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TMI Blog2018 (6) TMI 678X X X X Extracts X X X X X X X X Extracts X X X X ..... er) and Dr. Subba Rao P (Respondent No.2) of the First Directors of the Company. As per the Article-29 the member of Director should not be less than two and not more than 12 including Managing Director or nominated Director and other Directors if any. As per Article 34 Board of Directors shall have power to appoint Additional Directors subject to the maximum mentioned as sated above. As per Article-38: the quorum for a meeting of the Board of Directors shall be 1 /3rd of its total strength (any fraction contained in that 1/3rd being rounded off as one) or two Directors whichever is higher. Thus the impugned transfer and allotment are legal, there is no question of application of section 59 of Companies Act to the facts and circumstances of the case. - C.P. No. 58/2015 (TP No./HDB/2016 - - - Dated:- 23-10-2017 - MR. RAJESWARA RAO VITTANAL AND MR. RAVIKUMAR DURAISAMY, JJ. For The Petitioner : Shri S. Chidambaram. PCS For The Respondent : Shri Y. Suryanarayana, Advocate ORDER Per : Rajeswara Rao Vittanala, Member (J) The Present Company Petition bearing CP No. 58 of 2015 (TP No.80/HDB/2016) is filed by Mr. Rachakonda Siva Kumar (Petitioner), U/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, suppers, stockiest, servicing of Navigation Systems and calibration, Inertial and etc. (3) The Petitioner is one of the subscribers to the Memorandum of Association and he was also the First Director of the Company by holding equally 50% of the paid up equity shares along with second respondent in the Company. However, he has resigned as Director of the Company on 18.11.2014 and remains as shareholder holding 50% of the shares of the Company. (4) It is contended that the Petitioner promoted the Company by taking the 2nd Respondent as its co-promoter with 50:50 equity shareholding pattern and thus incorporated the Company as a private limited Company under the provisions of the Companies Act, 1956. (5) It is alleged that the 2nd respondent is indulging in anti-company activities and resorted to acts of mismanagement and creation of fake documents, tampering the public records of ROC/MCA web portal by uploading fake documents and resolutions. He has also failed to comply with the mandatory statutory compliances of the Companies Act, 1956/2013. (6) It is alleged that the agenda of Board of Meeting held on 25.08.2014 was altered and attaching a fake board resolution adop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich a provision was made for ₹ 1.79 Crores for payment of technical services, salaries, etc, payable into the petitioner bank account. The petitioner has sent the different balance sheet contrary to be based on 03.09.2014 before the Board of Directors of the Company. The Company tries to correct the balance sheet and placed proper balance sheet before the Board Meeting held on 03.09.2014. However, the petitioner refused to sign the balance sheet, on the contrary, he is making counter allegations. Due to the non-cooperation of the petitioner, it has become impossible for the Company to function in a normal manner resulting in non-finalization of accounts for the year 2013-14, non-holding of annual general meeting (AGM) etc (4) The Respondent No.3 was appointed as an Additional Director of the Company during Board Meeting held on 25.08.2014, and 500 shares of the Respondent No.2 were also transferred to him. The petitioner, in fact was also present at the Board Meeting. And necessary transfer deeds were duly executed by the Respondent No.2 in favour of Respondent No.3. The 2nd Respondent has chosen to file Form No.MGT-14 with the Registrar of Companies/MCA Portal only to ens ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n off the funds of Company could not succeed. Admittedly, ₹ 9,00,000/- was pending in the Company as Share Application money. 5. The Petitioner has filed a rejoinder dated 15.12.2016, in response to the counter filed by the respondent, by inter alia contending as follows: i. The counter filed by respondent Nos.2 and 3 is totally false, and it amounts to serious acts of 'perjury' and 'contemptuous'. Therefore, the Tribunal should take serious view of the matter. In support of his contention, he has relied upon the Judgment of Hon'ble Supreme Court of India: rendered in Sciemed Overseas Inc. v. BOC India Ltd. [2010] 3 SCC 70 where a reference was also made to Muthu Karuppan v. Parithillamvazhuthi [2011] 5 SCC 496. ii. The respondent No.1 has not yet filed a counter, only the respondent No.2 has filed a counter, which is adopted by the Respondent No.3. There is an inordinate delay to file a counter. iii. It is asserted that Petitioner has always cooperated with the 2nd respondent. He has signed the duly audited Annual Accounts for the Financial Year 2013-14 and as approved a the Board Meeting dated 3rd September, 2014 sent along with the final min ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 8. By perusal of pleadings and arguments of both the parties, the following main issues arise in the present Company Petition: (1) Whether the respondents have followed Articles 17 to 22 of Articles of Association of the Company, by duly following principles of natural justice in conducting and passing the impugned Board resolutions dated 25.08.2014, 03.09.2014; (2) Whether the alleged acts of oppression and mismanagement taking place, while he was one of two Directors of Company, can continue the present petition under section 397/398 of Companies Act, 1956/ Sections 241 and 242 of Companies Act, 2013, since he ceased to be Director on resignation on 14.10.2014. 