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TMI Blog2016 (12) TMI 1820X X X X Extracts X X X X X X X X Extracts X X X X ..... f course in addition to their to other instances as well of oppression and mismanagement, the above list of dates has been extracted from the pleadings of the parties for our convenience to understand the events in the correct perspective and as to how the transactions have been perpetrated - in the present case, as notice of EOGM seems to have deliberately been sent to an address where the petitioners were not residing to the knowledge of the respondents thereby clearly showing the intent of the respondents being in majority to exclude the petitioners. We are forced to come to a conclusion that the acts of the respondents in excluding the petitioners from the affairs of the company had been deliberate and willful and in the absence of notice or any evidence produced before us to sustain the plea of the participation of the petitioners or for that matter the petitioners were put on notice we are constrained to declare the Board Meeting held on 2.11.2010 and 10.12.2010 as well as the Extra-Ordinary General Meeting on 17.03.2011 were not held in accordance with law and as a consequence the agreement to sell is also required to be held as non-est in the eyes of law, however without ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of its objects, respondent No. 1 company is engaged in the manufacture of HDPE/PP woven sacks at its factory located at 66 -67 Mile Stone, Patti Kalyana, Samalkha, District Panipat, Haryana and that respondent No. 1 company have been availing credit facilities from State Bank of lndia, Panipat Branch securing by way of mortgage, the factory land and building situated as per the details above and also by hypothecation therein of all its movable assets. It is also averred by the petitioners that the directors of the company viz. 1st and 2nd petitioners and respondents No. 2 and 3 have also furnished their personal guarantees with the aforesaid bank and the fact of availing the loan as well as mortgage/hypothecation of the assets of the respondent No. 1 company have been duly recorded by filing requisite forms with the Registrar of Companies, N.C.T. Delhi and Haryana thereby recording the charge over the assets of the company in favour of SBI. The petitioners also aver that the management and control of the first respondent-company was all along with respondent No. 2 and 3 and that in the month of October, 2010 the petitioner received a notice under Section 13(2) of the SARFESI Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing suo motto steps to finalize the financial statements of the company for the year 2009-10, the petitioners on 4.12.2010 caused a notice to be issued to respondents No. 2 and 3 through their advocates with a copy duly forwarded to the statutory auditors of the company. However, no reply was given to the said notice even though the notice sent on 8.12.2010 was acknowledged by the addressee namely respondents No. 2 and 3. The auditors who were also put on notice informed the petitioners, it is averred by them, that he is not in the process of preparing the financial statement for the year 2009-10 since the same according to information has been referred to a Chartered Accountant at Delhi, however without any valid authority either from the Board or from the General Body of the first respondent-company. 2. In the circumstances, alarmed by the activities of the respondents No. 2 and 3 in relation to the first respondent company, it is averred by the petitioners that petitioner No. 2 visited the factory of the first respondent company at Samalkha, Panipat and was shocked to find that the entire machinery and stocks of the first respondent company were in the process of being remove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... achinery on loan for the manufacture of lamination sheets again with a view to providing livelihood to the family of the petitioners. Further, from time to time the son of the petitioner even though not being a Director or shareholder of the first respondent-company was allowed access to the factory premises of the first respondent company and also to carry raw materials for the purpose of sustaining the business carried on by him on a sole proprietary basis. The respondents also contend that soon after induction of second petitioner into the board of the company though she was without experience in business started meddling with the affairs of the company to the detriment of the company and its shareholders even though she along with her family members hold only 10.91% of the share capital of the company and the rest being held by respondents No. 2 and 3 along with other family members. Despite these serious provocations from and on the part of the petitioner No. 2 and her son, the respondents taking into consideration the addiction of their brother did not enforce their writ vehemently and in fact contrary to the allegations made in the petition, it was the second petitioner even ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kers discomfited in relation to the first respondent company and hence extension of financial facilities even if they were inclined to such a course of action was nullified. Thus, the petitioners with their minority holdings were virtually creating an impasse in relation to the affairs of the company and