Company Law Board
Ms. Hardeep Kaur, Shri Tripatjit Singh ... vs Thinlac Enterprises Pvt. Ltd., Mr. ... on 23 June, 2004
Equivalent citations: [2004]122COMPCAS944(CLB), [2005]57SCL459(CLB)
ORDER
K.C. Ganjwal, Member
1. This petition has been filed by Ms. Hardeep Kaur and Ors under Section 397/398 etc against M/s Thinlac Enterprises Pvt. Ltd. having its registered office at D-143, DDA Flats, Gulabi Bagh, New Delhi. The authorized share capital of the company is Rs. 10 lakhs and the issued and subscribed capital of the company is Rs. 7,06,000 only fully paid shares of Rs. 10/- each according to balance sheet of 31.3.2002. The main object of the company are to carry on the business as manufacture, buyer, seller and dealer in chemicals of all kinds. Chemical compounds (Organic and inorganic in all forms and chemical products of any nature and kind like paints, rubber, thinner etc.
2. The main issues in the petition are purported resignation of petitioner NO, increase in the paid up share capital of the company from Rs. 7,06,000 to 9,71,000 without any approval from the Board of Director/EGM and mismanagement etc.
3. The learned counsel for the petitioner submitted: M/s Thinlac Enterprises Pvt. Ltd was incorporated on 26.05.1995 by the fore fathers Mr. Subhash Chandra, Smt. Krishna Bala, Ms. Hardeep Kaur, petitioner No. 1 and Shri Tripat Jeet Singh Bedi (petitioner No. 2 ) each having 100 equity shares of the company. The authorized share capital of the company was Rs. 10 lakhs divided into 1 lakh equity shares of Rs. 10 each. The petitioners initially were allotted 200 equity shares and they claim that their shareholding has been increased to 40,200 shares in this company. As petitioner No. 3 had further purchased 20,000 equity shares of the company from Bahubali Rubber P. Ltd. and 10,000 shares from Mr. Ravinder Kumar Agarwal. However, the respondent have not deliberately registered the said 30,000 shares in the name of the petitioner No. 3. Respondent No. 1 was in charge of looking after the finance, accounts and statutory returns etc of the respondent company whereas the petitioner was looking after the manufacture and production part of the business. The petitioners state that Respondent No. 1 was negligent and committed various mismanagement in keeping statutory records as well as in filing returns of the company. In September, 2002 when the petitioner called upon the respondent to hold AGM, the respondents informed the petitioner No. 1 that she has no right to ask for AGM as she has already resigned from the Board of Directors of the said company, which was astonishing, shocking to the petitioner. Petitioner No. 1 was never resigned from the Board of the company. The petitioner No. 1 asked the respondent to send the copy of the said resignation letter alongwith the minutes of the Board Meeting. However, the respondents have dishonestly chosen not to reply the said request dated 10.4.2003 of the petitioner No. 1. The petitioners inspected the records of the company with ROC and found that a form 32 dated 9.1.2002 had been filed with ROC showing the petitioner "ceased to be the director since tendered resignation". The said form 32 was not supported by any resignation letter. The petitioner thereafter made a complaint to the ROC of the aforesaid illegal act of the respondent. The respondents thereafter, in order to have exclusive control of the said company appointed Mr. Nishant Shelly (R-3) as another director of the company and on 20.1.2002 allotted 26,500 equity shares to Mr. Anuj Chandra son of R-2 by increasing the paid up share capital of the company from Rs. 7,06,000 to Rs. 9,71,000 without any approval from the Board of Directors/EOGM. Due to the negligence and mismanagement of the management the company is not doing any business from the last eight to nine months, nor did the respondent take any steps to continue the business of the company. The electricity bill of the company amounting to Rs. 56,489 is also outstanding and for this reason electricity of the company has been disconnected despite the fact that the company is not doing any business for the last eight months, the respondents have withdrawn around Rs. 4 lakhs from the said account of the company. The respondents are not only misappropriating the funds of the company but are trying to dispose of the properties and are negotiating with various property agents. The petitioners do not have confidence in the respondent No. 2 and 3 and there is lack of probity and fair dealings in their part. The affairs of the company are being conducted in a matter oppressive to petitioners and prejudicial to company and also prejudicial to the public interest.
