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TMI Blog2021 (1) TMI 448X X X X Extracts X X X X X X X X Extracts X X X X ..... ases filed by the Respondents against the Petitioner. The Petitioner, admittedly, has filed several civil and Criminal cases against the Company and its Directors. In fact, as per Law, the Petitioner, being Shareholder holding substantial shares in the Company and also being a Permanent Director, has fiduciary duties towards the Company and its stakeholders, and he cannot, himself be a litigant, unless, he was arbitrarly not permitted to get involved in the affairs of Company by removing him even from the position of Director by the use of brute majority by other Directors and Shareholders. So far as various allegtions of fraud, misrepresentation on the part of Respondents in taking his signature, taking loan, mismanaging the affairs of Company etc are concerned, these are totally unsubstantiated. Similarly several charges of financial irregularities have been levelled against him. Though the Petitioner is well aware that Civil Court/Criminal Courts, do not have juridisdiciton over Company matters, he has approached those courts. Having not succeeded there, he is now before this Tribunal. Cases with regard to his dealings with the company's assets have been filed against him as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id Notice was also sent to the e-mail address of the Petitioner on 20.10.2015. The draft resolution on the subject of removal of the Petitioner was also communicated. It is however noticed that the Petitioner remained absent at the Board meeting held on 28.10.2015. It is also seen from the minutes of the meeting dated 28.10.2015, that it was resolved to convene an EGM on 21.11.2015 to consider the Petitioner's removal from Directorship. For this also the 1st Respondent served a notice dated 28.10.2015 convening an EGM on 21.11.2015 on the Petitioner - However, the Petitioner did not issue any confirmation of attendance till the date of the EGM. Further, the Petitioner failed to issue a written representation providing the reason as to why he should not be removed from the Directorship as provided under section 169(4) of the Act, 2013. It is further seen that the Petitioner through his advocate submitted a letter requesting for adjournment of the EGM only at the commencement of the EGM on 21.11.2015, on health grounds but without substantiating the same. He could have sent a proxy, but could not have prevented a meeting. On a perusal of the records, it is seen that the 3 members ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to 4 from interfering with the day to day management and administration of the first Respondent Company etc. 2. Brief facts of the case, as mentioned in the Company Petition, which are relevant to the issue in question, are as follows: (1) Mr.N.Gunasekar, the Petitioner is one of the Shareholders and originally a Life Time Director of the First Respondent Company, holding about 20.5% equity shares of ₹ 10/- each in the First Respondent Company. (2) It is submitted that the 1st Respondent was originally incorporated as a Team Life Care Company India Limited', on 02.07.2006 subsequently converted into Team Life Care Company India Private Limited', on 20.02.2008. Thereafter the name was changed to 'Global Finsol Private Limited' on 19.04.2013, under the provisions of Companies Act, 1956. The main object of the Company is to undertake the whole of the business, goodwill, assets and liabilities of the firm TEAM LIFE CARE for which the Company is established along with the conduct of business in the field of Insurance soliciting and procuring and other incidental business, including various other objects set forth in the Memorandum of Association of the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nthilrajan, thousands of Investors got logged in to 8th Respondent through the First Respondent and even few of Mr.G.K.Senthilrajan's friends have also invested funds in establishing this business and they worked as subsidiary units in identifying the number of customers who invested on the financial products of Bajaj Alliance the 7th Respondent. For every investment made, Bajaj Alliance pays a percentage as commission on a regular basis and hence if a customer is identified once and he starts investing either periodically or as one time investment and such investments will be treated as a reference of the 1st Respondent's Company and the 1st Respondent's Company will be paid a percentage of the investment many as well as commission. (6) It is further submitted that the said Mr. G. K. Senthilrajan originally commenced the business as a Partnership firm with the 2nd Respondent and thereafter appointed the Petitioner who is a shareholder and a lifetime Director, when the partnership firm was converted to a Company. Mr. G. K. Senthilrajan felt that it would be ideal to have the family members in the Company so that there will not be any