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TMI Blog2024 (8) TMI 1414X X X X Extracts X X X X X X X X Extracts X X X X ..... ving the meeting held on 03.05.2019 - nominee under Section 113 of the Companies Act is bound to exercise his powers as per the decision of Board of the Company - reappointment of Deepak as Executive Chairman of the FCL. Whether the amendments made in the Articles of Association in Extra Ordinary General Meeting held on 30.09.2014 amending Article of Association, Article 59 and Article 60 were to be treated to be entrenched Articles as referred to in Section 5, sub-sections (3) and (4) of the Companies Act, 2013? - HELD THAT:- There was no concept of entrenched articles in 1956 Act, as now has been brought by Section 5, sub-sections (3) and (4). An entrenchment provision in the Articles, which identifies special provisions, which can be altered only, if the conditions or procedure, which are much more restrictive than those applicable in the case of special resolution as is applicable for altering any provision of the Articles are met - The Resolution passed on 30.09.2014, cannot be said to be a Resolution, which was agreed to by all the Members of the Company. In the Meeting held on 30.09.2014, neither Prakash, nor Vijay the brother of Deepak were present. Thus, the Resolution dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... numbers from 13 to 12) - The Adjudicating Authority did not commit any error in approving the EOGM held on 03.05.2019. Whether nominee under Section 113 of the Companies Act is bound to exercise his powers as per the decision of Board of the Company? - HELD THAT:- Section 113 of the Companies Act is bound to exercise his power as per the decision of the Company or he having been appointed a representative of the Company is free to exercise his right, as per his discretion. Sub-section (2) of Section 113 throws a clear light on the statutory intendment. Sub-section (2) provides that a person authorised by resolution under sub-section (1) shall be entitled to exercise the same rights and powers, including the right to vote on behalf of the body corporate, which he represents as that body could exercise if it were an individual member. What is manner and exercise of a representative of the Corporation at the meeting of Companies is, as per the decision of the Body, which has authorized individual Member to cast his vote. Authorised representative is merely an Agent of the Company and is bound to act as per directions of the Board or Board of Directors. A representative under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plication MA No. 1449 of 2019 filed by the Appellant in Company Petition No. 47 of 2016 has been dismissed. The Appellant aggrieved by the order has come up in this Appeal. 2. Background facts and sequence of events necessary to be noted for deciding this Appeal are: (i) The parties shall be referred herein with their first name. Pralhad P. Chhabria (hereinafter referred to as Pralhad ) came to India from Karachi in the year 1945. His brother Kishan P. Chhabria ( Kishan ) joined him after two years. They entered into the business of manufacturing of cable and pipes fittings. (ii) The Appellant No. 1 Deepak K. Chhabria ( Deepak ) is son of Kishan and Appellant No. 2 Vini Chhabria ( Vini ) is wife of Deepak. Respondent No. 1 is Private Limited Company of Chhabria family. Respondent No. 2 in the Appeal, Prakash Pralhad Chhabria is son of Pralhad. Respondent No. 5 - Aruna Katara is daughter of Pralhad. Respondent No. 6 Kishan K. Chhabria is brother of Pralhad. Respondent No. 8 Vijay Kishan Chhabria is son of Kishan. Respondent No .7 Priya Chhabria is wife of Vijay Chhabria. Respondent Nos. 3 and 4 are Independent Directors of Respondent No. 1. Respondent No. 9 Meena D Sa is Sr. Vice Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to as Ao A ), which stipulates authority to represent the Orbit after Pralhad ceases to be Director in various Finolex Group Companies. (viii) On 15.10.014, Pralhad executed a WILL . The WILL contained arrangement of the family and also contemplated that all the properties will be bequeathed to the respective persons stated in the WILL, if and only they are not disposed of by Pralhad till his death and Pralhad continue to own them as on date of the WILL. In event Pralhad dispose of any of the properties before his death, the concerned legatee will not claim or have any right in respect of such property or on its sale proceeds. (ix) A Notice dated 26.03.2016 was received by Deepak regarding holding of Board Meeting of Respondent No. 1 on 31.03.2016. (x) On 28.03.2016, Pralhad executed a Gift Deed, gifting 100,300 shares to his son Prakash. On 28.03.2016, a Share Transfer Certificate was also executed by Pralhad, transferring 100,300 shares of Orbit to Prakash. (xi) On 31.03.2016, Deepak visited the venue of Meeting and signed the attendance sheet. (xii) The case of the Appellant is that Deepak after signing, left and he had conversation