2018 (9) TMI 1004 - AT - Companies Law

Oppression and mismanagement - Illegal increase in the authorised share capital - appellants have stated that No notice for holding AGM or EOGM was served on the appellants relating to the increase of authorised share capital of 1st respondent - Held that - It is noted that in the agreement it is stated that if ₹ 700001/- or any part amount has not been paid within the stipulated period then the shares in proportionate to the outstanding amount will be treated as not transferred. Since the 2nd respondent has not paid the remaining consideration amount of ₹ 700001/-, therefore, 2nd respondent is not entitled for 412 shares (941- 529 shares). Further, we find that the respondents have complied the orders dated 7.7.2017 of the Tribunal and have sent the shares certificate No.27, 28 and 29 in the name of Sujit Kumar Das to the appellants. After hearing the learned counsel for the parties we have come to the conclusion that the appellants have failed to establish the act of oppression and mismanagement. In view of the aforegoing discussions, the conclusion drawn by the Tribunal are justified and reasonable. The appellant has failed to establish his case.

Issues Involved:
1. Validity of the increase in authorized share capital.
2. Legality of the allotment of shares.
3. Change of registered office and bank account without appellants' knowledge.
4. Validity of directorship and removal of directors.
5. Stoppage of monthly payments to appellants.
6. Validity of the agreement dated 6th May, 1998.
7. Allegations of oppression and mismanagement.

Detailed Analysis:

1. Validity of the Increase in Authorized Share Capital:
The appellants argued that no notice for holding AGM or EOGM was served on them regarding the increase of authorized share capital from ?5,00,000/- to ?15,00,000/-. The respondents countered by stating that the increase was necessary for obtaining credit facilities and that all notices were duly served. The Tribunal found that the interest of the company is paramount and justified the increase in capital as the appellants did not express any inclination to subscribe to the additional capital.

2. Legality of the Allotment of Shares:
The appellants claimed that 12,718 shares were illegally allotted to the respondents. The respondents argued that the allotment was necessary for securing advances and that due notice was sent to the appellants. The Tribunal held that the increase in capital and subsequent allotment were justified as the appellants did not show any willingness to acquire the proportionate shares.

3. Change of Registered Office and Bank Account:
The appellants alleged that the registered office and bank account were changed without their knowledge. The respondents provided evidence of notices sent for these changes and argued that the changes were made for the smooth running of the company. The Tribunal found that the changes were justified and not oppressive as they were made for the company's convenience and within the same city.

4. Validity of Directorship and Removal of Directors:
The appellants contended that the appointment of appellant No.3 as a director was valid despite not filing Form 32 and that her removal was unjustified. The respondents argued that the 3rd appellant did not attend consecutive board meetings and failed to submit necessary documents, leading to her removal as per the law. The Tribunal concluded that the removal was lawful due to non-attendance and non-compliance with statutory requirements.

5. Stoppage of Monthly Payments to Appellants:
The appellants argued that the monthly payments of ?20,000/- were stopped, raising suspicions of foul play. The respondents clarified that the payments included director’s remuneration and rent for the registered office, which ceased upon the director’s death and the office’s relocation. The Tribunal agreed that it was not legitimate to expect continued payments after the director's death and office relocation.

6. Validity of the Agreement Dated 6th May, 1998:
The appellants disputed the validity of an agreement for transferring shares, arguing it was not fully executed and later terminated. The respondents maintained that the agreement was valid, and partial payment was made. The Tribunal noted that the unpaid balance meant some shares were not transferred, and the respondents complied with the Tribunal's order to transfer the remaining shares.

7. Allegations of Oppression and Mismanagement:
The appellants alleged acts of oppression and mismanagement, including manipulation of accounts and records. The Tribunal found no substantial evidence to support these claims, noting that the appellants had delayed raising these issues and failed to establish any acts of oppression or mismanagement.

Conclusion:
The Tribunal upheld the original order, finding no merit in the appellants' claims. The appeal was dismissed, and the order dated 7th July, 2017, by the National Company Law Tribunal, Kolkata Bench, was upheld. No order as to costs was made.

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