third party intrusion. (7) It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndent. It is submitted by the Petitioner that the 2nd and 3rd Respondents obtained signatures of the Petitioner, G.K.Senthilrajan and Kandhavel making misrepresentation that they are witness to the loan agreements, however, the same were obtained from them as Guarantors. (9) The Petitioner submits that he was denied access to meetings citing old age, by the 2nd and 3rd Respondents. However, the Petitioner persistently advised the 2nd and 3rd Respondents to maintain the accounts of the 1st Respondent since huge monies were being withdrawn from his account also. But the 2nd and 3rd Respondents were always persuasive and convincing the Petitioner stating that they were maintaining the accounts properly and in an orderly manner well within the procedure prescribed under law. The Petitioner was also believing the words of the 2nd and 3rd Respondents as apart from being the shareholders of the 1st Respondent Company, they were also the son-in-law and daughter of the Petitioner. However, the Petitioner could not refrain from questioning as the 2nd and 3rd Respondents started committing default in repayment of the loan amount to the 5th and 6th Respondents. Since there was a default in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of Respondent Nos.4, 9 to 13 being Companies held and more than 40 to 60 Crores of rupees has been siphoned off by the 2nd and 3rd Respondent, and all these monies that were siphoned were basically the loan amount taken from the Respondent Nos.5 to 7 and the periodical commission paid by the 8th Respondent. As stated supra even today about 20 to 40 Lakhs of Rupees are getting credited to the 1st Respondent from the 8th Respondent and seeing the business growth of the First Respondent Company which was about 600 Crores per annum as projected during the year 2010-13, the 8th Respondent in fact offered to pay certain. (11) It is submitted that, in addition to the siphoning of funds they also started to side line the Petitioner from the entire operations and management of the 1st Respondent Company and he immediately called upon 2nd and 3rd Respondents to pay the loan availed by them under the 1st Respondent Companies name and close the debt and discharge/release the properties of the Petitioner's son Mr. G.K.Senthilrajan and his friend Mr. Kandhavel along Petitioner's property which they had given as security due to the fraud played upon them. The 2nd and 3rd Respondents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... il Court and later the interim order was vacated. Pursuant to the same the Petitioner advised the 2nd and 3rd Respondents to kindly desist from acting in the high handed manner by unjustly removing the Petitioner from the board and there by taking the entire control and management of the 1st Respondent Company. However, to the utter shock and dismay of the Petitioner, the 2nd and 3rd Respondents issued another notice for removing the Petitioner from the board of the Company by letter dated 16.10.2015 based on a request given by the 4th Respondent. Thereafter on an alleged extraordinary General meeting said to have been held on 21.11.2015 the Petitioner was removed from being the Director of the 1st Respondent Company despite the objections that were made by the Petitioner stating and requesting for a postponement of the meeting and also based on the fact that there was no proper notice. It is submitted that even after receiving objections given by the Petitioner, the 1st Respondent Company went ahead to pass a resolution removing the Petitioner from the Directorship of the Company. The said removal was neither informed or intimated to the Petitioner. Further, it is submitted that, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... become a defaulter that too soon after taking huge monies as loans.it is further submitted that the non-justifiable fall of the 1st Respondent Company and the illegal removal of the Petitioner from Directorship when accounts were sought for only prove beyond doubt that the 2nd and the 3rd Respondents are maliciously and surreptiously usurping the monies to their personal benefits and not towards the growth and the betterment of the 1st Respondent Company. (16) It is submitted by the Petitioner that the only aim of 2nd and 3rd Respondents is to systematically break down the 1st Respondent Company so as to misappropriate and usurp the funds of the Company and to ultimately bring the 1st Respondent to a grinding halt and to close down the same and divert the funds to various other companies wherein the 2nd and 3rd Respondents are having interest either as beneficiaries /shareholders /promoters /Directors. The 9th to 14th Respondents are few companies which the Petitioner has come to know of such diversion. Thus they are in collusion with each other and are unworthy to manage the affairs of the first Respondent Company. The 2nd and 3rd Respondents are thus