with Ms. Meena D Sa, which conversation was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ombay High Court. Bombay High Court vide its order dated 21.09.2018, held that let the Board Meeting take place on 22nd September, 2018 and it would be subject to the decision of this appeal . (xx) AGM of Respondent No. 1 took place on 22.09.2018. The Board passed Resolution that Orbit would vote against Deepak s re- appointment at FCL s AGM, which is to be held on 25.09.2018. Deepak, despite the Board Resolution of Orbit to vote against re-appointment of Deepak as Executive Chairman of the FCL, voted in favour of re-appointment as Executive Chairman of FCL, despite Orbit i.e. a 30.7% shareholder of FCL. After the above requisition was given by Prakash, who is a shareholder, holding 74.52% of Orbit s equity share to requisition an Extra Ordinary General Meeting ( EOGM ) of Orbit s shareholders for the purpose of passing Resolution to delete existing Article 59 of the Articles of Association ( AoA )and replace the same and delete Article 60. (xxi) In the Meeting of Board of Directors of the Orbit, a Resolution was passed on 03.04.2019, calling for EOGM of Respondent No. 1. Notice agenda dated 09.04.2019 was issued, convening the EOGM of Respondent No1, which notice contained a Speci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 26.09.2023 vacated the interim order passed by this Tribunal while reserving the judgment on 21.09.2023. The Hon ble Supreme Court noticed in the order dated 26.09.2023 that any action, which is to be taken on proposed Resolution No. 4 pertaining to the appointment of the Executive Chairman of FCL in the AGM, shall be subject to the outcome of the Appeal which is pending before this Tribunal. After 26.09.2023 order of the Hon ble Supreme Court, the AGM of FCL took place on 29.09.2023 and voting was concluded, but the Scrutinizer, who has to submit a Report on e-voting conducted on 29.09.2023, did not declare the result. In Civil Appeal No. 6108 of 2023, a Contempt Application was filed impleading Deepak and Scrutinizer. On 13.10.2023, in the morning session, in the Contempt Petition, the Hon ble Supreme Court passed an order issuing notice in the Contempt Petition and further directing that the Scrutinizer shall in compliance with the order of the Hon ble Supreme Court dated 26.09.2023, to declare the result of AGM, which was held on 29.09.2023 forthwith and NCLAT shall proceed to declare its judgment after it is duly apprised of the fact that the result of the AGM has been dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aring for Respondent No. 2. 7. Shri Ramji Srinivasan, learned Senior Counsel submits that Board Meeting dated 31.03.2016, in which it is clamed that 100,300 shares were transferred by Pralhad in favour of his son Prakash was never held. It is submitted that no Agenda Item for the Board meeting dated 31.03.2016 was received by the Appellant, which would have contained any Agenda Item pertaining to transfer of shares by Pralhad in favour of Prakash. It is submitted that as per AoA, no member of Pralhad family or Kishan family can transfer any shares without notice to the Board. It is submitted that the Appellant Deepak went to the venue of the Meeting and also met Meena D Sa and had conversation with her, which conversation was recorded and filed by the Appellant. No Member of the Board being present, the Appellant returned after signing the attendance register. Transfer of shares of 100,300 in the Board Meeting dated 31.03.2016 is wholly illegal and against the AoA and it was on the basis of the said transfer of shares that Prakash is now claiming to yield majority shareholding and has been convening the AGM s and passing various Resolution on the strength of the shares, which have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Authority that there is no evidence to establish that Articles 59 and 60 are entrenched Articles is erroneous. The said amendments were carried by Pralhad in the Meeting headed by Pralhad himself, who amended the Articles to bring the same in accord with Section 5, sub-section (4) of the Companies Act, which Resolution was passed on 30.09.2014 unanimously by all the Members present. The Adjudicating Authority also committed error in holding that since, only because Resolution on 03.05.2019 was passed by majority of Members, who have attended the Meeting, the same is in accordance with law based on the norms of corporate democracy. The Adjudicating Authority further erred in observing that Applicant, who is in minority, having minimal percentage of shareholding, their case ought to be rejected. It is submitted that there is no conflict in Section 113 of the Companies Act and Article 59 of AoA. It is submitted that Trust was created by Pralhad on 12.03.2014, which was in recognition of equal rights of both the Group, i.e. Pralhad Group and Kishan Group. On the death of Pralhad, entire shareholding of Pralhad required to be transmitted to the Trust and no voting