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TMI Blog2015 (2) TMI 1413X X X X Extracts X X X X X X X X Extracts X X X X ..... the Companies Act, prima facie can not be read to be meant for the circumstances like the present one, however no final opinion needs to be expressed with regard to the scope and ambit of the said section, since that is not the controversy before this Court - Suffice it to hold that, in the facts of this case, considering the material on record and the chequered history between the contesting parties, and the chronology of the actions taken by the respondents, as borne out from record, the suit in question can not be termed to be not maintainable. The suit is therefore held to be maintainable. Whether the plaintiffs have prima facie case, where the balance of convenience lies and who would suffer irreparable loss, if the injunction as prayed for is not granted? - HELD THAT:- This Court finds that, what is prayed for by the plaintiffs is within four corners of law, and even in absence of any direction from any judicial forum, the respondents were under legal obligation to act in accordance with law. Therefore, by giving direction to the respondents to act in accordance with law, no prejudice would be caused to them, but in the event it is not done, the plaintiffs would certainly su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. Mr. Sanjanwala, learned senior advocate for the plaintiffs/ appellants has submitted that the Trial Court has committed error by not granting the interim injunction as prayed for, and the interim relief as prayed for ought to have been granted. It is submitted that, not only the appellants were entitled to the reliefs as prayed for, but even the provisions of the Companies Act, 1956 & 2013 and Rules made thereunder also obliges the respondent Company to do, what was prayed for by the plaintiffs by way of an interim order. It is further submitted that no written statement was filed by the defendants. It is submitted that, only a list of documents, along with copies of those documents, was placed on record, which according to plaintiffs was not legally acceptable material, to deny the relief as claimed for by the appellants. Learned advocate for the appellants has taken this Court through the averments made in the plaint to contend that, the action of the plaintiffs to approach the Trial Court on the same day after giving notice, could not, in the facts of this case, termed as premature institution of litigation. It is further submitted that during the pendency of the proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... invited to the proceedings initiated by one Mr. Atul Shah, and the Civil Suits filed by Mr. Bharat Patel being Special Civil Suit No.578 of 2014 and 347 of 2014. It is submitted that, thus this is an abuse of process of law by the plaintiffs. It is contended that, this would also amount to suppression of material facts by the plaintiffs, and this is an additional ground which would dis-entitle them from claiming any relief. 3.3 Without prejudice to the above, it is further submitted that the impugned Resolution of the Board of Directors dated 10.11.2014, inter alia reads as under. "RESOLVED FURTHER THAT all the rights, entitlements and privileges, arising from Shareholders' Agreement dated 14th September, 2010 stand terminated with immediate effect including all the right of nomination on the Board of Directors of the company and all the rights attached to the shares issued pursuant to the Shareholders' Agreement thereby consequently cessation of all the rights attached to such shares including the right to participate in the meetings of the shareholders of the company and the right to vote. Xxxxx" It is submitted that, in view of above, the plaintiffs would not have any r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or in the 69th General Meeting in a board meeting; (b) that this Hon'ble Court be pleased to restrain defendant Nos. 2 to 9 by a permanent order and injunction from convening and/ or holding and/ or attending any meeting of the Board of Directors of the defendant company, and/ or from voting threat and/ or pass any resolution by circulation, so as to frustrate and/ or prevent the holding of the EGM requisition by the plaintiff pursuant to the notice dated 18th December, 2014 (Ext. H and I) (c) that this Hon'ble Court be pleased to order and direct the defendants by themselves, their servant, agents, officers and subordinates by a mandatory order and injunction to take all steps and do all things necessary and required under the provision of the Companies Act, 2013, so as to ensure, effectuate and facilitate the holding of the EGM in accordance with law, and as envisaged under the provisions of Companies Act, 2013 pursuant to the requisition of the plaintiffs dated 18th December, 2014 (Exh. H and I)." 4.3 The prayers made in the application Exh.5 reads as under. "29. The plaintiffs, therefore, pray that pending the hearing and final disposal of the suit, this Hon'ble Court be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hile asking the plaintiffs to be relegated to the Company Law Board, the respondents also rely on the resolution dated 10.11.2014 passed by the Board of Directors, the relevant part of which is quoted in para:3.3 above. It is not in dispute that the shares held by the plaintiffs, pursuant to the shareholders' agreement in question, answers the eligibility criteria stipulated under Section 100 of the Companies Act, regarding holding of not less than one tenth of paid up share capital of the company. The said holding along with voting right attached thereto, but for the impugned decision of the Company, entitles the plaintiffs to take recourse to Section 100 of the Act, 2013. The said Section reads as under. "Calling of extraordinary general meeting. 100. (1) The Board may, whenever it deems fit, call an extraordinary general meeting of the company. (2) The Board shall, at the requisition made by- (a) in the case of a company having a share capital, such number of members who hold, on the date of the receipt of the requisition, not less than one-tenth of such of the paid-up share capital of the company as on that date carries the right of voting; (b) In the case of a compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the actions taken by the respondents, as borne out from record, the suit in question can not be termed to be not maintainable. The suit is therefore held to be maintainable. The contention of the respondents in this regard, is rejected. 5.1 Having held that the suit is maintainable, the next question would be whether the plaintiffs have prima facie case, where the balance of convenience lies and who would suffer irreparable loss, if the injunction as prayed for is not granted. 5.2 Considering the material on record and the chequered history between the contesting parties, and the chronology of the actions taken by the respondents, as borne out from record, this Court finds that the plaintiffs have strong prima facie case in their favour. 5.3 Coming to the next question, where the balance of convenience lies, and who would suffer irreparable loss, if the injunction as prayed for is not granted, this Court finds that, what is prayed for by the plaintiffs is within four corners of law, and even in absence of any direction from any judicial forum, the respondents were under legal obligation to act in accordance with law. Therefore, by giving direction to the respondents to act in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en to those members whose names appear in the Register of members of the company within three days on which the requisitionists deposit with the Company a valid requisition for calling an extraordinary general meeting. (7) Where the meeting is not convened, the requisitionists shall have a right to receive list of members together with their registered address and number of shares held and the company concerned is bound to give a list of members together with their registered address made as on twenty first day from the date of receipt of valid requisition together with such changes, if any, before the expiry of the forty-five days from the date of receipt of a valid requisition. (8) The notice of the meeting shall be given by speed post or registered post or through electronic mode. Any accidental omission to give notice to, or the non-receipt of such notice by, any member shall not invalidate the proceedings of the meeting." 5.4 Further, from the record it transpires that, even the Articles of Associations of the Company provides as under, in this regard. "Article 80- Calling of Extra-Ordinary General Meeting on requisition (1) The Board of Directors shall, on the requis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the respondents is weighed keeping in view the above quoted provisions, this Court finds that, refusal by this Court to grant interim relief as prayed for by the plaintiffs, would not only make the civil suit infructuous but would have effect of giving premium to the respondents for the impugned actions/in actions, if ultimately it turns out to be unsustainable. Thus judging from any angle this Court finds that, the balance of convenience is in favour of the plaintiffs and the grant of interim relief would not be against the respondents but refusal to do so, would result in irreparable loss to the plaintiffs. For this reason, the plaintiffs need to be protected by appropriate interim relief. 6. The argument of learned advocate for the respondents with regard to arbitration clause would not help the respondents for the reason that even they had, unsuccessfully attempted so, once before this Court. This Court also does not find any substance in the argument canvassed on behalf of the respondents about suppression of material fact by the plaintiffs or that the proceedings are taken out one by one by the plaintiffs or persons of their group. This Court has taken into consideration t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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