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TMI Blog2017 (11) TMI 1883X X X X Extracts X X X X X X X X Extracts X X X X ..... wini Hospitals Private Ltd on 24.08.1993. The company became public limited company on 2.1.2013 and now is a subsidiary of Punarjani Securities Ltd. The authorised capital is Rs. 75 lakhs divided into 75,000 equity shares of Rs. 100 and the issued, subscribed and paid up capital of the 1st Respondent company is Rs. 74,90,300 divided into 74,903 equity shares of Rs. 100. The main object of the company is to carry on the business of running hospitals, nursing homes, health centres, medical check-up centres, drug houses with all facilities and conveniences. An EGM was convened and held for the purpose of election of the Directors on 18.06.2015 under the supervision of an independent Chairman appointed by the then CLB, Chennai. However, subsequently, Respondents 2 to 11, at an EoGM purportedly convened on 27.07.2015, removed Petitioner No.l and Respondents 12 to 22 from the office of the Director and forfeited the shareholdings of the petitioners along with the shareholdings of another member/shareholder and the same is challenged in this petition. 2. There are 13 members including the holding company in the 1st Respondent company and the petitioners being two in number constitutes no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect to which the petitioners have lodged a complaint with the police authorities and the enquiry is in progress. It is also alleged by the petitioners that the respondents for notifying the election of Respondent Nos.2 to 11 as Directors have used digital signature of the 1st Petitioner in form DIN 12; which they must have newly obtained fraudulently from Information Technology company. In connection with this matter, the 1st Petitioner also filed a complaint with Cyber Cell of Crime Branch under the provisions of Information Technology Act. It has further been stated that the notice for the EoGM that was purportedly held on 27.07.2015 shows that Item No.3 relates to the appointment of Respondent Nos. 2 to 11 only. But the notice attached with DIN12 shows that the same relates to the removal of the 1st petitioner and Respondents No. 12 to 22 from the office of the Directors. Thus, the notice of EoGM attached with DIN12 in relation to the appointment of Respondents No.2 to 11 to the Office of the Board of Directors would reveal that the so-called meeting was nothing but a fraud committed on the shareholders of the company. In the notice of removal, the agenda in relation to the appo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dents 2 to 11 as directors of the company in the EoGM purportedly held on 27.7.15 is illegal, non est, null and void; e) to declare that the respondents 2 to 11 are not the fit and proper persons to occupy the office of Directors in the company; f) to direct the respondents 2 to 11 to return all the records and papers which they have forcefully taken away from the company; The Respondents 2 to 11 filed the counter denying all the allegations made in the petition except those that are specifically admitted. It has been asserted that the petitioners are not entitled to file the petition under sections 397, 398, 111 and 111A of the Companies Act, 1956, because the petitioners without disclosing their residential status had illegally acquired the shares of the 1st Respondent company and in the EoGM held on 27.7.2015 the 1st petitioner and Respondents 12 to 22 were removed from the office of the Directors of the 1st Respondent company and their shares were also forfeited. The reason given for holding EoGM on 27.7.2015 is that the petitioner acquired shares by concealing the fact about their residential status, so the petitioner and other NRIs ought not to have been elected as Direc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... who were removed earlier, agreed to convince and apprise other Directors on the Board of the situation. The petitioner wanted back the investment made in the 1st respondent company and the holding company. Therefore, agreed to restore earlier Board of Directors post on which the petitioner called for Board meeting on 1.7.2015 at 10.30 a.m. and in the said meeting it was decided to issue notice calling for EoGM on 27.7.2015. In the said EoGM, the Petitioner, Respondents 12 to 22 were removed from the office of the Directors and their shares were forfeited. 8. It is alleged that the petitioner filed required Forms with Registrar of Companies, Kerala, but after that the petitioner showed vacillate attitude. Similarly, the other allegations levelled against Respondents 2 to 11 have been denied and it has also been mentioned by the answering respondents that a criminal complaint has been filed on 17.7.2015 before the CJM, Trissur against the 1st petitioner, his daughters and R12 to 22 u/s 420, 468, 471, 120(B) of the IPC and sections 447, 448, 449 and 452 of the Companies Act, 1956 and the matter is under investigation. 