Company Law Board
Yogendra H. Desai vs Spatial Holodynamics (India) (P.) Ltd. on 14 May, 2002
ORDER
C.R. Das, Member
1. Mr. Yogendra H. Desai has filed an application under Section 167 of the Companies Act, 1956 ('the Act') praying that Spatial Holodynamics (India) (P.) Ltd. may be directed to call, convene and conduct the annual general meetings of the company in respect of the financial years 31-3-1998 to 31-3-2001. It is stated in the application that the last annual general meeting of the company in respect of the financial year ending 31-3-1997 was held on 30-8-1997 and thereafter the company has failed to convene the annual general meetings. Further, the company has also failed to convene the board meetings. The applicant in his application has prayed for the following reliefs :
(a) To allow the applicant to hold and conduct the board meetings without quorum being present with two or less directors, whereat the business that shall be conducted, shall be only in compliance and requirements of the law; and
(b) To allow the applicant to hold and conduct the annual general meetings without a quorum being present with two or less members, whereat the business that shall be conducted, shall be only in compliance and requirements of law.
2. The above-mentioned application was listed for hearing on 28-2-2002 and was adjourned at the request of the applicant. However, while adjourning the hearing, the applicant was directed to serve a copy of the application on the company for its comments at the address made available by the Registrar of Companies, Mumbai vide his letter No. 82441/TA/X/823 dated 17-2-2002. The matter was again listed for hearing on 19-3-2002 wherein Shri Jayesh Thakur, chartered accountant and authorised representative appearing on behalf of the applicant and the applicant, viz., Shri Yogendra H. Desai were present. Since none was present on behalf of the company inspite of due notice of hearing sent, while adjourning the case to 28-3-2002 at 2.30 pm, the authorised representative of the applicant was directed to send a copy of the application again to company as per the address made available by Registrar of Companies, Maharashtra by Registered A.D. and submit proof of the same to this Bench.
3. The matter was listed for final hearing on 28-3-2002. Shri Jayesh Thakur, chartered accountant appearing on behalf of the applicant submitted that in compliance with the directions of this Bench given at the time of hearing held on 19-3-2002, the application was sent to company by registered A.D./Speed post, but the same has been received back undelivered with the postal remarks' 'closed'.
Shri Jayesh Thakur, chartered accountant and authorised representative appearing on behalf of the applicant submitted that the company, namely, Spatial Holodynamics (India) (P.) Ltd. was incorporated on 27-10-1994 as a private limited company, having its registered office at EL-103, TTC, Electronics Zone, MIDC, Mahape, Navi Mumbai - 400701 with the main object of carrying on the business of manufacturers, buyers and sellers, importers, exporters or otherwise dealers in all types and sizes of Holograms, Holographies, etc., The authorised and paid-up capital of the company is Rs. 200 lakhs consisting of 20 lakhs shares of Rs. 10 each and the same is held as under :
Name of the shareholder Per cent of holding No. of shares held
1.
Global Images Incorporated Investment by Overseas Corporate Body 50 per cent 10 lakhs
2. Desai Group-(Indian Promoters) 25 per cent 5 lakhs
3. Tolia Group (Indian Promoters) 25 per cent 5 lakhs 100 per cent 20 lakhs The Board of directors of the company are as under :
Name of the director Designation Represented by
1.
Mr. Walter Clarke Chairman Global Images Incorporated Investment
2. Mrs. Eva Jonsson Director
-do-
3. Mr. M. Lafleur
-do-
-do-
4. Mr. Y.M. Desai
-do-
Indian Promoter
5. Mr. Anand Desai
-do-
-do-
The authorised representative submitted that as per Article 26(a) of the articles of association, the management of the company shall vest in the board of directors which shall consist of 6 members of which 3 directors shall be nominated by Global Images Incorporated and the remaining 3 members shall be nominated by the Indian Promoters Group.
