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TMI Blog2019 (7) TMI 1849X X X X Extracts X X X X X X X X Extracts X X X X ..... r quashing and setting aside the impugned notice dated 12.01.2018 issued by Respondent Company through its Board of Directors for convening the Extraordinary General Meeting on 05.02.2018 and be pleased to restrain the respondent company from holding or convening the Extraordinary General Meeting proposed to be held on 05.02.201 8, in the interest of justice. (c) The Tribunal be pleased to stay operation, execution and implementation of the impugned notice dated 12.01.2018 issued by the Respondent Company through its Board of Directors for convening the Extraordinary General Meeting on 05.02.2018 and further be pleased to restrain the respondent company from holding or convening the Extraordinary General Meeting proposed to be held on 05.02.2018 pursuant to the impugned notice dated 12.01.2018, in the interest of justice. (d) The Tribunal be pleased to grant such other and further reliefs in favour of the petitioner as may be deemed just and proper by this Tribunal, in the interest of justice. 2. It is stated that the petitioner company is Non-Resident Indian (NRI) Shareholder of Respondent Company. It claims that it is holding 66% of the Paid-Up Share Capital of the Responden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... produced certified true copy of the resolution passed by the Board of Directors of the Company at their meeting held on 29.03.2014 resolving to make additional allotment of shares to the extent of 10,12,770 in favour of the petitioner. Shri Subhash Chawra and Shri Hiren Chawra were authorized by the Board to file necessary forms. As submitted hereinabove, these two persons are the partners of SBPL. The certified true copy of this resolution is signed by Shri Subhash Chawra. A copy of this resolution is placed on record. The Return of Allotment (PAS-3) is also filed by Shri Subhash Chawra (Page-92). A list of allottees signed by Shri Subhash Chawra is also placed on record. 8. It is the case of petitioner that on account of this additional allotment of shares in favour of the petitioner by SBPL, being a party to the JVA and partners whereof being members of Board of Directors, which decided to make this additional allotment of shares in favour of the petitioner, there is novation of the contract, i.e. JVA. Therefore, as per the petitioner, the original contract need not be performed as per the provisions of Section 62 of the Indian Contract Act. 9. The Petitioner, being one of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a meeting for the consideration of that matter on a day not later than forty-five days from the date of receipt of requisition, the meeting may be called and held by the requisitionists themselves within a period of three months from the date of requisition". 14. Thus, by considering these circumstances, it was obligatory on the part of the Board of Directors to call EGM only to consider the matters referred to in and suggested by the shareholders requisitionists. Hence, it was not open to the Board to make any alteration including deletion or addition in the requisition notice. 15. The petitioner further alleged that despite this, the Board of Directors of the respondent company took the impugned action by issuing the notice dated 12.01.2018 whereby the Board of Directors not only modified the mode of resolution from ordinary to special, but went on further to modify the resolution and proposed appointment of two directors. Besides this, the Board of Directors also proposed to pass one additional resolution by way of a special resolution. Therefore, it is alleged that the impugned action on the part of the Board of Directors of the respondent company is completely contrary to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of more than two directors in the Board of the company. It is also contended that the respondent group of shareholders have also infused more unsecured loan in the respondent company. Therefore, if proposed change in the composition in the Board of Directors is allowed it may adversely affect rights of the respondent member group who are minority shareholders of the company and may amount oppression. The modified agenda of the EOGM proposed by the respondent member group would balance the equity groups and will be consistent with the Joint Venture Agreement. The respondent company further submits that the Joint Venture Agreement is valid and still hold good and operative, hence, it is not open to the petitioner to invoke such provision. The Ld. Counsel appearing for the respondent company further disputes this contention made by the petitioner that there is any kind of novation of such Joint Venture Agreement. In view of the above stated contentions and on the strength of such JVA, the respondent company has prayed for rejection of the present petition. 