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TMI Blog2017 (12) TMI 1640X X X X Extracts X X X X X X X X Extracts X X X X ..... also declared illegal and set aside. Apart from that, the transfer of shares of 1st Respondent to 2nd Respondent having set aside in addition to order for the allotment of shareholders of the shares of the 12th Respondent by duly following the procedures laid down under the Companies Act and Articles of Association, no interference is called for. We are of the view that apart from the just and proper order passed by the Tribunal, it has also passed consequential reliefs of setting aside illegal allotment and therefore, no further relief can be granted to the Petitioner. - Company Appeal (AT) No.159 of 2017, 198 of 2017 (Arising out of Order dated 15th March, 2017 passed by the National Company Law Tribunal, Ahmedabad Bench, Ahmedabad in TP No. 106/397-398/NCLT/AHM/2016] - - - Dated:- 22-12-2017 - S.J. Mukhopadhaya, A.I.S. Cheema And Balvinder Singh, JJ. For Appellants:- Mr. Ashok Lal Bhai, Mr. Arvind Kumar, Ms. Hena George and Ms. Purti Marwaha Gupta, Advocates. For Respondents: - Mr. Krishnendu Datta, Ms. Prachi Johri and Ms. Malvika Awasthi, Advocates for Respondent. JUDGMENT Sudhansu Jyoti Mukhopadhaya, The cross appeals have been preferred by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wn under the Companies Act and Articles of Association. (5) This Tribunal is not inclined to grant other reliefs prayed in the petition. The petition is disposed of accordingly. There is no order as to costs. The pending application TP 106-A/2016 (CA 35/2016) stands closed. 3. The contesting Respondents along with the Company has challenged the judgment on merit (Company Appeal (AT) No. 159/2017). 4. The Petitioner Mr. Bhavesh Narumalani has preferred the appeal against the said order on limited ground that the consequential declaration has not been passed by the Tribunal. 5. The brief facts of the case are as follows: - 5.1 The Petitioner alleged that, at the time of incorporation of the Company, he held 25% of the issued and subscribed and paid up equity share capital of the Company (M/s. Therm Flow Engineers Pvt. Ltd. Ors.) but the shareholding of the Petitioner has been illegally reduced from 25% to 8.33% by the 2nd and 3rd Respondents which is an act of oppression on the part of the Respondents. 5.2 Further, according to Petitioner, he was one of the four members of the Company but subsequently while issuing and allotting shares to others, the number of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioner. It was also submitted that the Petitioner being a subscriber to the Memorandum of Association of the Company at the time of incorporation of the Company on 29th August, 2002, share certificates for 2500 equity shares were issued and allotted to the Petitioner. 8. According to Respondents, the Petitioner cannot allege that the share certificates were not issued to him till 2014, after lapse of thirteen years from the date of subscription of the Memorandum of Association. However, such submissions cannot be accepted in view of the fact that the Petitioner does not have any grievance with regard to issuance of the original share certificates and has made grievance with regard to fresh certificates issued between 2010 and 2013. 9. Next, it was contended on behalf of the Respondents that notice of the Board of Directors meeting in which fresh issuance of shares had taken place in the years 2010, 2011 and 2013 were sent to the Petitioner and that Annual Returns for the respective years have also been filed with the Registrar of Companies. The Petitioner was duly served with notices of the concerned Extra Ordinary General Meeting dated 21st December, 2009, by which, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g leave of absence from the meeting which was to be held on 11th July, 2015. It was further contended that shares of the 12th Respondent were offered for purchase to the Petitioner vide letter dated 23rd June, 2015, however, Petitioner did not reply to such offer. It was submitted that the Petitioner intentionally and deliberately did not challenge the aforesaid increase in share capital or allotment of shares. 15. The main grievance of the Petitioner is that though the Tribunal has accepted oppression by Respondents but no consequential relief has been granted apart from the relief as noticed in the preceding paragraphs. Learned counsel for the Petitioner submitted that once the oppression is held, the Tribunal ought to have granted consequential relief by cancelling shares which were illegally issued to 5th to 10th Respondents. 16. So far as the maintainability of the Petition is concerned, we hold that the Tribunal rightly rejected the objection of the Respondents. Once the share of the member is reduced below 1/10th of the total share capital of the Company without information and knowledge to the member, the application under Sections 397 398 of the Companies Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usy on account of personal reasons requested for leave of absence, but there is nothing on the record to suggest that the notice of the meetings dated 1st September, 2014, 15th November, 2014 and 25th March, 2015 were served on the Petitioner. 19. The stand of the Respondents is that the Petitioner orally informed the Respondents on each occasion being busy on account of personal reasons and requested for leave of absence which was granted to him is also not based on record. There is nothing on the record to suggest that even the minutes of the meetings of the Board of Directors dated 1st November, 2014 and 22nd June, 2015 were served on the Petitioner. 20. The Tribunal noticed the stand taken by the Petitioner that the minutes of the Board meetings held on 29th January, 2010, 18th January, 2011 and 4th July, 2013, in which additional allotments were made to 4th to 11th Respondents are not at all legitimate and have been fabricated only with the intention to mislead the Tribunal. However, no such opinion having been expressed by the Tribunal on such stand taken by the Petitioner, we are not deliberating on such issue. In the present case, as it is clear that the further share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o evidence to suggest that notices were served on the Petitioner and other members. It is the case of the Petitioner that he had total faith on 2nd and 3rd Respondent and therefore, he did not bother about the manner in which the affairs of the 1st Respondent Company have been conducted till June, 2015. 24. It is an admitted fact that the Company who is holding 27% share capital i.e. 13,65,512 shares of the 13th Respondent (another Company) which is listed in Bombay Stock Exchange. It is also not disputed that Narayanbhai Patel Group , during the financial year 2014-15, advanced an amount of ₹ 07,01,30,000/- to the 1st Respondent Company as short term borrowings. The said amount was used by the 1st Respondent Company to purchase shares of 13th Respondent from 2nd and 3rd Respondents from Bombay Stock Exchange. The 1st Respondent Company made provisions of ₹ 40,60,111/- by way of interest to Narayanbhai Patel Group (2nd Respondent to 11th Respondent) for payment of interest on short term borrowings. There was no urgent and acceptable need placed on record by the 2nd and 3rd Respondents for increase in the share capital of 1st Respondent Company and allotment of sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dents to suggest that before 22nd June, 2015, the Petitioner had knowledge about the increase in share capital. 28. In the aforesaid background, the Tribunal has declared the increase in the share capital from ₹ 1 lac to ₹ 2 lacs of the 1st Respondent Company that took place on 21st December, 2009 and from ₹ 2 lacs to ₹ 3 lacs on 28th September, 2010 as illegal and set aside the allotment of 2500 shares to 4th Respondent on 29th January, 2010 and to the 5th Respondent to 11th Respondent on 18th January, 2011 and allotment of 2500 shares to 11th Respondent on 4th July, 2013 has been also declared illegal and set aside. Apart from that, the transfer of shares of 1st Respondent to 2nd Respondent having set aside in addition to order for the allotment of shareholders of the shares of the 12th Respondent by duly following the procedures laid down under the Companies Act and Articles of Association, no interference is called for. We are of the view that apart from the just and proper order passed by the Tribunal, it has also passed consequential reliefs of setting aside illegal allotment and therefore, no further relief can be granted to the Petitioner. 29. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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