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TMI Blog2018 (6) TMI 948X X X X Extracts X X X X X X X X Extracts X X X X ..... rovision in the Companies Act that a director can be removed but members are not normally removed. As per the claim of the appellant that respondents are not members and counter claim by the respondents that they are members. There are also some conflicting documents as some documents are showing that they are members of the company at some point of time and some documents are showing that they are not members of the company. Even if there is a provision in the Articles of Association for removal of the members, it may conflict with the provisions of law and if not so, strict compliance with the requirement for removal need to be placed on record so as to deny the membership right to a person who has been a member at one point of time or the other. This issue could be an exceptional circumstances, which may merit “waiver”. Looking to the nature of the company, location of the properties and the charity purpose for which the Association has been formed for the districts of Nashik, Aurangabad, Ahmednagar the shifting of the office from Nashik to Mumbai may be ground for Members of the company to be concerned. This seems to us exceptional circumstances for which waiver could be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant who had vacated the office on 30th September, 2015 and the appointment of 3 new directors was done on the same day i.e. 30th September, 2015 vide Resolution No.6, but he was authorised to do so on 3rd October, 2015 i.e. 3 days of his vacation from the post of director. Other allegations have also been levelled such as Board Meeting Resolutions are invalid, ultra vires, fake and non-existent. Board Meetings were convened on 18th and 19th December, 2016 for removal of new directors and appointment of additional new directors. The 1st and 2nd respondent sought the following relief from the Hon ble Tribunal: I) That the Petitioners be granted a permanent order and injunction of this Hon ble Tribunal restraining the Respondent Nos 2 to 12 from posing as the director of the company. II) That the petitioners be granted a permanent order and injunction of this Hon ble Tribunal restraining the Respondent Nos 2, 11,12 from posing as the members of the Company and cancel MGT-7 (annexure 1) with the Members. III) That the Hon ble Tribunal restraining Respondent No.2 in mismanaging the operations of the company in disguise and behind other respondents. IV) That this Hon ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ules, 2016, as the petition should not be rejected on technical grounds hence the petition filed by the 1st and 2nd respondent may not be considered, and applicants/petitioners are filing the application thereby seeking waiver from requirements as specified under Clause (a) and (b) of the Section 244 of the Companies Act, 2013to apply under Section 241 of the Companies Act, 2013. Therefore, the applicants prayed for the following: A) That this Hon ble Court may kindly be pleased to allow this application thereby waiving the embargo as provided under Section 244(1)(a) and (b) as per proviso clause provided under Section 244(1) of Companies Act, 2013. 4. After hearing both the parties the Tribunal passed the following order: I have taken due note of the two case laws cited from the side the Respondent (2): (1) AE AI Ameen and others Vs Bayangudi Muslim Educational Association and Others (C.P. No.35 of 2004) and (2) Prem Nath Gangneja Versus Edwardganj Public Welfare Association and another (C.P.No.72 of 1985). However, noticed that those facts are distinguishable from the facts of this case. A glaring distinction is that if the Petitioner with mala fide intention is creat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. Learned counsel for the appellant stated that general meetings of appellant No.1 were held on 30th September, 2015 and it was record that various persons including the respondents hereto stood automatically vacated of the office of directors by operation of law on account of, inter alia, non-filing of annual accounts and annual returns and failing to discharge their duties of directors and in terms of Section 167 read with Section 164 of the Companies Act, 2013 certain other persons including appellant Nos 2 to 13 were appointed as directors. It is further stated that this was necessary as the 1st appellant was being mismanaged. Learned counsel for the appellant stated that the 1st and 2nd Respondent have wrongly alleged in the Company Petition that they were unlawfully removed from the directorship of the company whereas actually the Respondents stood automatically vacated of the office of directors by operation of law on account of non-filing of annual accounts and annual returns and failing to discharge their duties as directors. Learned counsel next stated that they have intimated this fact only to the Registrar of Companies. Learned counsel for the appellants stated that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... some directors belonging to other religion for his personal gain and also changed the Registered Office from Nashik to Mumbai which is not as per the Memorandum and Articles of Association of the appellant No.1. 10. Learned counsel for the 1st and 2nd respondent submitted that the decision passed by this Appellate Tribunal in Cyrus Investment Pvt Ltd and Anr Vs Tata Sons Ltd Ors cannot be made applicable and differed with the present case as in the said petition the question was arose in respect of company having share capital, on the contrary in the present case the appellant No.1 is Section 8 of the Companies Act, 2013 having charity functions. Learned counsel submitted that even if it is presumed without admitting that the Cyrus case is applicable to the present case, even in that case the issue as raised by the appellants herein in respect of 1st and 2nd respondent of being member or not of appellant No.1, cannot be decided at the time of deciding application as per the provisions of proviso clause enshrined under Section 244 of the Companies Act, 2013. 