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TMI Blog2017 (6) TMI 1130X X X X Extracts X X X X X X X X Extracts X X X X ..... ness of the Company profitable. It was with this objective that the 'Investor' was inducted in the company's affairs by executing SHA. Thus, the Investor cannot be permitted to wholly replace the original shareholders/Promoters. In view of the above observations, I hold that the exit is not the appropriate course in this case. In view of above findings on various issues, the instant petition is partly allowed to the extent that agenda of continuation of L.K. Singh respondent No.9 as Director/Executive Director be placed in the meeting of the shareholders for approval along with his pay/emoluments/perks. For rest of the prayers, the instant petition is dismissed. It is directed that further continuation of Mr. L.K. Singh R-9 as Director/Executive Director/Whole time Director shall be subject to the approval of the shareholders meeting to be convened in terms of Section 152 of the Companies Act, 2013 and other applicable provisions of law. - CP NO. 70 (CHD) of 2016 - - - Dated:- 22-5-2017 - MR. R.P. NAGRATH, J. For The Petitioner : Manish Jain, Mayur Kanwar, Milan Singh Negi and Ms. Divya Sharma, Advs. For The Respondent : Anand Chhibhar, Sr. Adv., Aman Bahri, Amit Jh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entative of both these companies vide resolutions of the Board of Directors Annexures P-3 and P-4 respectively P-1 and P-2 are from the promoters group of R-1 company. P-3, P-4 and B.K. Nath were appointed as Promoters' Nominee Directors respectively in the EOGM dated 21.03.2014 in pursuance of the order dated 08.01.2014 passed by the Board for Industrial and Financial Reconstruction (for brevity BIFR). Due to resignation of B.K. Nath on 11.04.2015, P-5 was appointed as a Nominee Director in place of B.K. Nath on 11.04.2015. P-3 to P-5 are impleaded as proforma petitioners. 4. It is stated that till February 2007, P-1 and P-2 along with other promoters had majority shareholding of R-1 company to the tune of 48.9%. They had also invested huge money into R-1 company in order to take over the Spinning Mill Unit, which belonged to Gontermann-Peipers (India) Ltd. Due to the efforts of petitioners, R-1 company became one of the leading manufacturer in the Textile business. 5. However, to ensure that R-1 had sufficient Working Capital and to comply with its payment obligations, the petitioners entered into a Tripartite Share Subscription and Shareholders Agreement (SHA) with GL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Investor Group (allegedly appointed) 7. Mr. Tejinder Parkash (R-5) Investor Group (allegedly appointed) 8. Mr. Rajeev Bansal (R-7) Investor Group (allegedly appointed) 9. Mr. Sanjeev Chaudhary (R-8) Investor Group (allegedly appointed) 9. The instant petition has been filed with the prayers inter alia:- (i) to declare Deed of Adherence dated 05.06.2015 as null and void; (ii) to declare e-mail dated 26.09.2015 and letter dated 23.09.2015 sent by R-3 nominating five Directors as null and void and also for declaring the Board meeting dated 08.10.2015 and EOGM, dated 10.12.2015 to be null and void; (iii) to declare appointment of R-4 to R-8 as Directors in the Board meeting held on 8.10.2015 and R-9 as Executive Director in the EOGM held on 10.12.2015 to be null and void; (iv) to direct R-9 to obtain the requisite approval from shareholders to continue as Director of R-1 company; (v) to declare the Board meeting held on 21.09.2015, in which Sukesh Kumar Agarwal was appointed as Presid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s vide order dated 18.04.2013, but the company failed to convene any meeting for the purpose. BIFR expressed its displeasure in the hearing held on 06.08.2013. P-1 was, therefore, constrained to move application No. 410 of 2013 before the BIFR, copy of which is Annexure P-7. BIFR passed an order dated 08.01.2014 directing R-1 company for convening the Board meeting and further directed the parties to nominate their Directors on the Board of R-1 company. Copy of the order is Annexure P-8 and the relevant directions passed by BIFR in this regard are reproduced below (i) The existing promoters i.e. NREPL/its Associates are directed to convene a meeting of the shareholders of GPITL within a period of 6 weeks from the date of this hearing. (ii) GLAM NREPL are directed to propose the names of three directors each for appointment at the proposed meeting of shareholders of GPITL to be convened by NREPL its associates. The names of proposed three directors (nominees of GLAM) alongwith their particulars shall be delivered to NREPL by GLAM within a period of one week from the date of this hearing. (iii) Both the groups (i.e. NREPL GLAM) are directed to support the resolutions for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the merits of the case as the application for making certain