involving all possible ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntrary to the claims of the Petitioner, the business was the brain child of the Second Respondent, who continues to be the Managing Director of the entity to the present day. At the time of its incorporation, the other partner in the business was the second Respondent's Brother-in-law, one Mr. Senthilrajan, who was later removed from the administration of the business due to various reasons, as elaborated below. (6) It is submitted by the Respondents that from the time the partnership was converted into a Company until the year 2008, the Petitioner's Son, Mr. G.K.Senthilrajan, who the Petitioner claims to be visionary behind the growth of the Company, was neither a Director nor a shareholder in the business. Thus, the business was solely run under the leadership of the second Respondent. The 2nd Respondent had brought in Mr. G.K.Senthilrajan as a partner and subsequently, in 2008, as a Director, solely on familial considerations. (7) It is submitted by the Respondents that in the year 2011, the 4th Respondent Company had engaged the Petitioner as a general agent under registered deed dated 25.08.2011. The fourth Respondent Company at present hold 50% of the shareholdi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 4,00,37,003/- and that the Respondents are hereby directed to pay any sums that are due or may become due to the Petitioner directly to the Department. The letter also stated that if the Respondents made any payment to the Petitioner without paying it instead to the Department, the same would be recovered from the Respondents as an arrears of income tax. Thereafter, the Respondents addressed a letter dated 19.02.2015 to the Petitioner calling his attention to the income tax notice as well as an earlier letter addressed to him by the first Respondent Company in the month of April 2013. By way of the 2013 letter as well as the present letter, the first Respondent Company affirmed that as on 31.03.2014, the Petitioner owed the Company a sum of ₹ 2,54,03,115.15/-. The Petitioner was called upon to pay this sum immediately. The Petitioner through his Counsel replied to the aforementioned letter by way of letter dated 03.03.2015. This letter from the Petitioner did not furnish any accounts nor answered the claims raised in the income tax letter but merely raised technical issues with the letter addressed to him. The answering Respondents to this date have not been furni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Board Meeting on 28.10.2015 and no letter seeking leave of absence was received from the Petitioner. (13) It is submitted by the Respondents that on 28.10.2015, the Board of Directors of the first Respondent Company inter alia decided to hold the EGM on 21.11.2015. Subsequently, the members of the first Respondent Company convened the EGM on 21.11.2015. At the start of this meeting, a letter was received from the Petitioner's advocate seeking leave from the meeting, citing ill health. The Petitioner had not nominated any proxy despite notice regarding the meeting being served to him well in advance. (14) In the meeting, after duly considering the letter of the Petitioner, for the reasons recorded in detail in the minutes of the said meeting, by a unanimous vote, the Petitioner was removed from his Directorship. The Petitioner in the present Petition has claimed that the said minutes of the meeting are fabricated, however, has not cared to explain how such a claim of fabrication can be sustained. After the meeting, the first Respondent Company has also duly filed the relevant Form, Form DIR - 12 with the Ministry of Corporate Affairs. (15) It is stated that the First R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered with the Insurance Regulatory and Development Authority of India ( IRDAI ) and it holds a Certificate of Registration bearing License number 1525310. Under Regulation 7(2)(g) of the IRDAI (Registration of Corporate Agents) Regulations, 2015, the Directors are required to be 'fit and proper' persons. Owing to his various acts and what he was involved with, the board of Directors and shareholders of the First Respondent Company determined that the Petitioner had ceased to be a 'fit and proper' person, which had begun to affect the qualification and license held by the First Respondent Company as a corporate insurance agent. (5) It is further submitted by the answering Respondents that the Petitioner has suppressed the fact that various criminal proceedings have been initiated against the Petitioner for offences such as forgery, fraudulent disposal of the company's property and diversion of funds by the Answering Respondents and the Petitioner has also been charge-sheeted by the jurisdictional police in criminal proceedings filed by the First Respondent Company in Crime Nos. 95, 96 and 97 of 2015 before the Learned Judicial Magistrate, Devanahalli. (6) I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat Civil Court/Criminal Courts, do not have juridisdiciton over Company matters, he has approached those courts. Having not succeeded there, he is now before this Tribunal. Cases with regard to his dealings with the company's assets have been filed against him as well. Therefore, he has not come to the Tribunal with clean hands to seek equitable relief(s) from the Tribunal. The other contentions raised by the Petitioner are also baseless and un-tenable and thus they are liable to be rejected. 