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TMI Blog2018 (8) TMI 1480X X X X Extracts X X X X X X X X Extracts X X X X ..... investigator. What was required for him was to only see the contents of the resolution passed and relied upon in support of Form-32 himself and in case, it was shown to him in minute books, than he should have been very categorical as to who was in possession of minute books shown to him containing the resolutions in question. However, in this regard, no assistance has been provided to us. The Disciplinary Committee after the remand of the matter has gone through the entire controversy in detail, given cogent reasons in holding that the Appellant was Guilty of Professional Misconduct under item (7) of Part-I of the Second Schedule of the Act in as much as he did not exercise due diligence while certifying the two Forms-32 on both the occasions and as such he was grossly negligent in the conduct of his professional duties. We accordingly dismiss the appeal while maintaining the order of sentence as awarded by the Disciplinary Committee in this case, which according to us is not excessive in any manner. We, however, make it clear that since there is a dispute of management by the two sides of Khosla family and parties are already before various forums, observations made by us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n was accepted by the Board of Directors (BOD) in the meeting held on the same day. The Complainant and his wife (who were also the Directors of the Company) were present in that Meeting. It has also been alleged that Form-32 showing the cessation of Mr. Pramod Khosla and his wife Ms. Sarita Khosla on the ground of their having vacated offices of Director under Section 283 (1) (g) of the Companies Act, 1956 was signed by Mr. Bishender Singh, though he was not a Director of the Company on that date, and was filed by the Appellant after verifying and certifying the said form. It has been alleged that in this Form the reason for removal mandatorily required to be attached in terms of Ministry of Corporate Affairs Circular No.01/2012 dated 10th February, 2012 were not attached. It has been stated that in meetings held on 27th February, 2012, the cessation of Mr. Pramod Khosla and Mrs. Sarita Khosla was wrongly approved on the ground that they had not attended the previous three meetings consecutively held on 11th November, 2011, 13th December, 2011 and 19th January, 2012, by ignoring the Board of Directors meeting held on 20th December, 2011 as they had attended the said meeting and co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anded the matter by giving certain directions to the Disciplinary Committee to pass a fresh order. 6. It was in these circumstances, the matter came up before the Disciplinary Committee of the Institute again. The matter was taken up on 7th August, 2016 when the Disciplinary Committee called upon all the parties concerned before it and also gave liberty to them to file additional documents on 11th November, 2016. Mr. Nitin Khosla son of the Complainant appeared and made oral submissions on behalf of the Complainant. The Appellant did not appear as he had sought adjournment for the hearing. 7. The Disciplinary Committee directed Mr. Khosla to submit documents, not later than 21st November, 2016, namely, (i) Copy of Notice, (ii) Proof of service of the said notice, (iii) Attendance Register and (iv) Minutes of meeting of the AGM of M/s. Khosla Steel Industries Pvt. Ltd., held on 30th August 2011. The Disciplinary Committee further directed the Complainant to submit the aforesaid documents by 21st November, 2016 along with any additional document that would be directly relevant to the Complaint and fixed the hearing of the matter on Friday, the 2nd December 2016, at New Delhi. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1, for appointment of Shri Bishender Singh as Additional Director of M/s. Khosla Industries Pvt. Ltd. which is signed by 3 Directors, submitted by the complainant; and; (b) Resolution passed in the Extra Ordinary General meeting purported to have been held on 10th August, 2011 for appointment of Shri Bishender Singh as Director (Executive Director and Promoter Category) of M/s. Khosla Industries Pvt. Ltd. which is signed by Ms. Neelam Khosla without mentioning the date and place, which was submitted by the Appellant. 37. It is prerequisite for a certified copy of a resolution that it shall be signed with date and place. It has been alleged by the complainant that Ms. Neelam Khosla could not have signed the purported EOGM Resolution dated 10.08.2011 as she was not a Director at that time. She has also not signed the Attendance Register for Board Meetings for last so many years since she had shifted to Delhi in 2004 and she procured her DIN in 2012 only. 38. In form 32 pertaining to the appointment of Shri Bishender Singh as Promoter Director certified by the Appellant, no certified copy of resolution is produced. Moreover, verification in Form 32 states that the signa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... explicit statement of authorisation with duly certified Board Resolution and reliance of the Appellant on the certified copy of extract of the minutes of the Extra Ordinary General Meeting held on 10th August, 2011, which is not in order, shows that the Appellant has failed to exercise due diligence while certifying the Form 32 pertaining to appointment of Shri Bishender Singh. 