Case Law Details

Case Name : Arun Amidwar Vs Grip Tight Packaging (India) (P.) Ltd. (Mumbai, Company Law Board)
Appeal Number : C.A. NO. 179 OF 2011
Date of Judgement/Order : 06/02/2012
Related Assessment Year :
Courts : Company Law Board (19)

COMPANY LAW BOARD, MUMBAI BENCH

Arun Amidwar

Versus

Grip Tight Packaging (India) (P.) Ltd.

C.A. NO. 179 OF 2011
CP NO. 65 OF 2011

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FEBRUARY  6, 2012

ORDER

1. The present application is filed by the petitioners seeking directions to the respondents to stay the convening of extraordinary general meeting (‘EGM’) on 26th September, 2011, in the alternative suspend the resolution if any passed in the said EGM, and the bank account of the R1-company to be operated with the joint signature of petitioner No. l and respondent No. 2 till the disposal of the main CP, no general or Board meetings be held till the CP is disposed of, not to change the shareholding pattern of the R1-company and not to alienate, encumber or dispose of any movable and immovable property of the R1-company.

2. Shri Omkar, learned PCS appearing for the applicants submitted that the respondent No. 2 issued notice dated 16th September, 2011 calling Board meeting on 17th September, 2011. The Board meeting was called to decide, inter alia, matter for calling EGM on 26th September, 2011 deciding the matter as to removal of petitioner No. l under section 284(1) of the Act due to the requisition received by respondent No. l under section 169 of the Act issued by respondent Nos. 2 to 5. The petitioner No. l attended the Board meeting and voted against calling of EGM due to the fact that the petition under sections 397 and 398 of the Act is pending before the Company Law Board (‘CLB’), Mumbai Bench, Mumbai. However, respondent Nos. 2 and 3 passed the resolution calling EGM on 26th September, 2011 for removal of petitioner No. l under section 284 of the Act. This action from the respondent Nos.2 to 5 give rise to the present application under regulation 44 of the Company Law Board Regulations, 1991 pending the Company Petition No. 65 of 2011. The petitioner Nos. l to 4 most respectfully submitted to this hon’ble Board that the proposed removal of petitioner No. l from the Board of directors of respondent No. l is unfair and unequal. This will prejudice the position of petitioner Nos. l to 4. The proposed removal of petitioner No. l will make position of petitioners unequal and balance of convenience will not be ‘in favour of petitioners. Further such removal is proposed in spite of earlier order of the CLB, Mumbai Bench, Mumbai dated 24th August, 2011 where precedence was established. If this removal of petitioner No. 1 is successful, it will cause irreparable loss to the petitioners and they will not have representation on the Board of directors of respondent No. l, thereby loosing the right to protect their interest as 49 per cent shareholders of the respondent No l. ‘The applicants most respectfully submits that in the circumstances, the balance of convenience lies in favour of the applicants and the applicants are entitled to interim and ad interim orders, failing which irreparable loss, harm and injury will be caused to the applicants.

3. The respondents filed reply and raised preliminary objections. Shri Abhijeet V Khare, learned counsel appearing for the respondents submitted that the instant application is not maintainable as it is based on a alleged grievance which does not commensurate with the reliefs sought in the main petition and, hence, no such interim order can be sought by the petitioners. Most of the reliefs are sought by way of this application were already pressed for, during the hearing of the matter on 13th of September, 2011, when this hon’ble Tribunal has declined to pass any orders thereon. Thus, the reliefs are already denied to the petitioners and as such the same cannot be prayed for by way of a new application. Even in the entire application there is no allegation made by the petitioners as to there being any breach of law by the respondents in requisitioning or convening of EGM dated 26th September, 2011. Therefore, what has been legally and validly done by the respondents cannot be questioned by the petitioners. It is a settled law that rights emanating from statutory provisions should not be curtailed by court order and that too without there being any violation of law. Thus, even on this count the application is not maintainable.

4. He submitted that the petitioner No. l has himself in the instant application stated that he opposed convening of the meeting on 26th September, 2011, though a valid requisition is received by the respondent No. l-company, of which he was till that date, a director. Thus, the petitioner No. l himself has admittedly refused the statutory duty cast upon him as a director of the company of convening a meeting under section 169 of the Companies Act, 1956 (‘the Act’). Such a recalcitrant person does not deserve any indulgence even on equitable counts. It is also a matter of record that relief of similar nature was sought by the petitioner No. l before the civil court, where injunction of from holding similar meeting was sought by him. The civil court has entertained the application on merits but has rejected the prayer of injunction to the petitioner No. l. Even the appeal filed by the petitioner No. l has been dismissed. The civil court has categorically held that it has the jurisdiction to decide the questions raised before it, but has declined to grant any interim orders to the petitioner No. l. The suit is still pending. Thus, in these circumstances, the instant proceedings are in fact and law, not maintainable as they are based on the same set of facts which are also raised before the civil court at Nagpur. Last but not least and without prejudice to all the above objections, it is submitted that since no indulgence was granted by this hon’ble Tribunal on the last date of hearing of the present application, i.e., 22nd September, 2011, the present application has become infructuous as the meeting dated 26th September, 2011 was duly conducted and 51 per cent of the shareholders have resolved to remove the petitioner No. l from the post of director. The respondents are sighting the following reasons due to which they were constrained to remove the petitioner No. 1 from the post of director of the respondent No. l/company. The petitioner No. l was misusing his post as a director of the respondent No. 1 with his own selfish interests in mind and to the detriment of the respondents, who are 51 per cent shareholders. After the untimely demise of Shri Pramod Amidwar, the petitioner No. l immediately started his proprietary concern, viz., S B Industries which was a rival in business of the respondent No. l. The petitioner No. l with the help of other petitioners also floated some other bogus firms which are mentioned in the written statement. The petitioner No. l used his powers and authority as director of respondent No. l to siphon funds and raw material from respondent No. l to his proprietary concern, i.e., S B Industries. The petitioner No. l himself accepted all his misdeeds, when he was confronted by the respondent No. 2 after her return to Nagpur. He requested for amicable settlement instead of prosecution for his follies. Therefore, the petitioner even signed a deed of settlement which is annexed to the written statement. The admission of all the misdeeds and illegalities is writ large on the deed of settlement. Given this deed of settlement is not honoured by the petitioner No. l. As if this is not enough, the petitioner No. l has further misused his post of director of respondent No. l, by incorporating petitioner No. 4 with the words “grip tight” in its name. It would be worthwhile to mention that the business of the petitioner No. 4 is same as that of respondent No. l. The petitioner No. l has incorporated somewhere in April or May 2011 as per the arguments advanced by the representatives of the petitioners before this Bench. Still the petitioner No. 1 has temerity to proclaim in writing to the clients of the R1 that the petitioner No. 4 has been in the business for 19 years.