9. It has further been alleged by the Respondents that the petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us before the independent Chairman under whose supervision the EoGM was convened and held on 18.6.2015 and the issue raised by the respondents is an after-thought. Had it been so, they would have reported the matter to the CLB on 7.7.2015 when the company petitioner No.35 of 2015 was dismissed on becoming infructuous. The answering respondents also filed sur rejoinder, denying the allegations levelled in the rejoinder of the petitioner. They laid emphasis on the fact that since the investigation is pending, so the similar issues raised in the company petition cannot be determined and they prayed to dismiss the petition in limine with costs. 12. From the factual details narrated above, the issues that need consideration are as follows:- (a) Whether the EoGM purportedly held on 27.07.2015 is in accordance with the law and legally tenable? (b) Whether the forfeiture of 5415 equity shares of Rs. 100 each fully paid up held by the Petitioners and another shareholder in the 1st Respondent company, on 27.07.2015 is in accordance with the law and legally tenable ? (c) Relief. 13. In relation to the issue No. (a), it is on record that an EoGM was held and conducted for the purpose of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... round is not legally tenable, because it was for the competent authority to look into the DIN numbers issued to the Petitioner and Respondent Nos. 12 to 22 on the basis of providing the wrong addresses, if any. There was no authority with the Respondent Nos. 2 to 11 to remove the Petitioner and Respondent Nos. 12 to 22 as Directors of the 1st Respondent Company who were elected in duly convened EoGM held on 18.06.2015, that too, under the supervision of the independent chairman appointed by the then CLB. 16. The Respondent Nos. 2 to 11 have put forth a defence that there has been some understanding between the Petitioner and Respondent No.2. The 1st Petitioner promised and assured to restore the Directors who were removed earlier and wanted back his investment in the 1st Respondent Company and the holding company, based on which the purported EoGM was got conducted on 27.07.2015, and the DIN 12 were filed by the Petitioner with his signature to the ROC, which the Petitioner subsequently have denied stating that his signature was forged. Thus, there are serious contradictions in the counter filed. On one hand, it is stated that due to the non-disclosure of the residential status, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bonafide nor was in the interests of the 1st Respondent Company. Thus, the Respondent Nos. 2 to 11 seem to have made efforts to usurp the office of the Directors and to gain the control over the Board of Directors of the 1st Respondent Company. Therefore, the removal of the 1st Petitioner and R12 to R22 from the office of the Directors of the 1st Respondent Company in the EoGM purportedly held on 27.07.2015 amounts to acts of oppression by the Respondent Nos. 2 to 11. Moreover, it is on record that the appointment of Respondent Nos. 2 to 11 as Directors of 1st Respondent Company was made by a single resolution which is in violation of the provisions of Section 162 of the Companies Act, 2013. Therefore, the election dated 27.07.2015 per se is void ab initio. 18. The above view is fortified by rulings given in the following cases i) S. Vardarajan Vs. Udhyem Leasings and Investment Ltd., (2005) 125 Com. Cases 853; In this case, it was held that the Directors are in a fiduciary position vis-a-vis the company must exercise their powers with utmost good faith for the benefit as well as interest of the company. ii) Manmohan Singh Koli Vs. Venture India Properties Private L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he company to the Board of Directors. Therefore, there was no authority with Respondent Nos. 2 to 11 to forfeit the shares of the Petitioners and another shareholder. The whole action is patently illegal, perverse and is hereby declared as null and void. This view is fortified by the ruling given in Rashmi Seth Vs. Chemon, (I) Private Limited & Ors., Re. 1995, Vol (82) Comp Cas 563 CLB. Thus, in view of the legal position stated above, issue No. (b) also stands decided in favour of the Petitioners and against the Respondent Nos. 2 to 11. c) Relief:- 21. In the light of the factual and legal position stated above, we hold that the EoGM purportedly held on 27.07.2015 was illegal, and is declared as null and void. 22. We also hold that the removal of the 1st Petitioner and the Respondent Nos. 12 to 22 from the office of the Directors of the 1st Respondent Company in the EoGM purportedly held on 27.07.2015, is illegal, and is declared as null and void. We further declare that the 1st Petitioner and Respondent Nos. 12 to 22 continue to be the Directors of the 1st Respondent Company, and also declare that the forfeiture of 5415 shares of Rs. 100 each fully paid-up held by the Petition ..... X X X X Extracts X X X X X X X X Extracts X X X X
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