corrections in the order dated 08.01.2014 was already pending with the BIFR. While disposing of the appeal, AAIFR directed that since three Directors were already appointed by the promoters group, they will remain such Directors and for that, the ad-interim order dated 24.03.2014 need not be modified at this stage till the application pending before the BIFR is decided. It was further directed by AAIFR that R-9, who was R-2 before the AAIFR being still a Director of the sick company, will continue to work as such till the application was disposed of by the BIFR. BIFR was also directed to pass the order on the application as expeditiously as possible preferably within a period of three weeks from the date of communication of the order passed by the AAIFR. The matter, however, was still pending with BIFR, when the SICA Repeal Act came into force. 17. It is further the case of petitioners that in the meeting of the Board of R-1 Company held on 21.09.2015, Sukesh Kumar Aggarwal was appointed as President of R-1 company. It was further resolved that R-9 will continue as Director only and not as Executive Director with imm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llenged the Board Meeting dated 08.10.2015 called by the respondents' group on the grounds inter alia:- (a) that the notice of the proposed meeting was accompanied with one-page agenda without any supporting or relevant papers, copy being Annexure P-16. It is stated that there is violation of the Secretarial Standard-1 issued by the Institute of Company Secretaries of India and paragraph 1.3.7 is reproduced below:- The Agenda, setting out the business to be transacted at the Meeting, and Notes on Agenda shall be given to the Directors at least seven days before the date of the Meeting, unless the Articles prescribe a longer period , (b) that the notice of the meeting is in violation of Article 162.2 of the Articles of Association, which requires at least 14 business days' notice of such meeting, whereas the notice of the Board meeting dated 08.10.2015 was delivered on 30.09.2015; (c) that the petitioners had objected to the aforesaid meeting by sending email dated 07.10.2015 stating therein that the individual promoters of R-1 have filed Civil Suit No.59 of 2015 before the Civil Court challenging the transfer of shares by R-2 in favour of R-3 and thus, the meet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... details of Directors, Shareholders, Capital Structure of R-3. The Promoter Nominees also re-iterated the aforesaid objections in their e-mail dated 03.05.2015, copy of which is Annexure P-24, but the same were not provided. 23. It is staled that R-3 is a shell company, which is not engaged in any business. This company has no expertise in the field of Textile Industry. R-3 was formed with paid-up capital of ₹ 1 lac as on 31.03.2016 and has capital of ₹ 40,000/- due to mounting loss. So, this transfer in favour of R-3 was clearly made to bring to a halt the functioning of R-1 company. R-10, the Chief Finance Officer-cum-Company Secretary is also involved in the acts of oppression and management perpetrated by the other respondents. R-10 is said to have not apprised the petitioners about the financial position of the company despite the emails sent by Promoter Nominees on 04.02.2016 and 15.02.2016. 24. It is stated that an amount of ₹ 130 crores was owed by R-1 to HSBC Bank, which was reflected as secured loan in the books of account of R-1 company. R-2 made a payment of ₹ 80 crores to HSBC Bank for the said loan, but no details were provided by R-2 to R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsel for petitioners No.1, 3, 4 and 5 made a submission before the AAIFR that R-9 continues to be the Executive Director of R-1 company and there was no basis for his removal. The petitioners have also concealed the factum of the civil suit filed against R-2, by HSBC Bank and Phoenix ARC Ltd with regard to the assignment of the debt. There are some preliminary objections relating to the declaration of R-1 company as a Sick company, but those would not be relevant issues now due to the enforcement of the SICA Repeal Act, 2016, which came into force with effect from December 12, 2016 as per the notification dated 25th November, 2016. It is, however, averred that in view of pendency of multiple litigations filed before different judicial forums on the same subject matter/issues, the petitioners cannot be permitted to continue with parallel proceedings. The civil suit was filed by promoters group, where Parmod Mittal and Vinod Mittal are the plaintiffs, and the present petition is said to be proxy litigation by other members of the promoter group. Petitioners No.3 to 5, who have been impleaded as proforma petitioners cannot maintain the petition under Section 241 of 2013 Act not being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Board of Directors. 