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TMI Blog2009 (5) TMI 972X X X X Extracts X X X X X X X X Extracts X X X X ..... and respondent No. 2 were also the first directors of respondent No. 1 company. 3. Shri Vibhu Bakhru, counsel for the petitioner contended that on March 3, 2003, the petitioner and respondent No. 2 associated to form respondent No. 1 company. It was mutually agreed that the business would be on an equal footing with the management, administration and control between the petitioner and respondent No. 2. It was pointed out that the annual return filed on September 30, 2005, on behalf of respondent No. 1 with the Registrar of Companies reflects that the petitioner and his group held 1,02,300 shares and respondent No. 2 and his group held 97,700 shares in respondent No. 1 company. However, the annual return filed for the subsequent year reflected that as on September 30, 2006, while the petitioner and his group continued holding the same number of shares, i.e., 1,02,300 but respondent No. 2 and his group's shareholding increased to 1,16,200 shares, i.e., the respondent and his group surreptitiously ensured majority shareholding for themselves in respondent No. 1 by increasing the authorised share capital thereof and allotting the same to respondent No. 4 (namely, Shri Rakesh Gup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ords and documents besides continuing to suppress notices of board meetings and general meetings from the petitioner and attempt to further alter the shareholding pattern as also the constitution of the board of directors of the company thus prejudicing the interests of the company, the public and the interests of the petitioner. 6. My attention was drawn to the various acts of oppression and mismanagement of the respondents alleging that (a) the petitioner, despite being a director and owner of significant shareholding in respondent No. 1 company, was not given any notice of the purported board meeting dated May 18, 2006, where the resolution to appoint respondent No. 3 as director and to increase the authorised share capital were supposedly passed, on the basis of which purported resolution, Form No. 32 was submitted to the Registrar of Companies ; (b) upon the petitioner being imprisoned, the petitioner has been hastily, wrongfully, mala fide, forcibly and deceitfully ousted by respondent No. 2 and his group from the management and control of respondent No. 1 company, all decisions qua the running of the business of respondent No. 1 are being taken by the other respondents to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not have been so unwilling, especially in respect of such an important matter for the company, the respondents have sought to take advantage of the petitioner being incarcerated and have attempted to usurp the control of the company. 7. Further, counsel for the petitioner argued that the power of attorney with the petition is valid and legal as the same was got executed and notarised by the notary public through a personal visit in the jail premises where the petitioner had been lodged. My attention was drawn to the certification by the said notary public to this effect and a copy of the register maintained in the jail showing the visit of the notary public appended as annexures A and B , respectively. It has been argued that the respondents have not been able to point out any provision to show under what provision that the said power of attorney is invalid or inadmissible. 8. It was argued that the respondent has not denied that the petitioner was holding 51 per cent shares in the company, further it is confirmed by the respondents that the shares were issued as private placement, which is possible only on some understanding. The decisions taken in the alleged general mee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt, Delhi vide its order dated March 17, 2008, has discharged the petitioner's father at the stage of framing of charges, as far as the petitioner is concerned, he has been charged only for the commission of an offence under Section 25 of the Arms Act and has been discharged from charges of murder. The acts and conducts of the respondents are extremely prejudicial to the interests of the petitioner and his group. By allegedly holding the board meeting and taking decisions affecting the interest of the petitioner, the petitioner's status in the company has been put to serious jeopardy. Mrs. Pushpa Bansal who was inducted as a director on the board of the company and there was an order that certain information would be supplied to the said newly inducted director, however, not only the information supplied to her has been incomplete but all the clarifications sought by her have been ignored. 12. Counsel for the petitioner further pointed out that in so far as the preliminary objections raised in the application bearing C. A. No. 560 of 2007 are concerned, the same have no relevance as the Company Law Board has already dismissed the said application on May 9, 2008 and all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it is an admitted position that the relationship between the petitioner and his group and respondents Nos. 2 to 4 and their group stand irretrievably broken. 