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TMI Blog2023 (4) TMI 451X X X X Extracts X X X X X X X X Extracts X X X X ..... accept Appellant as their nominee director, she continued to act as a nominee director. Due to her lack of cooperation, the DKJ Group intimated CLB that her nomination had been withdrawn and in her place, a new director had been appointed - In such circumstances, when DKJ approached the CLB for interim directions, it was held that SKG Group was under obligation to uphold the interest of DKJ Group and thus, suspended Appellant s directorship. This was only to ensure that DKJ Group s interests are not jeopardised, pending final adjudication of the proceedings in the company petition. Appellant has contrary interests to DKJ Group and past association with the group is of no consequence - HELD THAT:- The Court finds the Appellant s past relationship with DKJ Group to be irrelevant to the matter at hand. Her assertion that she continues to be a nominee director is misconceived as the AoA stipulates that a nominee director can continue to serve on the Board of Directors only if they have the support of the nominating group. The pleadings on record show that the Appellant no longer has the backing of the DKJ Group, which is essential for a nominee director's continuation. Appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce, parties to the present appeal, their status before the CLB and their inter se relationship, is depicted as follows: PARTY IN THE PRESENT APPEAL NAME/ DESCRIPTION PARTY BEFORE THE CLB INTER-SE RELATIONSHIP OF THE PARTIES TO THE APPEAL Appellant Ms. Priya Jain Applicant in C.A. No. 79/2015 (for impleadment) Former Shareholder of Respondent No. 3 Respondent No. 1 Laguna Holdings Pvt. Ltd. Petitioner No. 1 Shareholder of Respondent No. 3. Respondent No. 2 Ms. Usha Jain Petitioner No. 2 Shareholder of Respondent No. 3. Respondent No. 3 Eden Park Hotels Pvt. Ltd. Respondent No. 1 The Company in question. Respondent No. 4 CLG Hotels and Resorts Pvt. Ltd. Respondent No. 2 Shareholder of Respondent No. 3. Respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansfer of Appellant's entire shareholding (a mere 0.5%), her involvement in Respondent No. 3 could not be perceived as representing the DKJ Group. Consequently, Appellant s directorship was ordered to be kept in abeyance until further orders. 3.7 Subsequently, Appellant filed an application [C.A. No. 79/2015] seeking impleadment and permission to file a counter affidavit to oppose the petition. This request was turned down in the Impugned Order. APPELLANT S SUBMISSIONS 4. Mr. Harish Malhotra, Senior Counsel representing the Appellant, submits that the Impugned Order is liable to be set aside on the following grounds: 4.1 Appellant, along with her father late Mr. D.K. Jain were appointed as the two nominee directors to represent DKJ Group. Appellant has admittedly never been removed or replaced as the nominee director during the lifetime of late Mr. D.K. Jain. Appellant has been a nominee director more than ten years without any complaint. Record would reveal that she had opposed SKG Group as and when they committed illegal acts and always protected the interest of DKJ Group as well as Respondent No. 3. 4.2 Relief under Section 111 of the Act and Section 59 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion before NCLT. RESPONDENTS NO. 1 AND 2 S SUBMISSIONS 5. Per Contra, Mr. Darpan Wadhwa, Senior Counsel representing Respondents No. 1 and 2, submits that: 5.1 Pursuant to the demise of Mr. D.K. Jain, Appellant started acting against the interests of Respondent No. 3 which led to withdrawal of her nomination in terms of the AoA. 5.2. DKJ Group withdrew nomination of Appellant vide letter dated 19th September, 2014 which was ratified by Respondent No. 1 in the Board meeting dated 09th October, 2014. In the said meeting, Mr. Rajan Sharma was also nominated in place of the Appellant and this decision was communicated to Board of Directors of Respondent No. 3 on 17th November, 2014. 5.3. Appellant continues to act against Respondent No. 3 as is evident from the prayer clause in C.A. No. 79/2015 wherein she indicates her intent to oppose the company petition. 