30. It is highlighted that after initiation of various litigations, at the instance of promoter group, the Promoter Directors resigned in the year 2010. On the advice of the Board of Directors, R-10 sent email dated 14.01.2011 requesting the Promoters to appoint their nominees as the company was going through a crucial phase. Having failed to do so, the Nominee Directors appointed by R-2 also resigned in May, 2012 on the ground of continued litigation at the instance of promoter group leaving L.K. Singh as only the professional Director, who could not constitute a quorum for holding meetings. The respondents have raised various grounds to challenge the EOGM held on 20.03.2014 under the directions of BIFR in which, three Promoter Nominee Directors were appointed, but all those grounds are not of much significance for disposal of the case, as the BIFR did authorise petitioners as well as R-2 to nominate three Directors each, though that meeting was also to be attended by the concerned officer of the SBI as observer. According to the respondents, the conditional order dated 08.01.2014 passed by BIFR, putting restrictions on R-2 in appointing majority of the dir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... antee with regard to the loan facility of ₹ 16 crores with State Bank of India, but no response was received, SBI also sent letters dated 19.07.2013 and 05.10.2013 requesting the Promoters to sign the renewal of credit facilities as guarantors. Copy of email and reminders of SBI are attached at Annexure R-3/17 (colly). Due to non-furnishing of the personal guarantees and non-induction of funds, the account of the company was declared as NPA and, therefore, the proceedings under SARFAESI Act were initiated. The petitioners also removed vital observation of R-9 from the minutes of the meetings held during September, 2014 to April, 2015 and R-9 had been raising the issue of dire need of the working capital and the consequent losses on account of non-availability of the working capital. During the distress period of R-1 company, R-2 in fact funded overdue interest and processing fee of HSBC to the tune of $ 23,58,144 from 2009 to 2012. The petitioners never put in the funds, rather indulged in litigation with R-2. Initial contribution of ₹ 20.05 crores of petitioners was to be made by 23rd of May, 2007 as per clause 5 of SHA, but that was done after a considerable delay in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat in fact Annexure P-12 are the draft minutes prepared by R-10, Company Secretary, whereas the minutes of the meeting dated 21.09.2015 actually finalised are at Annexure P-3 containing the aforesaid resolutions. It is further stated that this contention is fortified from the minutes of the Board meeting dated 08.10.2015 Annexure P-18, which reflects that the respondents did take note of the resolutions for appointment of Sukesh Kumar Aggarwal as President and re-designation of R-9 as Director and withdrawal of power of attorney relating to the meeting dated 21.09.2015 and that is why they have relied upon the resolution in that regard in the meeting dated 08.10.2015. The resolution passed in the Board meeting dated 08.10.2015 are re-produced as under:- ....... RESOLVED that in supersession of the alleged Board Resolution dated 21st September, 2015 under any other decision or communication by the Board or any representative of the Company, a power of attorney be executed in favour of Mr. L.K. Singh, authorising him to deal with statutory authorities or Court or Government authorities and to execute deeds for and on behalf of the Company in any place either in India or out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore the AAIFR and the copy of the order of AAIFR is Annexure as R-3/7. 40. It is further stated that R-3 had also agreed to induct ₹ 10 crores in the working capital, but those efforts were frustrated by the Promoters by continued litigation. This plea is raised in the written reply to the corresponding allegations in para 6.33 of the petition. 41. On almost the similar grounds, the petition has been opposed by respondents No.9 and 10 by filing a joint written reply. It is stated that R-9 is B-Tech (Textile) and MBA. He is associated with the R-1 company for the past 19 years. His first tenure was from September, 1994 till October, 2006 and during the aforesaid period, R-9 was involved in various departments ranging from Sale Marketing, Export Management, Project Management, Technical Services and Commercial Functions in India and abroad Since September, 2008 onwards. R-9 is working as Executive Director. During the period from October, 2006 to September, 2008, R-9 had worked overseas as Director (Unit Head) of another Textile Mill. R-9 was appointed as Director for the period of three years from 12th September, 2008 to 11th September, 2011. His appointment and terms ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utions/authorisation letters. Therefore, the votes for