P.P. ZIBI JOSE Vs. KALABHAVAN STUDIOS LTD.

JUDGEMENT

(1.) THIS is a petition filed under sections 397, 398, 399, 402 and 403 of the Companies Act, 1956 ('the Act') seeking, inter alia, maintenance of status quo with respect to the position and functions of the petitioner in the company and in the school trust, reconstitution of the Board of directors of the company in accordance with the principle of proportional representation, appointment of Mr. George Poothicote as independent director, to allow the managing director to function in accordance with the provisions in the articles of association and restrain the respondents from acquiring directly or indirectly any further share in the company. The averments made in the petition can be briefly extracted as follows : The first respondent -company was promoted by Fr. Abel and incorporated in the year 1971. In 1998 it was decided to promote and manage a school by a trust promoted by the company with ICSE syllabus. After the death of the promoter in 2002, the company was managed by a Board of directors. However, since 2005, the day -to -day affairs of the company were managed by Mr. Andrew Nettikadan, chairman and Mr. James Kulathunkal, managing director. The two were also the trustees of Kalabhavan Educational Trust. The petitioner is associated with the company and the school trust from the year 1997 onwards in various capacities as company secretary, shareholder and director. He was appointed honorary treasurer of the school trust on 11th June, 2006 with powers to operate the bank account of the company. In July 2006, in order to repay the outstanding term loan of Rs. 2.30 crore, the Board of directors entrusted the petitioner with the work of organising funds from a few local investors and accordingly the petitioner invited two of his friends, Mr. E.P. George (R2) and Mr. K.C. Raju (R3),.businessmen. The two aforementioned along with their respective associates purchased shares of the company and as on 31st March, 2008, the two owned 29 per cent of the company. It is contended that the above investment is based on the broad terms as under :

(2.) THE second respondent, who was appointed as director on 26th August, 2006, had a hidden agenda in taking control of the company, soon after the Board took a decision to vacate 6 non -resident Indians ('NRI') directors on the pretext of non -attendance at Board meetings. On 10th March, 2007, the 2nd respondent persuaded the director Board to appoint respondent No. 5 -Dr. Jose Chacko Periapuram as additional director and the 2nd respondent started interfering in the affairs of the School and the company and wanted the Board to give him full powers and charge including operation of the bank account and demanded that nobody else should interfere in view of his major shareholding in the company. It is stated that at the annual general meeting ('AGM') held on 30th August, 2008, Mr. Andrew Nettikadan, chairman of the company vacated his position as no shareholder proposed his name as director for re -appointment. In the meeting of the Board held immediately after the AGM, the 2nd and 3rd respondents were inducted to the Board as additional directors on 30th August, 2008. The 2nd respondent, after removing the 6 NRI directors, removed the chairman on 30th August, 2008, and in collusion with the 3rd respondent tried to remove the 4th respondent as director and on account of the non -cooperation of the petitioner the attempt failed. The 2nd and 3rd respondents continued to threaten the petitioner and without the knowledge of the managing director convened a Board meeting on 6th February, 2009 and circulated the minutes appointing 2nd and 3rd respondent as chairman and vice -chairman respectively. The 2nd and 3rd respondents decided to change the ICSE syllabus to CBSE syllabus and allotted Rs. 20 lakh for this project without checking the bank balance and the 3rd respondent was given the charge to implement the CBSE syllabus. The 2nd and 3rd respondents, by changing the authorised signatories to the bank by excluding Mr. James Kulathunkal, managing director, practically took over the affairs of the company in violation of the articles of association. As per clause 88 of the articles, the managing director is in -charge of the management of the company.

(3.) THE 2nd respondent convened another Board meeting on 21st March, 2009 with the following agenda items :