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• The minutes of the board meeting held on 15.03.2005, copy of which has been produced alongwith reply of the respondents would reveal that the minutes are neither dated nor signed by Chairman of the meeting, thereby not satisfying the requirements of Section 193 of the Act. At the same time, the minutes of the very same board meeting obtained from the Company and produced by the petitioner would show that the minutes are signed by the Chairman but, however not dated. While the minutes produced by the respondents further disclose that "Sri R.P. Mittal took the chair of the meeting", the minutes obtained by the petitioner from the Company would indicate that Sri R.P. Mittal was elected to the chair of the meeting. The minutes of the board meeting produced by the respondents specifically authorises R.P. Mittal director of the Company to issue notice of the extra ordinary general meeting for the purpose of increase in the authorised share capital from Rs. 125 lakhs to Rs. 225 lakhs. However, there is no such authorisation in the minutes of the board meeting obtained from the Company and produced by the petitioner empowering R.P. Mittal to issue notice of the extra ordinary general meeting. Thus, the recitals of the minutes of the board meeting held on 15.03.2005 are not uniformly recorded by the Company and they do not confirm to the provisions of Section 193 of the Act. Furthermore, the resolution of the board of directors only approves the increase of authorised share capital from Rs. 125 lakhs to Rs. 225 lakhs, but the board has not resolved either to convene the extra ordinary general meeting for raising the share capital or to issue any notice for the extra ordinary general meeting and therefore the extra ordinary general meeting was convened without any authority by the respondents. The board of directors neither approved the notice of extra ordinary general meeting, which is mandatory requirement under the provisions of the Act.
• The Company's banker while extending financial facilities in its letter of sanction dated 04.11.2003 stipulated that in case the Company incurs any net loss in any year, the same should be made good by bringing fresh capital of cash equity and maintain debt equity ratio as per the banking norms. This condition has been re-enforced by the banker in its subsequent sanction letter dated 07.03.2005, while granting fresh credit facilities. The Company suffered net loss in the current as well as previous years except the year 2004. In view of this, it was decided at the board meeting held on 15.03.2005 to increase the authorised share capital from Rs. 125 lakhs to Rs. 225 lakhs. The recitals of the notice calling for the extra ordinary general meeting have been approved at the board meeting held on 15.03.2005. Accordingly, the Board issued the notice for the extra ordinary general meeting on 21.03.2005 to the shareholders under certificate of posting. Mere increase in the authorised capital of which the petitioner is quite aware, cannot constitute oppression. After approval of the shareholders in the extra ordinary general meeting for increase in the authorised share capital, the board of directors at its meeting held on 10.05.2005 allotted ten lakhs equity shares of Rs. 10/- each to the fourth respondent, a company promoted and controlled by the second respondent. It cannot be expected of a private Company to maintain its minutes books in accordance with the provisions of Section 193. The directors have the authority under the articles of association of the Company to allot shares and therefore the petitioner cannot question the discretion of the authority exercised by the board of directors in allotting impugned shares in favour of the fourth respondent. The petitioner cannot question the utilisation of funds raised by way of issue of additional shares.

