2020 (10) TMI 277 - Tri - Insolvency and Bankruptcy

Validity of Board Meeting - issuance of SCN - Removal of Director of Company - whether the petitioner is a shareholder or not? - HELD THAT - A decision as regards the shareholding of the petitioner needs an elaborate hearing. When a meeting was held invalid, the Resolution passed therein has to go but since the issue has been raised by the petitioner that it was set aside as regards respondent No. 4 but not as regards the petitioner, it requires further hearing supported by records and evidence available, which probably would be available with the petitioner. It can certainly not be completed in a hearing through Video Conferencing. Both the parties are interpreting the judgment as regards shareholding of the petitioner in their own way. In these circumstance, we leave this issue open, for being decided after hearing the matter further at length. The maintainability of the application cannot be heard unless and until a clarification of the operative part of the judgment under challenge is obtained. The clarification would certainly go to the root of the right of Smt. Usharani in holding the disputed shareholding. Since such a dispute has already been entertained in the said CP, prima facie, the very same question cannot be entertained as it would attract constructive res-judicata. However, till the clarification is obtained, it is fair and just to safeguard the only one property held by R-1. Accordingly we are of the opinion that a status quo in regard to the landed property is to be passed till the petition is finally heard. An order of status quo pending final hearing of the maintainability of the petition is passed.

Summary

Issues Involved:
1. Validity of the Board Meetings and Resolutions dated April 22, 2020, and May 16, 2020.
2. Legality of the removal of the petitioner as a director.
3. Petitioner's entitlement as a shareholder.
4. Allegations of oppression and mismanagement.
5. Maintenance of status quo regarding the company's assets.

Issue-wise Detailed Analysis:

1. Validity of the Board Meetings and Resolutions dated April 22, 2020, and May 16, 2020:
The petitioner argued that the Board Meetings held on April 22, 2020, and May 16, 2020, were illegal, null, and void as no proper notice was given to her as a shareholder. Section 101 of the Companies Act, 2013, mandates that notice of every meeting should be given to every member of the company. The petitioner claimed she was only notified as a director and not as a shareholder, thereby invalidating the proceedings. The respondents countered that the petitioner was not a shareholder, and hence, the notice under Section 101 (3)(c) sufficed.

2. Legality of the Removal of the Petitioner as a Director:
The petitioner contended that her removal as a director during the AGM on May 16, 2020, was illegal as she was not allowed to vote in her capacity as a shareholder. The respondents maintained that since the petitioner was not a shareholder, her removal was valid. The Tribunal noted that the issue of the petitioner's shareholding needed further examination and could not be conclusively determined in a video conferencing hearing.

3. Petitioner's Entitlement as a Shareholder:
The petitioner claimed she was allotted 5000 shares in 2013, and this allotment was upheld in previous orders by the NCLT and NCLAT. However, the respondents argued that the Board Resolution that allotted shares to the petitioner was invalidated in previous proceedings, and thus, she was not a shareholder. The Tribunal recognized the need for further evidence and clarification on this matter, noting that the previous judgment's operative part did not explicitly quash the resolution regarding the petitioner's shares.

4. Allegations of Oppression and Mismanagement:
The petitioner alleged that respondents 2 and 3 acted with ill motive and malafide intentions, leading to her removal as a director and the potential disposal of the company's assets for personal gain. The Tribunal acknowledged that the issue of oppression and mismanagement required an elaborate hearing and could not be resolved summarily.

5. Maintenance of Status Quo Regarding the Company's Assets:
Given the ongoing dispute and the need for further clarification on the petitioner's shareholding, the Tribunal ordered the parties to maintain the status quo concerning the company's landed property. This order aimed to safeguard the company's assets until the final hearing of the petition.

Conclusion:
The Tribunal concluded that the maintainability of the petition could not be determined without further clarification on the petitioner's shareholding. The Tribunal directed the parties to maintain the status quo regarding the company's assets and allowed for the filing of reply/rejoinder affidavits. The matter was left open for further hearing post-lockdown, with parties given the liberty to mention the petition for listing after the lockdown is lifted.