay the outstanding loan and get the company’s properties transferred to his name.

Point No. 5: Validity of Deed of Conveyance and Agreement Dated 04.03.2013

The deed of conveyance and assignment dated 04.03.2013, executed between the first respondent company and respondent No. 3, was contested. The tribunal held that the validity and authority of this conveyance deed must be decided by the civil court where the petitioner had already filed a suit.

Point No. 6: Validity of Actions by Respondent No. 10 Regarding Transfer of Plots

Petitioner challenged the actions of respondent No. 10 in rejecting the letter dated 06.04.2011 and acting on the letter dated 15.02.2013, which led to the transfer of plots to respondent No. 3. The tribunal noted that the Gujarat High Court dismissed the petitioner’s Special Civil Application No. 7735 of 2013 due to suppression of material facts and directed that the issues of forgery and the validity of the transfer be decided by the civil court.

Conclusion:

The tribunal found no acts of oppression or mismanagement by the respondents. The EOGM conducted on 17.12.2012 was invalid. Issues related to the resolutions dated 01.08.2012 and 15.10.2012, the MoU dated 15.02.2013, and the final order by respondent No. 10 must be decided by the civil court. Therefore, no relief was granted in this petition, and it was disposed of accordingly.

Order:

Petition disposed of. Pending applications closed. No order as to costs.