which mandatory pre-requisite condition was not complied with and a resolution/authorisation letter was not made available before casting e-vote were not counted. The same have been rightly segregated from the e-votes accompanied by the requisite documents. The Scrutinizer segregated the institutional votes as per the instruction (j) sent along with the notice of the meeting of the EOGM. So, out of the 28 institutional votes, only 17 votes have been reflected to be valid and 11 e-votes have been lawfully separated for non-availability of any resolution/authorisation. There was even no reason or privilege of R-11 to himself calculate the e-voting data. R-11 only did a limited role to prepare the consolidated report of e-voting/ballot voting and accordingly Annexure P-22 was prepared strictly on the basis of R-11/1. It is further submitted that no specific relief has been sought against R-11. 43. The petitioners also filed rejoinder to the different sets of written statements of respondents. The main respondents in the written reply had also set up a plea that a proceeding for revival of the company was pending before the BIFR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case. Moreover, the proceedings before the Centre were initiated by the individual Promoters, namely, Vinod Mittal and Parmod Kumar Mittal. With regard to the prayer for interim order under Section 9 of 1996 Act relating to the Rights Issues, the Promoters merely sought relief in respect of Rights Issues, which in fact did not take place. These proceedings were filed in accordance with the applicable provisions of law. 47. The petitioners have also filed the rejoinder to the written statement of respondents No.9 and 10. 48. It is averred that pendency of the suit at the instance of two individual promoters in the Civil Court at Alipur cannot non-suit the petitioners as it was observed in the order declining temporary injunction by the Civil Court that the provisions of SICA puts a bar on the jurisdiction of the Civil Court and also there was status-quo order passed by the BIFR, which was in operation. Now the situation has undergone a change due to the repeal of SICA. With regard to the validity of the Board/General Meeting of the company, the jurisdiction lies squarely with the Tribunal and not with B1FR or AAIFR. This assertion is raised with regard to the withdrawal of ite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... virtue of representation agreement, which is also a part of SHA Annexure P-5, executed between the Promoters Group Companies (16 in numbers including P-1 and P-2) and Vinod Kumar Mittal and Parmod Mittal, it was agreed that Vinod Kumar Mittal would represent all the Promoters Group Companies as well as individual shareholders of R-1 company for enforcing any rights and defending any obligations arising out of Shareholders Agreement. In this agreement, the Promoters Group is stated to be having 37.7% of the equity shares of R-1 company. The aforesaid Vinod Kumar Mittal and Parmod Mittal claimed themselves to be representing the Promoters Group having 37% of the equity shares in the civil suit filed at Alipur. Parmod Mittal and Vinod Kumar Mittal themselves hold only 0.15% each of the equity shares. It is also alleged that as per clause 12 of SHA Annexure P-5, the Investors had step-in-rights for forcing the Promoters Nominees to resign in case the Promoters Companies defaulted in service of debts, but this right was not exercised with the only intention for proper management and working of R-1 company by taking Promoters Group and Investors Group along. The issue with regard to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gone sick, the decision on all these aspects as per the provisions of the Act, has to be by the shareholders. This rule in a sick company has been given a go-bye. It is the operating agency, which is now preparing a scheme and providing the measures on the aforesaid aspects. It is the BIFR, which is now deciding on these measures after having the opinion of the creditors and workers and without any role of the shareholders. It was further held in the process, the BIFR may completely change the Board of Directors and appoint new Board of Directors and even alter or amend the Memorandum and Articles of Association. It may even reduce the interest or rights, which the shareholders have in the sick industrial company. The Hon'ble High Court further observed that it is the BIFR, which is the sole authority to deliberate on such issues. It was also held that from the date of registration of the reference, there is complete take over by the BIFR, which assumes total control and the company is to function as per the mandate of the BIFR. It is the BIFR, which has to decide, how the company is to be rehabilitated and sanction the scheme, which would be a package deal for operation of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e copy of SLP filed in the Hon'ble Supreme Court and the same was dismissed as withdrawn vide order dated 04.03.2016, Annexure R-3/6. 