B.S. PUTTARAJU Vs. C.R. SOMA SHEKAR

JUDGEMENT

(1.) THE applicants are the first and eighth respondents in the company petition and filed the present company application under regulation 44 of the Company Law Board Regulations, 1991. The respondents in this application are the petitioners in the main company petition. This application is filed seeking an order of injunction to:

(2.) THE factual matrix of the case is that originally the respondents herein filed the above company petition under Sections 397, 398, 402, 403 and 388C of the Companies Act, 1956, alleging certain acts of oppression and mismanagement in the affairs of the second applicant -company. At the time of moving the company petition, this Bench passed an interim order on October 6, 2008, directing the parties to the petition to maintain the present status quo in regard to (i) shareholding pattern and management of the company ; and (ii) immovable assets including the lease hold rights in the mines held by the company until further orders.

(3.) LEARNED senior counsel submitted that the earlier order of this Bench in C.P. No. 21 of 2008 was a stumbling block to the plans of the respondents in usurping the management of the company. The respondents herein deliberately withdrew the company petition (C. P. No. 21 of 2008) and proceeded to file a series of returns which were totally fabricated and began to deal on behalf of applicant No. 2 company as if they are in the management without any authority whatsoever causing prejudice and harm to the company. The applicants reserve their rights to file a detailed counter in C. P. No. 62 of 2008, in relation to the false allegations regarding the removal of applicant No. 1 as director. The applicant submits that no board meeting was ever convened on September 19, 2008, as alleged to consider a letter received from one of the shareholders, viz., the first respondent with respect to the removal of applicant No. 1 as a director of the company and if in fact the same was true, there would have been no need for withdrawal of the company petition (C. P. No. 21 of 2008) on September 23, 2008, even prior to the date of the alleged extraordinary general meeting on September 29, 2008. Learned senior counsel submitted that neither there was any extraordinary general meeting held on September 29, 2008, nor was any special notice received by applicant No. 1 in relation to his removal as a director and the Form No. 32 along with its entire enclosures are completely fabricated and filed with the Registrar of Companies, Karnataka and a copy filed before this Bench. The respondents have approached this Bench with unclean hands. Learned senior counsel submitted that even according to the first respondent herein applicant No. 1 was admittedly very much in charge of the affairs of the company and, therefore, the subsequent case set by the respondents that there was an extraordinary general meeting convened on September 29, 2008, to remove him and that despite receipt of a special notice of the meeting, his non -representation and explanation before the meeting and subsequent removal, applicant No. 1 chose to remain silent, is nothing but a figment of the imagination and a statement on the basis of records created for the purpose of this case. A mere electronic filing of false information and fabricated documents do not lend any sanctity to the illegal and improper conduct of the respondents. The respondents also filed another false and fabricated return in respect of shifting of the registered office of the company from its existing address which was incidentally the residential address of applicant No. 1 and the said return is also invalid and baseless. The respondents also approached the bank for changing the authorised signatory for operating the account from applicant No. 1 to them. This particular action has caused great prejudice inasmuch as the bank has now chosen to freeze the account due to the dispute between the parties, precipitated by the respondents. The shareholding pattern and the board of directors of the company are detailed in paragraph 9 of the application and the averments contained in the company petition with respect to the directorship and shareholding are totally false. When the company petition (C. P. No. 62 of 2008) was moved, this Bench passed an order on October 6, 2008, on an ex -parte basis that there would be status quo with respect to the shareholding pattern, management and with respect to immovable properties of the company. The respondents are grossly misusing the said order by virtue of their false representation and are attempting to interpret the order as if they are in the management when clearly they had admitted during the previous company petition that the applicant herein (the second respondent in C. P. No. 21 of 2008) was in charge of the affairs and management of applicant No. 2 company. Learned senior counsel in support of his contention further submitted that in C. P. No. 21 of 2008, filed by the first respondent herein, there are averments at paragraphs (d), (f), and (k) to show that applicant No. 1 was managing the affairs of the company. Further, Shri G. Shankar Prasad, practising company secretary, had signed on the attendance/order sheet dated September 23, 2008, the date on which the petition was withdrawn, representing respondents Nos. 1, 2, 6, 7 and 8 to the company petition. Applicant No. 1 acting as the managing director has been dealing with various authorities in the ordinary course of business all these years. Learned senior counsel further submitted that the mining lease held by Shri B. R. Amar Singh, a shareholder and director of the company was transferred in favour of the company. Applicant No. 1 regularised all the issues relating to mining lease including its renewal in the year 2008, with effect from 2005. After withdrawal of C. P. No. 21 of 2008, the respondents caused a letter to be written through a person Shri B.S. Arun who far from being the managing director was not even a director of the company. The respondent's claim to the management of the company is denied in toto and has to be decided in the company petition. The respondents are now attempting to represent the company before the various authorities which is causing confusion in the minds of various authorities and would affect the interest of the company. A letter dated September 25, 2008, was addressed to the Principal Secretary, Government of Karnataka by Shri B.S. Arun, stating that the following directors of the company, namely, Shri B.S. Arun and Shri M. Manjunath have been authorised to represent the company before all the concerned authorities for operation of the mining activities on the basis of a board resolution dated September 19, 2008. The bank has also stopped the operation of the account due to the confusion created by the respondents. Therefore, the applicants are constrained to approach this Bench for an injunction restraining the respondents from representing to various authorities in relation to the affairs of the company and for a further injunction restraining them from lifting or selling any of the material lying with the company pursuant to the permits issued by the Government of Karnataka, Department of Mines and Geology, in favour of the company pending disposal of the company petition under Section 403 of the Act. As on the date of status quo order, i.e., October 6, 2008, applicant No. 1 continues to be the managing director of applicant No. 2 company. As stated supra, there is an alleged board meeting dated September 19, 2008, which is prior to withdrawal of C. P. No. 21 of 2008 and an alleged extraordinary general meeting dated September 29, 2008, in which applicant No. 1 was removed from directorship. These proceedings are void ab initio as there was a status quo in C. P. No. 21 of 2008 and that came to an end only on September 23, 2008. Learned senior counsel contended that the meeting dated September 19, 2008, was purportedly conducted at the requisition of the first respondent herein under Section 169 of the Act by notice dated September 10, 2008, addressed to Shri B. S. Naveen, chairman. Applicant No. 1 was not aware of the appointment of the chairman and no notice was received by him. As per Section 169(2) of the Act, the requisitionist shall set out the matters for the consideration for which the extraordinary general meeting is to be called, which shall be signed by the requisitionist and be deposited at the registered office of the company. Though there was no change in the address of the company, the notice dated September 10, 2008, had not been delivered at the registered office as required under Section 169 of the Act. Learned senior counsel contended that there is no such board meeting held on September 19, 2008, since, written notice under Section 286 of the Act, is mandatory. The legal infirmity is that when there is no valid requisition, notice deposited with the company as per the provisions of the Act, there could not be board meeting on September 19, 2008. There was no board meeting held on September 19, 2008, if at all held, is void ab initio. Learned senior counsel submitted that as per the directions of this Bench the original minutes of board meetings and minutes of the other meetings have been deposited with the Bench Officer and those minutes are only the original minutes and the other minutes filed by applicant No. 2 company represented by Shri B.S. Arun are not genuine. Further, learned senior counsel submitted that the respondents are doing forum shopping by filing suit against applicant No. 1 in the civil court seeking certain reliefs. In support of his submissions relied upon the following decisions: