BSE LTD. Vs. SURESHCHANDRA V. PAREKH

JUDGEMENT

(1.) IN this order I am considering CP No. 77/284(4)/2012 filed by BSE Ltd. against the respondents praying that the petitioner -company be exempted from the publication, circulation or reading out at the forthcoming general meeting, the said Notice issued by the respondents, as the same seeks to abuse the process of law to secure needless publicity for defamatory matter and that direction be passed permanently restraining the respondents from sending notices under section 284 of the Act to the petitioner -company raising the same issues. The petitioner's case is that the respondents, Mr. Sureshchandra V. Parekh and MS. Nilaben S. Parekh, jointly hold 5 equity shares of Re. 1 each of the petitioner -company, under DP ID IN 300450 and Client ID 10497810 from 26th August, 2011. The equity shareholding of the respondents represents 0.000005 per cent of the total issued and paid -up share capital of the petitioner -company. The respondents have sent a notice, a special notice within the meaning of section 190 of the Act to move, at the extraordinary general meeting ('EGM') or the next annual general meeting ('AGM') 2012/13, resolution for removal of Mr. Keki M Mistry, a shareholder -director of the petitioner -company, under the provisions of section 284 of the Act on the ground that the petitioner -company had not helped the respondents in resolving their grievances with Housing Development Finance Corporation Ltd. ('HDFC') in the last 14/18 years. It was pointed out that their shareholding is "insignificant holding" and is pertinently below the statutory and numerical requirements of section 188 of the Act for any shareholder to move any resolution at any general meeting. Mr. Keki M Mistry is holding the position as shareholder -director in the petitioner -company since 22nd June, 2010, as on date of this petition, Mr. Mistry is also the managing director of HDFC Ltd. It was pointed out that the respondents have become the shareholders only on 26th August, 2011 and within a short span of just 5 months, the respondents have moved the said notice to remove Mr. Mistry. It was contended that it indirectly justifies that the intention of the respondents to acquire the shares of the petitioner -company was only to remove Mr. Mistry, notice served is not just and in good faith but merely an abuse of the privilege given by the Act to the shareholders. The notice moved by the respondents evidently brings their grievances against HDFC Ltd. and highlights no ground or issues with respect to Mr. Mistry as a Director in the petitioner -company. It was contended that the respondents' grievances against HDFC Ltd. should not be the ground for removal of Mr. Mistry as director in the petitioner -company. The main plea for taking action against HDFC Ltd. is void of any merits to move any notice for removal of director. The respondents seek the publication of defamatory material against the petitioner -company, its directors and HDFC Ltd. by serving notice under section 284 of the Act for removal of Mr. Keki M Mistry, managing director of the HDFC Ltd., without any merits and without any additional point of complaint.

(2.) FURTHER , it was contended that in HDFC v. Sureshchandra V. Parekh : (2002) 51 CLA 320 (CLB) : : (2002) 40 SCL 309 (CLB), the Company Law Board had directed the company not to circulate a special notice for the removal of the director because the notice was served on the company by a shareholder who had made it a habit of serving such notice year after year. Upon receiving an unfavourable order against them for removal of a director on the Board of HDFC Ltd., the respondents have been acquiring the shares of the company(ies) where a director of HDFC Ltd. is also on the Board of those companies with a motive to move notice under section 284 of the Act, for removal of that director from those companies. With a similar intention, the respondents have also acquired 5 equity shares of Re. 1 each of the petitioner -company with a sole motive to remove Mr. Mistry from the petitioner -company. The respondents have grossly abused the process of law by giving frivolous and vexatious notice against the petitioner -company to remove Mr. Mistry as director without justifying any ground for the same. The intention of the respondents is mala fide and not in good faith, as the issues raised by them in the notice do not concern or are in no way be deemed to be concerned with the petitioner -company. Respondents' such abuse of the privilege given by the Act to the shareholders by serving such notices affects the reputation, image and goodwill of the petitioner -company to a great extent.

(3.) IT was argued that to move any resolution at a general meeting of a company must necessarily comply as a condition precedent with the requirements of section 188 of the Act, which stipulates a minimum shareholding requirements for moving any resolution. As a result of noncompliance with the requirements of section 188 of the Act, the said notice is bad in law, illegal and void ab initio.