9911796707
TMI Blog2002 (7) TMI 809X X X X Extracts X X X X X X X X Extracts X X X X ..... ,59,000 equity shares in favour of respondents 2 to 4; (e) illegal removal of the petitioner as a director of the Company; (f) non-issue of share certificates for the shares originally allotted to the petitioner; and (g) illegal appointment of directors. 3. Shri T.K. Seshadri, Advocate appearing for the petitioner, while initiating his arguments submitted that the Company was incorporated in April, 1990 by the petitioner and the second respondent being the wife and husband with the main objects of carrying on the business of acting as marketing agents, consultants, brokers etc. The petitioner and the second respondent were the first directors of the Company. Apart from the Company, the petitioner was also running a proprietary concern under the name and style of M/s. Cos. Trades. While the second respondent was running the affairs of the Company at a loss, the petitioner was making profits in her proprietary concern which resulted in certain disputes between them. Subsequently, their matrimonial relationship became estranged resulting in divorce proceedings initiated by the second respondent before the family court. In view of these disputes, the second respondent start ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equest made by the petitioner in her letter dated 2-12-1999 (Page 196 of Petition). * The minutes of the Board meeting (Page 45 of typed set of documents by respondents) said to have been held on 1-3-1995 resolving to remove the petitioner from directorship on account of her consistent absence at the Board meetings is not signed by the Chairman of the meeting. Again the minutes of the general body meeting (Page 83 of typed set of documents by respondents) of members of the Company said to have been held in September, 1995 show that members resolved that as per Section 283(1 )(g), the petitioner ceased to be a director for non-attending the consecutive Board meetings without leave of absence from the Board of Directors. Thus, the minutes of the Board meeting convened on 1-3-1995 as well as annual general body meeting convened in September, 1995 are concocted. * The letter dated 23-12-1996 sent by Counsel for the second respondent to Counsel for the petitioner (Page 162 of Petition) shows that the petitioner continued to be director as on 23-12-1996. * The annual return made up to 29-9-1994 (Page 34 of Petition); Memorandum and Articles of Association of the Company (Pages 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... requisite Form No. 3. Return of allotment discloses names of two allottees, but the register of members does not contain their names. There is no documentary proof for cash consideration of ₹ 20 lakhs made by the second respondent for allotment of shares. The counter affidavit dated 21-2-2000 (Page 15 of typed set of documents by petitioner) of the second respondent filed before the family court confirms that he has meagre income and that he has no source for payment of ₹ 20 lakhs towards allotment of the impugned shares. * Though 200 shares were allotted to the respondent No. 4 on 5-11-1993 (Page 1 of typed set of documents by respondents), the register of members produced before the Bench does not reveal his name. * The annual return as at 29-9-1995 (Page 50 of Petition) and the annual return as at 23-9-1997 (Page 94 of Petition) do not show the name of the fourth respondent. * The annual return made up to 29-9-1995 (Page 48 of Petition) shows that the petitioner ceased to be a director of the Company with effect from 8-3-1995, but Form 32 filed with the ROC, Chennai (Page 3 of typed set of documents by respondents) reveals that she ceased to be a director wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... letter, there is no presumption of due delivery of the letter upon the addressee. (vii) Panneshwari Prasad Gupta v. Union of India [1974] 44 Comp. Cas. 1 (SC) to show that unless due notice has been given to all the directors, the meeting of directors cannot be deemed to have been duly convened and that the business transacted at a meeting not duly convened is invalid. (viii) S.T. Ganapathy Mudaliar v. S.G. Pandurangan[1999] 96 Comp. Cas. 919 (CLB). (ix) Vijay Krishan Jaidka v. Jaidka Motor Co. Ltd. [1997] 1 Comp. LJ 268 (CLB) to show that in the absence of proper service of notice upon the directors, vacation of their office by absenting themselves for the Board meetings should be proved by the Company. In the absence of proof of service of notice upon the directors vacation of office by them under Section 283 is not proper. (x) Rashmi Seth v. Chemon (India) (P.) Ltd. [1995] 82 Comp. Cas. 563 (CLB) to show that the directors of a company cannot utilize their fiduciary powers over the shares purely for the purpose of destroying an existing majority or creating a new majority. If the power to issue further shares is exercised by the directors not for the benefit of the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... connection, he made a reference to the decision in M. Meenakshisundaram v. S. Venkatesan AIR 1981 Mad. 277 to show that in case of letters sent by certificates of posting the presumption is that the letters are delivered to the addressee. The petitioner never chose to attend the Board meetings, continuously held in February, 1994, 31-3-1994, 12-6-1994, 26-8-1994 and 20-12-1994, despite the notices and she therefore ceased to hold the office under the provisions of Section 283(l)(g). Accordingly, the Board of Directors at its meeting held on 1-3-1995 (Page 45 of typed set of documents by respondents recorded cessation of directorship of the petitioner. The cessation is on account of operation of law, in which case, the petitioner cannot be reinstated as a director in support of which he relied upon the decision reported in Vinod Kumar Mittal v. Kaveri Lime Industries Ltd. [2000] 23 SCL 176 (CLB - Delhi). Though the petitioner was requesting to convene the Board meeting in her various letters, later she did not evince interest in the affairs of the Company and failed to attend the Board meetings and annual general meeting as and when called by the Company after due notice to the pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shareholding at 25 per cent by allotting further shares at par value. He, therefore, sought for dismissal of the petition. 8. We have considered the pleadings and arguments of Counsel for the petitioner and the respondents. 9. Before going into merits of the case, we shall deal with the issue of limitation. While it is the contention of the respondents that the petition is barred by limitation and that the petitioner is guilty of laches, it is denied by the petitioner. The CLB has considered this issue in quite a number of cases and categorically held that plea of limitation does not arise in the case of proceedings in relation to Section 397/398 proceedings. In this connection, reference is invited to the decision in Lake Palace Hotels Motels (P.) Ltd. case (supra). The decision is cited by Shri Ramakrishnan in regard to limitation is not applicable to the facts and circumstances of the present case. Moreover, the CLB is exercising equitable jurisdiction in its proceedings under Section 397/398. We cannot, therefore, debar the petitioner from claiming the equitable relief on merits of the case. In the circumstances, the plea of the respondents must fail. 10. In regard t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been manipulation of the minutes of meetings of Board of Directors and as such they cannot be relied on insofar as allotment of shares impugned in the petition is concerned. There is nothing on record to show that offers were made to the petitioner even though she was the only other shareholder in the Company. Even though the respondents have contended that the petitioner had always been a minority and therefore non-allotment of further shares to her cannot be considered to be either for creation of a new majority or for conversion of a majority into minority, yet, when there are only two shareholders, allotment of shares to only one of them is a clear act of oppression. While, we do find that by allotment of further shares, the Company has been benefited, yet, in our view, the petitioner should have offered further shares. 12. On a overall assessment of the facts of the case, we are convinced that the petitioner has made out a case under Section 397 and as such deserves to be granted appropriate relief. The second respondent is willing to allot further shares to the petitioner to maintain 25 per cent shareholding which is not acceptable to the petitioner. It is on record that ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