58. Learned counsel for the petitioner, however, vehemently contended that the petitioners are independent shareholders of R-1 company and filing of civil suit by two of the promoters, who have miniscule of shareholding would not debar them in bringing a petition under Sections 241 and 242 of the Companies Act, 2013 (for short the Act) as the petitioners together hold about 30% of the shareholdings whereas the plaintiffs in the said civil suit together have only about 0.30% of the shares. 59. Having given my thoughtful consideration to this controversy, I find that the above contention is unsustainable so far as the challenge to DOA and nomination of the promotor directors is concerned. 60. It is apparent that the petitioners, who are from the promotor group, have tried to take recourse to these proceedings to seek the same relief which some of the promoters failed to obtain in the civil suit upto the Hon'ble Supreme Court. The Civil Suit is still pending. The instant petition was filed on 30.09.2016. The petitioners cannot possibly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Agreements and to undertake all their obligations, duties and responsibilities under SHA and Ancillary Agreements. It is further undertaken by the promoters to ratify and confirm whatsoever the attorney shall lawfully do or cause to be done from time to time and at all times by virtue of the authority granted under the irrevocable power of attorney. With this kind of power of attorney having wide ramifications, it would be quite improbable to say that the petitioners were not having the knowledge of complete details or consequences of the civil suit or the orders passed by the Courts therein. It can also not be prima-facie accepted that the civil suit or for that matter the proceedings under the Arbitration and Conciliation Act, 1996 were filed and prosecuted without the authority of rest of the promoters. There is a reference in the instant petition to the withdrawal of the Special Leave petition (for short SLP), but what were the orders passed by the Civil Court or the High Court in revision, have not been revealed. 64. Parmod Mittal and Vinod Kumar Mittal, the plaintiffs in the civil suit alleged that the plaintiffs own approximately 37% of shares in R-1 company, which is a D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied with those conditions. It is not shown by learned counsel for the petitioners that the issue of transfer of the shareholding was falling within the scope of appeal before AAIFR. 67. The term 'Investor' is defined in SHA Annexure P-5, as R-2 which expression shall unless it be repugnant to the context or meaning thereof be deemed to include its successors and permitted assigns. Learned counsel for respondents would contend that as per clause 13.4 of the SHA, the Investor's equity shares are freely transferable. It says that subject to any other restriction contained in this agreement, the Investor's and the Promoters and/or any of their respective affiliates shall at all times, be free and fully entitled to sell or encumber or otherwise transfer (save and except in the case of Promoters, the Promoter shares that are pledged in terms of the Pledge Agreement and that are otherwise subject to any other non-disposal obligation on the part of Promoters), any or all of its equity shares and/or other securities held in the company to any person, whether by way of block deal or a negotiated trade or otherwise. It is contended that there is however a restriction for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ight under the said agreement to any of its affiliates in the same manner as indicated in the preceding clause. On harmonious reading of the different clauses including 13.4, there is no hesitation that the equity shares are freely transferable or assignable, as further observed by the Hon'ble High Court. 70. In view of the above, I find that no occasion has arisen for this Tribunal to look into the credentials of R-3 in the Instant petition as R-2 had a right to assign its equity shareholding in favour of R-3. which apparently should be for a valuable consideration. I am not otherwise observing that the petitioners do not have a right to know the credentials and the history relating to the formation of R-3 because Promoters' interest is always involved in the functioning of the company, but so far as the assignment is concerned, that cannot be assailed, especially at the instance of petitioners without prejudice however to the ultimate determination of the issues by the Civil Court. Otherwise the Promotors may have a right as permissible in the circumstances to place the agenda for discussion to know the credentials of R-3, whenever the occasion arises. 