Company Law Board
Shri Rohit Churamani vs Disha Research And Marketing Services ... on 15 July, 2004
Equivalent citations: [2005]123COMPCAS467(CLB), [2005]57SCL383(CLB)
ORDER
K.C. Ganjwal, Member
1. This company petition is filed by Shri Rohit Chudamani against M/s Disha Research and Marketing Services Pvt. Ltd. 24, Vasundhra Limited, Delhi-96. M/s Disha Research and Marketing Ltd was incorporated as a private limited company on 10.1.2000 with the registered office at Faiz Road, Karol Bagh, New Delhi and which was subsequently shifted by respondent No. 2 to Vasundhra Enclave, Delhi. There were three first directors of the company the petitioner, Respondent No. 2 and Mr. Pandey and they were to hold office till their life time or till they resign as per Article 23 of the Article of Association of the company. One of the directors Mr. Pandey resigned on 4.10.2000 and both the petitioner and Respondent No. 2 remained the only two directors with equal shareholding holding 10000 equity shares of Rs. 10 each. Both the directors were drawing a salary of Rs. 24,500 per month. Both had also advanced loans to the company. The Petitioner had advanced loan to the tune of approximately Rs. 75 thousand as on 31.3.2001. The company was carrying on the business of market research.
2. The learned counsel for petitioner submitted that differences arose in August, 2001 between the directors when Respondent No. 2 who was exclusively handling the accounts refused to render the accounts. They tried to settle the issues amicably but failed to do so. The main allegation in the petition is that Respondent No. 2 wanted to grab the Income tax refund order of Rs. 2.55 lakhs and siphon of the same but due to timely intervention of the petitioner the refund order could not reach in the hands of Respondent No. 2 and has been kept safely in the bank with the intervention of this Board. The Respondent shifted the registered office of the company from Karol Bagh to Vasundhra Enclave, Delhi. The petitioner became suspicious of the actions of Respondent No. 2 from his letter dated 1.5.2002 showing a different address other than the Karol Bagh address. The petitioner then approached ICICI Bank ,- Company's bankers when he was informed on 11.5.2002 that the petitioner was removed from the directorship of the company in the EGM of 11.2.2002 and the respondent No. 3 who happens to be the father of Respondent No. 2 has been appointed as director. The petitioner submits that the EGM held on 11.2.2002 was illegal and null and void as no notice of any Board Meeting or EGM was received by the petitioner as a director or shareholder. In a two member company like this there cannot be any meeting without the presence of the petitioner. It is alleged that the petitioner has been removed under Section 284 of the Companies Act, 1956 but the procedure prescribed in Sub-sections 2/3/4 and 5 of Section 284 of the Companies Act has not been complied with. As per respondents the notices were sent under UPC on 3-12-2001, 17.12.2001, 2.1.2002 and 9.1.2002. The petitioner has submitted that Regd./UPC are fabricated and never received by the petitioner. The post office stamps affixed on the alleged notices are not genuine. The stamps indicate some extra words which has led to the false postal receipts, the alleged regd. letter has been posted on 17.12.2001 which happens to be the closed public holiday on account of Idul-Fitur and the said post office was closed on that clay. There are only two shareholders and there are the only two directors. The petitioner has not attended any Board Meetings and accordingly in his absence, the quorum of atleast two directors for the Board Meeting and atleast two shareholders for the EGM was not fulfilled the meetings convened were illegal. The minutes of these meetings have also not been filed by the respondents. The three Board Meetings were allegedly held on 10.12.2001, 24.12.2001 and 10.1.2002 within a period of one month which is not in compliance with the provisions of Section 283 (1)(g), being less than 3 months period in holding these meetings. The respondent No. 2 has allegedly sent notice by registered post as also by UPC. The need for sending notice twice indicate that the respondent got the postal stamp made and he did not mind using it time and again. The Respondent No. 2 also diverted the main business of the company with Hindustan Lever Ltd to his own sole proprietary firm. The Respondent No. 2 has also not rendered accounts for the year ending 31.3.2002 and for subsequent years. All the books of account and statutory record are in the custody of Respondent No. 2 who was dealing with accounting matters from the very beginning. No AGM has been held after the removal of the petitioner as a director. The petitioner has prayed that removal of petitioner as a director on 11.2.2002 and appointment of Respondent No. 3 be set aside. The accounts of the company for the year ended 31.3.2002 be ordered to be audited by the statutory auditors namely, M/s Kumar Parveen and Associates.