9. In order to validate the proceedings of Board of Directors, it is necessary to issue proper notice with agenda to Board of Directors in the first instance. In the instant case, there are only two directors, the petitioners and second respondent. A notice dated 13.08.2014 (page 46 47 of counter) is issued to the petitioner by the Chairman, second respondent by proposing to conduct Board Meeting on 25th August, 2014 along with agenda which includes approval for transfer of shares to Shashi kumar Vijaybalan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ong as the petitioner accepts that notice(s) in question received and also attended the meetings in question, and accepted the second respondent as Chairman of the Meetings, he cannot challenge the authority of second respondent to take appropriate action in accordance with resolutions passed therein, that too, on un-tenable grounds. 11. It is not in dispute that the petitioner has resigned as Director of the respondent No.1 Company on 24.10.2014 (18.11.14 is stated in the Company Appeal) filed before the Hon'ble NCLAT). So the present status is only a shareholder holding 5 % of shares of the total shares of the Company. When the petitioner admittedly ceased to be a Director with effect from 14.10.2014/18.11.2014, the alleged acts of Oppression and Mismanagement are also ceased to exist. Therefore, he cannot continue the present petition on those grounds. It is a settled position of law that acts Oppression and Mismanagement is not to be available at the time of filing the Application/Petition but they should be perpetuated till the petition is actually taken up for final hearing. As held by the Honb'le High court of Kerala in Palghat Exports (P.) Ltd. v. T.V. Chandran [ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also to be noted the balance sheet as on 31.03.2014, which is also signed by the petitioner and the respondents contains details of share application money as on 31.03.2013 and unsecured loan as on 31.03.2014. 14. When the provisions of section 42 of the Companies Act, 2013 relating to allotment of securities came into force from 01.04.2014 which stipulate that the Company shall allot its securities within 60 days from the date of receipt of the application money, failing which the application money should be repaid within date of completion of 60 days. We are satisfied that the Company followed all extant rules in this regard. 15. The transfer of shares of the Company is dealt with under Article-17 to 26 of the Articles of Association. Article-17 is more relevant to extract for ready reference as it is referred in the case: Article-17: Save as hereby otherwise provided, no shares shall be transferred to any person who is not a member of the Company so long as any member is willing to purchase the same at the fair value to be determined in the manner hereinafter provided. The above provisions did not bar to transfer of the shares to non-member of the Company, but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per Article 30 Mr. R. Shiv Kumar (Petitioner) and Dr. Subba Rao P (Respondent No.2) of the First Directors of the Company. As per the Article-29 the member of Director should not be less than two and not more than 12 including Managing Director or nominated Director and other Directors if any. As per Article 34 Board of Directors shall have power to appoint Additional Directors subject to the maximum mentioned as sated above. As per Article-38: the quorum for a meeting of the Board of Directors shall be 1 /3rd of its total strength (any fraction contained in that 1/3rd being rounded off as one) or two Directors whichever is higher. As stated supra the petitioner as well as the 2nd respondent are admittedly present during Board Meeting in question to transact the business of the Company. Accordingly the business of the Company was conducted duly following the above articles of Association of the Company. It is also relevant to point out here that the petitioner is not disputing the appointment Mr. V Shashi Kumar (respondent No.3) but selectively opposing allotment of shares to him for the reasons best known to him. Since we hold that the impugned transfer and allotment are legal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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