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2022 (12) TMI 412 - AT - Companies LawOppression and Mismanagement - Validity of Board Meeting - appointment of Respondents 2 to 5 as Additional Directors - legality of allotment of shares made on 04.03.2013, 22.04.2013 to the second, third, sixth seventh Respondents - cancellation of said allotment and rectification in the register of Members in order to restore the original Shareholding pattern - legality of removal of the Petitioners from the directorship of the Company under Section 284 of the Companies Act 1956 in the AGM - Section 421 of the Companies Act, 2013. HELD THAT - This Tribunal having gone through the issues framed by the NCLT are of the view that they relate to the acts of Oppression and Mismanagement affecting the functioning of the Company and therefore have the jurisdiction to entertain and adjudicate these acts of Oppression and Mismanagement alleged to have been committed by the Appellants under Sections 397 398 of the Companies Act, 1956, (Sections 241 242 of the Companies Act, 2013). The issues raised by the Respondents are reflected in para 7 of the Company Petition 93/2019 and therefore it cannot be said that these issues were never pleaded or that these issues do not form part of the acts falling within the ambit of the definition of Oppression and Mismanagement as defined under Sections 241 242 of the Companies Act 2013. The pendency of the Criminal Case has no relevance to the adjudication by the NCLT regarding acts of Oppression and Mismanagement . NCLT has only based its observations that the Meeting had never taken place on the findings given by Truth Labs and the Government Forensic Laboratory, apart from other material on record . It appears from the record that Respondent No. 4 disputes his presence at the Board Meeting dated 01.10.2012. It is significant to mention that the letter dated 11.05.2015 addressed by the Bureau of Immigration, Ministry of Home Affairs, Government of India shows that the fourth Respondent had never attended any Board Meeting on 01.10.2012 as he was travelling abroad as on 01.10.2012. The NCLT has not based its opinion about the disputed Meeting on 01/10/2012, solely on the reports of Truth Labs filed before NCLT or that of Government Forensic Laboratory which is part of the record at the Criminal Court but rather on the other documents as well, including the relevant dates which substantiate the stand of the Respondents that the disputed Meeting never took place on 01.10.2012. Therefore, the contention of the Learned Counsel for the Appellant that the statements made under Section 164 is inadmissible and that the Criminal Case is still pending, is of no relevance here keeping in view the facts of the attendant case on hand This Tribunal is of the earnest view that NCLT had rightly referred to the consent letters of the third Appellant and the fourth Respondent both being backdated as the DIN Nos. were allotted by the Ministry of Corporate Affairs only on 26.12.2012 and 21.12.2012 respectively, together with all Reports of Truth Labs and Andhra Pradesh Foresnic Science Laboratories and also the evidence that the fourth Respondent was not even in India as on the date and has passed the Impugned Order, allowing the Company Petition. Appeal dismissed.
Issues Involved:
1. Validity of the board meeting held on 01.10.2012 and the appointment of additional directors. 2. Legality of the allotment of shares made on 04.03.2013 and 22.04.2013. 3. Legality of the removal of the petitioners from the directorship of the company under section 284 of the Companies Act, 1956. Issue-wise Detailed Analysis: 1. Validity of the Board Meeting held on 01.10.2012 and Appointment of Additional Directors: The NCLT declared the board meeting held on 01.10.2012 as invalid, rendering the appointment of Respondents 2 to 5 as additional directors also invalid. The Appellant argued that the term of the additional directors had ended by the time the petition was filed, making the case infructuous. They contended that there was no quorum as required under Section 287(2) of the Companies Act, 1956, and that the meeting was based on assumptions, ignoring evidence that all directors were present. The Respondents alleged forgery of digital signatures and backdating of consent letters. The NCLT relied on forensic reports from Truth Labs and Andhra Pradesh Forensic Science Laboratories, which indicated forgery and fabrication of documents. The Tribunal found that the meeting on 01.10.2012 never took place, as evidenced by the absence of Respondent 4, who was abroad, and the backdated consent letters. 2. Legality of the Allotment of Shares Made on 04.03.2013 and 22.04.2013: The NCLT found the allotment of shares on 04.03.2013 and 22.04.2013 to the second, third, sixth, and seventh Respondents to be illegal. The Appellant argued that the issues raised were not related to oppression and mismanagement but were solely about the allotment of shares. The Tribunal, however, considered these allotments as acts of oppression and mismanagement, affecting the company's functioning. The Respondents claimed that the allotments were made using forged digital signatures and fabricated documents. The NCLT's reliance on forensic reports and other evidence led to the conclusion that the allotments were illegal and directed the company to cancel them and rectify the register of members to restore the original shareholding pattern. 3. Legality of the Removal of Petitioners from Directorship: The NCLT declared the removal of the petitioners from the directorship of the company under Section 284 of the Companies Act, 1956, as illegal and null and void. The Appellant argued that there were no pleadings regarding oppression and mismanagement, and the reliefs sought were primarily related to the allotment of shares. The Tribunal found that the issues of share allotment and removal of directors fell within the ambit of oppression and mismanagement, as defined under Sections 241 and 242 of the Companies Act, 2013. The NCLT's findings were based on evidence of forgery and fabrication, including backdated consent letters and the absence of Respondent 4 from the alleged board meeting. The Tribunal upheld the NCLT's decision, dismissing the appeal and affirming the illegality of the removal of petitioners from directorship. Conclusion: The Tribunal dismissed the appeal, affirming the NCLT's decision that the board meeting on 01.10.2012 was invalid, the allotment of shares on 04.03.2013 and 22.04.2013 was illegal, and the removal of petitioners from directorship was null and void. The findings were based on evidence of forgery, fabrication, and the absence of required quorum, substantiating acts of oppression and mismanagement.
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