rights could have be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which letters were immediately replied by Pralhad claiming on 21.07.2011 and 08.08.2011 denying any such existence of any family arrangement. It is submitted that the correspondence between Kishan and Pralhad are part of the pleadings in the suit No. 1418 of 2016, which has been filed by Deepak himself. It is submitted that MoU dated 11.10.2011 relied by the Appellant in no manner helps the Appellant in the present case. The MoU was executed on behalf of FCL by Deepak and by Prakash on behalf of FIL and at the time of execution of MoU, Deepak has only 0.06% shareholding in FCL and Prakash has 0.12% shares. Both FCL and FIL are not party to the present proceedings, hence MoU is wholly irrelevant. It is submitted that Trust Deed dated 12.03.2012 is a private Trust by Pralhad and Pralhad continued to be beneficiary to the Trust during his life time. It is post Pralhad death that beneficiary are named. Pralhad was fully entitled to deal with the shares during his left time. Even after execution of the Trust Deed dated 12.03.2012, Pralhad has gifted 4,274 equity shares of Orbit each to Prakash and Aruna, which is a clear pointer that Pralhad was owner of shares of Orbit and he dealt wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e time Director/ Executive Chairman. The requisition Notice was given by Prakash, who was holding 74.52% of Orbit equity shares, to convene an EOGM to amend the Article 59 and delete Article 60. Notice of the EOGM was issued on 09.04.2019, which was challenged by MA No. 1449 of 2019. EOGM was convened on 03.05.2019 where two special business Resolutions were passed with requisite majority for amendment of Article 59 and deletion of Article 60. 9. Shri S. N. Mukherjee, learned Senior Counsel appearing for Respondent No. 2 has advanced submissions with regard to amendment of AoA as was approved on 03.05.2019. Shri Mukherjee submits that Article 59 and Article 60, which were brought by amendment dated 30.09.2014, cannot be held to be entrenched Articles, within the meaning of Section 5 sub-section (4) of the Companies Act, 2013. It is submitted that the Minutes of the Meeting dated 30.09.2014, indicate that Special Resolution was passed for amendment and out of thirteen Members, only four Members were present in the Meeting dated 30.09.014 and for Article to be entrenched Article, the amendment has to be approved by all the Members of the Company. The Resolution dated 30.09.2014 was n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rayers clauses (a) to (b) here in above; (d) Any other appropriate order(s) as this Hon ble Appellate Tribunal deems fit and proper, to protect the interests of Appellants and in the interest of justice, equity and good conscience. 12. From the prayers made in the Appeal, it is clear that the Appellant prayed to set aside order dated 31.12.2019 and to stay the implementation of the Resolution passed in EOGM dated 03.05.2019 till the final hearing of the Company Petition. The Adjudicating Authority in the impugned order has also observed that MA No. 1449 of 2019 has a limited scope of adjudication and while adjudicating MA No. 1449 of 2019, the merits of the main petition must not be influenced in any manner to cause prejudice to either of the litigants. In paragraph 17 of the impugned order, the Adjudicating Authority made following observations: 17. To conclude, it is pertinent to place a finding on record that the main Petition i.e. C.P.47/241-242/NCLT/MB/2016 is yet to be decided. Thus, this Application has a limited scope of adjudication so that the merits of the main petition must not be influenced or in any manner may cause prejudice to either of the litigants. While deciding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch are as follows: a) That this Hon'ble Tribunal be pleased to pass necessary orders or direction to restrain the Respondents from acting in furtherance to the Requisition Notice dated 18th March 2019 issued by Respondent No. 2. the illegal Board Resolution passed on 3rd April 2019 and the Notice dated 9th April, 2019 calling for Extra-ordinary General Meeting of Respondent No. 1; b) That this Hon'ble Tribunal be pleased to pass necessary orders or directions deferring the date of the Extra-ordinary General Meeting proposed to be held on 3rd May 2019 or pass necessary orders restraining Respondents from ding the Extra-Ordinary General Meeting till the final hearing and disposal of the captioned petition, c) In the Alternate to prayers (a) (b), this Hon'ble Court be pleased to pass necessary orders or directions staying the implementation of resolution(s) passed in the Extra-Ordinary General Meeting proposed to be held on 3rd May 2019, till the final hearing and disposal of the present petition; d) That this Hon ble Tribunal be pleased to restrain Respondent No. 2 from exercising any rights, voting rights or otherwise, in respect of 100,300 disputed shares of Respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e existing Article 59 and to substitute the following Article 59 in place thereof: *59. The Board of Directors shell: (a) if it is a member of a company within the meaning of this Act, by resolution of its Board of Directors, authorize such person as it thinks fit to act as its representative at any meeting of the company, or at any meeting of any class of members of the company in which the company is a legal or beneficial owner of securities; (b) if it is a creditor, including a holder of debentures, of a company, by resolution of its directors authorise such person as it thinks fit to act as its representative at any meeting of any creditors of the company held in pursuance of this Act or of any rules made there under, or in pursuance of the provisions contained in any debenture or trust deed, or otherwise, as the case may be The person authorised by resolution by the Board of Directors shall be entitled to exercise the same right and powers including the right to vote by proxy, voting and/or by postal ballot on behalf of the company as the company could exercise if it were an individual member, creditor or holder of debentures of the company. RESOLVED FURTHER THAT the Directors ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es Act, 1956, or subject to such modification and re-enactment thereof and subject to the approval of shareholders in General Meeting, new set of Articles of Association as tabled before the Meeting be and is hereby read and adopted. RESOLVED FURTHER THAT Mr. Pralhad P. Chhabria, Director of the Company and / or Mrs. Meena D Sa, Authorised Signatory be and are hereby authorized to do all such acts, deeds and things and to sign all such documents, papers and writings as may be necessary to give effect to the resolution. 19. Under Any other Businesses , under Resolution (D), following was noted: D. The Chairman informed the Board and it was necessary to review the Authorised persons to represent the Company U/s 187 at General Meetings of the Bodies Corporate RESOLVED THAT In supersession of all previous resolutions and pursuant to Section 187 of the Companies Act, 1956, following persons be and are hereby authorized on behalf of Company to represent the Company at General/ Court Convened Meetings of the Shareholders and Meetings of the Debenture holders of respective Bodies Corporate (Including adjournment thereof, if any) whose shares and Debentures are held and/or would be held by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Companies Act, 2013 and the Rules made there under and accordingly to adopt the new regulations in the Articles of Association as per the amended Articles of Association. AND RESOLVED FURTHER THAT any of the following Directors of the Company namely: Mr. P P Chhabria, Dr Snil U Pathak and Mrs Aruna M Katara or Mrs Meena D Sa, Senior Vice President Finance of the Company be and are hereby authorized to do all such acts, deeds, matters and things as may be considered necessary, usual, proper or expedient to give effect to the aforesaid resolutions. 21. On 03.9.2014 itself, Explanatory Statement with regard to Item No.4 was also circulated, which is as follows: 2. EXPLANATORY STATEMENT FOR ITEM No. 4 The management of your Company proposes to alter the Articles of Association in order to make appropriate regulations to enable the smooth functioning and succession planning of the Company. It was proposed to amend Article Nos. 15A, 26 31(d), 35, 38, 39, 42, 43, 57(g), 60 and 106 of the Articles of Association of the Company. Further it was proposed to alter the Articles of Association of the Company to bring it in Consonance with the provisions of Companies Act, 2013 and the Rules ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the year ended on that date together with the Report of the Directors and the Auditors be and are hereby received, approved and adopted. RESOLVED FURTHER THAT any one Director of the Company be and is hereby authorized to sign any Document either physically or digitally and to file necessary forms with Registrar of Companies, Pune. 4. The Chairman informed the members that the Auditors of the Company, M/s B. K. Khare Co., Chartered Accountants, retire at the conclusion of this Annual General Meeting and are eligible for re-appointment. Thereafter the following resolution was proposed by Mr. P.P Chhabria, and seconded by Ms. Aruna Mukesh Katara, which when put to vote was passed unanimously. RESOLVED THAT pursuant to the provisions of section 139(1) and 142 of the Companies Act, 2013 M/s. B. K. Khare Co, Chartered Accountants, Pune (FRN 105102W) the retiring auditors be and are hereby appointed as appointed as Statutory Auditors of the Company for period of 3 (Three) years subject to ratification by the members at every Annual General Meeting commencing from the conclusion of this Annual General meeting until the conclusion of Annual General Meeting for the year 2017. 5. The Chai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffect to the aforesaid resolutions. 7. The meeting then ended with a vote of thanks to the Chair. 23. On same day, Form No.MGT.14 was submitted by the Company, where the date of Notice was mentioned as 03.09.2014 and date of Resolution was mentioned as 30.09.2014 and Section of the Companies Act, under which Resolution was passed was referred as Section 14, sub- section (1) and subject matter of the Resolution. Form No.MGT.14 at Item II, contains following information: 24. The AoA of Respondent No. 1 is submitted on 30.09.2014 along with Form No.MGT.14. Articles 59 and 60 of the AoA, are as follows: 59. Authority to represent the Company at General / Court Convened Meetings of the Shareholders and Meetings of the Debenture holders of respective Bodies Corporate (including adjournment thereof, if any) whose shares and Debentures are held and/ or would be held by the Company and any other matters pertaining to the respective companies shall always vest with Mr. Pralhad P. Chhabria and only upon Mr. Pralhad P. Chhabria ceased to be Director and Chairman of the Company for any reason whatsoever, the said authority shall be as mentioned below, sand such authority shall remain in force t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d with the memorandum, articles of association signed by the subscribers of the memorandum, prescribing regulations for the company 27. It is relevant to notice Section 5, sub-sections (3) and (4) of the Companies Act, 2013, which are as follows: 5. (3) The articles may contain provisions for entrenchment to the effect that specified provisions of the articles may be altered only if conditions or procedures as that are more restrictive than those applicable in the case of a special resolution, are met or complied with. (4) The provisions for entrenchment referred to in sub-section (3) shall only be made either on formation of a company, or by an amendment in the articles agreed to by all the members of the company in the case of a private company and by a special resolution in the case of a public company . 28. There was no concept of entrenched articles in 1956 Act, as now has been brought by Section 5, sub-sections (3) and (4). An entrenchment provision in the Articles, which identifies special provisions, which can be altered only, if the conditions or procedure, which are much more restrictive than those applicable in the case of special resolution as is applicable for altering ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) as follows: The amendments made in Articles of Association in AGM held on 30.09.2014, amending Articles 59 and 60, cannot be treated to be entrenched Articles as referred to in Section 5, sub-sections (3) and (4) of the Companies Act, 2013. Question Nos. (II) and (III) 30. Now, we come to the EOGM dated 03.05.2019, which was subject matter of consideration in the impugned order dated 31.12.2019. The Notice convening the EOGM on 03.05.2019 was issued on 09.04.2019. We have noticed above that tenure of Deepak as Executive Chairman was to be considered for extension/ non-extension in the Meeting of the FCL. The Orbit was shareholders of FCL to the extent of 30.7%. The Board of Orbit on 22.09.2018 resolved that Orbit would vote against Deepak s re-appointment for continuing him as Chairman of FCL, to which decision, Deepak was well aware. In spite of the Resolution of the Board of Orbit to vote against continuance of Deepak, Deepak in the Meeting of Orbit, has voted for his continuance and by which decision, Deepak continued for five years from 01.07.2018. After the aforesaid decision, requisition Notice dated 18.03.2019 was given by Mr. Prakash to Orbit Electricals for issuance of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company could exercise if it were an individual member, creditor or holder of debentures of the company. RESOLVED FURTHER THAT the Directors be and are hereby severally authorized to file, sign, verify and execute all such e-forms, papers or documents, as may be required and do all such acts, deeds, matters and things as may be necessary, usual, expedient and incidental for giving effect to this Resolution, including agreeing to any condition as may be required or suggested by the Registrar of Companies and / or any statutory / regulatory authority, or to authorise any official of the company to give effect to the foregoing resolution. Item No. 2 Deletion of Article 60 from the Articles of Association of the Company To consider, and, if thought fit, to pass the following resolution(s) as a Special Resolution: RESOLVED THAT pursuant to the provisions of Sections 5. 