14. Counsel for the petitioner drew my attention to two letters dated December 14, 2007, addressed by Mr. Rajesh Gupta, director in respondent No. 1 company, whereby the subject power of attorney holder, Mrs. Pushpa Bansal has been requested to inform her director's identification number (DIN) apart from other information. A list of the fixed assets of respondent No. 1 company as on March 31, 2006 and the details of receipts and payments for the period commencing November 15, 2007 and ending November 30, 2007, have also been provided. It was contended that given the addressing of the letters it is indubitable that the applicants/respondents have submitted to the orders of the Company Law Board without demur and are thus estopped from objecting/protesting through the Company Application No. 560 of 2007. 15. Shri K.N. Popli, counsel for the respondents argued that the registered office has been shifted to B-268, Mangolpuri Industrial Area, Phase-I, Delhi, legally, the authorised share capital of respondent No. 1 has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... must be satisfied. It was pointed out that it appears that neither condition is satisfied in this case because the power of attorney is without date and there is merely an attestation by a notary public on October 18, 2007, there is no authentication at all, hence Section 85 of the Indian Evidence Act does not apply to raise any presumption in favour of this power of attorney. It was argued that in the circumstances the petition filed by the petitioner on the basis of the power of attorney is not competent and has not been signed, verified and instituted by a duly authorised person for and on behalf of the petitioner and as such the result would be that the petition should be dismissed on this ground alone. 18. Further, it was contended that M/s. C C Associates, counsel for the petitioner has no right to represent the case as the vakalatnama is defective and unauthenticated as allegedly signed by Mrs. Pushpa Bansal, power of attorney holder, who is incompetent and not duly authorised to sign the petition as well as the vakalatnama. 19. Further, it was argued that pursuant to the provisions of regulation 14(3) of the Company Law Board Regulations, 1991, the petition needs t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with clean hands, this petition has been designed as a tool to wind up the affairs of the company, the petitioner and his associates have criminal records and have mala fide intentions, they are involved in the murder of the father of respondent No. 2. It was pointed out that whenever the respondents intended to re-start the factory operations, they were not allowed to do so, their access was infringed and they were attacked time and again. It was pointed out that on July 4, 2006, the associates of the petitioner attacked the respondents, my attention was drawn to FIR dated July 4, 2006 and it was contended that in view of the criminal attacks the respondents were forced to shut down the factory operations. 23. Further, counsel pointed out that it is admitted that respondent No. 2 and respondent No. 3 are directors and respondent No. 4 is holding 19,500 equity shares in respondent No. 1 company. However, the appointment of respondent No. 3 was duly made in an extraordinary general meeting of respondent No. 1 on May 18, 2006 and not May 18, 2005, as alleged, and for which meeting proper notice was given to all the members and as a matter of abundant caution, notice was also publ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t No. 3 was duly made by the members in a duly convened extraordinary general meeting. The allotment of shares was duly made in duly convened board of director's meeting and shifting of registered office was also made in duly convened meeting. For all the meetings, proper notices were given and requisite quorum was present in the meeting. When the petitioner was sent to jail, there were only two directors, i.e., the petitioner and respondent No. 2, hence no meeting could be held as such without the appointment of another director through the members in the general body meeting, this was the only legal way left out with respondent No. 2 to manage the affairs of respondent No. 1. The petitioner and other members of Bansal family did not attend other general body meetings intentionally for the reasons best known to them in spite of service of notice. The general body meeting was duly convened and there was proper quorum and the resolutions were duly passed according to the provisions of law, therefore, there is no contravention of the provisions of the Act, nor is there any oppression or mismanagement as alleged in the petition. The decision regarding shifting of the registered of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he respondents' case any further in view of the documents produced by the respondents in the present case. Besides in the case of Electric Construction and Equipment Co. Ltd. (supra), the decision turned on whether Section 85 of the Evidence Act was applicable to the facts of that case wherein no attempt was made in the trial court to rely on this section, so the facts and circumstances were examined to see whether the power of attorney was valid in the present circumstances of that case as the power of attorney showed that the seal was affixed on November 27, 1973 and the attestation was done on December 13, 1973, it did not seem that it was executed before a notary public. The facts are distinguishable. Each case turns on its own facts. In view of the documents produced and in view of the Company Law