Calcutta High Court (Appellete Side)
Qvc Exports Private Limited & Ors vs Cosmic Ferro Alloys Limited & Ors on 7 July, 2020
Author: Moushumi Bhattacharya
Bench: Moushumi Bhattacharya
1
07.07.2020
Item Nos. 2 & 3
Court No.13
ap
C.O. No. 1136 of 2020
With
CAN 3802 of 2020
QVC Exports Private Limited & Ors.
Versus
Cosmic Ferro Alloys Limited & Ors.
AND
C.O. No. 1137 of 2020
With
CAN 3803 of 2020
Neha Singh Chouhan
Versus
Cosmic Ferro Alloys Limited & Ors.
Mr. Aniruddha Chatterjee,
Mr. Jishnu Chowdhury,
Ms. Namrata Basu,
Ms. Rashhmi Singhee,
Ms. Sweta Gandhi.
...For the petitioner
in both these matters.
Mr. Abhrajit Mitra, ld. Sr. Advocate,
Mr. Naresh Balotia.
...For the respondent nos.1 & 3.
Mr. Joy Saha, ld. Sr. Advocate, Mr. Naresh Balodia.
...For the respondent nos. 2 & 6.
With the consent of the parties, both these matters are heard analogously and disposed of by this common order. Both the matters involve identical issues.
The petitioner in the first matter is a 40% shareholder of the Company. The petitioner has nominated one Ms. Neha Singh Chouhan on the Board of the Company, who is the petitioner in the second matter. The petitioner appears to have a second nominee on the 2 Board of the Company who has apparently not acted in terms of such nomination till date.
The dispute is between two warring groups of shareholders and their respective nominees on the Board of Directors of the Company in question. The majority group holding 60% wants to get rid of the minority 40% shareholders' nominee on the Board. The petitioner today has come up against a notice dated 1st July, 2020 for an adjourned Extraordinary General Meeting (EOGM) which was scheduled to be held on 7th July, 2020 i.e. today, at 10:30 A.M. at the registered office of the Company. One of the agendas of which was to remove the petitioner's nominee (the petitioner in the second matter) on the Board of the Company.
The petitioner had earlier gone before the National Company Law Tribunal (NCLT) on 29th June, 2020 to challenge the EOGM but had not got any relief. Being unsuccessful, the petitioner filed a revisional application before this Court in which an order was passed on 30th June, 2020 wherein it was observed that the petitioner should be given reasonable notice of the adjourned EOGM in view of the non-functioning of the National Company Law Appellate Tribunal (NCLAT) in New Delhi. It should be mentioned that NCLAT ceased to function on and from 29th June, 2020 since one of its members contracted COVID-19.
3
The order passed by the learned Single Judge further directed that the adjourned EOGM would be held on 7th July, 2020 i.e. today and that the respondent Company and its Directors would inform the petitioner about the venue and date of the meeting. Significantly, the order recorded that the meeting was being fixed at 7th July, 2020 to enable the petitioner to move the NCLAT, New Delhi against the proposed resolution to remove the nominee of the petitioner on the Board.
Learned counsel appearing on behalf of the petitioner submits that the impugned notice of the adjourned EOGM mentions the time at 10:30 A.M. to deprive the petitioners of their valuable rights and due to the fact that NCLAT would not resume functioning before 13th July, 2020. Counsel places the resolution taken at the EOGM today by which the petitioner's nominee was removed from the Board which was taken despite the matter being mentioned before this Court at 11:00 A.M. today morning for being taken up at an appropriate point of time.
Learned counsel appearing on behalf of the respondents i.e. the majority shareholders and its nominee Directors proposes that since the resolution of removing the petitioner's nominee has already been passed, the Company will not transact any contentious issues and will also not deal with any assets of the Company, except in the usual course of business till the 4 petitioner approaches the Appellate Tribunal. It is also submitted that the petitioner has been declined relief by NCLAT on the ground that the petitioner does not have any statutory right to remain in the Board of the Company.
Having heard learned counsel for the parties, this Court is of the view that the immediate decision called for is not whether the petitioner has a statutory right to remain on the Board of the Company. This question can be addressed by the proper forum, in this case NCLAT. However, it is common knowledge that the NCLAT ceased to function from 26th June, 2020 for reasons which have been stated above. Hence, it is solely a question of the petitioner's right of appeal being protected in the facts as urged. The implications of the order of the NCLAT and the resolution taken today at the adjourned EOGM shows that the respondents have denuded the petitioners of their valuable rights as shareholder and director and frustrated the petitioners' right of protecting and preserving such rights by way of an appeal which is provided under the relevant Statute.
In the view of this Court, the petitioner's right will not be adequately protected if the Company restrains from taking any contentious decision or dealing with the assets of the Company except in usual course of business.
5
Whether the NCLAT will decide to turn the clock back in favour of the petitioner is a matter for NCLAT to consider and cannot be a ground for this Court to turn a blind eye to the inequities of the matter. Until the petitioner has been afforded an effective opportunity to present its case before the NCLAT, the respondents should not act in terms of the resolution taken today or the notice for the EOGM.
The manner in which the respondents have fixed the timing of the EOGM is against the spirit of the order of the learned Single Judge dated 30th June, 2020 which had clearly fixed the meeting taking into consideration the right of the petitioner to approach the NCLAT.
In view of the above, the respondents are restrained from giving any effect to or acting in terms of the notice dated 1st July, 2020. This order will remain in force till 15th July, 2020 in view of the fact that the NCLAT is due to start functioning from 13th July, 2020.
It is made clear that this Court has not gone into the merits of the matter.
Hence, C.O. No.1136 of 2020 and CO. No. 1137 of 2020 are disposed of.
In view of the disposal of the main revisional applications, the connected applications being CAN 3802 of 2020 and CAN 3803 of 2020 are also disposed of. 6
Urgent photostat certified copy of this order, if applied for, be supplied expeditiously after complying with all necessary legal formalities.
(Moushumi Bhattacharya, J.)