RAKESH KUMAR & ANOTHER Vs. VIJAY JULKA

JUDGEMENT

(1.) This appeal under Section 10-F of the Companies Act, 1956 (hereinafter 'the 1956 Act') has been filed against the order dated 25-8-2014 passed by the Company Law Board, New Delhi (hereinafter 'the CLB'). Thereby the CLB has set aside the resolutions of EGMs of M/s.Supriya Pharmaceuticals Ltd. held on 8-2-2012 and 3-4-2012 on the ground that the requisition in terms of Section 169(4) of the 1956 Act by 10% of the share holders had not been made, and neither compliance with Section 284 of the 1956 Act made nor the Director sought to be removed served notice of the EGMs in accordance with Section 172 of the 1956 Act. So holding the CLB set aside the EGMs of 8-2-2012 and 3-4-2012.

(2.) The main contention of the learned Senior counsel Mr. U.N. Bhandari appearing with Mr. Sanjeev Singhal on behalf of the appellant is that the two aforesaid meetings of EGMs of the company in issue were held in pursuance of the directions of BIFR constituted under the Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter 'the 1985 Act'). Senior Counsel has submitted that the BIFR under the Act of 1985 having changed the management of the company in question, the CLB had no jurisdiction to hear an application under Sections 397, 398 and 402 of the 1956 Act or interfere with the resolutions/ decisions of the EGMs of 8-2-2012 and 3-4-2012. It has been further submitted that the impugned order dated 25-8-2014 passed by the BIFR setting aside EGMs of 8-2-2012 and 3-4-2012 appointing the appellants as directors are vitiated for violation of the principles of natural justice as the newly appointed directors were neither impleaded in the application before the CLB nor heard. It has been finally submitted that the independent director appointed by BIFR Shri Bhagwan Das who convened the EGMs as authorised not having been impleaded or heard, requisite material could not be placed before the CLB with regard to the statutory compliances having been made in respect of the EGMs of 8-2-2012 and 3-4-2012. Counsel submitted that even otherwise the respondent had been found by the BIFR guilty of various acts of omission and commission and could not have been resorted to directorship by the CLB. It has been finally submitted that there was no material before the CLB to hold that the EGM was not lawfully requisitioned or proper notices to convene the two EGMS in issue were not issued or served entailing violation of Section 169, 171, 172, 173 and 284 of the 1956 Act.

