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2019 (6) TMI 643 - AT - Companies LawOppression and mismanagement - Section 421(1) of the Companies Act, 2013 - removal of the appellant as Director of 1st respondent company - HELD THAT - The appellant is apparently against the appointment of 3rd respondent as Director of 1st respondent but this will not amount to prove that he was not informed or was not aware of the Meeting and the said Meeting was not held in terms of provisions of Companies Act, 2013. Apart from this, considering the shareholding of parties as noted in para 2, (which includes Respondent No.3), Respondent had no fear not to serve Notice on Appellant for holding EGM. Thus the argument that the Notice was not given has no substance. It is also noted that the appellant has been Managing Director of the 1st respondent from 29.3.2010 to 22.12.2016 almost 6 years and he has no inherent right to continue as Managing Director/Director in the 1st respondent unless he is able to carry the majority shareholders with him. Therefore, there is no force in the arguments of appellant and the same is rejected outrightly. We are of the view that non providing the copy of the Power Purchase Agreement relates to operation of the company and does not come under oppression and mismanagement. Appeal dismissed.
Issues Involved:
1. Validity of the EGM held on 2.11.2016. 2. Allegations of oppression and mismanagement. 3. Legitimacy of the appellant's removal as Managing Director and Director. 4. Entitlement to access the Power Purchase Agreement. Detailed Analysis: 1. Validity of the EGM held on 2.11.2016: The appellant contended that no notice was given for the EGM held on 2.11.2016, and alleged that the resolution appointing the 3rd respondent as Director was fake. The Tribunal noted that the appellant did not explicitly state in his petition that he did not receive notice for the EGM. The appellant's email dated 22.12.2016 only mentioned that he did not pass any resolution on 2.11.2016 appointing the 3rd respondent as Director, but did not deny receiving notice or attending the meeting. The Tribunal concluded that the appellant's objection was to the appointment itself rather than the procedural aspects of the EGM, thus dismissing the argument that the notice was not given. 2. Allegations of oppression and mismanagement: The appellant alleged that the respondents indulged in creating fake resolutions and mismanagement. The Tribunal emphasized the principle from Foss vs Harbottle and Rajahmundry Electric Supply Corporation Ltd vs Nageshwara Rao, stating that courts generally do not intervene in internal company matters if directors act within their powers and are supported by the majority shareholders. The Tribunal found that the appellant failed to provide substantial evidence of oppression or mismanagement and noted that the company had not yet started its operations, making the claims premature. 3. Legitimacy of the appellant's removal as Managing Director and Director: The appellant argued that his removal was orchestrated through fabricated documents. The Tribunal observed that the appellant had been Managing Director from 29.3.2010 to 22.12.2016 and had no inherent right to continue unless supported by the majority shareholders. The Tribunal found no merit in the appellant's claims, noting that the removal was done in accordance with the law and the company's internal procedures. 4. Entitlement to access the Power Purchase Agreement: The appellant claimed entitlement to peruse and obtain a copy of the Power Purchase Agreement with NTPC. The Tribunal held that this issue pertained to the company's operations and did not fall under oppression and mismanagement. Therefore, the appellant's request was not considered a valid ground for the appeal. Conclusion: The Tribunal dismissed the appeal, upholding the NCLT's decision. It concluded that the appellant failed to substantiate his claims of oppression and mismanagement, and that the procedural aspects of the EGM and his removal were in compliance with the law. The appellant's request for access to the Power Purchase Agreement was deemed unrelated to the allegations of oppression and mismanagement. No order as to costs was made.
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