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TMI Blog2021 (8) TMI 396X X X X Extracts X X X X X X X X Extracts X X X X ..... t the same impugned order dated 26.07.2019, accordingly, both the appeals have been clubbed together by their respective counsels for hearing, written submission set cand accordingly we are considering for disposal of the appeals. 2. The Appellants are aggrieved of the impugned order of the Tribunal as the Tribunal had held that there was no 'Oppression and Mismanagement' of the affairs of 'Safeco Hygiene Films Pvt. Ltd' (SHFP) and has also adjudicated on the rights arising out of the 'Joint Venture Agreement'(JVA) dated 22.03.2013 executed between the 'Loganmoy Limited Matheson Trust CO. Ltd' (LLMT)- Respondent No.1 and 'SBPL Polymers LLP' (SBPL) - Appellant and has directed the Appellant to convene an 'Extra-ordinary General Meeting' (EGM) for appointing four 'Nominee Directors' on the Board of Appellant. It was also informed that the Appellant in C.A (AT) No. 263 of 2019 (SBPL) who is a party to the JVA has not been heard. 3. The Tribunal after hearing the parties in the petition has directed the Board of Directors of the Respondent Companies- SHFP to call an 'EGM' of the members of the Respondent Company - (SHFP) in terms of requisition dated 20.12.2017 issued by LLMT (Petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Joint Venture Company involving the composition of the Board, proceedings of the Board and Key Management employees. He has submitted that the management of the Respondent No.2 Company are in the hands of the Appellant group and Respondents being a foreign entity established in British Virgin Land having no business interest in India and were only investors. 'LLMT'- Respondent No.1 should only be interested in receiving Return on Investments. The Appellant has also submitted that the Respondent No.1 did not seek to appoint a single 'Director' on Board of Respondent No.2 between the years 2013 to 2016. The Appellants have challenged the impugned order on the various grounds like - it has no jurisdiction and it has not considered the JV rights and rights of minority shareholders. It was also submitted that the Tribunal has exercised wrong jurisdiction under Section 241 & 242 of the Act. Findings of the Tribunal qua JV Agreement is beyond the scope of the Section 98 of the Act. The JVA contains arbitration clause and the same cannot be decided in the Company Petition. They have also insisted that the JVA is valid and subsisting. The right of management is contingent in 50% sharehol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SHFP' instead of four 'Directors' to be nominated by 'LLMT'. All this leads to 'LLMT' filing an application before the Tribunal under the Act. Brief background as submitted by the Appellants are stated below: Dates Events 11.02.2012 Respondent No.2 incorporated by Subhash Ratiwal Chawra and Hiren Subhash Chawra (Appellat Group) who are the original subscribers and first directors 22.02.2013 JVA between Appellant and Respondent No.1 for infusing 18Cr share capital in R2. As per JVA the management of R2 was to vest with Appellant. 21.11.2013 That the Union Bank of India while sanctioning credit facilities for R2 vide sanctioned letter dated 21.11.2013 put a condition that before the release of credit facilities the R2 shall execute a JVA between Appellant and R1. 2013-14 R2 was not issued 66% shareholding to R1 against the share capital infused by it wheras Appellant was allotted 34 % shareholding in proportion to the share capital infused by it. 30.09.2014 The board of the company (comprising of representatives of the appellant) was authorised by the shareholders resolution dated 30.09.2014 to borrow by way of the loan/ debenture for the purpose of business of the compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iterating the contents of letter dated 19.09.2017 12.01.2018 R2 informed R1 regarding the decision of board death EGM will be held on 5.2.2018 and issues regarding amendment of AoA to bring it in accordance with JVA and appointment 2 out of 4 nominee Directors of R1 will be decided on the basis of a special resolution instead of ordinary resolution 31.01.2018 R1 filed application u/s 98 R/w Section 100 of the Act before the NCLT, Ahmedabad praying to set aside the notice dated 12.01.2018 as per their requisition. 17.02.2018 Affidavit in reply by the R2 to the Company Petition 23.03.2018 Before NCLT matter was adjourned at joint request as the parties were attempting to arrive at an amicable settlement whereby the Appellant would purchase the entire share capital of R1. 09.04.2018 Affidavit in Rejoinder by the R1 to the Company Petition 02.05.2018 The R1 requested the Bank that it should not restrict the disbursal of credit within the sanctioned limit due to the frivolous litigation instituted by R1 since non-availability of creditor was hampering the growth of the Company 20.06.2018 NCLT allowed R1 to amend/convert its application into a petition under Section 241 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by SBPL with consent of R1. Both parties had to invest 50% each in the equity of the Company, however the Appellant SBPL LLP failed to do so, as it did not had requisite funds. 