14 and other applicable provisions, if any, of the Companies Act, 2013 including any statutory modification or re- enactment thereof for the time being in force, and Rules framed thereunder as amended from time to time, the existing Article 60 be and is hereby deleted and the existing Articles 61 to 109 be and are hereby ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... retires by rotation, and being eligible, offers himself for reappointment Against 5. Ratification of Appointment of M/s. Deloittee Haskins Sells LLP, Chartered Accountants, [Firm Registration No.117366W / W100018] as Statutory Auditors till the conclusion of the 51st Annual General Meeting to he held in the financial year 2019-20. For SPECIAL BUSINESS 6. Reappointment of Mr. D.K. Chhabria [DIN: 01403799] as Executive Chairman of the Company for a period of five years with effect from 1st July, 2018 to 30 June, 2023 Against 7. Reappointment of Mr. Mahesh Viswanathan [DIN: 02780987] as Deputy Managing Director Chief Financial Officer of the Company for a period of five years with effect from 1st July, 2018 to 30th June, 2023. Against 8. Ratify remuneration payable to M/s Joshi Apte Associates, Cost Accountants, Pune (Firm Registration No. 00240) and their appointment as Cost Auditor of the Company for the financial year 2018-19. For 9. To offer invite subscriptions for secured/ unsecured redeemable non-convertible debentures, in one or more series/ tranches, aggregating up to Rs. 150 Crores (Rupees One Hundred Fifty Crores Only) on private placement basis. For 10. Payment of Commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P. Chhabria, Mr. Deepak K. Chhabria, Mr. Vijay K. Chhabria and Mrs. Aruna M. Katara. (xvi) The present Article 60, as read and understood, is unenforceable and void under Indian Law and therefore it is essential that the Article 60 be deleted with immediate effect. The subsequent Articles are proposed to be renumbered as Articles 60 to 108. (xvii) The Board of Directors of the Company would like to clarify that a copy of the Notice issued by the Requisitionist is being sent along with this Notice with a view to provide the relevant background concerning Item No. 1 of Special business to be transacted at the Extraordinary General Meeting. A copy of the Requisition Notice is annexed hereto (Annexure). 33. The EOGM was held on 03.05.2019. The result of the Meeting are contained in the Report of Scrutinizer, which has been brought on the record along with the Appeal. The Report of Scrutinizer in Form No.MGT.13 dated 03.05.2019 is as follows: FORM No.MGT-13 Report of Scrutinizer(s) [Pursuant to Section 109 of the Companies Act, 2013 and Rule 1(2) of the Companies (Management and Administration) Rules, 2014) To Chairman, Orbit Electricals Private Limited, Harmony, 5, ICS Colony Ganesh K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... members present and voting (in person) Number of votes cast by them NIL NIL The resolution is passed with requisite majority 4. The poll papers and all other relevant records were sealed and handed over to the Chairman for the safe keeping Thanking you, Yours faithfully, Sd/- Sd/- CS Vinayak Khanvalkar Ritu Prakash Chhabria Partner Member KANJI Co. LLP Company Secretaries Pune Oribt Electricals Private Limited. Place: Pune Place: Pune Date: 3rd May 2019 Date: 3rd May 2019 34. A perusal of the above Report of Scrutinizer indicates that in EOGM dated 03.05.2019 in favour of Resolution No. 1 to alter Articles 59 by deleting existing Article 59 and substituting new Article was voted in favour by 91.74% and votes against the Resolution were only 8.26%. Similarly on Resolution No. 2 for deletion of existing Article 60, votes in favour of Resolution were 91.74% and votes against the Resolution were 8.26%. The aforesaid makes it clear that the Resolution dated 03.05.2019 was not passed by unanimously by all the Members of the Company. The submissions, which have been advanced on behalf of the Appellant is that the Resolution dated 03.05.2019 for altering Article 59 and deleting Article 60 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd deletion of Article 60 could be done by Special Resolution as passed in EOGM dated 03.05.2019 and there was no requirement of agreement by all the Members of the Company, i.e., all twelve Members, as existing on the relevant date. (Pralhad Prakash Chhabria having died on 05.05.2016, reducing the Member numbers from 13 to 12). Ans. to Question No. (III) : The Adjudicating Authority did not commit any error in approving the EOGM held on 03.05.2019 . Question No. (IV) 37. Section 113 of the Companies Act provide for representation of corporations at meeting of Companies and of creditors. The question to be answered is as to whether a representative/ nominee under Section 113 of the Companies Act is bound to exercise his power as per the decision of the Company or he having been appointed a representative of the Company is free to exercise his right, as per his discretion. Sub-section (2) of Section 113 throws a clear light on the statutory intendment. Sub-section (2) provides that a person authorised by resolution under sub-section (1) shall be entitled to exercise the same rights and powers, including the right to vote on behalf of the body corporate, which he represents as that b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... up on behalf of the