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2021 (5) TMI 707 - Tri - Companies LawOppression and Mismanagement - illegal share allotments - void ab-initio allotments - HELD THAT - This Tribunal has ample powers while dealing with applications filed under Section 241-242 for the purpose of safeguarding the interests of the company and its shareholders and the public in general. Such powers encompass passing of orders that may include exemption or waiver of certain parameters of the Act for larger interests. The instant application is an apt case for exercise of powers in order to bring a quietus to the issues inter-se the parties and for overall interests. The Settlement Agreement dated 20.01.2020 is taken on record and liberty is granted to the Applicants to withdraw the corresponding Company Petitions - Application disposed off.
Issues Involved:
1. Decree of the Settlement Agreement dated January 20, 2020. 2. Withdrawal of Company Petitions CP No. 11/JPR/2018 and CP No. 279/JPR/2019. 3. Waiver/exemption from penalties for inadvertent violations in share allotments. 4. Waiver/exemption from compounding of irregular appointment of directors. 5. Status of previous filings with the Registrar of Companies regarding share allotments and director appointments. Issue-wise Detailed Analysis: 1. Decree of the Settlement Agreement dated January 20, 2020: The Tribunal considered the joint applications IA No. 316/JPR/2020 in CP No. 11/JPR/2018 and IA No. 315/JPR/2020 in CP No. 279/JPR/2019, which sought to decree the Settlement Agreement dated January 20, 2020. The parties involved had been in amicable talks facilitated by friends and family, leading to a mutually acceptable settlement. The Settlement Agreement was attached as Annexure A-1 to the application. 2. Withdrawal of Company Petitions CP No. 11/JPR/2018 and CP No. 279/JPR/2019: The Tribunal noted that the Petitioners intended to withdraw the Company Petitions following the Settlement Agreement. The Respondents consented to withdraw their objections regarding alleged wrongful share allotments and irregular director appointments. The Tribunal granted liberty to the Applicants to withdraw the corresponding Company Petitions, CP No. 11/JPR/2018 and CP No. 279/JPR/2019. 3. Waiver/exemption from penalties for inadvertent violations in share allotments: The Petitioners sought waiver/exemption from penalties for inadvertent violations in share allotments. The Tribunal acknowledged that the Respondent No. 1 Company had declared the share allotments void ab-initio in a board meeting held on July 30, 2018. The Tribunal's order dated August 9, 2018, which had stayed the resolutions passed in the board meeting, was set aside by the NCLAT on October 1, 2019. Consequently, the irregular share allotments were canceled, and the actual paid-up equity share capital stood at INR 1,00,000/-. 4. Waiver/exemption from compounding of irregular appointment of directors: The Petitioners also sought waiver/exemption from compounding of irregular appointments of directors. The Tribunal noted that the Respondent No. 1 Company resolved to set aside the appointments of Petitioners No. 1 & 2 and Respondent No. 4 as directors in the board meeting dated July 30, 2018. The NCLAT's order dated October 1, 2019, resulted in the removal of these directors. The Petitioners withdrew their objections regarding their removal, and the current Board of Directors consisted of Mrs. Priya Choudhary and Mr. Rahul Yadav. 5. Status of previous filings with the Registrar of Companies regarding share allotments and director appointments: The Tribunal granted liberty to the Petitioners to seek marking as defective the previous filings with the Registrar of Companies concerning the erroneous share allotments and incorrect appointment of directors. These filings would be nullified, and appropriate modifications/rectifications could be made in relevant statutory registers and related records. Conclusion: The Tribunal, exercising its powers under Sections 241-242 of the Companies Act, 2013, and considering judicial precedents, ordered the following: (i) The Settlement Agreement dated January 20, 2020, was taken on record, and liberty was granted to withdraw the corresponding Company Petitions. (ii) No action would be taken against Respondent No. 1 Company or its past/incumbent directors or officers or shareholders by any authority concerning the improper share allotment or irregular appointment of directors. (iii) The previous filings with the Registrar of Companies regarding share allotments and director appointments could be marked as defective and nullified. (iv) Cross-petitions CP No. 11/JPR/2018 and CP No. 279/JPR/2019 were disposed of in terms of the Settlement Agreement and the Tribunal's directions.
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