20. We heard the rival submissions put forth by the Ld. Counsels for both parties. We duly considered the contents of the presen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tudy of Section 100(2) (3) and (4) of the Act goes to show that in case of a company having a share capital, members holding one-tenth of the paid-up share capital of the company carrying right of voting are entitled to requisition an Extra Ordinary General Meeting for the purpose of considering matters set-out in such a notice. Thus, the wisdom and intention of the legislature is to give clear and complete right to the members of the company, those are holding more than 10% of the paid-up capital to make a requisition for EGM and even to convene EGM, if Board fails for convening the same and to consider such agenda as they deem appropriate. In case, the Board of Directors agree on the request of the requisitionists, the EGM has to be held only for the purpose of considering the matters suggested in the requisition. It is not open to the Board of Directors to modify or make change in proposed agendas for consideration in such EGM. 22. The legal position in respect of the supremacy of the members of the company to convene General Board Meeting and to pass appropriate resolutions has been settled by the Hon'ble Supreme Court in the matter of Life Insurance Corporation of India vs. E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter, may consider/ approve or reject the same by way of an appropriate resolution. 24. In addition to the above, we made efforts to examine the validity and enforceability of Joint Venture Agreement entered between the parties, which has not been fully performed as the SBPL by declining to make contribution to additional fund to the company. Therefore, the petitioner company had to make arrangement of additional fund of Moreover, the existing Board of Directors of the respondent company went further to ratify the action of the petitioner for accepting additional fund in the company. Further, allotted additional shares in favour of the petitioner, thus, shareholding of the present petitioner has increased to 66% of the total share value of the company. Therefore, in our view, such amounts to modification or renovation of a contract, i.e., JVA, as both the parties by way of their conduct have admitted and impliedly accepted to make suitable change in terms of the JVA to accept additional contribution of fund to be received by the respondent company, then obviously both the parties of JVA are expected to follow the spirit behind such renovation of contract and to get their sharehold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Act and a Court should not interfere with it. The relevant paragraphs of the above stated decision is being reproduced hereinbelow; "7. So far as the jurisdiction of the Civil Court to entertain a suit for removal of the directors of a limited company is concerned, it may be observed that Part VI of the Companies Act contains detailed provisions for the management and administration of companies. Chapter Il thereof deals with constitution of the Board of Directors, disqualification of directors, vacation of office by directors and matters connected therewith. Section 283 deals with the vacation of office by directors. Section 284 deals with the removal of directors. The procedure for removal of directors is laid down in the said section. From a careful perusal of the scheme of the Companies Act, particularly Chapter Il of Part V/ thereof, it is clear that the appointment of directors, their working, their removal etc. are all provided for by the Companies Act itself. Under S. 284, a director of a company may be removed by ordinary resolution" 27. In addition to the above stated decision, the Hon 'ble Madras High Court came to examine the legal position with regard to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to remove some directors and appoint others in their place. The life Insurance Corporation of India cannot he restrained from doing so nor is it bound to disclose its reasons for moving the resolutions. " Further, by quoting the above stated Supreme Court's ruling, the Hon'ble Madras High Court in paragraphs 19 and 25 of the above stated judgement held as such; "19. Thus it is clear that the obligation to annex an explanatory statement to the notice of the meeting is only on the company when it calls for a meeting to transact special business. When a requisitionist calls for an extraordinary general meeting under section 169, there is no obligation on the requisitionist to annex an explanatory statements to the notice of the meeting. There is in my view no warrant for imposing such an obligation on the requisitionists. Therefore, I am of the view that there is no merit in the contention of Mr. A. K. Mylsamy, learned counsel for the petitioner, that the requisition notice dated February 8, 1992, and the notice of the meeting dated March 28, 1992, are bad and that they contravene the provisions of the Companies Act. 25. Point No. 5 : As already observed by me, a sharehol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laid down in the above referred judicial precedents and by considering the facts and circumstances of the present case, the present company petition must succeed, hence, it is allowed in terms of its prayer clause. 29. Consequently, the notice dated 12.01.2018 issued by the Respondent Company, through its Board of Directors, for convening the EGM is held bad in law, hence, it is set aside. 30. The Board of Directors of the respondent company is directed to proceed forthwith to call an Extra Ordinary General Meeting of the members of the respondent company in terms of the requisition dated 20.12.2017 issued by the petitioner. The Board of Directors of the respondent company shall proceed to call the EGM for considering matters specified in the requisition notice dated 20.12.2017 within 30 days from the date of receipt of an authentic copy of this order by prescribing minimum 21 days' notice to its all shareholders. It shall not be convened beyond 45 days from receipt of this copy of this order without having express permission of this Court. 31. In the event the Board of Directors does not proceed to call for the EGM within the time stipulated in this order, it shall be open ..... 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