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2020 (6) TMI 691 - AT - Insolvency and BankruptcyOppression and Mismanagement - Sale of entire assets of the Respondent No. 1 Company sold illegally for the purpose other than the object of the Company - misuse of power of attorney granted unilaterally by Respondent No. 2 without notice - HELD THAT - The Appellant is free to exercise her remedy under the Companies Act, 2013 when the Company law provides for Oppression and Mismanagement and hence imposition of costs needs review. It is also evident that the Appellant came to know about the Board Resolution dated 4-9-2014 for the first time when Respondent No. 3 has submitted its reply affidavit dated 8-3-2019 and at that juncture the Appellant wish to file a rejoinder affidavit but the NCLT refuse to allow her to do so and subsequently reserved the judgment. Since the Companies Act, 2013 provides for restrictions on powers of the Board to sell or dispose of the whole or substantially the whole of undertaking of the Company; Hence, the approval of shareholders through Extra-Ordinary General Meeting was required for selling the land being substantially the entire Assets of the Company. It is very much evident that Members are free to file a petition/application if he or she is adversely affected or the interest of the Company is prejudicially affected, he or she is authorized to file petition/application under the Companies Act, 2013. The NCLT/NCLAT is the specialised agency to look into the impact on the members/company. Hence, there is a need to provide proper opportunity to the aggrieved members to present the genuiness or otherwise of the documents in relation to the provisions of Section 241 of the Companies Act, 2013 - matter remanded for appropriate consideration by the NCLT, Chennai Bench.
Issues Involved:
1. Allegations of illegal sale of company assets. 2. Claims of oppression and mismanagement under Sections 241-242 of the Companies Act, 2013. 3. Validity of Board Resolution dated 4-9-2014 and Power of Attorney. 4. Requirement of shareholder approval for sale of substantial company assets. 5. Overlapping legal proceedings and imposition of costs. Issue-Wise Detailed Analysis: 1. Allegations of Illegal Sale of Company Assets: The appellant alleged that the entire assets of the Respondent No. 1 Company were illegally sold by Respondent No. 3, who misused a power of attorney granted unilaterally by Respondent No. 2 without notice to Respondent No. 1. This sale was based on a fabricated Board Resolution dated 4-9-2014. The appellant sought to set aside the impugned order dated 24-7-2019 in CP/281/2019 passed by NCLT, Chennai Bench. 2. Claims of Oppression and Mismanagement: The appellant filed a petition under Sections 241-242 of the Companies Act, 2013, seeking action against acts of "Oppression and Mismanagement" by the only other shareholder and Director of the Respondent No. 1 Company, who is her husband, Respondent No. 2. They are living separately, and the appellant claimed that the NCLT, Chennai Bench, relied on previous orders from the Madurai Bench of the Hon'ble Madras High Court and imposed costs of ?5 Lakhs on her. 3. Validity of Board Resolution and Power of Attorney: The appellant argued that the Board Resolution dated 4-9-2014, the power of attorney executed, and the illegal sale deed executed by Respondent No. 3 were ultra vires the Memorandum of Association of the Company and against the company’s objectives. Additionally, the appellant was not given an opportunity to file a rejoinder. 4. Requirement of Shareholder Approval: The appellant submitted that selling substantially the whole of the undertaking requires shareholder approval in accordance with the Companies Act, 2013. The sale of the company's assets, which included approximately 16.64 acres of land, required a special resolution as per Section 180 of the Companies Act, 2013. The Tribunal noted that the approval of shareholders through an Extra-Ordinary General Meeting was necessary for such a sale. 5. Overlapping Legal Proceedings and Imposition of Costs: The appellant contended that the two causes of action (NCLT proceedings and the civil suit filed by Respondent No. 2) overlap significantly, which should not deprive her of the right to move the NCLT. The respondent argued that the relief sought before the NCLT and the Additional District Judge were similar and requested dismissal of the case. The Tribunal observed that the appellant is entitled to exercise her remedy under the Companies Act, 2013, and the imposition of costs needed review. The Tribunal remanded the matter back to the NCLT, Chennai Bench, for appropriate consideration, ensuring proper opportunities for the parties to present their case. Conclusion: The Tribunal highlighted the necessity for shareholder approval for the sale of substantial company assets and the appellant's right to seek relief under Sections 241-242 of the Companies Act, 2013. The matter was remanded to the NCLT, Chennai Bench, for fresh consideration, ensuring that the appellant is given a proper opportunity to present her case without being influenced by previous orders. No order as to costs was made.
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