The authorised representative further submitted that as a result of difference among the promoters in regard to day to day functioning of the company, the company could not hold the board meetings for more than two years as the quorum was not complete. In this connection, the authorized representative submitted that Article 33 lays down that the quorum for the meeting of the board of directors shall be one-third of its total strength. In view of the reasons that the quorum was not complete, no board meetings could be held and hence the annual accounts and audit report in respect of the financial years from 31-3-1998 to 31-3-2001 could not be adopted. He further submitted that the applicant as a director, put all his efforts to convene the board meeting by sending notices/fax messages to all the directors but he could not succeed and ultimately he resigned from the directorship of the company with effect from 29-1-2000. The result is that after the year 1997, the company could not convene and board meeting or annual general meeting and, hence, this present application.
4. The Registrar of Companies, Maharashtra vide his letter No. 82441/ TA/X/823 dated 17-2-2002 has submitted his report on the application of the applicant intimating that:
"(i) The applicant namely Shri Yogendra H. Desai is one of the directors/ shareholders of the company holding 60,000 equity shares of Rs. 10 each.
(ii) The company was regular in filing the statutory returns upto the year 1997. The company has not filed the annual returns and balance sheets in respect of the financial years from 31-3-1998 to 31-3-2001 and thus has contravened the provisions of Section 159/166/210 and 220 of the Companies Act, 1956 for which default notices have been issued to the company and its directors. The Registrar of Companies is also contemplating filing of prosecution against the company and its directors for the above defaults.
(iii) The Registrar of Companies in his report has also intimated that it seems from the balance sheet as at 31-3-1997 and the annual return made upto 30-8-1997 that the last AGM of the company was held on 30-8-1997 and thereafter the company has failed to convene any annual general meeting i.e., from 31-3-1998 to 31-3-2001."
5. It is an admitted fact that the applicant is a registered shareholder and member of the company and he has approached this Bench to invoke the provisions of Section 167. I also find from ROC's report that the company has filed with him the balance sheet as at 31-3-1997 and annual return made upto 30-8-1997 and thereafter no annual accounts appear to have been filed. This indicates that the company has come to stand still position consequent upon non-co-operative attitude/differences amongst the directors of the company. The company is also not doing any business and has closed down its business activities.
6. In view of the facts and circumstances as stated supra. If no direction is given under Section 167 for holding annual general meeting, it will be very much against the interest of the shareholders, creditors and public at large. I also note that the criteria laid down under Section 167 for giving permission for holding the annual general meetings has also been fulfilled. In the facts and circumstances, it would be just and proper to direct the company to call, hold and conduct the annual general meeting in respect of the financial years from 31-3-1998 to 31-3-2001 which were long overdue to transact the normal business of the company.
In view of above, I pass the following order :
" 1. The company and its directors are hereby directed to call and hold the annual general meetings of the company in respect of the financial years from 31-3-1998 to 31-3-2001 by 31-7-2002 in accordance with the law.
2. The said annual general meetings shall be called for at a time during the business hours, on a day that is not a public holiday and held either at the registered office of the company or at some other place within the city, town or village in which the registered office of the company is situated.
3. The notice convening the said AGM's shall be issued by the company as per the provisions of the Com panics Act, 1956 on the strength of this order.
4. The said meetings shall be deemed to the AGM's of the company for the purpose of transacting usual business within the meaning of Section 173(1)(2) of the Companies Act, 1956.
5. The chairman shall be appointed from amongst the directors/ shareholders of the company.
6. The chairman shall decide the eligibility of person to attend and vote at the meeting as member/proxy and his decision shall be final.
7. The chairman will record the minutes within two weeks after the conclusion of each meeting and forward a copy of the same to this Bench.
8. The quorum for each meeting shall be as per the articles of association of the company but if such a quorum is not present, even a single member in person or by proxy shall be deemed to be the quorum for constituting the meeting.
9. Every director/officer of the company will take necessary steps for convening and holding the aforesaid meetings.
10. The parties will extend full assistance and cooperation to the chairman in holding and conducting the meetings."
This order will not prevent the Registrar of Companies, Maharashtra from taking any action as he may deem fit and proper in accordance with the law, against the company and its directors/officers in default committed by them for non-compliance of the statutory provisions of the Act.
Let a copy of this order be served on the company, the applicant and the Registrar of Companies, Maharashtra.