9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (10) TMI 446 - Tri - Companies LawMaintainability of petition - Oppression and mismanagement - Fraudulent transfer of shares - section 241 of the Companies Act 2013 - petitioner is shareholder of company or not - name to be entered into the registers of members or not - validity of board meetings on December 10 2014 January 6 2015 and January 16 2015 - appointment of respondents Nos. 4 to 7 as directors of the company. Whether the company petition is maintainable? - Whether the petitioner is a shareholder of the company? - HELD THAT - The petitioner has not been able to establish the nexus between respondent No. 2 and Data Pro. Though memorandum of transfer in respect of those shares indicate that they have been transferred to the petitioner the petitioner has not been able to prove satisfactorily that the shares of the company were held by respondent No. 2 and they were duly transferred under section 56 of the Act to him. The board resolution dated March 7 2014 does not speak of transfer of any shares by respondent No. 2 in favour of the petitioner. Therefore the transfer of 53, 69, 520 11, 50, 000 (65, 19, 520) can only be approved. The contention of the respondent that the petitioner did not clear the whole of the loan amount would not have any consequence since as per the declaration dated November 6 2011 the petitioner was entitled to transfer of share in his favour on clearing of 50 per cent. of the outstanding dues of the bank. There is no dispute that the petitioner has cleared more than 50 per cent. of the bank dues. As against 1, 85, 00, 000 shares the petitioner is held to have owned 65, 19, 520 shares. The petitioner accordingly is share- holder of the company holding 35.24 per cent. of the paid-up share capital - Issue is answered in the affirmative. Whether his name deserved to be entered into the registers of members? - HELD THAT - The name of the petitioner ought to have been entered in the register of members of the company in terms of section 2(55) read with section 88 of the Act - answered in the affirmative. Whether the conduct of the board meetings on December 10 2014 January 6 2015 and January 16 2015 is valid? - HELD THAT - Admittedly the annual general meeting of the company was not held within that date. The petitioner as an additional director of the company did not take any steps to see and ensure that the annual general meeting was held on or before September 30 2014. The plea that he was ignorant of legal provisions to that effect would not come to his rescue. Directorship having not been ratified by the annual general meeting on or before September 30 2014 he cannot claim to hold the office of the director of the company beyond that date. Therefore the petitioner was not required to be notified of any subsequent meetings. His absence or lack of notice in the board meetings dated February 1 2014 January 6 2015 and January 16 2015 would accordingly have no consequence. The board meetings could not be invalidated on that score - answered in the negative. Whether appointment of respondents Nos. 4 to 7 as directors of the company is valid? - HELD THAT - Respondents Nos. 4 to 7 were appointed as directors of the company in the annual general meeting held on February 21 2015. Notice of the annual general meeting was required to be given in less than clear 21 days either by writing or through electronic means in terms of section 101(1) of the Act. No material is placed on record by the respondents that a notice of the meeting was sent to the petitioner who held 35.24 per cent. of shares in the company. The meeting held on February 21 2015 accordingly cannot be held to be valid. Consequently actions taken therein would necessarily be invalid. Appointment of respondents Nos. 4 to 7 as directors accordingly would not be valid - answered in the negative. Despite holding 35.24 per cent. shares in the company the name of the petitioner was not shown in any of the annual returns as required under section 92(1) of the Act subsequent to March 7 2014. The investment made by the petitioner in the nature of clearing of liabilities of the company with the bank have not been shown in the annual returns. But the mala fides of the auditor cannot be inferred merely from the fact that the payments made by the petitioner were not reflected in the annual returns. Therefore the allegation that respondent No. 8 perpetrated fraud cannot be accepted - The petitioner is declared as the owner of 65, 19, 520 shares of respondent No. 1- company. His name shall be entered in the register of members and the register shall accordingly be rectified. The annual general meeting dated February 21 2015 is held to be invalid. Appeal allowed in part.
Issues Involved:
1. Maintainability of the company petition. 2. Petitioner's status as a shareholder. 3. Entry of petitioner's name in the register of members. 4. Validity of board meetings held on December 10, 2014, January 6, 2015, and January 16, 2015. 5. Validity of the appointment of respondents Nos. 4 to 7 as directors. 6. Reliefs to which the petitioner is entitled. Detailed Analysis: Issue I: Maintainability of the Company Petition The respondents argued that the petitioner is neither a shareholder nor a director of the company, thus questioning the maintainability of the petition. The tribunal examined the factual matrix and the legal standing of the petitioner, concluding that the petition is maintainable based on the substantial investments and the agreements entered into by the petitioner. Issue II: Petitioner's Status as a Shareholder The tribunal noted that respondents Nos. 2 and 3 sought financial assistance from the petitioner to repay the company's loan to the State Bank of India. The petitioner made significant payments totaling ?7,93,54,000 by July 2014. The tribunal found that the petitioner was entitled to the transfer of shares upon repayment of 50% of the outstanding loan amount, as per the declaration dated November 6, 2011. Consequently, the petitioner was recognized as holding 65,19,520 shares, constituting 35.24% of the paid-up share capital of the company. Issue III: Entry of Petitioner's Name in the Register of Members Given the tribunal's finding that the petitioner held 35.24% of the company's shares, it concluded that the petitioner's name should have been entered in the register of members as per sections 2(55) and 88 of the Companies Act, 2013. Issue IV: Validity of Board Meetings The tribunal found that the petitioner and his son were appointed as additional directors on March 7, 2014. However, their directorship was not ratified by the annual general meeting, which was not held by September 30, 2014. Consequently, the petitioner was not required to be notified of subsequent board meetings, and the meetings held on December 10, 2014, January 6, 2015, and January 16, 2015, were deemed valid. Issue V: Validity of Appointment of Respondents Nos. 4 to 7 as Directors The tribunal determined that the annual general meeting held on February 21, 2015, was invalid due to the lack of proper notice to the petitioner, who held 35.24% of the shares. Consequently, the appointment of respondents Nos. 4 to 7 as directors was also invalid. Issue VI: Reliefs to the Petitioner The tribunal ordered the following reliefs: - The petitioner is declared as the owner of 65,19,520 shares of the company. - The petitioner's name shall be entered in the register of members, and the register shall be rectified accordingly. - The annual general meeting dated February 21, 2015, is invalid, and all consequential actions are illegal and inoperative. - The company shall hold the next annual general meeting within four months, following due legal procedures. - An independent auditor shall be appointed to conduct a comprehensive financial audit within three months, with the remuneration decided by the annual general meeting and borne by the company's funds. All other prayers were refused, and each party was ordered to bear its respective costs. Conclusion: The tribunal partially allowed the company petition, recognizing the petitioner's substantial shareholding and ordering rectification of the register of members. It invalidated the disputed annual general meeting and subsequent appointments while directing the company to hold a new annual general meeting and appoint an independent auditor for a comprehensive financial audit.
|
