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TMI Blog2022 (12) TMI 412X X X X Extracts X X X X X X X X Extracts X X X X ..... leged to have been committed by the Appellants under Sections 397 398 of the Companies Act, 1956, (Sections 241 242 of the Companies Act, 2013). The issues raised by the Respondents are reflected in para 7 of the Company Petition 93/2019 and therefore it cannot be said that these issues were never pleaded or that these issues do not form part of the acts falling within the ambit of the definition of Oppression and Mismanagement as defined under Sections 241 242 of the Companies Act 2013. The pendency of the Criminal Case has no relevance to the adjudication by the NCLT regarding acts of Oppression and Mismanagement . NCLT has only based its observations that the Meeting had never taken place on the findings given by Truth Labs and the Government Forensic Laboratory, apart from other material on record . It appears from the record that Respondent No. 4 disputes his presence at the Board Meeting dated 01.10.2012. It is significant to mention that the letter dated 11.05.2015 addressed by the Bureau of Immigration, Ministry of Home Affairs, Government of India shows that the fourth Respondent had never attended any Board Meeting on 01.10.2012 as he was travelling abroad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said allotment and rectify the register of Members in order to restore the original Shareholding pattern; and lastly that the removal of the Petitioners from the directorship of the Company under Section 284 of the Companies Act 1956 in the AGM held on 07.09.2013, is illegal and therefore null and void. 2. Submissions of the Learned Sr. Counsel appearing on behalf of the Appellant: It is submitted by the Learned Counsel for the Appellant that on 23.11.2013, the first and the second Respondent filed an Application under Sections 397 398 of the Companies Act, 1956 (now Sections 241 242 of the Act) and under Section 59 of the Act before the NCLT against the Company seeking the Board Resolution dated 01.10.2012 as invalid and declare the allotment of shares in favour of the Appellants nos. 2, 3, 4 5 as null and void. It is submitted that there is no clear averment in the Company Petition alleging Oppression and Mismanagement which is the condition precedent for entertaining any such Company Petition. NCLT did not formulate any issues relating to oppressive acts against the Respondents or if the Company Affairs have been conducted in a manner prejudicial or oppressive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is clearly evidenced by the Minutes of the Meeting prepared by the second Respondent which is uploaded on the MCA portal that two Directors were present and even assuming that only one Director was present, it means that their attendance was 50%. It is the case of the Appellants that as per Section 287(2) of the Act, which describes the quorum for Meetings, the quorum for the Meetings of the Board of Directors shall be 1/3rd of its total strength or two Directors whichever is higher. In terms of Section 287(2) the quorum is complete as in the present case, the total Directors are only two and even if one Director is present it comes to 50%. The question of interplay of sub-Section (2) does not arise when the total number of Directors is only two in number. 3. Submissions of the Learned Sr. Counsel appearing on behalf of the Respondents: It is submitted that the authorized capital of the Company is Rs. 5Crs./ divided into 50,00,000 Equity Shares of Rs.10 each and that Respondents 1 2 are the only subscribers to the entire issued and paid up capital of Rs.1Lakh divided into 10,000 Equity Shares of Rs.10 each fully paid up. The Respondents constituting the Board of Dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice ( ACP ) with respect to the details of the DSC serial nos. of Sri Dhanada Laboratories Private Limited. It is submitted that Fraud vitiates everything and the same was laid down by the Hon'ble Supreme Court in a catena of Judgements. A few of them are detailed as hereunder: Smt. Srisht Dhawan Vs. M/s. Shaw Brothers (1992) 1 SCC 534 . Madhukar Sadbha Shivarkar Vs. State of Maharashra (2015) 6 SCC 557 . Meghmala Ors. Vs. G. Narasimha Reddy Ors. (2010) 8 SCC 383 . S.P. Chengalvaraya Naidu (Dead) by L.Rs. Vs. Jagannath (Dead) by L.Rs. and Ors. (1994) 1 SCC 1 . It is contended that a person who basis his case on falsehood has no right to approach any Court. It is submitted that NCLT has given a right finding that there was no quorum as required under Section 287(2) of the Companies Act, 1956 for the alleged Board Meeting to have been held on 01.10.2012. Assessment: 4. The issues framed by NCLT in para 10 of the Order are as follows: (1) Whether the board meeting held on 01.10.2012 and the appointment of R2 to R5 therein is valid or not; (2) Whether the allotment of shares made on 04.03.2013 and 22.04.2013 to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entertaining a Company Petition under Sections 241 and 242 of the Companies Act 2013. At this juncture, we find it relevant to reproduce Sections 241 242 of the Companies Act, 2013, (Sections 397 398 of the Companies Act, 1956) for ready reference: 241. (1) Any member of a company who complains that- (a) the affairs of the company have been or are being conducted in a manner prejudicial to public interest or in a manner prejudicial or oppressive to him or any other member or members or in a manner prejudicial to the interests of the company; or (b) the material change, not being a change