9911796707
TMI Blog2016 (1) TMI 421X X X X Extracts X X X X X X X X Extracts X X X X ..... ellants to discharge the onus to show that the documents were signed under misrepresentation or were otherwise not binding. They could very well have led evidence in this behalf . There is nothing on record to show that they offered to lead any evidence on the subject besides what was produced before CLB or were denied any opportunity to lead further evidence. Parties take various positions in their pleadings. What is considered at the hearing by any Court or tribunal is the submissions advanced before it at the hearing. Without advancing submissions on a particular issue, and that too on an issue of fact, a party cannot fault an order of the Court or the tribunal relying on its case on the issue pleaded in its pleadings. That would clearly spring a surprise on the opponent and compromise the integrity of the trial. Besides, the parties have clearly acted on the resolutions passed at the EOGM; the Appellant in Company Appeal (Lodging) No. 46 of 2013 was a nominee director of promoters represented by Appellant No.1 in the main appeal and has himself signed the share certificates issued to Respondent Nos. 1 to 3 in pursuance of decision take at the EOGM of 5 March 2010. It was the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs placed on the Company by its prospective customers, the business of the Company was severely affected. Respondent Nos. 1 to 3 offered to invest a further sum of ₹ 10 crores in the Company and called a meeting on 5 March 2010 for discussions on the terms and conditions of the proposed investment. This meeting, which was treated as a board meeting followed by a general meeting, purported to pass resolutions approving amendments to the SSSA as well as Articles of Association of the Company to give effect to the amendments inter alia allowing Respondent nos. 1 to 3 to convert their preference shares (Series A) into equity shares in the manner provided in the amended SSSA. This was followed by a purported Supplemental Agreement dated 6 March 2010. Respondent nos. 1 to 3 claimed to have exercised their right of conversion of preference shares into equity shares. After such conversion, the shareholding of Respondent Nos. 1 to 3 went up from 0.01% to 69.38% of the issued, subscribed and paid up share capital of the Company. Upon such conversion, Respondent Nos. 1 to 3 requested for reconstitution of the Board of Directors of the Company, which was not done. Respondent Nos. 1 to 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was a clear violation of the Articles and showed lack of probity and unfairness, seriously jeopardizing the interest of the original Petitioners. (vi) The Appellants (original Respondents) had assumed control over the Company by illegal means, including manipulation of records. (vii) Having regard to the facts of the case, it would have been just and equitable to wind up the Company, but such winding up would be unfairly prejudicial to the interests of the Petitioners who are genuinely entitled to participate in the management of the Company. On these findings, CLB granted various reliefs including setting aside of the various resolutions passed at the Board meetings and general meetings held after 5 March 2010, and reconstitution of the Board of Directors of the Company. 4. The following questions of law are pressed by Mr. Doctor, learned Counsel for the Appellants, at the hearing of the Appeal for impugning the CLB order: (i) The reliefs claimed in the petition are on the basis that the Petitioners are 69.38% shareholders of the Company; but no relief can be granted on such footing unless a rectification is sought and obtained as part of the reliefs. Till such time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts rely on the decision of the Supreme Court in the case of Balkrishan Gupta Ors. Vs. Swadesh Polytex Ltd. Ors. 1985 (Vol. 58) Company Cases Page 563 and of the Kerala High Court in the case of Lalithamba Bai Vs. Harrisons Malayalam Ltd. 1988 (Vol. 63) Company Cases Page 662 and the decisions of Company Law Board in Satish Chand Sanwalka Ors. Vs. Tinplate Dealers Association Pvt. Ltd., Ors. (1998) 93 Comp Cas 70 (CLB) T.N.K Govindaraju Chetty Co. Vs. Kadri Mills (CBE) Limited (1999) 96 Comp Cas 871 (CLB) and Navin Ramji Shah Ors. Vs. Simplex Engineering and Foundry Works Pvt. Ltd., (2007) 136 Comp Cas 770 (CLB) in support of their contentions. 7. The Supreme Court in Balkrishna Gupta's case (supra) has held that the privileges of a member can be exercised by only those persons whose names are entered in the register of members and not by others. (To the same effect are observations of the Kerala High Court in Lalithamba Bai's case (supra) relied upon by the Appellants.) The questions before the Supreme Court were whether a receiver appointed of shares was entitled to a notice of a general meeting and whether mere appointment of a receiver would deprive the h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and paid up equity shares of the Company to the Petitioners. The share certificates were produced by the Petitioners before CLB. After such conversion, according to the relevant Article, Article14(a), the Board of the Company was to comprise of four directors to be nominated and appointed, three by the Petitioners and one by the promoter. The Petitioners called upon the Company to do so. That was not heeded. These allegations form part of the Petitioner's case of oppression. It cannot possibly be suggested that on these allegations, the Petitioners cannot seek reliefs such as reconstitution of the Board or setting aside resolutions passed in meetings, urging their entitlement to 69.38% equity shares of the Company. Andhra Pradesh High Court in the case of N. Satyaprasad Rao Ors. Vs. V.L.N. Sastry Ors. 1988 (Vol.64) Company Cases 492 considered the case of petitioners, who were allottees of shares, but whose names were not entered in the register of members in the context of an application under Sections 397 and 398. The Court held that such petition was maintainable at the instance of shareholders to whom share certificates were issued notwithstanding the omission of their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such member. That was clearly a collateral purpose. This ratio cannot be invoked in the present case, where the petitioners are claiming reliefs in respect of their membership. Besides, the real purpose as opposed to the ostensible purpose of the petition is a matter of fact and the finding of CLB in that behalf cannot be faulted on a question of law. 11. The questions as to whether the EOGM of 5 March 2010 did take place and whether the resolutions passed thereat and documents executed in pursuance thereof were validly passed and executed, are examined by CLB in the light of the respective pleadings of the parties and documents placed on record before CLB. The extracts of minutes of the Board meeting along with the Notice of EOGM of 5 March 2010 (containing an explanatory statement) was duly signed by Appellant No.1. Even the minutes of EOGM of 5 March 2010 were duly signed by him. These signatures are not disputed. In pursuance of the decisions taken at the EOGM, share certificates were duly issued to Respondent Nos. 1 to 3 on 31 March 2010. The share certificates contain signatures of the Company Secretary and two directors, one of whom is Appellant No.1. In the premises, CL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the pleading in this behalf was not considered by CLB. So also in the case of the Appellant in Company Appeal (Lodging) No. 46 of 2013, though he was represented at the hearing before CLB, there is nothing to show that his case on want of notice was argued before CLB or that despite such argument, CLB failed to address itself to the issue. Parties take various positions in their pleadings. What is considered at the hearing by any Court or tribunal is the submissions advanced before it at the hearing. Without advancing submissions on a particular issue, and that too on an issue of fact, a party cannot fault an order of the Court or the tribunal relying on its case on the issue pleaded in its pleadings. That would clearly spring a surprise on the opponent and compromise the integrity of the trial. Besides, the parties have clearly acted on the resolutions passed at the EOGM; the Appellant in Company Appeal (Lodging) No. 46 of 2013 was a nominee director of promoters represented by Appellant No.1 in the main appeal and has himself signed the share certificates issued to Respondent Nos. 1 to 3 in pursuance of decision take at the EOGM of 5 March 2010. It was the case of Respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
