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2021 (12) TMI 248 - Tri - Companies LawSeeking restraint on 2nd Respondent from conducting any meetings of the Board or the Annual General Meeting of the shareholders of the 1st Respondent Company till disposal of petition - HELD THAT - From a reading of the above, it is clear that Clause 3 of the notification GSR 464(E) dated 5th June, 2015 is applicable to a private company only if the interests of their shareholders are protected. In this case, since some of the shareholders (petitioners and Respondent No. 4) objected to the convening of the AGM, the AGM held without considering their request is against the spirit of the notification issued by Ministry of Corporate Affairs. The AGM held on 18.09.2021 is to be declared as null and void. Hence, it is declared that the AGM of the Company held on 18.09.2021 as null and void and the respondents are restrained from implementing any resolutions passed in the said AGM until further orders. Application disposed off.
Issues:
1. Application filed seeking reliefs against conducting meetings and AGM. 2. Disqualification of the 2nd Respondent as Managing Director. 3. Allegations of oppression towards majority shareholders. 4. Dispute over the notice period for AGM of a private company. 5. Validity of AGM held without considering objections. Analysis: 1. The application was filed seeking reliefs to restrain the 2nd Respondent from conducting meetings and AGM until the disposal of the case. The majority shareholders had removed the 2nd Respondent as Managing Director and appointed a new MD. Allegations of oppression towards majority shareholders were made, leading to the need for approval of resolutions by the Tribunal. The proceedings were adjourned multiple times due to requests from the Respondents, while the 2nd Respondent continued to convene meetings, causing prejudice to the Applicants. 2. The 2nd Respondent was alleged to be disqualified as Managing Director under Sec. 203(3) and the Proviso. The majority shareholders had removed the 2nd Respondent and elected a new MD. The Tribunal was approached for approval of the resolutions adopted and appointment of an interim MD. The conduct of the 2nd Respondent was viewed as contemptuous towards the judicial process, taking advantage of hearing adjournments. 3. The Tribunal addressed the dispute over the notice period for the AGM of a private company. The Respondents argued that the interests of shareholders were not compromised, emphasizing that the meeting was solely for adopting financial statements as required by law. They contended that the interests of shareholders were protected, and holding the meeting with a shorter notice period did not curtail any rights of the shareholders. 4. The validity of the AGM held without considering objections was questioned. The Tribunal referred to the notification by the Ministry of Corporate Affairs, emphasizing that the interests of shareholders must be protected for the provisions to apply. Since objections were raised by some shareholders regarding the AGM, the Tribunal declared the AGM held on a shorter notice as null and void, restraining the implementation of any resolutions passed in that meeting. 5. The judgment concluded by declaring the AGM held on a specific date as null and void, restraining the implementation of any resolutions passed during that meeting until further orders. The case was disposed of with this direction, emphasizing the importance of protecting shareholders' interests in such proceedings.
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