5.4. Appellant had already transferred her shareholding in Respondent No. 3 to Ms. Usha Jain, which stands recorded in order dated 31st March, 2016 in C.P. No. 36/59/2014. Therefore, Appellant s allegations of her shareholding are completely misconceived and to that extent, Appellant has no ground for implead ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lling to the petitioners to see a person supports the cause of the petitioners shall remain on Board, not a person, who works against the wish of them. If Ms Priya has any grievance over his mother or sister over their rights inter se, either they have to resolve, if not, they can approach civil court for declaration to their rights, but not to remedy their grievance in a case filed by somebody. Here, since Ms Priya continued as director, not by virtue of any individual right endowed upon her, therefore, her removal or suspension as nominee director will not become deprivation of her rights. Even if she is allowed to become a party, as to nominee director ship, she cannot continue without the petitioners backing, hence forth, she cannot claim that unless she is made as a party the proceeding, the issues in this petition cannot be adjudicated, especially in a case, where the petitioners made serious allegations against other group alleging that they are not allowed to participate in the functioning of the company and the other group is siphoning the funds of the company, which is prejudicial to the interest of the petitioners group. 8. The Applicant Counsel argued that she is e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;s behalf. To which, the Petitioner Counsel made a statement that R1 Company already acted on the orders passed by this Bench by replacing her with a person nominated by the petitioners. As to this Argument, I believe that there is no point in allowing the applicant continue as nominee on the petitioners behalf, especially when she filed an application saying the CP filed by her mother against other group as illegal and malafide. It is not her case she has majority in P1 company and she could defeat the resolution moved by P2 in P1 Company. 12. To decide the issues raised against Gupta group in this petition, I don't believe Ms Priya Jain needs to become a party to the CP, hence this application is dismissed without any costs. 7. The Court perceives no flaw in the aforementioned perspective. (i) DKJ GROUP S INTERESTS HOLD PRECEDENCE 8. According to the AoA of Respondent No. 3, the DKJ Group is entitled to an equal number of directors on Respondent No. 3 s Board, as the SKG Group. The Appellant was a nominee of DKJ Group. Following Mr. D.K. Jain's demise, the Appellant began acting against the interests of her nominating group. Despite DKJ Group's r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er to oppose the illegal and malafide petition . [Emphasis Supplied] 10. The Appellant has also argued that during a decade-long past relationship with the DKJ Group, she served as a nominee director and also the Executive Director. She claims that she always acted in the interest of her nominating group, but her appointment was suspended on false grounds that she was not working for the cause of the DKJ Group. The Court finds the Appellant s past relationship with DKJ Group to be irrelevant to the matter at hand. Her assertion that she continues to be a nominee director is misconceived as the AoA stipulates that a nominee director can continue to serve on the Board of Directors only if they have the support of the nominating group. The pleadings on record show that the Appellant no longer has the backing of the DKJ Group, which is essential for a nominee director's continuation. Appellant was to further the interests of DKJ group, but since she was not acting in their interests, she risked losing their support and being removed from the board. (iii) NO SUFFICIENT CAUSE UNDER SECTION 405 OF THE ACT 11. The Appellant s reliance on Section 405 of the Act is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hen Respondent No. 3 failed to register Ms. Usha Jain as the owner of the shares in place of the Appellant, Ms. Usha Jain filed C.P. No. 36/59/2014 against Respondent No. 3 and the Appellant. This petition was decided by an order dated 31st March 2016, as follows: The petitioner, Mrs. Usha Jain and Respondent No.2 - Ms. Priya Jain are present in person. The Petitioner has handed over Pay Order No. 055649 dated 16.3.2016 for Rs. 501acs to R2 i.e. Ms. Priya Jain. 2. R2 filed CA 38/C-11/2016 to dispose of this CP praying this Bench to record payment of Rs. 50lacs by the Petitioner to R2 vide Pay Order No. 055649 dated 16.03.2016 drawn on Canara Bank, Okhla, New Delhi before this Bench in furtherance of the agreement dated 15th March, 2016 and thereafter reply/objections dated 30.04.2015 filed by R2 for transfer of 50,000 equity shares be dismissed as not pressed and for further direction to R1 company to transfer 50,000 equity shares of R2 issued vide Certificate No. 9 bearing Distinctive No. 62,10,001 to 62,60,000 in the name of Mrs. Usha Jain i.e. the Petitioner, and also for a direction that Mrs. Usha Jain (the petitioner) and Ms Priya Jain, (R2) shall be bound by all the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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