2021 (5) TMI 607 - Tri - Companies Law

Oppression and mismanagement - non-service of notice for any meeting except for the meeting dated 14.10.2017 - Rights issue applied or not - HELD THAT - The notice for the meeting is sent and he is also having knowledge of meeting, the petitioner has received the offer letters for Rights issue and he has not applied for the Rights issue. Further Rights issue was made in October 2017, and he is having the knowledge of Rights issue and its allotment, he filed this petition as an afterthought only in 30.10.2018 on non-receipt of full consideration for sale of the shares as per his version orally agreed consideration. Hence, the Rights Issue and its allotment by the company is in order. Service of notice - HELD THAT - The Respondent Company has not filed any proof for serving the notice or attendance of the Petitioner in the meeting and Respondent no 3 contended that notice was served and postal receipt is attached in page 317 of the petition. But there are no postal receipt, further the DIN no of R4 and R5 is allotted on 03.01.2018 where as they were appointed as Directors on 26.12.2017. As per Section 152(3) of the Companies Act, No person shall be appointed as Director of a company unless he has been allotted the Director Identification Number under Section 154 or any other number under as may be prescribed under Section 153 Hence, the appointment of R4 and R5 as director in the EOGM dated 26.12.2017 is not valid. It is admitted by the petitioner that he has received ₹ 25 lakhs from R4 and ₹ 25 lakhs from R5 as consideration for sale of shares. The Respondents have agreed to transfer the shares to petitioner if ₹ 50 lakhs is repaid. The petitioner is also willing to repay ₹ 50 lakhs. The Petitioner has liberty to repay ₹ 50 lakhs and get back his share certificate. Any transfer shares without Share Transfer Form, is not valid - The Respondent agreed not to Effect the sale of the assets to purchaser (Respondent no 6) and stated that the purchaser is not interested in purchase. It is admitted by the Respondent that the Bank Loan is repaid. In that event the Respondent 1 Company to co-operate and furnish/execute necessary papers/documents for release of the personal property of the petitioner mortgaged with the Bank - Petition partly allowed.

Summary

Issues Involved:
1. Oppression and mismanagement under Sections 241-242 of the Companies Act, 2013.
2. Validity of Board Meetings and resolutions passed therein.
3. Validity of share allotment and rights issue.
4. Validity of the appointment of directors.
5. Sale of company assets without shareholder consent.
6. Personal property mortgage release.
7. Interim reliefs and status quo maintenance.

Detailed Analysis:

1. Oppression and Mismanagement:
The petitioner, a shareholder holding 50% of the company shares, filed a petition under Sections 241-242 of the Companies Act, 2013, alleging acts of oppression and mismanagement by the respondents. The petitioner sought various reliefs, including the appointment of an administrator, preventing the sale of company assets, and declaring certain board and general meetings illegal.

2. Validity of Board Meetings and Resolutions:
The petitioner claimed that he did not receive notices for several board meetings held in 2017-18, and that the statutory records were falsified to show his attendance. The tribunal noted that the petitioner did receive notices for some meetings but did not attend them. The tribunal emphasized that as per Section 167(1)(b) of the Companies Act, a director's office becomes vacant if they are absent from all board meetings for 12 months. The tribunal found that the petitioner had knowledge of the meetings and the rights issue but did not participate, indicating that the board meetings and resolutions were valid.

3. Validity of Share Allotment and Rights Issue:
The petitioner alleged that the rights issue conducted in October 2017 was illegal as he was not properly notified. The tribunal found that the petitioner received the offer letters but chose not to subscribe, and filed the petition only after a year, indicating an afterthought. The tribunal upheld the validity of the rights issue and share allotment.

4. Validity of the Appointment of Directors:
The petitioner challenged the appointment of R-4 and R-5 as directors, claiming the EOGM held on 26.12.2017 was illegal. The tribunal found that the DIN numbers for R-4 and R-5 were allotted on 03.01.2018, after their purported appointment, violating Section 152(3) of the Companies Act. Hence, the appointment of R-4 and R-5 was declared invalid.

5. Sale of Company Assets Without Shareholder Consent:
The petitioner opposed the sale of GIDC plots, alleging it was done without proper shareholder consent. The tribunal noted that the respondent agreed not to proceed with the sale as the purchaser was no longer interested. Thus, the issue of asset sale was resolved.

6. Personal Property Mortgage Release:
The petitioner sought the release of his personal property mortgaged to the bank. The tribunal directed the respondent company to cooperate and furnish necessary documents to release the petitioner's mortgaged property, as the bank loan had been repaid.

7. Interim Reliefs and Status Quo Maintenance:
The petitioner sought interim reliefs to maintain the status quo of company assets and prevent the execution of sale deeds. The tribunal's order to maintain the status quo was upheld until the disposal of the petition.

Conclusion:
The tribunal partially allowed the petition, validating the rights issue and board meetings, but invalidated the appointment of R-4 and R-5 as directors. The tribunal directed the release of the petitioner's mortgaged property and allowed the respondent company to proceed with appointing a new auditor following the resignation of the previous one.