11. Learned counsel for the 1st and 2nd respondent submitted that they have represented the appellant No.1 in num ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e directors of the appellant No.1 company. It is next submitted that unless and until being a member of the company no one could be director of the company. 13. Learned counsel for the 1st and 2nd respondent submitted that the Tribunal has correctly dealt with the application filed by it without going into the merits of the Company Petition. Learned counsel for the 1st and 2nd respondent submitted that the they are members of the appellant company and were legally entitled to waiver under the proviso of Section 244(1) of the Companies Act, 2013 and the company petition filed before the Tribunal is maintainable. Learned counsel further submitted that the in view of the decision passed by this Hon ble Appellate Tribunal in Cyrus Investment Pvt Ltd and Anr Vs Tata Sons Ltd Ors the Tribunal has rightly allowed waiver to the 1st and 2nd respondent and the appellant No.2 to 7 were never ever being members or directors of the appellant company. Merely misusing the online system became members and online directors of the appellant company and started mismanaging and their acts of oppression. Learned counsel lastly submitted that the appeal is totally devoid of any substance and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat event he registered office of the appellant company was illegally changed by the 2nd appellant from Nashik to Mumbai in spite of the management being the Nashik Diocese Council. 16. Learned counsel for the 3rd respondent further submitted that it is prima facie made out that the 2nd appellant alongwith other appellants have connived with one builder namely Prakash Pusaram Laddha to usurp the properties of the company and to completely destroy its charitable objectives. Learned counsel submitted that he got registered FIR against the 2nd appellant for his criminal and fraudulent acts and the 2nd appellant was denied anticipatory bail and was taken in police custody for seven days and now he is remanded for judicial custody at Nashik Central Jail on the same charges of corporate and criminal fraud levelled against him. Learned counsel for 3rd respondent further submitted that the 1st and 2nd respondent had moved a Company Petition before the Tribunal under Sections 241 and 242 read with Section 244 of the Companies Act. Learned counsel further submitted that the two members fell below the one fifth of total member s threshold mandated under Section 244(b) of the Companies Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the appeal. 20. Rejoinder has been filed by the appellant No.1 to the affidavit in reply filed on behalf of Respondent No.3. Learned counsel for the appellant No.1 stated that the 3rd respondent would not be the ex-officio Chairman-Director-Member of the appellant company in terms of the order passed by Hon ble High Court of Bombay in the matter of Sadanand Shantwan Salvi and Ors Vs The Nasik Diocesan Counsel Reg. Trust and Ors decided on March 13, 1997 and the consequent amendment of the Memorandum and Articles of Association of the Company in the year 2000. It is next stated that the Hon ble High Court in the said order observed the manner in which the trust was being mismanaged due to the temporal nature of its administrative structure. The Hon ble Court observed that the amended Memorandum and Articles of Association of the company did not have any provisions for respondent herein to be the ex-officio Member-Director. Learned counsel further submitted that even as per the Memorandum and Articles of Association of the Company of 1990, there is no concept of ex-officio chairmanship of the appellant company. 21. We have heard the learned counsel for the parties, perused t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ased on record/evidence but also required to show that after being satisfied itself the Court/Tribunal has passed such order. To form an opinion as to whether the application merits waiver, the Tribunal is not only required to form its opinion objectively, but also required to satisfy itself on the basis of pleadings/evidence on record as to whether the proposed application under section 241 merits consideration. 26. Section 241(1) of Companies Act, 2013 provides as under: Application to Tribunal for relief in cases of oppression, etc. (1) Any member of a company who complains thata) the affairs of the company have been or are being conducted in a manner prejudicial to public interest or in a manner prejudicial or oppressive to him or any other member or members or in a manner prejudicial to the interest of the company; or b) the material change, not being a change brought about by, or in the interests of, any creditors including debenture holders or any class of shareholders of the company, has taken place in the management or control of the company, whether by an alteration in the Board of Directors, or manager, or in the ownership of the company s shares, or if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e are only 8 members. Therefore, there has to be some linkage how 46 members have become 8 members. Further the appellant has stated that certain directors stood automatically vacated of the office of directors by operation of law on account of non-filing of annual accounts and annual returns and thereby failing to discharge their duties as directors. However, we are of the opinion that there is provision in the Companies Act that a director can be removed but members are not normally removed. On the other hand, as per the claim of the appellant that respondents are not members and counter claim by the respondents that they are members. There are also some conflicting documents as some documents are showing that they are members of the company at some point of time and some documents are showing that they are not members of the company. Even if there is a provision in the Articles of Association for removal of the members, it may conflict with the provisions of law and if not so, strict compliance with the requirement for removal need to be placed on record so as to deny the membership right to a person who has been a member at one point of time or the other. This issue could be an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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