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TMI Blog2018 (2) TMI 1452X X X X Extracts X X X X X X X X Extracts X X X X ..... g which granted option as a term attached to the loan raised by the Company permitting conversion of such loan into shares of the company. It cannot be that moment a document is executed, the party goes and takes over the Companies and starts doing whatever he likes without following any procedure for transfer of shares, administration etc. Till the Petitioners resigned as Directors or were removed under established procedure under the Companies Act, or in execution, it will not be permissible not to send any notices to them and declare that they have not attended meetings and they discontinued to be Directors under Section 167 of the New Act. The Appellants themselves in the NCLT relied on Section 167 to claim that the Original Petitioners were not Directors. As such, they were bound to show that duly notified and called meetings were not attended to so as to attract Section 167 of the New Act. Original Petitioners have filed an Execution Petition before the High Court of Calcutta to give effect to the award. Even the Appellant No. 1 has filed application under Section 17 of the Arbitration Act as has been referred above. It would be more appropriate for the parties to coope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; Original Respondent No. 2 Raj Singh Chopra and Original Respondent No. 3- Narpat Singh Surana, incorporated the company. Original Petitioner No. 1 is father of Petitioner No.2 and Respondent No. 2. Original Petitioners Nos. 1 and 2 were holding 50.51% equity stake in the company. The Chopra family had other businesses and companies also. Their business was of dealing in freight forwarding and brokering. The business was running smoothly till the end of December, when disputes arose. The Petitioners and the Original Respondent No. 2 agreed to refer to the disputes for settlement in presence of independent persons. Accordingly, family settlement was entered into in the form of partition of business and residential house. Original Respondents/Appellants claimed that the parties went for arbitration by three persons, namely, Birendra Kumar Surana, Ashok Kumar Manot and Rajesh Kumar Chandak. On 22nd January, 2016, the Arbitrators with the consent of the Original Petitioners and Original Respondent No. 2 passed an award containing directions for division of several family assets and properties and also division of the existing family business including the companies and firms. These p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause representation on their behalf nor have appeared. We have kept in view Section 422 of the New Act also which requires time-bound disposal of such appeal(s). We have thus proceeded to hear the learned counsel for the Appellants. 7. Learned counsel for the Appellants referred to the copy of the Company Petition as was filed before the learned NCLT where in the Synopsis, Original Petitioners pleaded as under : (2) The Respondent Company was carrying on it s business smoothly till December, 2015. Thereafter family disputes arose. The Petitioners and the Respondent No. 2 agreed to refer the disputes for the settlement by way of arbitration. On 22nd January, 2016 the arbitrators with the consent of the petitioners and respondent no. 2 passed an award containing directions for the division of several family business, assets and properties and companies. However, the Respondent No. 2 is not taking any steps to implement the said arbitration award. 8. Reference was then made by the learned counsel to the Paragraphs 6 and 7 of the Company Petition, which read as under : 6. In such circumstances, the Petitioners and Respondent No. 2 agreed to refer the entirety of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espondent No. 2) had filed application under Section 17 of the Arbitration and Conciliation Act, 1996 ( Arbitration Act in brief) before the Arbitrators seeking interim measures till the award is enforced. 10. It has been argued by the learned counsel for the Appellants that in the order of the NCLT, it is not a finding of mismanagement and if oppression has to be held under Section 242, it would require series of acts. It is stated that only because Respondents (Original Petitioners) have extended unsecured loans in the Company to recover that the Company Petition under Section 242 could not be maintained. It has been argued that the Appellants have done whatever they had to do under the award. Learned counsel referred to the impugned order to say that NCLT could see from the record that enhancing the capital base of the Company was in the interest of the Company but still went on to cancel the allotment of 26000 equity shares wrongly referring to Section 62(3) of the New Act. It is stated that the NCLT forgot that when Respondent No. 2 had extended loan to the Company, Section 81 of the Companies Act, 1956 ( Old Act in brief) was applicable and so if the conversion was d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thus invoked Section 62(3) of the New Act. It was found that the purported allotment of 26,000 equity shares in favour of the Original Respondent No. 2 was required to be cancelled. 14. The learned counsel for the Appellants has questioned this invoking Section 62(3) of the New Act. Section 62 of the New Act deals with Further issue of share capital . There is provision how Company having a share capital, can increase its subscribed capital by issue of further shares. Such shares are to be offered to persons, in the manner stated in sub-Section (1) of Section 62. Sub-Section (2) deals with notice and sub-Section (3) which has been relied by the NCLT reads as under : 62. Further issue of share capital.-(1) Where at any time, a company having a share capital proposes to increase its subscribed capital by the issue of further shares, such shares shall be offered- xxx xxx xxx (3) Nothing in this section shall apply to the increase of the subscribed capital of a company caused by the exercise of an option as a ter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vations of the NCLT but the learned counsel preferred to submit that when the award was already there and the present Company had come to the share of Appellant No. 1 (Original Respondent No. 2), the Original Petitioners were even otherwise required to resign as Directors and they could not have maintained the Company Petition. 18. At the time of arguments, when the learned counsel for the Appellants referred and relied on the arbitration award passed, we had posed a question to the learned counsel that once an arbitration award like present, has been passed and the Company has been decided to be given to the share of Appellant No. 1 (Respondent No. 2), does it mean that the Petitioners next moment cease to be Directors ? The learned counsel fairly did not claim that the Petitioners would immediately cease to be Directors. We have carefully gone through the Arbitration Award which is without any reasons and quite cryptic and very much using telegraphic language. In most of the places, initials have been used and abbreviation for Companies, Individuals and Business and even HUF (Hindu Undivided Family) without explaining. The fact however, remains that such agreement has been ent ..... X X X X Extracts X X X X X X X X Extracts X X X X
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