Board's order dated November 13, 2007, duly appointing the petitioner's power of attorney as a director to represent the petitioners' group, the technical objection, which however, when pitted against substantial justice cannot be given preference, is not found tenable as raised by way of preliminary objections in C. A. No. 560 of 2007. As regards the respondents' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the petitioner and attempt to further alter the shareholding pattern as also the constitution of the board of directors of the company thus prejudicing the interests of the company, the public and the interests of the petitioner in order to misappropriate and control the assets of the company/respondent No. 1, primarily land/property of immense value leased for 25 years by a partnership firm as owner thereof, of which the petitioner is a partner. 30. The respondents have not been able to meet the allegation that the petitioner, despite being a director and the owner of significant shareholding in respondent No. 1 company was not given any notice of the purported board meeting dated May 18, 2006, where the resolution to appoint respondent No. 3 as a director and to increase the authorised share capital were supposedly passed. Upon the petitioner being imprisoned, the petitioner has been hastily, wrongfully, mala fide, forcibly and deceitfully ousted by respondent No. 2 and his group from the management and control of the company/respondent No. 1, all decisions qua the running of the business of respondent No. 1 are being taken by the other respondents to the wrongful exclusi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ime at which the document would be delivered in the ordinary course of post. However, where a member has intimated to the company in advance that documents should be sent to him under a certificate of posting or by registered post with or without acknowledgment due and has deposited with the company a sum sufficient to defray the expenses of doing so, service of the document shall not be deemed to be effected unless it is sent in the manner intimated by the member. Non-service of notice of meetings and dividend warrants have serious consequences and consequently even though not required the companies send them under certificate of posting as this would help them in establishing that the notices and the dividend warrants are so posted. In the present case besides claiming that the notice was given in the newspapers, it is claimed that UPC is also available for having sent the notices. However, on perusal of the UPC it is noted that the date of despatch is May 27, 2006, whereas the meetings are shown to have been held on May 18, 2006. When it was pointed out to the respondents it was pleaded that by mistake wrong UPC have been annexed, however, no other UPC were sought to be produced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [2006] 1 SCC 407, the Supreme Court has, in regard to certificate of posting, made the following significant observations (page 416): A certificate of posting obtained by a sender is not comparable to a receipt for sending a communication by registered post. When a letter is sent by registered post, a receipt with serial number is issued and a record is maintained by the post office. But when a mere certificate of posting is sought, no record is maintained by the post office either about the receipt of the letter or the certificate issued. The case with which such certificates can be procured by affixing antedated seal with the connivance of any employee of the post office is a matter of concern. The Department of post may have to evolve some procedure whereby a record in regard to the issuance of certificate is regularly maintained showing a serial number, date, sender's name and addressee's name to avoid any misuse. In the absence of such a record, a certificate of posting may be of very little assistance, where the dispatch of such communication is disputed or denied as in this case. Be that as it may. 35. Certificates of posting are not reliable since it is t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... patch register or entry of expenditure in books of account was placed before the court. Hence it is hereby held that the notices were not sent. It is held that a certificate of posting by itself is not evidence of posting of a letter. It is only too well known that certificates of posting can be got hold of without actually putting letters in the post. The meetings under challenge and the decisions taken thereunder regarding the appointment of directors and increase in the paid-up capital and allotment of shares to respondent No. 4 are found to be illegal. 37. Further, it is noted that the decisions taken at the meeting are ex-facie mala fide and for the ulterior purpose of usurping the control of the company and not for the benefits of the company. The alleged increase in the capital of the company is also insignificant and does not in any manner increase the benefit to the company. It has been contended by the respondents that the capital was increased keeping in view the share application money received and the requirement of respondent No. 1. The petitioner has rightly contended that the share application money cannot be received without any decision about increase in the pa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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