3. The Learned Counsel for Respondents submitted: The respondent company was started by respondent No. 2 who is a research professional and had held senior responsible position in top ranking research companies in India and abroad. While working as a research professional, the Respondent No. 2 came in contact with the petitioner who was a junior to him. Respondent No. 2 started his own venture in 1999 and the petitioner approached him that he was unsatisfied with his job and wanted a change. The Respondents No. 2 treated the petitioner as a good friend, and he offered the petitioner to join him to start a new company. The petitioner did not have the funds to contribute in setting up the proposed company. The respondent No. 2 offered to make the total investment required for setting up the company. Hence the respondent company was set up on 1.1.2000 to offer market research and consultancy services. It is a knowledge based service organization and its credibility is based on the reputation and credibility of its directors, researchers and consultants. The respondent company was doing job mostly for M/s Hindustan Lever Ltd. At the instance of the petitioner the work of incorporation of the company was given to Mr. Parveen Kumar of M/s Kumar Parveen and Associates, Chartered Accountant who is a close friend of the petitioner and the registered office of the company was also shown at the premises of M/s Parveen and Associates situated at Karol Bagh, New Delhi. The authorized share capital of the company at the time of incorporation of the company was Rs. 2 lakhs consisting of 20,000 equity shares of Rs. 10 each. Initially 2150 shares only were shown as issued even though the respondent No. 2 had already invested almost Rs. 2 lakhs in the company on the advice of Mr. Parveen Kumar. The petitioner was expected to work full time for developing and managing the projects acquired. However, the petitioner was tardy and seldom attended the office. The petitioner in the meanwhile indulged in undercutting clients of the company for his personal gains and working side by side independently in competition with the company. In furtherance to his ulterior motives, the petitioner issued instructions to the bankers of the company to stop honouring any cheques unless signed by both the directors knowing fully well that the same would lead to chaos in the company as approximately 20-30 cheques were issued for clearance every day. The petitioner in collusion and connivance with Mr. Praveen Kumar increased the percentage holding of the Petitioner and delayed the completion of books of accounts, changed the return which was signed jointly to another return signed by petitioner alone and filed the same. In this manner, the petitioner alongwith the Chartered Accountant of his choice has colluded to hijack and manipulate the functioning of the company to his own interest. In one instance which the respondent No. 2 was able to find out that after the work for one of the client was completed by the company, M/s Vaishnavi Advertising, had issued a cheque No. 126959 dated 13.12.01 from HSBC Bank to the company in which the TDS worth Rs. 3,060 was deducted the petitioner malafidely got the same cancelled and got it issued in the name of his sole proprietorship firm called M/s Progressive Consultants vide cheque No. 068508. In such circumstances EOGM was held on 11.2.02 for which notice was given to him but he failed to attend the same and he was removed from the directorship of the company for not attending three consecutive Board Meetings for which due notice was given to the Petitioner and respondent No. 3 was appointed as director. Mr. Praveen Kumar, CA was hampering the work of the company and was passing all the letters to the petitioner. Therefore, the registered office of the company was shifted. The petitioner connived with Mr. Praveen Kumar who collected the cheque of Rs. 2,55,276 of the refund of TDS from the Income Tax Department, took away this cheque and instead of handing over the same to the respondent company handed over the same to the petitioner. It was further submitted that the accounts of the company for the year 2001- 2002 are being prepared by Mr. Amarjeet Sahni, FCA through Alka EDP Centre, but work on the same has also come to stand still as the company is unable to pay remuneration to the Chartered Accountants. It is also submitted that M/s Kumar Parveen and Company were not re-appointed as auditors of the company for the year 2001-2002 due to their indulgence, in activities, incompatible with their professional status and detrimental to the interest of the company.
4. The learned counsel for respondent prayed that the petition as filed by the petitioner is false and thus deserves to be dismissed.
5. I have considered the arguments of the Learned Counsel of both the sides, it is seen from the records that the petitioner holds 10000 equity shares of Rs. 10 each fully paid up aggregating to Rs. 1 lakh which constituted 50% of the subscribed and paid up capital of the company. The Article 23 of the Articles of Association of the company mentions that the first directors of the company who shall subscribe to the Memorandum and Article of Association of the Company and who shall hold office till their life lime or till they resign are namely; S/Shri Mr. Jayant Jain, Mr. Rohit Churamani and Mr. Tarakeshwar K. Pandey. Shri Tarakeshwar Pandey subsequently resigned as director of the company and only two directors were left, out of which the petitioner is one of the directors. Article 26 of the Article of Association of the company indicates that the quorum necessary for the transaction of the business of the Board Meeting, subject to Section 287 of the Companies Act shall be one third of the total strength or atleast two which ever is higher.
6. After the resignation of Mr. Pandey which is an admitted position, only two directors were left and without the presence of the petitioner, no Board Meeting was valid. Accordingly, all Board Meetings/EGM held by the company without the petitioner are illegal and set aside. The petitioner is restored as director of the company which position he held before the alleged EGM held on 11.2.2002.
7. The refund order received by the petitioner and kept with him of Rs. 2,55,276 should be immediately deposited within three days in the accounts of the company, if not already deposited as per order dated 28.5.2002. There is a dispute and some allegations have been leveled against the company's auditor M/s Kumar Parveen and Associates for working against the interest of the company in connivance with the petitioner. The petitioner being a founder director and having invested a substantial amount in the company feels oppressed, I am of the view that petitioner should be given an option in case he desires to go out of the company on return of his investment in shares of the company. In case the petitioner is willing to part with his shares, the company/respondent should: purchase the shares on valuation to be made by an independent valuer. The valuation will be based on the balance sheet as on 31.3.2001 being the approximate date of the removal of the petitioner from
8. directorship. In case the petitioner decides to go out of the company then on an application made by him, a valuer will be appointed by this Board in consultation with both the parties.
9. With the above directions, the petition is allowed. There are no orders to cost.