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2022 (8) TMI 322 - AT - Insolvency and BankruptcyRestraint on Appellants from acting upon or giving effect to any resolution passed at the EGM held on 25.01.2022 till the disposal of the Company Petition - whether the right of the shareholders calling the EGM of the Company in view of the statutory right enshrined in the statute can be interfered with by the Tribunal? - HELD THAT - In the present case, the requisitionist/shareholder i.e. SGAH admittedly holding 77.04% of shares in SACL, has every right to issue a notice calling for as EGM as per Section 100 of the Companies Act, 2013. However, the Respondents have rejected the requisitionist request on 17.12.2021 on the ground that the Director Mr. Yeap is not authorised to requisition EGM on behalf of SGAH. And the Aapico cannot seek to enforce Singapore Award until Madras High Court uphold its validity and the Aapico cannot unilaterally take law into their own hands. As per the provisions of Section 100(4) of the Companies Act, 2013 if the Board does not within 21 days from the date of receipt of a valid requisition in regard to any matter, proceed to call a meeting for the consideration of that matter on a day not later than 45 days from the date of receipt of such requisition the meeting may be called and held by the requisitionists themselves within a period of 3 months from the date of the requisition. Failing to call the meeting by the SACL Board, the requisitionist itself convened a meeting of EOGM on 25.01.2022 is in accordance with law - In the present case, the Learned NCLT passed the impugned order restraining the Appellants in giving effect to any resolutions that was passed at the EGM held on 25.01.2022 till the disposal of the Company Petition, in our view is without any proper analysis and no finding recorded with regard to how the outcome of the resolution / decision is prejudicial to the public interest or the company at large. The Learned NCLT merely recorded the pending proceedings before the Hon ble High Court of Madras and UK Court. The NCLT ought to have seen that whether the requisitionist has right to call for an EGM in accordance with law or not. Admittedly, the 3rd Appellant holding 77.04% of shareholding in SACL. This Tribunal is of the view that the right exercised by the requisitionist is in accordance with shareholder agreement dated 29.09.2018 and in accordance with Articles of Association of the SACL. This Tribunal in unequivocal terms hold that validly passed resolution cannot be stayed. This Tribunal comes to an irresistible and inescapable conclusion that the impugned order passed by the Learned NCLT dated 29.03.2022 in CP No. 25/2022 is hereby set aside - Appeal is allowed with a request to the Learned NCLT to dispose of the CP No. 25/2022 within a period of one month from the date of receipt of copy of this order.
Issues Involved:
1. Validity of the resolutions passed at the EGM held on 25.01.2022. 2. Right of majority shareholders to convene and hold an EGM. 3. Legality of the NCLT's interim order restraining the implementation of EGM resolutions. 4. Applicability of the Singapore Arbitration Award and its enforcement in India. 5. Shareholder rights under the Companies Act, 2013, and the Shareholders Agreement (SHA) dated 29.09.2018. Detailed Analysis: 1. Validity of the Resolutions Passed at the EGM Held on 25.01.2022: The Appellants argued that the resolutions passed at the EGM were valid as the meeting was convened by the majority shareholder, SGAH, holding 77.04% shares in SACL. The resolutions aimed to appoint additional nominee directors and remove current nominee directors from the 1st Respondent and its Group Companies. The NCLT's order dated 29.03.2022 restrained the Appellants from acting upon these resolutions, which the Appellants contended was an abuse of legal process. 2. Right of Majority Shareholders to Convene and Hold an EGM: The Appellants contended that under Section 100 of the Companies Act, 2013, they had a statutory right to call an EGM. The requisition for the EGM was issued on 15.11.2021, and when the Board of SACL failed to act within the stipulated time, SGAH convened the EGM on 25.01.2022. The Tribunal affirmed that the requisitionists followed due procedure and had the right to convene the EGM. 3. Legality of the NCLT's Interim Order Restraining the Implementation of EGM Resolutions: The Appellants argued that the NCLT's interim order was contrary to the law settled by the Supreme Court in LIC vs. Escorts Limited, which held that validly passed resolutions at an EGM cannot be stayed. The Tribunal found that the NCLT's order was an egregious departure from the law and lacked proper analysis. The Tribunal concluded that the NCLT should not have granted the injunction without recording how the resolutions were prejudicial to public interest or the company at large. 4. Applicability of the Singapore Arbitration Award and Its Enforcement in India: The Respondents argued that the Singapore Arbitration Award, which recognized the Appellants' rights of management and representation on the SACL Board, was not enforceable in India without the approval of the Madras High Court. The Tribunal noted that the Appellants had invoked arbitration under the SHA, and the award recognized their right to appoint directors proportionate to their shareholding. Despite ongoing proceedings in the UK Court and the Madras High Court, the Tribunal found that the Appellants' right to call the EGM was valid. 5. Shareholder Rights Under the Companies Act, 2013, and the SHA Dated 29.09.2018: The Tribunal emphasized that the Articles of Association of SACL, read with the SHA, provided the Appellants the right to appoint and remove directors. The Tribunal held that the shareholders' right to call an EGM and pass resolutions was protected under the Companies Act, 2013, and could not be restrained by the NCLT without a prima-facie finding of prejudice to public interest or the company. Conclusion: The Tribunal set aside the NCLT's interim order dated 29.03.2022, allowing the resolutions passed at the EGM on 25.01.2022 to be implemented. The Tribunal directed the NCLT to dispose of CP No. 25/2022 within one month, allowing the parties to complete and exchange their pleadings before the hearing. The Tribunal reiterated that validly passed resolutions at an EGM cannot be stayed, upholding the shareholders' statutory rights under the Companies Act, 2013, and the SHA.
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