N. THIRUMURTHY Vs. SREE PAVITHRA STEELS (P.) LTD.

JUDGEMENT

(1.) THE present company application has been filed by the petitioner under section 403 of the Companies Act, 1956 ('the Act') read with regulations 17 and 44 of the Company Law Board Regulations, 1991 ('CLB Regulations') praying this Bench, inter alia, to restrain the company from convening, holding and conduct of the proposed extraordinary general meeting ('EGM') to be held on 26th April, 2013 pending hearing and to order status quo in relation to the management of the company till the disposal of the main company petition. Shri Varadarajan, learned counsel appearing on behalf of the applicant submitted that the applicant along with his wife constituting 20 percent or 1/5th of the equity shareholding of the respondent -company has filed company petition under section 397 read with section 398 of the Act seeking various reliefs and the applicant craves leave of this hon'ble Bench to refer to the main company petition as part and parcel of this application. It is submitted that the first respondent -company is a family company wholly owned by the family in which the members of the family are the only directors of the company and it is more akin to the nature of the family partnership and the applicant being a 20 percent shareholder along with his wife has a legitimate expectation that he should be a part of the management of the company in relation to its day -to -day affairs with other family members. It is submitted that the respondent Nos. 2 to 5. while having committed all acts of gross mismanagement in relation to the affairs of the first respondent -company, in defiance of the proceedings pending before this hon'ble Bench have sought to convene an EGM on 26th April, 2013 seeking to remove the applicant herein from the Board of the first respondent -company which in itself is per se perverse and in negation of the corporate principles as applicable to a family company like the first respondent -company, solely made with a view to deliberately stifle the sane voice, which had been only hitherto trying to inculcate good sense further submitted that the resolution that is sought to be moved by the 3rd respondent herein on the plea that the applicant herein has been continuously acting against the interests of the company for over 5 years now by sending several untenable complaints in a mala fide manner to various authorities in relation to the affairs of the company citing e -mails alleged to have been sent by the applicant without enclosing any of the said e -mails and letters based on which the resolution for removal is sought to be moved and alleged to form the basis of the removal of the applicant, which in itself strike at the root of the proposed resolution and the notice circulated, inasmuch as it does not contain the basis on which the resolution is sought to be moved and over which the shareholders are required to apply their mind and decide whether the e -mails and letters cited constitute the serious allegation made against the applicant as a justification for his removal or for the removal of the proposer, namely, respondent No. 3. It is also submitted that the notice convening the EGM is sought to be issued under the hand of Mr. E.S. Narayanamurthy, the 5th respondent herein whose appointment itself is under challenge in the main company petition and, hence, the EGM notice itself is under question as that of being not convened in accordance with law. It is submitted that the various e -mails referred to in the special notice proposed to be moved by the 3rd respondent pertains to Axis Bank. However, at this juncture it is submitted that the first respondent -company till June 2008 was enjoying credit facilities only with Canara Bank, SME Branch, Padi, Chennai -50. However, without any intimation to the applicant and based on covert acts, the OCC limits and bank account have been shifted to Axis Bank and the limits enhanced to Rs. 60 lakh from Rs. 30 lakh enjoyed with Canara Bank thereby putting the assets of the company into further encumbrance and that too at a higher rate of interest solely to spite the applicant. It is submitted that this clearly denotes non -application of mind of the person proposing to move the resolution by way of special notice, more out of personal animosity arising out of his own deliberate omissions and commissions which had culminated into confirmed orders being issued against the first respondent -company having huge financial repercussions and consequences which are required to be mulcted on the third respondent individually. The orders issued by Central Excise in relation to the first respondent -company clearly prove the allegation made by this applicant is with substance and in alignment with truth. In these circumstances, the action of the third respondent along with other respondents who are in the control and management of the affairs of the first respondent -company in CP Nos. 57 of 2009 and 58 of 2009 is clearly under question and their interest is seriously affected. It is further submitted that being vitally interested and that too when the matter is sub -judice, in the resolution of removal the Board meeting suffers from the lack of quorum and could not have passed the notice to be taken into consideration and, hence, on this count also the proposed notice convening the EGM on 26th April, 2013 is null and void. In support of his case, the learned counsel relied upon the following citations:

(2.) RESPONDENT Nos. 1 and 2 filed interim counters to the above application. Shri. A.K. Mylsamy, learned counsel appearing on behalf of the respondents, submitted that a copy of the application served on these respondents is unsigned and the affidavit verifying the application, apart from being unsigned is also neither executed on stamp paper nor has the same been notarised and the same are, therefore, not in accordance with the regulations and, therefore, the respondents reserve their right to raise further objections in this regard. It is submitted that the proposed EGM has been convened in accordance with the provisions of the Act after complying with the relevant provisions and the application is, therefore, required to be dismissed in limine. It is also submitted that this hon'ble Board is a court of equity and in the present case, the applicant is severely guilty of several mala fide actions, inter alia, including in purposely delaying the proceedings of the hearing of his own company petition from time -to -time which is clearly evident from the sequence of the various proceedings before this hon'ble Board. It reflects the clear intention and desperation of the applicant to gain information to support his non -existent case before this hon'ble Board. It is in furtherance of such intention that the applicant has addressed several complaints to various authorities such as the bankers of the company, the Registrar of Companies ('RoC'), the Regional Director, the Reserve Bank of India, etc., and some of such complaints are in the guise of applications under the Right to Information Act, 2005. It is solely due to the above reasons that the applicant has been purposely delaying his own cases and he has directly contributed to the case being delayed for several years now. In view of the above, the applicant is not entitled to any reliefs whatsoever even under the equitable jurisdiction of this hon'ble Board. The sequence of events, leading to the proposed convening of the EGM of the company on 26th April, 2013, is as under:

(3.) IT is submitted that the Assistant Commissioner of Central Excise, Chennai IV Division, had passed an Original -in -Order No. 21 dated 14th November, 2012 demanding Rs. 3,69,905 which was imposed under section 11AC of Central Excise Act, 1994 read with rule 25 of Central Excise Rules, 2002. The company has filed an appeal against the above order of the Assistant Commissioner with Commissioner of Central Excise (Appeals) under section 35 of the Central Excise Act, 1944 on various grounds, and the most relevant of them are summarised below: