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2023 (6) TMI 651 - AT - Companies LawSeeking to declare the Meetings of the Board of Directors of the first Respondent Company/M/s. MetroCorp Infrastructure Ltd. as null void - seeking to declare the Mortgage Deeds signed pursuant to the aforesaid Meetings as null void - direction of removal of the second Respondent from the Board of Directors of MetroCorp. - case of Oppression and Mismanagement or not. HELD THAT - It is seen from the record that it is an admitted fact by the Appellants themselves that Board Meetings were conducted on 29.10.2008, 25.02.2009, 23.06.2009, 02.09.2009, 27.12.2010, 18.03.2011, 05.10.2011 17.10.2011, but it is the case of the Appellants that the four Board Meetings dated 02.11.2009, 10.11.2009 25.10.2010 were conducted without issuing proper Notice and were not convened as Article 87(iii) of the AoA and that their nominee Director was not present only because due process of service of Notice was not followed. It is seen from the record that the Board Meetings dated 02.11.2009, 10.11.2009 25.10.2010 which the Appellant is strongly contesting are illegal, null void, are the dates falling in between the aforenoted admitted Board Meetings and being a majority Shareholder the Appellant has failed to adduce any evidence in support of his case that these Board Meetings were not conducted as per procedure of Law specifically taking into consideration that Mr. Jason Van Hoong, who has based in Singapore and China has not chosen to attend a single Meeting either personally or through video conference. This Tribunal is of the view that the Appellant has not denied the submission of the Respondent before the NCLT regarding the entries in the passport of Mr. Jason Van Hoong standing testimony to the fact that he had never attended any of these Meetings in India. It is stipulated in Section 283 of the Act that if a Director absents himself from three consecutive Meetings of the Board of the Directors or from all Meetings of the Board for a continuous period of three months, whichever is longer without obtaining leave of absence from the Board, the said Director is ceased to be a Director - The Appellants have not filed any material/documents in support of their contention that being a majority Shareholder they had taken all the steps to be lawfully involved in the Project through their Directors. It is evidenced from the record that a Notice of EGM dated 24.06.2013 for the Meeting proposed to be held on 30.07.2013 was sent through RPAD and the Respondent herein has filed the Postal Receipts establishing that the Notices were indeed sent and served. A Board Meeting was also scheduled to be held on the same date and a Notice was also issued for the same, the agenda being increase of Share Capital to Rs.1,10,00,000/- and to pass special Resolution to allot Equity Shares to the existing Shareholders - This Tribunal keeping in view the fact and circumstances of the case on hand and the documentary evidence holds that both the EGM and the Board Meetings held on 30.06.2013 were legal void. As far as the impugned Mortgage Meetings which the Appellant is contesting, keeping in view the material on record we agree with the finding given by NCLT that though the other Board Meetings held before and after the Impugned Meetings, were admitted by the Petitioner/Appellant, being a majority Shareholder, has indulged in dereliction of their statutory duties and has indulged in filing multiple proceedings before various fora. Subsequent to these developments, a Settlement Agreement was entered into between the parties vide a Share Purchase Agreement dated 29.09.2016 an MoU of the same date and an Escrow Agreement dated 14.02.2017 of the same date. It is the case of the Appellant that a fraud was committed by the Respondents as the Plots which were meant to finance the purchase of the Appellant s shares, have already been sold by the Respondents. The scope and objective of Sections 397, 398 399 of the Act defining Oppression and Mismanagement does not entail the Tribunal to adjudicate on the issues arising from the facts of the attendant case on hand. Even if there is any breach of the Terms of Settlement, it cannot be construed as an issue which would fall within the ambit of the definition of Oppression and Mismanagement as defined under the Act. Appeal dismissed.
Issues Involved:
1. Validity of Board Meetings and Mortgage Deeds. 2. Allegations of Oppression and Mismanagement. 3. Settlement Agreements and Alleged Fraud. Summary: 1. Validity of Board Meetings and Mortgage Deeds: The Appellant challenged the validity of Board Meetings held on 02.11.2009, 10.11.2009, and 25.10.2010, claiming they were conducted without proper notice and in violation of the Articles of Association (AoA). The Appellant argued that the quorum required under Article 87(iii) of the AoA was not met, as no nominee Director of the Appellant was present. The NCLAT found that the Appellant failed to provide evidence that these meetings were not conducted as per the law, noting that the Appellant's nominee Director had never attended any meetings in India. 2. Allegations of Oppression and Mismanagement: The Appellant alleged that the Respondents conducted oppressive acts by not issuing proper notices for Board Meetings and by creating mortgages without the Appellant's consent. The NCLAT held that the Appellant, being a majority shareholder with 75% equity, failed to substantiate their claims of oppression and mismanagement. The Tribunal noted that the Appellant did not take steps to be lawfully involved in the project through their Directors and had indulged in dereliction of their statutory duties. 3. Settlement Agreements and Alleged Fraud: The Appellant contended that the Settlement Agreements, including the Share Purchase Agreement (SPA) and Memorandum of Understanding (MoU), were rendered meaningless due to fraudulent acts by the Respondents. The Appellant claimed that plots meant to finance the purchase of their shares were sold by the Respondents. The NCLAT concluded that any breach of the Settlement Agreements does not fall within the ambit of 'Oppression and Mismanagement' as defined under the Companies Act, 1956. Conclusion: The NCLAT dismissed the appeals, finding no merit in the Appellant's claims regarding the validity of Board Meetings, allegations of oppression and mismanagement, and the alleged fraud related to the Settlement Agreements. The Tribunal upheld the NCLT's decision to dismiss the Company Petitions.
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