5. The learned counsel further submitted that the petitioner No. l has been removed from the directorship of the respondent No. l company by passing of a valid resolution dated 26th September, 2011. The R1-company is, therefore, required to operate its bank accounts as per its memorandum of articles under joint signatures of any two of its directors and since at present there are only two directors, namely, Smt. Aarti Amidwar and Rupal Amidwar, the bank accounts of the R1-company are required to be operated under their signatures. The company informed the Cosmos Co-operative Bank Ltd. about the removal of Shri Arun Amidwar from the directorship of the company and requested them to change the standing instructions as regards the operation of accounts of the company with them by substituting the name of the removed director with the name of Ms. Rupal Amidwar.

6. Heard the learned counsel appeared for the parties. The applicants filed the above petition before this Bench seeking directions to the respondents to declare the decisions taken in the EGM dated 8th August, 2011 to be void, appointment of R3 to be declared void, the bank account of R1-company to be operated by petitioner No. l, petitioner No. l to be allowed to continue as director of R1-company, and the respondents to be restrained from alienating, encumbering or disposing of the movable and immovable property of the R1-companv and any such further and other reliefs. The said petition was mentioned on 24th August, 2011 and the Bench after hearing the learned PCS, directed the company not to be given effect the resolution passed in the EGM dated 25th August, 2011 till 14th September, 2011. It was submitted that the reason to mention the petition was on the ground that the company proposed to convene EGM to remove the petitioner No. l from the director. The CP came up for further adjudication on 13th September 2011, on that day the learned counsel for the respondents submitted that they intend to withdraw the notice calling EGM on the ground that there is flaw in the notice. He submitted that in view of the withdrawal of the notice, all the decisions taken in the EGM will automatically get nullify. Thereafter the present pplication is filed seeking the reliefs as prayed therein. The stand of the respondents that some of the reliefs which the applicants have sought are already prayed in the main petition. Therefore, when the main petition is pending for adjudication, the interim reliefs which are in the nature of main reliefs cannot be granted. He submitted that the application is filed on 20th September, 2011 and mentioned on 22nci September, 2011 and at the request of the respondents, 3 weeks time was granted to file reply. After completion of the pleadings in the application, the same has been taken up for hearing. The company issued notice dated 16th September, 2011 wherein it was stated that the company received valid requisition for convening EGM under section 169(1) of the Act, to remove petitioner No. l from the post, of directorship and the company decided to convene EGM on 26th September, 2011 at 11 AM to transact the business as stated therein. Along with the notice an explanatory statement was also enclosed. The respondents have stated that the petitioner No. 1 has been removed by passing a valid resolution in the EGM dated 26th September, 2011. The petitioner did not deny the same. This Bench also will not interfere in the internal affairs of the company when there is no illegality and violation of any provisions of law or articles of the company. In the present case the petitioner No. l was removed as director and this Bench presumes that the convening and holding of general meeting in which he was removed is legal and valid. So far as para 11.3 of the reliefs is concerned that the R1-company be directed to be operated only with the joint signature of the petitioner No.1 and respondent No.2 is concerned a similar relief is sought by the applicants in the main petition at para 9.3. Therefore, pending adjudication of main petition, I do not consider it to grant the reliefs at the interim stage. So far as reliefs at para 11.4 is concerned I am not inclined to grant the stay in conducting the shareholders and Board of directors meetings which are to be conducted by the company in accordance with the law or the company may thinks fit to call the meetings in its best interest. Insofar as reliefs prayed at paras 11.5 and 11.6 is concerned, the learned counsel for the respondents agreed and undertook that they will not change the shareholding pattern of the company and they will not alienate, encumber or dispose of or reating any third party rights or interest in any movable and immovable property of the R1-company till the disposal of the petition. The company shall abide by the undertaking given by the learned counsel for the espondents. In view of the undertaking given by the learned counsel for the respondents there is no need to give further directions. However, if there is any disobedience of the above undertaking, the petitioners have liberty to approach this Bench. The learned counsel for the petitioners did not press the reliefs prayed at paras 11.7 and 11.8 of the application. In view of the above, the Company Application No. 179 of 2011 is disposed of. No orders as to cost.

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