4. The petitioners have also submitted that the respondents during the pendency of the present company petition alleged to have held the AGM of the respondent company on 30.9.2003 without informing this bench or the petitioners. The respondents have alleged that they have sent notices to petitioners through UPC which is totally contrary to the guidelines of the Hon'ble High Court of Delhi in the case of "Trilokchand Khanna v. Rajkumar Kapur, 1983 (54 Com. Cases(Delhi) and it has been held that "A me of the majority group had no proper notice of the meeting of the Board held on 30.3.1978 and 26.4.1978, because no Registered A.D. notice was sent to him even though that was not the strict legal requirement. It follows, therefore, that either these meetings were not held or if they were held, the person concerned was not properly notified.".
5. The petitioners submit that in view of the provisions of Section 53(2)(A) of Companies Act, 1956 i.e. service of document/notice shall not be deemed to be effective unless it is sent in the manner intimated by the me/shareholder. The respondents are bound to send the notice of the alleged AGM through registered A.D. post to the petitioner. It is also relevant to mention that no notice of the alleged AGM was sent to the auditor, which is a mandatory requirement under 172 (2)(iii) of the Companies Act, 1956. It is apparent that no AGM was held on 30.9.2003 and the respondents have manipulated the purported documents in the support of alleged AGM and filed the same on record just to mislead this Board. The petitioners have prayed that respondent be directed to accept transfer of 30,000 shares from petitioner No. 2 and issue share certificate during the pendency of the present petition and also to cancel the alleged allotment of 26,500 shares to Mr. Anuj Chandra S/o Respondent No. 2. A declaration be made that respondent No. 2 and 3 are deemed to have vacated and ceased to be the director of the company. An injunction be issued restraining respondent No. 2 and 3, their agents and servants from entering the company premises and dealing with any raw material, finished products etc. An injunction may also be granted restraining the respondent 2 and 3 from making sales of the properties belonging to the company alongwith other prayers.
6. The learned counsel for respondent submitted: The petition is not maintainable as it has been made with an ulterior motive of harassing the company and its present directors. The petitioner No. 1 Mrs Hardeep Kaur resigned from the directorship of the company long back on 1.1.2002. The original letter and photo copy of the resignation letter was produced in the court. The allegation of the petitioners that the company have avoided to register the transfer of 30,00 fictitious shares, claimed to be purchased by them is wrong, the petitioner never lodged the said shares with the company for transfer in their name. The allegation of the petitioner that whether directors are negotiating with the property dealers for disposing the land of the company, is wrong and denied. In fact, the land in question was purchased from M/s Ashutosh Industries in 1966 who had purchased this land from UPSIDC on instalments. The company has now made the final payment on instalment on 31.12.2001 and stamp worth Rs. 25,700 has also been paid for registration of this land. The company has not been doing any business for the last eight months as alleged by the petitioner, the facts behind the company not doing any businesses is that there are two companies namely, Thinlac Enterprises Pvt. Ltd. and Kakkar Organics Pvt. Ltd. and one partnership namely, Thinners and Lackers in which the family members and relatives of petitioner/respondents are involved. There was a fierce dispute between the partners of the firm and the petitioner No. 2 locked the office of the partnership firm on 3.12.2002. The respondents tried to concentrate on the company Thinlac Enterprises Pvt. Ltd but the petitioners started creating nuisance by discouraging the suppliers who were supplying on credit and by spreading the rumors that the respondent company is going to be closed. The petitioners also wanted to forcefully take managerial control over the other company namely, Kakkar Organics Pvt. Ltd. The police authorities have registered a complaint under Section 107 and 116 of Criminal Procedural Code on this dispute. The petitioner No. 3., son of petitioner No. 1 and 2 has formed a new proprietorship firm by the name of Deep Chemicals which has started marketing the products under the same brand as of the respondent company namely, Manstik. The allegations made by the petitioner No. 1 that she never resigned from the Board of Directors is wrong. The petitioner No. 1 submitted her resignation to the company on 1.1.2002 which was accepted by the Board of Directors in the meeting held on 1.1.2002 itself. This position has been reported to Registrar of Companies, Delhi and Haryana on 11.6.2003 in reply to their letter dated 29.5.2003. It is admitted by the respondent that R-3 was appointed as additional director on 10.9.2002. The respondent company has allotted 26,500 equity shares to Mr. Anuj Chandra, son of R-2 by increasing the paid up share capital of the company from Rs. 7,06,000 to 9,71,000, on 20.1.2003 by passing a resolution in the Board meeting.