71. For the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the members voted against the resolution. Learned counsel further contended that it was thus not permissible for R-11 to report that e-voting data was not available and to say that item No.6 of the meeting had been withdrawn as this is against the secretarial standards published by Ministry of Corporate Affairs vide notification dated 19.03.2015. There is sub clause (xviii) of sub-rule (2) of Rule 20 (as substituted vide the above notification) of Companies (Management and Administration) Rule, 2014, which says that a resolution proposed to be considered through voting by electronic means shall not be withdrawn. Learned counsel submits that the Scrutinizer was supposed to mention in the report about the above clause of the notification instead of supporting the management about the withdrawal of this agenda. 75. I am in agreement with the contention of learned counsel for resopondent No.11 that the data of e-voting on this agenda item was required to be retrieved from the portal of NSDL agency, which was entrusted the task of recording e-voting of the EOGM, dated 10.12.2015. The Company having instructed NSDL agency about withdrawal of this agenda item, it seems to be unlikely t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned counsel for the petitioners, however, submitted that despite the company running into huge losses, the salary being paid to respondent No.9 is exorbitant. I am, however, of the view that this is for the general house to decide because with regard to the previous payments, I do not find any ground to go into the said question. 79. Under Section 98 of the Act, the Tribunal may call for such a meeting of the shareholders. Section 98 of the Act reads as under:- Power of Tribunal to call meetings of members etc.- (1) If for any reason, it is impracticable to call a meeting of a company, other than an annual general meeting, in any manner in which meetings of the company may be called, or to hold or conduct the meeting of the company in the manner prescribed by this Act or the articles of the company, the Tribunal may either suo motu or on the application of any director or member of the company who would be entitled to vote at the meeting,- (a) order a meeting of the company to be called, held and conducted in such manner, as the Tribunal thinks fit; and (b) give Such ancillary or consequential directions as the Tribunal thinks expedient, including directions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orrection of the order passed by it. 82. Under clause 15.3.1 of SHA, it was further agreed that the Investors shall be entitled to appoint Investors Directors by submitting nomination letters in writing to the company. It is further stipulated that to the extent permissible under the Act, the appointment of Investors Director(s) as such will not require approval of the Board or of the shareholders. The company shall and the promoters shall ensure that the company shall, forthwith complete all the necessary procedural formalities, if required, to give effect to the formal appointment of the Investors Directors on the Board. 83. Annexure P-14 is the email dated 26.09.2015 sent by R-3 along with the nomination of R-4 to R-8, dated 23.09.2015 as Investors Directors'. The notice of Board meeting scheduled for 08.10.2015 is Annexure P-16, dated 30.09.2015, with which Agenda Note is also annexed. The Board meeting dated 08.10.2015 is mainly challenged on the ground that the SHA required at least 14 days' prior notice of the meeting of the Board and further that the agenda for the meeting was accompanied with a single page note, which violates Section 118 of the Companies Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions in the Articles of Association. The petitioners even cannot challenge the resolution of the Board of Directors dated 08.10.2015 on the ground that the meeting was attended only by R-4 to R-8, whose appointment was in the agenda for discussing the nominee Directors of the petitioners having failed attend the said meeting. 88. Even if for the sake of arguments, there was any irregularity in the said meeting, the appointment of Directors was always subject to the approval of the shareholders meeting, which was scheduled to be held on 10.12.2015. The agenda items proposed for the general meeting scheduled for 10.12.2015 inter-alia were to take note of the appointment of Investors Nominee Directors and also the appointment of L.K. Singh as Executive Director. Copy of resolution dated 10.12.2015 of the general meeting of R-1 company is at Annexure P-21. There is no challenge to the convening of this meeting on the ground that it lacked requisite notice. This meeting was also attended by P-3 and P-4, the Promoters nominee Directors; R-9 and the Investor nominee directors. The resolutions of appointment of R-5 to R-8 as Directors were passed in this meeting. The appointment of R-4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... For the purpose of this clause, the parties agreed to appoint V.K. Mittal as the first Chairman. In the event, the Chairman is absent or unable to serve as a presiding officer at any meeting of the Board, another Promoter Director present at the meeting shall preside over the meeting in his place, and in the event that no other Promoter Director is present at the meeting, any one of the Directors present shall be nominated with the majority consent of the Directors present at the meeting to preside over the meeting in his place. So, the combined reading of Article 15.6 and Article 16.3 would indicate that it was always the intention that the Chairman of the Board and shareholders meeting has to be preferably the Promoter Director. 