2020 (10) TMI 174 - Tri - Companies Law

Oppression and mismanagement - rectification of share register of Respondent - shareholder of Respondent No. 1 Company or not - removal of the Petitioner from the Directorship of the Respondent No. 1 Company - maintainability of petition - section 241 of the Companies Act 2013. HELD THAT - All the Agreements i.e. Facilitation Agreement and Pledge Agreement dated 06.10.2016 and letter 07.10.2016 have been duly executed by the authorized signatory of the Respondent Nos. 1 7 namely Mr. Vikram Prabhakar (Respondent No. 2). However the Respondent No. 2 contemptuously denying everything including his signature by alleging fraud forgery misrepresentation for the first time in his Reply without raising those issues before filing the instant Company Petition. It is for the Respondents to take appropriate civil/criminal action if the Petitioners are resorting to such type of frauds. Instead of doing so they are making baseless allegations in the instant Petition - the facts and circumstances of the case shows even though the Petitioner has rendered substantial services to the Respondents and got executed Facilitation Agreement in its favour the Petitioner could not get any benefit out of the transaction and on the top of it the Respondents wanted to remove even nominee Directors of Petitioner No. 1 on un-tenable grounds as detailed supra in order to deprive them as not to involve in the affairs of the Respondent No. 1 Company. They have succeeded in their attempt to remove them while the Company Petition is pending. The main contentions/allegations raised on behalf of the Respondents such fraud forgery manipulation of records etc. are not at all tenable and not substantiated by the Respondents. It is relevant to point out here the affairs of R 1 Company is under the control of other Respondents but not under the control of Petitioners and even the nominee Directors of Petitioner No. 1 were thrown illegally moreover by examining the signature of Mr. Vikram Prabhakar(MD/Respondent No. 2) appearing on various documents including Facilitation Agreement Pledge Agreement with naked eye there is no doubt in our mind that those signatures are not all forged and those documents binds on the Respondents - In terms of said Facilitation and Pledge Agreements and as per said Articles of Association all conditions required to be fulfilled for transfer of shares stand fulfilled at least in respect of 51 % of shares held by Respondent No. 7 at the time of Pledge Agreement and the second Respondent cannot deny it and the Respondent No. 1 Company is bound to register the name of Petitioner No. 1 in the Register of Members of R 1 Company. Even subsequent consideration for transfer of shares was paid by the First Petitioner to the Respondent. The contention of the Respondent Nos.2 and 7 that the amount paid by the Petitioner No. 1 towards consideration of the share price value of the Transfer of Shares is not towards consideration for transfer of shares is not at all tenable and same is liable to be rejected. It is bounden duty of the Respondent No. 1 Company to register the names of the Petitioner No. 1 in the Register of Members. Moreover it is not the case of the Petitioner that the Transfer of Shares in question was rejected by the Company so as to give cause of action to the Petitioner to file any Petition/Application U/s.58 or 59 of the Companies Act 2013. Therefore the Petitioner No. 1 deemed to be shareholder holding 51% of Shares of Respondent No. 1 Company. Therefore the Petitioner No. 1 can maintain the main Company Petition filed U/s.241 of the Companies Act 2013. Similarly by virtue of Facilitation Agreement Petitioner Nos.2 to 4 are entitled to be continued as nominee Directors and they cannot be removed without participation of Petitioner No. 1 in the concerned meetings. Therefore removal of the Petitioners No. 2 to 4 from the Directorship of Respondent No. 1 Company is illegally contrary to law and against the principle of nature justice. Transfer of shares - HELD THAT - There are lapses on the part of first Petitioner to take appropriate action at appropriate time. So that the Respondents able to take several actions including transfer of shares to other Persons. In respect of remaining shares there is no pledge Agreement by other shareholders unlike Respondent No. 7. Therefore the first Petitioner has not satisfied the Tribunal for transfer of entire shareholding of R 1 Company by producing the relevant documents for Transfer of Shares in terms of the Article 20 21 22 and the extant provisions of the Companies Act. Thus the instant Company Petition is maintainable U/s.241 of the Companies Act 2013 and the Petitioner No. 1 deemed to be a shareholder of Respondent No. 1 Company by holding 51% of Shares as held by the Respondent No. 7 and the Petitioner Nos.2 to 4 cannot removed from the position of Directors of R 1 Company without consent of majority shareholders and it is contrary to law and against the principle of natural justice - petition disposed off.

Summary

Issues Involved:
1. Whether the Petitioner No. 1 is deemed to be a shareholder of Respondent No. 1 Company.
2. Whether the removal of Petitioner Nos. 2 to 4 from the Directorship of Respondent No. 1 Company was in accordance with law.
3. Whether the main Company Petition is maintainable under Section 241 of the Companies Act, 2013.

Detailed Analysis:

Issue 1: Whether the Petitioner No. 1 is deemed to be a shareholder of Respondent No. 1 Company

The Tribunal examined the Facilitation Agreement dated 06.10.2016, the Pledge Agreement dated 07.10.2016, and the Board’s Resolution dated 19.12.2016. The Facilitation Agreement outlined the services rendered by the Petitioner No. 1 and the consideration agreed, which included a security deposit of Rs. 25,00,00,000. The Pledge Agreement secured the payment of the deposit amount by pledging 51% of the shares of Respondent No. 1 Company to Petitioner No. 1. The Board of Directors of Respondent No. 1 Company passed a resolution on 19.12.2016 approving the transfer of shares to Petitioner No. 1. Despite the Respondents' allegations of fraud and forgery, the Tribunal found no evidence to substantiate these claims. The Tribunal concluded that the Petitioner No. 1 is deemed to be a shareholder holding 51% of the shares of Respondent No. 1 Company.

Issue 2: Whether the removal of Petitioner Nos. 2 to 4 from the Directorship of Respondent No. 1 Company was in accordance with law

The Tribunal found that the removal of Petitioner Nos. 2 to 4 from the Directorship of Respondent No. 1 Company was done without following the due process of law. The removal was carried out without providing sufficient notice or the opportunity to be heard, which is required under the Companies Act, 2013. The Tribunal noted that the Respondents acted in an oppressive manner by removing the nominee directors of Petitioner No. 1 to deprive them of their rights. Consequently, the Tribunal set aside the removal of Petitioner Nos. 2 to 4 from the Directorship of Respondent No. 1 Company.

Issue 3: Whether the main Company Petition is maintainable under Section 241 of the Companies Act, 2013

The Tribunal held that the main Company Petition is maintainable under Section 241 of the Companies Act, 2013. The Tribunal reasoned that Petitioner No. 1, being a shareholder holding 51% of the shares, has the locus standi to file the petition. The Tribunal rejected the Respondents' contention that the petitioners were not members of the company and therefore could not seek relief under Section 241. The Tribunal emphasized that the oppressive acts and mismanagement by the Respondents justified the filing of the petition to protect the rights of the shareholders and the company.

Conclusion:

The Tribunal declared that Petitioner No. 1 is deemed to be a shareholder holding 51% of the shares of Respondent No. 1 Company and directed Respondent No. 1 Company to register the name of Petitioner No. 1 in the Register of Members within three weeks. The Tribunal set aside the removal of Petitioner Nos. 2 to 4 from the Directorship of Respondent No. 1 Company. Other reliefs sought by the Petitioners were rejected as devoid of merits. No order as to costs was made.