7. It is further submitted by the respondent that it is wrong to say that no AGM was held whereas proper notices in pursuance of Section 172 (2) of Companies Act, 1956 were sent to all shareholders for calling AGM on 30.9.2002, A copy of the UPC issued by the Postal Authorities had been filed. It is further submitted that the unwarranted lapse of the petitioner providing misleading information to the debtors/creditors/banks and financial institutions etc created a situation in the market that the creditors denied extending credit facilities. The directors of the company had no alternative but to induct additional capital in the company to meet payment to creditors and day to day expenditures of the company. The allegation of the petitioners that directors have withdrawn Rs. 4 lakh is denied. In fact the directors have made a payment of Rs. 3 lakhs to the creditors on 12.6.2003 for other expenses of routine nature of the company. The respondents have prayed that petitioner No. 1 be restrained to represent herself as director of the respondent company and the petition be dismissed with cost as non maintainable both in law and facts of the case.
8. I have considered the pleadings and arguments of learned counsels of both the sides. There are only three main issues in this petition, namely;
a) Resignation of petitioner No. 1 from directorship.
b) Issuance of 26500 equity shares to Mr. Anuj Chandra son of Respondent No. 2 by increasing the paid up share capital of the company from Rs. 7,06,000/- to Rs. 9,71,000/- with out proper approval from Board/EGM.
c) AGM held on 30.9.2003 without proper notice to the petition.
9. All other prayers are of frivolous in nature and I need not be discussed. As regards purchase of additional 30,000 shares by the petitioner No. 3 from Bahubali Rubbers Pvt. Ltd. and Mr. Ravinder Kumar Agarwal, it is the contention of the respondents that the petitioner never filed proper documents before the respondent company for transferring shares on their names. In view of this, the petitioners may lodge all requisite documents with the company and if they are in order, the company will register the shares in the name of the third petitioner.
10. Regarding resignation from the directorship by the petitioner No. 1 Smt. Hardeep Kaur, the respondent company has filed photocopy of resignation letter dated 1.1.2002 and also produced original resignation letter signed by petitioner No. 1 in the court. The petitioner has not established that the letter did not contain her signatures. During the course of arguments, it was only mentioned that petitioner No. 1 has not resigned and the respondents have also failed to file the copy of the minutes of the Board Meeting in which the resignation was accepted. However, this position had been clarified to ROC by the respondents on 11.6.2003 in reply to their letter dated 19.5.2003. As the signatures on the letter has not been disputed and the petitioners have not been able to place any evidence on record, I have no hesitation in accepting the position that the petitioner No. 1 had resigned on 1.1.2002. May be she has tried to retract her decision. I therefore, do not feel proper to interfere in this matter.
11. The respondents in their reply have mentioned that the creditors had stopped supplying material on credit, the company wanted to get money for cash payments and therefore increased its share capital by allotting shares to Mr. Anuj Chandra. The extract from the minutes of Board Meeting held on 20.1.2003 have been filed where this decision had been taken. The petitioners have failed to show any illegality in issuing these shares. Accordingly, the allotment of shares by the respondent company to Shri Anuj Chandra of 26500 shares is upheld.
12. Now I deal with the last point i.e. the holding of AGM by the respondent company on 30.9.2003, when the present petition was pending before this Bench. The holding of the meeting should have been reported to the Bench. At the same time alleged intimation given to the petitioner through UPC during the pendency of the present petition is not in order. I am inclined to accept the arguments of the petitioners that in view of the guidelines of Hon'ble High Court of Delhi in the case Trilokchand Khanna v. Raj Kumar Kapoor, 1983 (54) Comp. Cases Delhi should have been followed and the notice should have been sent through Registered AD. I, therefore, hold the AGM of the respondent company held on 30.9.2003 as illegal and set aside the same. The respondents are directed to hold the AGM again after issuing appropriate notice through Regd. A.D.
13. In order to settle the matter, I am of the view that petitioners should be given an option to go out of the company on return of their investment in the shares, of the company after completing the formalities. In case the petitioners are willing to part with their shares, then the company/respondent should purchase their shares at the fair price to be valued by a valuor to be appointed by this Board on the basis of balance sheet of the respondent company for the year ending 31.3.2002 The petitioner may file an application to this effect.
14. With the above directions, the petition is disposed of. There are no orders as to cost.