5. I have considered the pleadings and elaborate arguments of learned Senior Counsel. The issues which arise for consideration are whether the petitioner has made out a case under Section 397 and if so, whether the petitioner is entitled for the reliefs as claimed in the company petition. The main grievance is that the petitioner had neither any notice nor knowledge of the extra ordinary general meeting held on 18.04.2005. According to the respondents, the Company had despatched the notice of extra ordinary general meeting on 21.03.2005 by certificate of posting which ought to have, in the normal course, reached the petitioner. The respondents further drew support from the minutes of the board meeting of the petitioner held on 11.05.2005 granting power of attorney in favour of its attorneys and the consequent execution of the power of attorney on 1 1.05.2005 empowering the attorneys, inter-alia, to initiate proceedings in the CLB in relation to the matters concerning the Company, to impute knowledge about the extra ordinary general meeting and the allotment of impugned shares. The sequence of events may, perhaps, indicate that the petitioner might be aware of the extra ordinary general meeting convened and held by the Company. It is required to be seen whether mere knowledge of the meeting would tantamount to serving of notice in terms of Section 172 of the Act. This section provides that notice of every meeting of the Company shall be given to every member of the Company, whose name appears on its register of members, in any manner authorised by Sub-sections (1) to (4) of Section 53. It is settled law that the requirements of Section 172 are mandatory and must strictly be complied with, non-compliance of which invalidates the resolutions passed at such meeting. In this context, the principles laid down in Wardon v. Hotchkhs Limited (supra) that service of notice on shareholders residing outside the country will be of little assistance to the respondents. The assertion of Sri. Sundaram, learned Senior Counsel, drawing support from the decision of the Supreme Court in Needle Industries (India) Limited v. Needle Industries Neway (India) Holding Limited (supra) that non-sending of the notice of the extra ordinary general meeting will be of no consequence on account of the legal disability suffered by the petitioner in subscribing to the enhanced capital by the petitioner, is ill conceived in the light of the RBI Circular dated 08.12.2003, a close scrutiny of which, envisages the eligibility of the overseas corporate bodies in undertaking fresh investments with the prior permission of Government/Reserve Bank of India as the case may be. By virtue of the RBI Circular dated 08.12.2003, dealing with de-recognition of overseas corporate bodies, facilities under various Foreign Exchange Management Regulations have been withdrawn. This circular does not impose any blanket bar against overseas corporate bodies in undertaking fresh investments, as specified therein. It has to be borne in mind that the petitioner has not expressly dispensed with the need for being given any notice of extra ordinary general meeting held on 18.04.2005. The respondents have produced a certificate of posting to establish service of notice on the petitioner by sending it by post in accordance with Sub-section (1) of Section 53. The certificate of posting, in the event of serious disputes between the parties, cannot amount to conclusive proof of service of notice on the addressee, meeting the mandatory requirements of Section 172. It is rather unsafe to place any reliance on mere certificate of posting, without any corroborative evidence such as despatch register, books of account etc, showing the expenses incurred in connection with sending of notices to the shareholders, including the petitioner. The certificate of posting would show that certain postal envelopes have been put into the post office and will not by itself necessarily mean that there has been conclusive proof of service of the notice on the addressee concerned, as held by the Supreme Court in M.S. Madhusoodhanan v. Kerala Kaumudi (P) Ltd (supra). It is, therefore, far from doubt that mere production of certificate of posting will not necessarily mean that there was conclusive service of notice of the extra ordinary general meeting on the petitioner. This Board in IT Cube Inc v. IT Cube India (P) Ltd. (supra) has set aside the allotment of further issue of shares, being wrongful, illegal and void initio for want of notice to the petitioner and without holding general meeting. The ratio that meetings without notice to a director are invalid has not been applied in Hillcrest Realty Sdn. Bhd v. Hotel Queen Road Private Limited (supra), in view of the fact that neither of the petitioners in that case could claim to be a shareholder of the Company, as they became shareholders by transfer/allotment of shares approved in board meetings without notice to the second petitioner and, therefore, not applicable to the Facts of the present case.

It is observed that the authorised share capital of the Company has been increased from Rs. 125 lakhs to Rs. 225 lakhs at the board meeting held on 15.03.2005, without however, assigning any justification for such enhancement of the share capital. The board of directors has not resolved either for convening the extra ordinary general meeting for enhancing the authorised capital or for issuing any notice for the extraordinary general meeting, as borne out by the minutes of the board meeting dated 15.03.2005 provided by the Company to the petitioner. No reliance can be placed on the minutes produced by the respondents, disclosing such authorizations, for want of production of the original minutes book containing the relevant minutes of the board meeting. The explanatory statement forming part of the notice of extra ordinary general meeting clearly indicates that the increase in the authorised capital has been necessitated by the facts that the Company suffered losses and availed fresh financial facilities from the bank. The board of directors, on the other hand, approved the increase in the share capital from Rs. 125 lakhs to Rs. 225 lakhs at the board meeting held on 15.03.2005 to meet the raise in prices of steel and the pressure from the bank for enhancing the promoter contribution towards equity. At the same time, the Company utilized the entire one crore of rupees realized, pursuant to the issuance of enhanced capital, for entirely a different purpose by purchasing the shares in M/s. Hotel Queen Road Private Limited, which is not the main business of the Company. The respondents failed to establish the benefit derived by the Company on account of the further enhancement as well as issue of the share capital.