2019 (5) TMI 1635 - AT - Companies Law

Oppression and Mismanagement - Validity of Board Resolution dated 12.8.2010 and Authority letter dated 15.2.2013 - case of appellant is that the resolution is forged and illegal and it is signed by Resigned Directors - Appellant further argued that the Resolution dated 12.8.2010 is not there in the compliance certified issued by Practicing Company Secretary for FY 2011 - HELD THAT - As 6th to 8th respondent had resigned on 15.1.2011, therefore, the authority letter was got signed from them in terms of the MOU dated 16.11.2010. Further 1st appellant became director of 1st respondent on 16.9.2010, therefore, he cannot state that the Board Resolution dated 12.8.2010 is a forged and illegal document. Therefore, the Deed of conveyance dated 4.3.2013 in favour of 3rd respondent was signed by Mr. Jai Bhagwan Gupta on the basis of Resolution dated 12.8.2010 as he was authorised by 5th to 8th Respondent, as in the books of GIDC the names of the erstwhile directors were on record and only they could sign the conveyance deed. It is to be noted that Board of Directors take a decision through Resolutions and the decisions could be taken by the Board of Directors to authorise any body not necessarily the Member of the Board of Directors so that follow up action on the Board Resolution can be taken to logical conclusion. Once decision to dispose off the property has been taken by the Board and in terms of MOU ex-Directors has already agreed to cooperate in the matter for transfer of property. In the light of the decision taken by Board, that the application signed by the ex-Directors can not be termed as illegal. We have perused the Board Resolution dated 1.8.2012 and the letter dated 15.2.2013 and we find no illegality in this. It is not disputed that the Power of Attorney was given in favour of the Bank by 1st appellant and 2nd respondent with the power to sell, transfer, assign, handover possession and to create interest right etc. As the Bank was unable to locate a best buyer then Board Resolution dated 15.10.2012 was passed and then it was also made clear to the bank that the loan is not being repaid and in such case if the guarantor repays the loan amount then the property and legal rights of company should be transferred in favour of the guarantor. Guarantor, 3rd respondent cleared the loan and property was transferred in his favour. However, if the appellant was interested to take the property then he should have repaid the outstanding loan. No such offer was made by the appellant, earlier and subsequent offer would be of no use. Appeal dismissed.

Issues Involved:
1. Allegations of oppression and mismanagement.
2. Legality of Board Resolutions and Authority Letters.
3. Legitimacy of property transfer and handling of company assets.
4. Validity of actions taken by former and current directors.
5. Role and actions of the bank and guarantors.

Detailed Analysis:

1. Allegations of Oppression and Mismanagement:
The appellant claimed acts of oppression and mismanagement by the respondents, specifically alleging siphoning of funds and improper handling of company assets. However, the NCLT found that the petitioners failed to provide sufficient evidence to establish these claims. The tribunal noted that the allegations of fund siphoning were not substantiated, and the company had ceased operations, making the appointment of a Managing Committee or ordering an audit unnecessary.

2. Legality of Board Resolutions and Authority Letters:
The appellant argued that several board resolutions and authority letters were forged and illegal. Specifically, the resolutions dated 12.8.2010, 1.8.2012, 14.9.2012, and 15.10.2012 were contested. The tribunal examined these documents and found no illegality. It was noted that the resolutions were signed by the appropriate directors, and the authority letter dated 15.2.2013 was in accordance with the MOU signed on 16.11.2010, which required cooperation from former directors. The tribunal concluded that the resolutions and authority letters were valid and binding.

3. Legitimacy of Property Transfer and Handling of Company Assets:
The appellant contended that the transfer of the company's immovable property to the third respondent was illegal. The tribunal found that the transfer was executed following the proper procedures, including board resolutions and MOUs. The third respondent had paid off the company's outstanding loan to the bank, which justified the transfer of property as per the agreements in place. The tribunal noted that the appellant had not taken timely steps to transfer the property in their names and was responsible for the delay along with the second respondent.

4. Validity of Actions Taken by Former and Current Directors:
The actions of former and current directors, including the signing of resolutions and authority letters, were scrutinized. The tribunal found that the former directors had resigned but were still required to cooperate as per the MOU. The current directors, including the appellant, were found to have been aware of and involved in the decisions and actions taken, including the sale of machinery and property transfer. The tribunal dismissed the claims of forgery and illegality, confirming that the actions were within the legal framework.

5. Role and Actions of the Bank and Guarantors:
The bank's role in demanding repayment and the actions of the guarantors, including the third respondent, were examined. The tribunal noted that the third respondent had provided a personal guarantee for the company's loan and had repaid the outstanding amount when the company defaulted. This repayment justified the transfer of property to the third respondent. The tribunal also observed that the appellant had not made any offer to repay the loan themselves, which weakened their position.

Conclusion:
The tribunal dismissed the appeal, finding no merit in the appellant's claims. It upheld the validity of the board resolutions, authority letters, and property transfer, concluding that there were no acts of oppression or mismanagement. The pending applications were closed, and no order as to costs was made.

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