appellant that a shareholder has got a right in the property of the company. It is true that the shareholders of the company have the sole determining voice in administering the affairs of the company and are entitled, as provided by the articles of association, to declare that dividends should be distributed out of the profits of the company to the shareholders but the interest of the shareholder either individually or collectively does not amount to more than a right to participate in the profits of the company. The company is a juristic person and is distinct from the shareholders. It is the company which owns the property and not the shareholders. The dividend is a share of the profits declared by the company as liable to be distributed among the shareholders. 11. Reliance is placed on behalf of the appellant on a passage in Buckley's Companies Act, 12th Edn., p. 894, where the etymological meaning of dividend is given as dividendum, the total divisible sum but in its ordinary sense it means the sum paid and received as the quotient forming the share of the divisible sum payable to the recipient. This statement does not justify the contention that shareh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ory of persons if any. There was also no question of the transferor invoking Article 61 bypassing the right of a willing member or selectee, if any, to negotiate a fair price. 62. Apart from the violation of Section 108 as far as the registration of shares is concerned, the meeting of the Board of Directors at which the Company recorded the transfer was invalidly held. According to Article 93 of the Articles of Association of the Company: Every notice of a meeting of the Company shall specify a place, date and hour of the meeting, and shall contain a statement of the business to be transacted thereat. No general meeting, annual or extraordinary, shall be competent to enter upon, discuss or transact any business which has not been specifically mentioned in the notice or notices upon which it was convened. In every notice there shall appear with reasonable prominence a statement that a member entitled to attend and vote is entitled to appoint a proxy or, where one or more proxies are allowed, to attend and vote instead of himself and that the proxy need not be a member of the Company. In the notice for the meeting held on 21-9-1985, there was no mention whatsoever, let alone a statem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irman of the FCL was extended for five years in meeting held on August 2018, which term was till 30.06.2023. An AGM was convened on 29.09.2023 during pendency of this Appeal in this Tribunal for considering the Resolution for reappointment of Deepak as a whole time Director designated as Executive Chairman in the Company for a period of five years. As noted above, judgment was reserved in the Appeal on 21.09.2023 by earlier Bench. While reserving the judgment, following interim order was passed: ..we propose to direct the parties to maintain Status Quo as was available prior to EOGM dated 03.05.2019 till the judgement is delivered by this Tribunal 44. Against the order dated 21.09.2023, a Civil Appeal No. 6108 of 2023 was filed and Hon ble Supreme Court in Civil Appeal on 26.09.2023 vacated the interim directions and directed as follows: 1 The National Company Law Tribunal1 dismissed the application filed by the first respondent for the grant of interim relief by an order dated 31 December 2019. The first respondent is in appeal before the National Company Law Appellate Tribunal. 2 Admittedly, no interim relief operated in favour of the first respondent during the pendency of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Appeal to be heard afresh. When we read judgment of the Hon ble Supreme Court dated 13.10.2023 passed in the morning session, it is clear that Hon ble Supreme Court directed to declare the judgment in the pending Appeal, after it is duly apprised of the fact that the result of the AGM has been declared. Now the Appellant has brought on record the Consolidated Scrutinizer s Report, which has noticed the voting on the Resolution No. 4, which Resolution was voted against by 72.34% votes and the Resolution to reappoint Deepak Chhabria has not been approved in the AGM held on 29.09.2023. While deciding this Appeal finally, we do not find any reason to interfere with the AGM held on 29.09.2023. 46. In view of the above, we answer Question No.(V) as follows: Ans. to Question No.(V) : The result of AGM held on 29.09.2023 on Resolution No.4 with regard to re-appointment of Mr. Deepak Chhabria as Executive Chairman of the FCL, need no interference in this Appeal. Question No. (VI) 47. Now we come to the last question as to relief, to which the Appellant may be entitled in this Appeal. 48. We have noticed above that Company Petition was filed by the Appellant under Section 241 and 242 of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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