(3.) Mr. Anant Kasliwal, appearing on behalf of respondent Director whose removal at the EGMs was set aside by the CLB, has submitted that no material was placed before the CLB to establish that EGMs held on 8-2-2012 and 3-4-2012 were in pursuance to the directions of the BIFR. And in fact it was not so. It has been submitted that EGM as required by the BIFR was only for consideration of accounts under Section 167 of the 1956 Act. It has been submitted that in writ petition No.4157/2013, the Delhi High Court vide order dated 5-7-2013 had directed the AAIFR to dispose of all pending appeals and reserved the rights of the respondent to challenge the resolutions passed in EGMs held on 8-2-2012 and 3-4-2012 before the CLB. It has been submitted that aggrieved of the gross illegality by the appellants and others in the EGMs of 8-2-2012 and 3-4-2012 ousting a promoter director, the respondent promoter director invoked his statutory rights and took proceedings under Sections 397, 398 and 402 of the 1956 Act against the oppressive acts of the appellants in his suppression as a minority share holder. The action was inter alia founded on the ground of the contravention of Sections 169, 171, 172, 173 and 284 of the 1956 Act by the purported EGMs. No document was filed along with the reply to the petition under Section 397, 398 and 402 of the 1956 Act by the appellants to prima facie show that compliance with the provisions of Sections 169, 171, 172, 173 and 284 of the 1956 Act for holding EGMs on 8-2-2012 and 3-4-2012 was made. Notices of EGMs were not sent to the correct addresses and no postal receipt regarding acknowledgment of receipt of notices was filed before the CLB. Similarly the address indicated in the special notice under Section 284 of the 1956 Act was incomplete and no postal record filed to show and prove the issue and receipt of the said notice. It has also been submitted that EGMs of 8-2-2012 and 3-4-2012 were held in clear violation of AAIFR orders. It was submitted that it was an admitted fact that a director of the company in fact issued a letter dated 9-2-2012 to the Registrar of Companies, Jaipur pointing out the illegal act of convening the EGM on 8-2-2012. Further on 9-2-2012 letters to SHO Police Station Bhiwani and Registrar of Companies Jaipur were sent by a director alleging that his digital signatures were unauthorisedly used for filing of form 32 for the purported removal of the respondent director, who was the promoter director of the company. It has been submitted that the appellant failed to establish as was their burden on a challenge being made, that while holding EGMs of 8-2-2012 and 3-4-2012 the mandatory provisions of Section 284 of the 1956 Act or other mandatory provisions of the 1956 Act were complied with. In fact this was not so done by the appellants and their cohorts as they were adamant in illegally removing the respondent as director (promoter) of the company. It has been submitted that since the respondent has denied the receipt of the special notice under Section 284 of the 1956 Act, the Dugar group whom the appellants have comity of interest with was under an obligation to discharge its burden to prove that the mandatory provisions of the 1956 Act were complied with in convening the EGMs of 8-2-2012 and 3-4-2012. The appellants failed to discharge that burden before the CLB to its satisfaction. Therefore the EGMs of 8-2-2012 and 3-4-2012 were null and void and has been so rightly held by the CLB. It has been submitted that it is a well settled principle of law that even a single act may amount to an act of oppression where its effect is of a continuous nature and the aggrieved shareholder is deprived of his rights and privileges for all times to come in the future. Reference for this proposition has been made to the case of Donald Stummer Vs. Maharashtra Power Development Corporation,2003 117 CompCas 506. It has been further submitted that in the facts obtaining since the EGMs of 8-2-2012 and 3-4-2012 were convened without the statutory requisition, issuance and delivery of the mandatory special notice in violation of Section 284 of the 1956 Act and other statutory provisions of the 1956 Act, they were null and void and rightly so held by the CLB as in the case of Queens Kuries & Loans Pvt. Ltd. Vs. Sheena Jose, 1993 76 CompCas 821 and Ansarkhan Vs. Fine Core Cables P. Ltd., 2007 140 CompCas 76. Mr. Kasliwal has further submitted that it is incorrect to state that the management of the company had been changed by the BIFR. He pointed out that on 22-11-2010 BIFR indeed issued a notice for change of the management of the company, and in the following advertisement for the purpose, the bid of one Samriddhi Mega Structures Ltd. (a company owned by the erstwhile chartered accountant and director of M/s. Supriya Pharmaceutical) was accepted and it declared the successful bidder by the BIFR on 6-9-2011. On the same date, one Bhagwan Das Gupta was appointed as independent director to oversee process of change of management. However, AAIFR in appeal No.219/2011 against the order dated 6-9-2011 stayed BIFR's order on change of management. That stay has not been modified or vacated in any proceeding. It is submitted that in the circumstances invoking of the 1985 Act to launch a challenge to the CLB's jurisdiction to hear an application under Section 397, 398 and 402 of the 1956 Act is completely misdirected and untenable. Counsel submitted that the argument of non-impleadment of the appellants before the CLB vitiating its impugned order dated 25-8-2014 is a non-sequitor. The appellants have no interest in the matter except on the basis of their wrongful and illegal appointment as director by the EGMs of 8-2-2012 and 3-4-2012 ultra vires the 1956 Act. Those EGMs have been set aside and all resolutions therein negated. Further the company M/s. Supriya Pharmaceutical Ltd. was impleaded in before the CLB and it was for it to produce relevant record showing statutory compliances for the EGMs of 8-2-2012 and 3-4-2012. Mr. Bhagwan Das the independent Director appointed by the BIFR for the limited purpose of a EGM for confirmation of accounts under Section 167 of Companies Act was not required to be impleaded in personal capacity. Learned counsel for the respondent has finally submitted that since the respondent the promoter director had been ousted completely in an illegal manner and in contravention of mandatory statutory provisions of the 1956 Act, the impugned order passed by the CLB is a just and fair one based on evidence before it, and should brook no interference in this appeal by this court.