94. That, however, is a procedural flaw, which has cropped up on account of interpretation of the Articles of Association, but in view of the facts and circumstances of the case, that would not result in the decisions taken in the meeting held on 10.12.2015 to be illegal and liable to be quashed. It is however, directed that for the future meetings, this observation has to be complied with. The nature of the above dispute seems due to long drawn litig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... grant exit to the minority. It was further contended that this aspect should be considered as the first and foremost issue to resolve the controversy once for all. It was submitted that in the circumstances of the case, it has become impossible to run the affairs of the company smoothly. 99. In support of this contention, reliance was placed upon M.S.D.C. Radharamanan v. M.S.D. Chandrasekara Raja [2008] 6 SCC 750 (SC) . In that case, the shares of the Company were mainly held by father and son and remaining share belonged to a company, of which the father and son were holding the shares equally. The petition was filed before the Company Law Board under Sections 397 and 398 of the 1956 Act. It was found that there was no act of mala fide or oppression on the part of appellant, but the Board formed an opinion that there was a deadlock in the affairs of the company. It directed the appellant to purchase the shares of the respondent at a value to be determined by the Chartered Accountant. The order of the Company Law Board was unsuccessfully challenged in the Hon'ble High Court. The appeal before the Hon'ble Supreme Court was also dismissed. The Hon'ble Supreme Court h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... andum and Articles of Association. 100. I am, however, of the view that it is not in every case that such a recourse should be adopted. In (2008) 6 SCC 750 (supra) , there were two shareholders and two Directors. It was observed by Hon'ble Supreme Court that any animosity between them not only would have come in the way of proper functioning of the company, but would also affect the smooth management of the affairs of the company. The parties admittedly were at loggers heads. A suit was also pending regarding title of the shares of the company. It was thus held that the Company Law Board and the Hon'ble High Court rightly exercised the jurisdiction. 101. In the present case, however, there are many Directors and various shareholders including number of shareholders of the promoters, all of whom are not the parties to the instant petition. The grant of exit to the petitioners or for that matter respondent No.3 would not serve any purpose as that would not completely settle the unresolved issues. 102. Further one cannot lose sight of the fact that when R-2 was inducted as 'Investor', R-1 company was already running in heavy losses to the tune of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said meeting, I appoint Mr.Suvir Sehgal, Advocate, Punjab and Haryana High Court, Chandigarh, Mobile No.+919417110072, as the chairperson of the shareholders meeting to be held positively before 15.07.2017. The date, time and hour of the meeting be decided within a period of one week from the date of receipt of this order in consultation with the chairperson. Fee of the chairperson is fixed at lumpsum amount of ₹ 80,000/- apart from other out of pocket expenses. Ms Meenakshi Gupta, Company Secretary Mobile No.9814693649 and email [email protected] is appointed as the Scrutinizer for the said meeting. The fee of the Scrutinizer is fixed at lump sum amount of ₹ 40,000/- to be borne by R-1 company. The venue of the meeting shall be Registered office of the company, which is GPI Textiles Ltd., Bharatgarh Road, Nalagarh, for which all the required arrangements shall be made by R-1 company. The agenda of the meeting shall be as per agenda item No.61.06 of resolution of the Board meeting dated 08.10.2015 Annexure P-18 with such modification and changes, as may be necessary for which the chairperson shall be assisted by all the key managerial persons of the company a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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