2022 (5) TMI 146 - Tri - Companies Law

Oppression and mismanagement - fraudulent removal of Petitioner from directorship of the Company by attaching false resignation letters bearing forged signatures of the Petitioners - Section 169 of the Companies Act, 2013 - Respondents have alleged that the land was encroached and occupied in due course and that too due to negligence of the Petitioners - Legality of e-Form DIR-12 filed for the cessation of Petitioner No. 1, 2 and 3 from directorship of the Respondent Company - legality of transfer of shares - HELD THAT - In the instant case, no evidence has been submitted by the Respondents in relation to compliance of procedural aspects while giving effect to the said resignation. No document relating to meetings of Board of Directors for taking note of the resignations has ever been produced by the Respondents. Moreover, on receipt of complaint from the Petitioners, the Registrar of Companies, Bihar took cognizance in the matter and issued a show cause notice dated 20.06.2019 to the Respondents seeking their reply within 15 days. However, no representation is stated to have been made by the respondents in this regard. Thereafter the ROC marked the R1 Company as having management dispute . This Tribunal is of the view that due compliance of Section 169 of the Companies Act, 2013 has been done in removal of Respondent No. 2 and 3 from directorship of the Respondent Company. On the above basis, it is proved that the Respondent No. 2 and 3 have committed acts of oppression and mismanagement against Petitioners as well as the Respondent Company. Petition allowed.

Issues Involved:
1. Alleged fraudulent removal of directors.
2. Allegations of oppression and mismanagement.
3. Legality of e-Form DIR-12 for cessation of directorship.
4. Legality of share transfer from Mr. Krishna Kumar Rungta.
5. Legality of removal of Respondent No. 2 and 3 from directorship under Section 169 of the Companies Act, 2013.

Detailed Analysis:

1. Alleged Fraudulent Removal of Directors:
The Petitioners alleged that Respondent No. 2 and 3 fraudulently removed Petitioner No. 1, 2, and 3 from the directorship by filing false resignation letters with forged signatures in e-Form DIR-12. The Petitioners contended that they never resigned, and the fraudulent act was discovered through an auto-generated email from the Ministry of Corporate Affairs. The Registrar of Companies (ROC), Bihar, took cognizance and issued a show cause notice to the Respondents, who failed to respond, leading the ROC to mark the Company as "having management dispute."

2. Allegations of Oppression and Mismanagement:
The Petitioners cited several instances of oppression and mismanagement by Respondent No. 2 and 3, including unauthorized agreements and financial misconduct. Respondent No. 2 and 3 allegedly extorted funds from Mr. Krishna Kumar Rungta and acted against the interests of the Company and its stakeholders. The Petitioners also claimed that Respondent No. 2 and 3 failed to infuse promised capital and engaged in actions detrimental to the Company.

3. Legality of e-Form DIR-12 for Cessation of Directorship:
The Tribunal found that the Respondents did not comply with procedural aspects while effecting the alleged resignations. No evidence of Board meetings or resolutions approving the resignations was provided. The ROC's show cause notice and subsequent marking of the Company as having a management dispute further supported the Petitioners' claims. The Tribunal concluded that the e-Form DIR-12 filed by the Respondents was illegal.

4. Legality of Share Transfer from Mr. Krishna Kumar Rungta:
The Petitioners contended that the transfer of shares from Mr. Krishna Kumar Rungta to Petitioner No. 1 was approved at a duly convened Board meeting on 08.04.2019, attended by Respondent No. 2 and 3. Despite their opposition, the resolution was approved by a majority vote. The Tribunal verified the original share certificates and found them to be in order, concluding that the share transfer was legal.

5. Legality of Removal of Respondent No. 2 and 3 from Directorship:
The Petitioners followed due process under Section 169 of the Companies Act, 2013, to remove Respondent No. 2 and 3 from directorship. Special notices were served, opportunities for representation were given, and an Extra-Ordinary General Meeting (EOGM) was convened, where shareholders unanimously approved the removal. The Tribunal found that the removal process complied with legal requirements and upheld the resolution.

Conclusion:
The Tribunal concluded that Respondent No. 2 and 3 committed acts of oppression and mismanagement. The fraudulent removal of Petitioners from directorship was nullified, and their directorship was restored as of 05.06.2019. The removal of Respondent No. 2 and 3 by shareholders was upheld. The Registrar of Companies, Bihar, was directed to take necessary steps to give effect to the order. The Petitioners were advised to seek other remedies for the alleged forgery of signatures.

Order:
- DIR-12 filed by Respondent No. 2 and 3 for cessation of Petitioner No. 1, 2, and 3 from directorship is nullified.
- Restoration of directorship of Petitioner No. 1, 2, and 3 as of 05.06.2019.
- Removal of Respondent No. 2 and 3 by shareholders on 08.07.2019 is upheld.
- Registrar of Companies, Bihar, to comply with the order.
- Petitioners may pursue other remedies for forgery allegations.

Disposition:
C.P. No. 1738/KB/2019 is disposed of, and a copy of the order is to be sent to the Registrar of Companies, Bihar, for compliance. Order signed on 22nd April, 2022.

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