8. As regards the contention of the Petitioner that he is a permanent/life Time Director, and he cannot be removed from the Board, it is settled law that such a Director can be removed, duly following the extant provisions of the Articles of Associaiton and the Company Law. The Counsel for the Respondents has rightly pointed out the decision of High Court of Delhi in Tarlok Chand Khanna and another v. Raj Kumar Kapoor and others reported at ILR (1982) I Delhi 156, the relevant para of which reads as under: The question still remains, if Khanna, a permanent Director of the company, could have been removed by the company in a general meeting in spite of the provision in the articles ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pondents-plaintiffs were fighting for their reputation for whom dishonour was worse than death. However in the instant case as already pointed out on one has got a right to become a Director of the bank as such and if one were to lose such directorship on account of shareholders choosing to remove them, one cannot make that an issue involving one's reputation or prestige and the ground urged does not help in tilting the balance in one's favour... 10. We may add here that when the majority of the shareholders are of the opinion that the person in question is not fit and proper to hold the position of a Director in the Company, it is not material that the Petitioner is the father of Respondent No. 3 or that he is of the opinion that the Respondents are keeping him away from the management of the Company. If the due procedure of removal is followed, the Petitioner's removal does not become invalid merely because he holds that position by virtue of a clause in the Articles of Association. 11. Further, in this regard, the decision of Company Law Board, Mumbai Bench, in Varshaben S. Trivedi v. M/s. Shree Sadguru Switch Gears Pvt. Ltd. and others [(2013) 116 CLA 153], ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 69(3) of the Act, 2013 which is extracted below for the sake of convenience: (3) On receipt of notice of a resolution to remove a Director under this section, the company shall forthwith send a copy thereof to the Director concerned, and the Director, whether or not he is a member of the company, shall be entitled to be heard on the resolution at the meeting. Further, clause (4) of Section 169 provides as below: (4) Where notice has been given of a resolution to remove a Director under this section and the Director concerned makes with respect thereto representation in writing to the company and requests its notification to members of the company, the company shall, if the time permits it to do so,- (a) in any notice of the resolution given to members of the company, state the fact of the representation having been made; and (b) send a copy of the representation to every member of the company to whom notice of the meeting is sent (whether before or after receipt of the representation by the company), and if a copy of the representation is not sent as aforesaid due to insufficient time or for the company's default, the Director may without prejudice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wever noticed that the Petitioner remained absent at the Board meeting held on 28.10.2015. It is also seen from the minutes of the meeting dated 28.10.2015, that it was resolved to convene an EGM on 21.11.2015 to consider the Petitioner's removal from Directorship. For this also the 1st Respondent served a notice dated 28.10.2015 convening an EGM on 21.11.2015 on the Petitioner. 15. However, the Petitioner did not issue any confirmation of attendance till the date of the EGM. Further, the Petitioner failed to issue a written representation providing the reason as to why he should not be removed from the Directorship as provided under section 169(4) of the Act, 2013. It is further seen that the Petitioner through his advocate submitted a letter requesting for adjournment of the EGM only at the commencement of the EGM on 21.11.2015, on health grounds but without substantiating the same. He could have sent a proxy, but could not have prevented a meeting. On a perusal of the records, it is seen that the 3 members representing 79.50% of the paid up capital of the 1st Respondent were present at the meeting and that after considering the letter dated 21.11.2015 of the Petitioner, s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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