2022 (2) TMI 255 - Tri - Companies Law

Seeking calling, holding and conducting Extraordinary General Meeting of the members of the Respondent-Company - Section 169 of the Companies Act, 2013 - seeking direction to Board of the Respondent-Company on receipt of a valid requisition from its members to fix the date, time, and venue of the Extraordinary General Meeting and to comply with the statutory requirements in respect of the notice of the meeting as per Section 101 and special notice under Section 115 of the Act - HELD THAT - As per Section 100 of the Companies Act, 2013 in order to call an EoGM, it is prescribed that the Board of Directors may call an EoGM; whenever deemed fit. As per Section 100(1) and as per Section 100(2) of the Act when a Requisition is made by Members, the Board shall call an Extra Ordinary General Meeting. In the case on hand, 49 shareholders requisitioned to convene an EoGM of the Company claiming an aggregate 9800 shares representing 13.82% of the paid-up equity share capital of the Company. Respondent Company countered that all the submissions made by the Petitioners are admitted since the non-compliance of statutory requirements were not made due to inadvertent omission, which they undertakes to correct when the next Extra Ordinary General Meeting is held. It is also stated that the requisitionists sought an amendment of their requisition dated 14.01.2020. However, the company denied the request and refused to conduct the EoGM. Hence, the Extra Ordinary General Meeting slated on 28.02.2020 did not take place. Section 98 provides that if for any reason it is impracticable to call a statutory meeting or an Extra Ordinary General Meeting according to the provisions of the Act or the articles, the Company Law Board (now NCLT) may, either on its own motion or on the application of any director of the company, or any member thereof who would be entitled to vote at the meeting, direct the calling of a meeting and give necessary directions therefor. Hence, either a director or a member of the company entitled to vote at the meeting can file an application under Section 98 - there is no dispute as to whether the applicants are shareholders of the company in view of the fact that the respondents have not refuted the argument that they are shareholders. Whether it was impracticable to call an Extra Ordinary General Meeting of the company? - HELD THAT - A careful scrutiny of the requisitions dated 14.01.2020 reveal that the 49 shareholders of the company requested under Section 169 of the Act to convene an Extra Ordinary General Meeting to transact the business such as removal of Directors as contemplated under Section 169(1) of the Companies Act, 2013 and for appointment of Directors under Section 169(5) of the Companies Act, 2013. Even though on the basis of the requisition from 49 shareholders, the Company decided to hold an EoGM on 28.2.2020 finding certain defects and omission on the part of the requisitionists while submitting the requisition, the company cancelled the meeting slated on 28.02.2020 and they stated that they are ready to conduct an EoGM following the procedures/rules in the Companies Act - the respondents are directed to conduct the EoGM of the Company if a valid requisition from the shareholders is received, strictly following the relevant rules/provisions of the Companies Act, 2013. On receipt of the requisition from the shareholders, the Board shall call an EoGM immediately after following all the prescribed procedures. Petition disposed off.

Issues Involved:
1. Validity of the requisition for an Extraordinary General Meeting (EoGM).
2. Compliance with statutory requirements for calling and conducting an EoGM.
3. Impracticability of calling an EoGM under Section 98 of the Companies Act, 2013.
4. Directions to the Board for convening an EoGM following proper procedures.

Detailed Analysis:

1. Validity of the requisition for an Extraordinary General Meeting (EoGM):
The petitioners sought the Tribunal's intervention to order an EoGM for the removal and appointment of directors, as the requisition dated 14.01.2020 by 49 shareholders was claimed to be defective. The requisition did not include necessary details such as Folio No., Share Certificate Nos., and Director Identification Numbers (DIN) for proposed directors. The Tribunal noted that the requisition must state the matters for consideration, be signed by the requisitionists, and deposited at the company’s registered office. The respondents admitted the omission of these details and stated that the EoGM slated for 28.02.2020 was postponed due to these defects.

2. Compliance with statutory requirements for calling and conducting an EoGM:
The Tribunal emphasized the need for compliance with statutory requirements under Sections 100, 115, and 169 of the Companies Act, 2013. The respondents admitted that the notice for the EoGM lacked an explanatory statement for each resolution, which is required when the Board calls an EoGM. The requisitionists did not provide necessary declarations or consents from the proposed directors, which are mandatory under the Companies Act. The Tribunal directed that all statutory requirements must be strictly followed when calling an EoGM.

3. Impracticability of calling an EoGM under Section 98 of the Companies Act, 2013:
The Tribunal examined whether it was impracticable to call an EoGM as per the requisition. Section 98 allows the Tribunal to order a meeting if it is impracticable to call one in the prescribed manner. The Tribunal found that the respondents acknowledged the defects in the requisition and the notice, and they undertook to correct these when a valid requisition is received. The Tribunal noted that the respondents are willing to convene an EoGM following proper procedures, thus addressing the impracticability issue.

4. Directions to the Board for convening an EoGM following proper procedures:
The Tribunal directed the Board of the respondent company to convene an EoGM upon receiving a valid requisition from the shareholders. The Board must ensure compliance with all statutory requirements, including providing an explanatory statement for each resolution and obtaining necessary declarations and consents from proposed directors. The Tribunal emphasized that the meeting should be called and conducted in accordance with the relevant provisions of the Companies Act, 2013.

Conclusion:
The Tribunal disposed of the petition by directing the respondents to convene an EoGM upon receiving a valid requisition, ensuring strict compliance with statutory requirements. The decision underscores the importance of adhering to legal procedures for corporate governance and shareholder rights. The Tribunal’s order ensures that the shareholders' requisition for an EoGM is addressed appropriately, maintaining the integrity of the company's governance framework.

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