44. In the common parlance a Promoter Director means a person who promotes a Company and is named as one of the First Directors in the articles of association of the Company. Shri Bishender Singh did not fulfil this requirement. Therefore, the Appellant has not exercised due diligence in certifying and filing this Form-32 relating to the appointment of Additional Director of the Company despite having been fully aware of the fact that the Board of Directors in its meeting held on 10.08.2011 had approved the appointment of Shri Bishender Singh only as an Additional Director. By changing the category of Shri Bishender Singh from Additional Director to Promoter Director the Appellant tampered with the public record to show that Shri Bishender Singh was not liable to retire at the next Annual General Meeti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng resolution was: Proposed by Mrs. Veena Khosla Seconded by Mrs. Sarita Khosla RESOLVED THAT the audited profit and loss account for the year ended 31.10.2011 the Balance Sheet as 31.03.2011 along with its Schedules and notes to account, auditor's report thereon and the Directors' report for the year for the company, be, and/are, hereby received, adopted and approved 48. The appraisal of the aforesaid facts brings out that AGM was held on 30.08.2011 and since the agenda for the meeting did not contain any item relating to the appointment of Shri Bishender Singh, he, in terms of the provisions of the Companies Act, 1956, ceased to be the Director of the Company from that date. It is clearly established that the Appellant failed to exercise diligence, expected of him, while certifying and filing Form 32 regarding the Appointment of Shri Bishender Singh as Promoter Director . 49. In so far as Form-32 relating to the removal of the Complainant and his wife from the directorship of M/s Khosla Steel Industries Pvt. Ltd., purportedly under section 283 (1) (g) of the Companies Act, 1956, is concerned the Disciplinary Committee noted that Section 283 (1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice of the Board meeting. (ii) Agenda of the Board meeting. (iii) Proof of Dispatch of Notice of the Board Meeting. (iv) Minutes of the meeting duly signed by the Chairman. (v) Documentary Evidence for requisite Quorum i.e. Attendance Sheet. 54. The removal of a Director of the Company is a serious matter particularly when the Appellant was aware of the existence of the management dispute. Therefore, it was incumbent upon him to be more vigilant and send a written communication to the Director for providing him an opportunity before verifying and certifying Form-32 for his removal as a principle of natural justice. 55. In the present case, the appellant verified the minutes and relied on the proof of dispatch of the notice sent through Speed Post on 22nd February, 2012 which was sent to Jamshedpur address. There is no proof of service of the notices on the Complainant and his wife. The fact that the management conducted the Board Meeting for the removal of Director by sending notice to a place where the Complainant was not available, appears to have been known to the Appellant while certifying the form as the appellant has admitted in his submission da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore, we direct the parties of this matter more particularly in whose possession the same are kept, to bring the original minutes book before us on the next date of hearing of this Appeal. In case, if it is not in the possession of either party than they are directed to file an Affidavit, as to whether those documents are not in their profession. 2. In the meanwhile, both the parties are directed to file their respective written submissions highlighting the main issues pointing out the differences before the Authority before the next date of hearing. 13. On 10th April, 2018, we have passed the following order:- 2. Further, in terms of the directions issued vide Order dated 19th January, 2018 passed earlier by this Authority, the Appellant as well as Respondent No.2 were directed to file an Affidavit specifying that under whose possession the original minutes book pertaining to all dates of which there is reference regarding the resolutions which have been passed by the Company and perused by the Appellant in this case before certifying Form 32. Therefore, in compliance, both the parties have filed an Affidavit along-with written submissions stating that the origin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce required on his part. 16. We have also gone through the Written Arguments, filed on behalf of both the parties. We are of the considered view that it is not a case where the professional i.e. the Appellant was expected to act as an investigator. What was required for him was to only see the contents of the resolution passed and relied upon in support of Form-32 himself and in case, it was shown to him in minute books, than he should have been very categorical as to who was in possession of minute books shown to him containing the resolutions in question. However, in this regard, no assistance has been provided to us. 17. As stated above, we are of the considered view that in the present case, the Disciplinary Committee after the remand of the matter has gone through the entire controversy in detail, given cogent reasons in holding that the Appellant was Guilty of Professional Misconduct under item (7) of Part-I of the Second Schedule of the Act in as much as he did not exercise due diligence while certifying the two Forms-32 on both the occasions and as such he was grossly negligent in the conduct of his professional duties. We accordingly dismiss the appeal while maintain ..... X X X X Extracts X X X X X X X X Extracts X X X X
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