2018 (10) TMI 1259 - AT - Companies Law

Non-compliance of relevant provisions in the holding of AGM - Held that - Considering the documents on record when the petition is perused, it must be said that no material to make out a case is there to spell out cause of action and no prima-facie case is made out for the various allegations. The Petitioner himself was not witness to the happenings in the meeting and no Affidavits or any other proof is filed of his alleged authorized representative or proxy, or anybody else. When no supportive material is available to make out cause of action or prima facie case, it is not necessary to go into roving inquiry into the manner in which the AGM was conducted. As such the arguments raised by the Appellant on the legal question relating to interpretation of Section 97 needs no discussion in the present case, as Appellant failed to cross the first hurdle itself to make out case invoking jurisdiction. Although the Appellant failed to make out a cause of action or prima facie case, the NCLT still considered his grievances and found it fit to dismiss the Petition at the preliminary stage itself. We do not find any reason to interfere.The Company Petition is dismissed. Impugned Order is maintained.

Summary

Issues Involved:
1. Validity of the Annual General Meeting (AGM) held on 26th September 2017.
2. Compliance with procedural norms and statutory provisions during the AGM.
3. Authority and scope of Section 97 of the Companies Act, 2013.
4. Allegations of oppression and mismanagement.

Detailed Analysis:

1. Validity of the Annual General Meeting (AGM) held on 26th September 2017:
The appellant challenged the validity of the AGM held on 26th September 2017, alleging non-compliance with procedural norms and statutory provisions. The appellant claimed that the AGM was conducted without following the stipulated procedures, such as the absence of the Board of Directors, resolutions being adopted without a vote, and threats made to shareholders who objected.

2. Compliance with procedural norms and statutory provisions during the AGM:
The appellant argued that the AGM was held in violation of Sections 96-98, 101-102, 107 read with Sections 118 and 121 of the Companies Act, 2013. The specific grievances included:
- The Board of Directors were not present at the venue.
- The usual convention of adopting resolutions by show of hands was not followed.
- Resolutions were adopted by the Company Secretary without putting them to vote.
- Shareholders, including the appellant’s representative, were threatened with dire consequences for raising objections.

The NCLT observed that the appellant did not provide sufficient evidence to support these allegations. The appellant failed to disclose the name of his representative or any other shareholders who allegedly raised objections or were threatened. No affidavit or supporting documents were filed to substantiate these claims.

3. Authority and scope of Section 97 of the Companies Act, 2013:
The appellant argued that Section 97 of the Companies Act, 2013, which empowers the Tribunal to call an AGM, should include not only the timing but also the manner of holding the AGM. The appellant contended that any material irregularity or illegality in the manner of holding the AGM should be considered a "default" under Section 97.

The respondents countered that Section 97 pertains only to the failure to hold the AGM within the prescribed time and does not extend to the manner of conducting the meeting. They argued that the slight change in the wording of Section 97 compared to the old Section 167 of the Companies Act, 1956, does not alter its meaning or scope. The NCLT did not delve into this legal question, as the appellant failed to make a prima facie case.

4. Allegations of oppression and mismanagement:
The NCLT considered whether the alleged non-compliance of provisions could amount to oppression and mismanagement under Sections 241 and 244 of the Companies Act, 2013. The Tribunal found that the appellant had not made out a case for exemption and had devised a way to come to NCLT by claiming the petition under Sections 96, 98, and other sections. The NCLT dismissed the petition with costs of ?50,000, stating that the appellant did not provide sufficient evidence to support the allegations.

Conclusion:
The appeal was dismissed as the appellant failed to provide sufficient evidence to support the allegations of procedural irregularities and statutory violations during the AGM. The NCLT maintained that the appellant did not make out a prima facie case or cause of action to invoke the jurisdiction of the Tribunal. The impugned order was upheld, and no orders as to costs were made.