2013-2014 Consequently, R1 had to invest upto Rs. 12.27 Crores and was issued 66% shareholding against share capital infused by it whereas SBPL / Chawra Group was allotted 34% shareholding as per share capital infused by it Current shareholding structure SubhashChawra - 5000 Hiren Chawra - 5000 Loganmoy Limited 1,22,74,233(R1) SBPL Polymers LLP 63,13,016 -- o To meet financial requirements of Company, Appellant SBPL LLP infused unsecured loan in the Company & furnished collateralsecurities / personal guarantee o R1 also gave collateral security against Bank loan and personal Guarantee 21.11.2013 30.09.2014 29.02.2016 o Union Bank of India (UBI) vide letter dated 21.11.2013 while sanctioning credit facilities, the company shall execute a JVA between SBPL & R1. o Resolution dated 30.09.2014 passed by shareholders authorized Board of Companies (consisting of members of SBPL) to borrow by way of loan/ debentures on behalf of Company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iance of the provision of the Companies Act 20.12.2017 Requisition notice sent by R1 to call an EGM of members on 12.02.2018 - for appointing 4 Directors on the Board of the company. 04.01.2018 R1 wrote to UBI: o R1 majority shareholder - however JVC business conducted solely by Chawras without knowledge or consent of R1 o R1 had vide letter dated 19.09.2017 informed UBI that Chawras are conducting business without complying with the provisions of companies Act- UBI was also informed that business was carried on without R1's consent and the Ubi should not make any further disbursements without R1's consent - however UBI did not reply o SBPL LLP to be personally liable fore repayment of credit facilities since R1's consent not obtained by SBPL LLP o UBI to not make any further disbursement of credit facilities to Safeco until new Board of Directors constituted. 12.01.2018 Company instead of calling EGM as requisitioned by the R1, issued notice to call EGM on 05.02.2018 to: -decide special resolution regarding adoption of AoA in conformity with the JVA - appoint 2 Directors on the Board instead of 4 31.01.2018 R1 fined CP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ediately thereafter the Company was called upon to do the needful, however, once again the Company acting through Chawra Group denied complying with the orders passed by this Hon'ble Court. 16.04.2021 25.05.2021 In response to R1's letter dated 16th April, 2021 the Company has refused to complete the appointment process of the Directors (nominees of R1) appointment was approved in EGM held on 27.11.2019. The Respondents have observed that when they have asked for convening EGM of the members on 31.05.2017 to consider appointment of their nominee 'Directors' on Board of the Company and also to consider matters of non-compliance of the provisions of Act instead the Appellant group issued notice to call EGM on 05.02.2018 to decide special resolution regarding adoption of 'AoA' in conformity the JVA and appointment of two 'Directors' of the Board instead of four requested by Respondents. It was also submitted by the learned Sr. Counsel for the Respondents that shareholders have a right to requisition Extra Ordinary General meeting under section 100 of the Act and after the consideration by the Members the same can be considered and passed by the Members or may be rejected by the Mem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submits the accounts and participation of Respondents in AGM. The company controlled so far by Chawra group has not filed statutory returns for last 3 years. All this suggest that the Oppression and Mismanagement is being done by minority shareholders over majority shareholders. 6. Both the parties have supplemented their arguments with the citations of judgments including two common judgments - (1986) 1 SCC - 264 - Life Insurance Corporation of India Vs. Escorts Ltd & another is (2012) 6 SCC 613 - Vodafone International Holding BV. Vs. Union of India. 7. We have carefully gone through submission and citations made by the parties. We are having following observations: a. This Appellate Tribunal heard both the parties on 11.11.2020 on the issue of mediation and order is enumerated below: 11.11.2020 - Heard Learned Counsel ShMohitChaudhury on IA No.2641/2020 and 2642/2020 in Company Appeal (AT) No.263/2019 and also IA No.2639/2020 and 2640/2020 in Company Appeal (AT) No. 262/2019. These applications are filed for the direction and reference to mediation under Section 442(2) of the Companies Act, 2013. We have also heard Learned Counsel for both the parties. Learned Counsel for r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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