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2017 (10) TMI 89 - Tri - Companies LawOppression and mismanagement - eligibility of meeting appointing the AD - Held that - Here no grounds are given for removal of the petitioner as Director. The contention of respondents that they have issued notice to convene AGM on 29.12.2010 to transact the business of removal of petitioner as Director. This is a notice dated 07.12.2010 said to have been sent to the petitioner under Certificate of posting. The notice fixing the date for EGM did not contain any reasons for removal of petitioner as Director. There was no E-mail communication to the petitioner about the proposed AGM on 29.12.2010. It is surprising to see as to why the notice was sent to the petitioner by Certificate of posting than through E-mail. There was lot of correspondence between the petitioner and the respondents and vice versa through E-mail only concerning all important matters of the Company. It is very surprising that Respondents No.1 to 3 have chosen the mode of communication through Certificate of posting rather than e-mail. From the above, the intention of Respondents is evident that they wanted to keep the petitioner in dark so that they can take drastic action against him. The petitioner being 50% shareholder of the 1st Respondent Company and also a promoter, his removal as Director of the Company on the ground of causing loss to the Company is totally unsustainable. It is clear that the said allegation was invented with a view to take control of the Company by Respondents No.2 and 3 by removing the petitioner. Thus, all these actions were initiated behind the back of the petitioner. We are of the opinion that the petitioner has made out a case of oppression and mismanagement against Respondents No.2 and 3 and consequently, we pass the following reliefs against Respondents No. 2 and 3 by allowing the petition. (1) By declaring that the meeting held on 24.08.2010 by which Respondent No.3 was appointed as Additional Director as illegal and is therefore, his appointment is set aside; (2) By declaring that the removal of petitioner as Director of the 1st respondent company in the impugned AGM dated 29.12.2010 as illegal and contrary to law and is therefore set aside and the petitioner is restored as Director of the 1st respondent Company; Relief No. 3 deleted in lieu of modified order dated 30.08.2017 (3) In the facts and circumstances of the case elaborated above, the petitioner may be permitted to invest for allotment of 22,500 shares at the current valuation 67,500 shares of the Company and the Company should have further shares to the petitioner in terms of the provisions of Section 62 of the Companies Act, 2013 (4) By declaring that Form-32 dated 29.12.2010 filed before the Registrar of Companies, Karnataka at Bangalore, as null and void
Issues Involved:
1. Appointment of Respondent No.3 as Director. 2. Increase in Share Capital. 3. Removal of the Petitioner as Director. 4. Allegations against Respondent No.4 (Auditor). Issue-wise Detailed Analysis: 1. Appointment of Respondent No.3 as Director: The petitioner contended that the appointment of Respondent No.3 as Director was done behind his back and without his consent. He alleged that there was no Board meeting on 24.08.2010, and the proceedings were fabricated. The tribunal found that there was no proof of a Board meeting on 24.08.2010, and the E-mail correspondences did not disclose the appointment of Respondent No.3. The tribunal concluded that the appointment of Respondent No.3 was concocted and created, and thus, the appointment was set aside as null and void. 2. Increase in Share Capital: The petitioner argued that the increase in share capital was done without his knowledge and behind his back, violating the Articles of Association. The tribunal noted that there was no proof of any Board meeting or EGM held on 07.12.2010 and 29.12.2010, respectively. The respondents failed to prove the need for increasing the share capital and did not follow the prescribed procedure in Article 5 of the Articles of Association. The tribunal declared the enhancement of share capital by issuing 90,000 shares and allotting them between Respondents No.2 and 3 as illegal, null, and void. 3. Removal of the Petitioner as Director: The petitioner contended that his removal as Director was done without following the due process and was based on fabricated documents. The tribunal found that no notice was given to the petitioner under Section 190 of the Companies Act, 1956, and no opportunity was provided for him to be heard. The tribunal noted that the removal was against Article 16 of the Articles of Association, which provided that the first Director shall continue to hold office until they vacate voluntarily or are disqualified by law. The tribunal set aside the removal of the petitioner as Director and restored him to his position. 4. Allegations against Respondent No.4 (Auditor): The petitioner alleged that Respondent No.4 colluded with Respondent No.2 and misused his digital signature. Respondent No.4 denied these allegations, stating that he acted on the consent given by the petitioner for filing documents with the Registrar of Companies. The tribunal found that the petitioner failed to substantiate his allegations against Respondent No.4, and thus, no adverse findings were made against Respondent No.4. Conclusion: The tribunal allowed the petition, setting aside the appointment of Respondent No.3 as Director, declaring the increase in share capital as null and void, and restoring the petitioner as Director. The tribunal also declared Form-32 dated 29.12.2010 filed before the Registrar of Companies as null and void. No costs were awarded.
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