2021 (7) TMI 565 - Tri - Companies Law

Entitlement and eligibility to seek direction for calling an Extra-ordinary General Meeting in the Respondent Company by this Tribunal - Section 98 of the Company Act 2013 - HELD THAT - Under Section 98 of Companies Act, 2013, Tribunal may either Suo motu or on the application of any director or member of the company may exercise its power, only if; for any reason, it is impracticable to call a meeting of a company, other than an annual general meeting - Whereas a bare perusal of the provision of Section 100 of the Companies Act 2013 shows that the board may whenever it deems fit may call an extra ordinary general meeting of the company under Section 100(1) of Companies Act, 2013 - Apart from that provision, even a shareholder under Section 100(2) of Companies Act, 2013 may send a requisition to call an EOGM and in view of Section 100(4) of the Companies Act, 2013, on the requisition of the shareholder, if the Board does not within twenty-one days from the date of receipt of a valid requisition, proceed to call a meeting for the consideration of that matter on a day not later than forty-five days from the date of receipt of such requisition, the requisitionists themselves within a period of three months from the date of the requisition shall call and held a meeting in the same manner in which the meeting is called by the Board. The petitioner being the shareholder of the company is entitled under the law to submit a requisition to call an EOGM under Section 100(2) of the Companies Act, 2013. Apart from that it is admitted by the petitioner that the petitioner is the director of the company and the respondent No. 2 in its reply has also admitted that the resignation of the petitioner No. 1 from the post of director has not been accepted as yet and the name of the petitioner No. 1 and her son are still appearing on the website of Ministry of Corporate Affairs, as Directors in the respondent No. 1 company. So, the petitioner may even call an EOGM u/s. 100(1) of the Companies Act, 2013. It is seen that there is a specific provision under the Companies Act, 2013 to call an EOGM and there is no objection on behalf of respondent No. 2 to call an EOGM under Section 100 of the Companies Act, 2013. Hence, it is not impracticable to call an EOGM of the company. So, under such circumstances instead of exercising power under Section 98 of the Companies Act, 2013, it is deemed proper to direct the petitioner to call an EOGM of the company as per the provision contained under Section 100 of the Companies Act, 2013. The prayer of the petitioner to call an EOGM of the company under Section 98 of the Companies Act, 2013 is hereby rejected and the petitioner is hereby directed to take appropriate steps to call an EOGM in accordance with the provision of Section 100 of the Companies Act, 2013 - Application disposed off.

Summary

Issues Involved:
1. Entitlement to call an Extra-ordinary General Meeting (EOGM) under Section 98 of the Companies Act, 2013.
2. Shareholding and directorship disputes.
3. Marital dispute and its impact on company affairs.
4. Compliance with statutory provisions for calling an EOGM.

Issue-wise Detailed Analysis:

1. Entitlement to call an Extra-ordinary General Meeting (EOGM) under Section 98 of the Companies Act, 2013:
The Applicant/Petitioner, holding 20% of the shareholding in the Respondent No. 1 Company, sought a direction from the Tribunal to call an EOGM under Section 98 of the Companies Act, 2013. The Tribunal noted that Section 98 allows for Tribunal intervention if it is "impracticable to call a meeting" in the prescribed manner. However, Section 100 provides that the Board or shareholders holding not less than one-tenth of the paid-up share capital can requisition an EOGM. The Tribunal observed that the Petitioner had not availed the provision under Section 100(2) and could still call an EOGM under Section 100(1) as the resignation had not been formalized. Hence, the Tribunal directed the Petitioner to follow the procedure under Section 100 instead of exercising its power under Section 98.

2. Shareholding and directorship disputes:
The Petitioner claimed to have resigned from the directorship along with her son, leaving the company without active directors. The Respondent No. 2, holding 80% shares, contended that the Petitioner was responsible for the company's affairs and had misled the bank to freeze the company's account. The Tribunal noted that the Petitioner and her son were still listed as directors on the Ministry of Corporate Affairs website, indicating that their resignations were not formalized. The Tribunal concluded that the Petitioner could call an EOGM as a director under Section 100(1).

3. Marital dispute and its impact on company affairs:
The marital dispute between the Petitioner and Respondent No. 2 had led to various legal proceedings, including a Domestic Violence Complaint and a FIR under the Muslim Women (Protection of Rights on Marriage) Act. The Petitioner argued that the lack of communication with Respondent No. 2 made it impractical to wait for 21 days to call an EOGM. The Respondent No. 2, however, claimed that the marital dispute had no bearing on the company's affairs and that he had no active role in managing the company.

4. Compliance with statutory provisions for calling an EOGM:
The Tribunal emphasized the need to comply with statutory provisions under the Companies Act, 2013. It highlighted that the Petitioner had not utilized the provision under Section 100(2) to requisition an EOGM and could still call an EOGM as a director under Section 100(1). The Tribunal found no impracticality in calling an EOGM as per Section 100 and thus rejected the prayer under Section 98.

Conclusion:
The Tribunal rejected the Petitioner's application to call an EOGM under Section 98 of the Companies Act, 2013, and directed the Petitioner to take appropriate steps to call an EOGM in accordance with Section 100 of the Companies Act, 2013. The application was disposed of accordingly.