seriously undermining the revival and restructuring efforts of the company as well as the interest of the majority shareholders. The actions of the petitioners were neither conducive to the welfare of the family as the petitioner No. 1 and 2 along with respondents 2 and 3 had given their personal guarantees and any contemplated distress action which the bankers namely SBI would have taken against the assets of the company would have only prejudiced the interest of the family as well as the company. In the circumstances, taking into consideration of the then prevalent financial position of the first respondent-company, it was decided to dispose of the immovable property of the company on as is where is basis to offset the liabilities with SBI and to this effect resolutions of both the Board and General Meeting were passed at the registered office of the company the same also bein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll books, inward and outward registers. And to prepare an inventory of all the articles lying in the aforesaid premises of the respondent No. 1 company and to take over the control and management of the affairs of the respondent No. 1 company including its land, factory building, plant and machinery and to perform all statutory duties by taking suitable action in relation to the affairs of the respondent No. 1 company during the pendency of the present petition. (g) Declare the Board meeting held on 2nd Nov., 2010 thereby approving the appointment of Sh. Sumit Poddar S/o. Sh. Prahlad Poddar and Sh. Anil Kumar Poddar, S/o. Sh. Jagdish Rai Poddar as Executive Directors of the respondent No. 1 company as null and void. (h) Declare the Form - 18 deposited with the Registrar of Companies on 5th April, 2011 thereby changing the address of the registered office of the respondent No. 1 company from KU-160, Pitampura, Delhi-110034 to A-4/18, first Floor, Shiv Mandir Mohalla, Main Rithala Road, Badli Village, Delhi-110042 as null and void; (i) Declare the agreement to sell dt. 7th March, 2011 executed with one 'Aero Industries', Gurudwara Road, Opp. Post Office, 2168, Ka ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said M/s. Aero Industries being a third party purchaser of the immovable property situated at 66/67 Mile Stone, G.T. Road, Village Patti Kalyana, Samalkha, Distt. Panipat, Haryana (Khewat No. 775, Killa No. 167/10-1(4-0) and Khewat No. 471, Killa No. 167/17(8-0), Khewat No. 703, Killa No. 167/10-1(4-0) and Khewat No. 775 Killa No. 167/18/2(4-0) (hereinafter for sake of brevity referred to as the 'property') and also the declaration of the resolution passed at the EOGM held on 17.03.2011 whereby the consent was accorded to the Board of Directors to sell the above-described property, as null and void. In addition, consequential other reliefs have also been sought including the leave of the CLB to include the name of the third party purchaser namely M/s. Aero Industries as the 4th respondent to the above petition. The respondents had been afforded an opportunity to file the reply to the amended application seeking amendment of the main petition and after due consideration, the application seems to have been allowed on 18.07.2014. The newly impleaded respondent No. 4 from the records it is seen had also been permitted to file the reply which has been taken on record by the CLB ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he sale of electronic equipment, it is averred that since the UPS which was found not to meet the requirement of the respondent No. 1 company was returned to the manufacturer and in lieu thereof, a sum of ₹ 4,00,000/- collected was duly credited to the account of the company. The respondents further contend that all the above was done solely to wipe off the liabilities of the company and in fact, the sales proceeds received were duly credited to the SBI account and that respondents 2 and 3 have not individually benefited in any way, as claimed by the petitioner. It has also been contended by the respondents 2 and 3 in their amended reply that the financial statements for the year 2009-10 could not be finalized as the petitioners were withholding the books of accounts at their residential address which till 31.03.2010 also happened to be the registered office of respondent No. 1 company and all the statutory records and books were being maintained thereat. Respondents 2 and 3 in their amended reply have further affirmed that the petitioners No. 1 and 2 being Directors of the company were in full know of the happenings including the agreement entered into between the first resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. Sunil Poddar nephew of respondent No. 2 vide resolution dated 10.12.2010 were authorized to do all legal formalities for outright sale/lease out/transfer of business assets of branch business situated at Samalkha, Panipat more fully described in paragraph supra and based on which initially a sum of ₹ 1.95 crores was paid vide cheque No. 138617 dated 24.01.2011 as an earnest money and subsequently backed with an agreement to sell dated 30.03.2011 and based on resolution passed in General Meeting dated 17.3.2011 for the sale of the property. Further, a sum of ₹ 2.5 crores was directly paid to SBI, Chandigarh through RTGS for the release of the property from mortgage and thus out of the total consideration payable, a sum of ₹ 1.5 crores are alone required to be paid at the time of execution of the sale deed which has been as of date not done and for which the 4th respondent has initiated a suit for specific performance. 