brought about by, or in the interests of, any creditors, including debenture holders or any class of shareholders of the company, has taken place in the management or control of the company, whether by an alteration in the Board of Directors, or manager, or in the ownership of the company s shares, or if it has no share capital, in its membership, or in any other manner whatsoever, and that by reason of such change, it is likely that the affairs of the company will be conducted in a manner prejudicial to its interests or its members or any class of members, may apply to the Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne by or against an individual, be deemed in his insolvency to be a fraudulent preference; (h) removal of the managing director, manager or any of the directors of the company; (i) recovery of undue gains made by any managing director, manager or director during the period of his appointment as such and the manner of utilisation of the recovery including transfer to Investor Education and Protection Fund or repayment to identifiable victims; (j) the manner in which the managing director or manager of the company may be appointed subsequent to an order removing the existing managing director or manager of the company made under clause (h); (k) appointment of such number of persons as directors, who may be required by the Tribunal to report to the Tribunal on such matters as the Tribunal may direct; (l) imposition of costs as may be deemed fit by the Tribunal; (m) any other matter for which, in the opinion of the Tribunal, it is just and equitable that provision should be made. (3) A certified copy of the order of the Tribunal under sub-section (1) shall be filed by the company with the Registrar within thirty days of the order of the Tribunal. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia Limited) Ors. (2019) 18 SCC 569 , wherein the Hon ble Apex Court has laid down as follows: 6. It is not in dispute that were a dispute to arise today, the civil suit remedy would be completely barred and the powers would be vested with the National Company Law Tribunal (NCLT) under Section 59 of the said Act. We are conscious of the fact that in the present case, the cause of action has arisen at a stage prior to this enactment. However, we are of the view that relegating the parties to civil suit now would not be the appropriate remedy, especially considering the manner in which Section 430 of the Act is widely worded. 10. This Tribunal having gone through the issues framed by the NCLT are of the view that they relate to the acts of Oppression and Mismanagement affecting the functioning of the Company and therefore have the jurisdiction to entertain and adjudicate these acts of Oppression and Mismanagement alleged to have been committed by the Appellants under Sections 397 398 of the Companies Act, 1956, (Sections 241 242 of the Companies Act, 2013). The issues raised by the Respondents are reflected in para 7 of the Company Petition 93/2019 and therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed before the CLB. This argument that the material papers were filed before NCLT and not before the CLB has no legs to stand as a Witness Statement itself is not denied and moreover when the matter is transferred from CLB to NCLT, the proceedings continued before NCLT, which has been laid down by the Hon ble Supreme Court, in a catena of Judgements. At this juncture, we find it relevant to reproduce the Report of Truth Labs relied upon by NCLT in giving a finding that the Meeting dated 01.10.2012 never took place and that the documents were fabricated. The final opinion of the copy of the Report dated 06.05.2014, submitted by Truth Labs (Annexure R-9) is reproduced as under : 12. The aforenoted Truth Labs gave an opinion that the signatures do not match and have also given cogent reasons for the same. Apart from this Report, NCLT has also placed reliance on a copy of the Report dated 19.02.2015, 10.04.2015, 29.07.2015, and 01.10.2015 from Andhra Pradesh Forensic Science Laboratories pertaining to documents in Cr. No. 199/2014 and observed that signatures were forged as per the reports given. FIR 199/2014 was lodged based on the complaint given and a detailed investigat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dditional Director had come to an end. The issue of quorum and the attendance of the second Respondent is not being gone into, though it is the case of the Appellant that an error had crept into the pleadings that the second Respondent had not attended the Meeting, when he had actually been present and attended the Meeting. R2, has categorically denied having attended any such Meeting. This aspect is not being gone into at this stage as the other documents on record have clearly established that the Meeting on 01.10.2012, never took place whereby and whereunder a Resolution is stated to have been passed in the presence of R3 R4 who is supposed to have attended as special invitees , (R4 was not even present in India, while R3 denies attendance). 15. At the cost of repetition, it is reiterated that the issue of Allotment of Shares and Removal of Director , if alleged to be illegal do fall within the ambit of the acts of Oppression and Mismanagement as they affect the overall functioning of the Company. We also observe that the NCLT has not based its opinion about the disputed Meeting on 01/10/2012, solely on the reports of Truth Labs filed before NCLT or that of Govern ..... X X X X Extracts X X X X X X X X Extracts X X X X
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