8. Apart from the above contentions placed by the respondent No. 4, it is also submitted that in the partition suit filed by petitioner No. 1 with C.S. (OS) No. 1138/2011, before the Hon'ble High Court, Delhi, 4th respondent herein has moved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agraph. 11. However, the reaction of the respondents after the receipt of the SARFESI notice seems to have been drastic what with the following actions being taken as is evident in retrospect: a) 02.11.2010 - Board Meeting held for the appointment of one Sumit Poddar son of the 2nd respondent and one Anil Kumar Poddar son of Jagdish Rai Poddar as Executive Directors of the Company; b) 10.12.2010 - Board Meeting held for authorizing the 2nd respondent to discuss with prospective buyers for outright sale/lease out the transfer of the right of business assets of branch business situated at 66/67 Mile Stone, G.T. Road, Patti-Kalyana (Samalkha), Dist. Panipat, Haryana; c) 24.01.2011 - Receipt of ₹ 1.95 crores as earnest money from the 4th respondent on the strength of the Board Resolution dated 10.12.2010 for and on behalf of the 1st respondent company by the 2nd respondent vide cheque duly encashed by the company for the sale of the property for a consideration of ₹ 5.95 crores; d) 15.02.2011 - Filing of Form No. 32 with respect appointment of executive directors by virtue of Board Resolution dated 02.11.2010; e) 17.03.2011 - EOGM held for the purpose of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the EOGM, alleged to have been held on 17.03.2011, had been given as required and hence all these meetings should be declared as null and void. Per contra, it is contended by the respondents 2 and 3 that the board meetings and EOGM were held at the registered office of the company which is the residential address of the petitioners 1 and 2 and hence the petitioners were in the full know of the meetings. In addition, the respondents 2 and 3 also contend that notice of the EOGM was indeed dispatched to all the shareholders, including the petitioners as statutorily required, as per the postal receipts evidencing the dispatch of notice on 19.02.2011. Thus only after the duly called, convened and held EOGM of 17.03.2011 wherein the approval of shareholders were obtained, the company decided to sell the property and pursuant to which the agreement to sell was entered into with the 4th respondent and the amounts received were utilised for the purpose of One Time Settlement with SBI. 13. However we are unable to agree with the contentions of the respondents for the reason that while in relation to revival and restructuring exercise of the company with bankers, the petitioners seemed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alculated to exclude the minority from the affairs of the company particularly in relation to the sale of immovable property of the company where the factory was located the same being the substratum of the company. What could have been achieved legally in compliance with the provisions of the Companies Act, 1956 including the compliance of the provisions of Section 293(1)(a) of the said Act requiring shareholders approval for the transactions contemplated thereunder, unfortunately had been seen sought to be achieved by disguised means and hence we are inclined to grant the reliefs sought for in relation to the said meetings by the petitioners. In this we are fortified by the decisions of the Hon'ble Supreme Court in Kamal Kumar Dutta v. Ruby General Hospital Ltd. reported in (2006) 74 CLA 91 and Shiv Nath Rai Bajaj v. Nafabs India Pvt. Ltd. and Another rendered by CLB, our predecessor reported in (2002) 108 Company Cases 642 wherein it has been held to the effect that lack of notice of Board or general meetings vitiates the meetings as such rendering it invalid. Even though the decisions pertain to lack of proper notice to majority shareholders residing abroad and notice being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e same are declared null and void; ii) that the meeting of the Board of Directors held on 10.12.2010 authorizing the second respondent to negotiate with prospective buyers of the immovable property of the company were bad in law and the same are declared null and void; iii) that the Extra Ordinary General Meeting held on 17.03.2011 seeking the approval of the company under Section 293(1)(a) to sell/dispose of the whole or part of the Company's undertaking situated at 66/67 Mile Stone, G.T. Road, Village Patti Kalyana, Samalkha, District Panipat, Haryana and the resolutions passed there at were bad in law and the same are declared null and void. As a necessary consequence the agreement to sell dated 30.03.2011 entered into by the company with the 4th respondent is declared as non-est, however allowing the right of the third party purchaser, namely the 4th respondent to exercise its right as may be available to it under law; iv) that the bank accounts of the company, if any, shall be jointly operated by the 2nd petitioner and the 2nd or 3rd respondent hence forth; v) that the Form - 18 deposited with the Registrar of Companies on 5th April, 2011 thereby changing the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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