Case Law Details

Case Name : In re Reliance Industries Ltd., (COMPANY LAW BOARD, MUMBAI BENCH)
Appeal Number : CP NO. 83 of 2012
Date of Judgement/Order : 04/06/2012
Related Assessment Year :


Reliance Industries Ltd., In re

Smt. Vimla yadav, MEMBER

CP NO. 83 OF 2012

JUNE  4, 2012


1. In this order I am considering CP No.83/284/2012 filed by Shri Anil Kumar Poddar against M/s Reliance Industries Ltd. and Ors. in pursuance to the liberty granted by the Hon’ble High Court, Bombay vide its order dated 25.5.2012 in Civil Writ Petition No.1160 of 2012 to make an application before the CLB seeking stay of the AGM of Reliance Industries Ltd. scheduled to be held on 7.6.2012, the petitioner had sought leave to withdraw the Writ Petition before the Hon’ble High Court with liberty to move the CLB for appropriate reliefs. This matter was heard today at length. The Petitioner argued his case in person. R-I and R-2 were represented by different counsels.

2. It is noted that the petitioner has filed a company petition (not a company application) wherein the following reliefs and interim orders have been prayed for in para Nos.9, 10 and 11 at pages 29 to 32 of CP No.83/284/2012 which read as under:


In view of the facts mentioned in paragraphs above, the Petitioner pray for the following reliefs:

(a)  The Hon’ble Bench may be pleased to direct Board of Directors of R-I Company to issue fresh notice of the 38th AGM along with the notice of Resolution of Special Business to remove Mr. Mukesh Ambani as a Director of R-I Company after complying the provisions of section 284 of Companies Act, 1956.

(b) This Hon’ble Bench may be pleased to appoint some fit and proper person preferably Ex-judge of the High Court or the Hon’ble Supreme Court as a Chairman of the Meeting which is likely to be held in meeting to consider the notice of removal of Mr. Mukesh Ambani.

(c)  This Hon’ble Bench may be pleased to direct Respondent Company to video record proceedings of the AGM to be held after giving notice of removal of Mr. Mukesh Ambani and submit the copy of the same to the Petitioner and this Bench and other members of the Company if they so require on payment of copy charges.

(d) This Hon’ble Bench may be pleased to direct the Board of Director to furnish full explanation for the question which may be arised by any of the shareholders including supplementary questions regarding affairs of the Company by giving them unlimited time.

(e)  To annul the business if transacted if any on 7.6.2012 if meeting is held while petition is pending or the interim orders.

(f)  Not to implement any of the resolutions passed at the 38th AGM to be held on 7.6.2012.

(g)  Award exemplary cost to be paid by the Respondent Company to the Petitioner.

(h) Such further orders that this Hon’ble Court may deem fit and proper having regard to the facts and circumstances of the case and thus render justice.

10. The Petitioner submits that the Bench was on leave and therefore it was not possible to file the Petition earlier to obtain any relief. The Petitioner further submits that since law point involved and whether the Company can take away the rights conferred by the Parliament under the statute or not will take considerable time to decide in the interest of justice the Petitioner is asking for following interim prayer.

11. Interim Order, if any, prayed for

(a)  Pending final decision of this Petition, the Petitioner seeks/prays the issuance of the following interim reliefs:

(i) Be pleased to defer the date of AGM which is scheduled to be held on 7.6.2012 at 11 A.M. at Birla Matushri Hall, Mumbai uptill the Respondent Company makes proper compliance of the provision of section 284 read with section 190 of Companies Act, 1956 and issues a fresh individual notice to all the shareholders, as per the provisions of Companies Act.

(ii) Be pleased to direct the Respondent Company to send fresh notice of 38th AGM incorporating:

•  the resolution as proposed by the Petitioner in this Special Notice dt.16.4.2012 u/s 284 to the respondent company as a special business with proper Explanatory Statement and

•  any representation received from the director proposed to be removed.

(iii) Be pleased to direct the Respondent Company to provide information to the Petitioner as asked by him vide several E-mails from 1-4-2012 to 6-5-2012 and the Petitioner be allowed to raise any issue on going through the information/details and accordingly date of AGM be fixed keeping in consideration the time to be taken in providing the information by the respondent company and further reasonable time of two seeks at least to be taken by the petitioner on study such information.

(iv) Be pleased and this Hon’ble Bench may pass any appropriate order in justice, fair pay and equity.

(v)  Cost of this Petition be provided for.

(b)  in the interest of justice pass ad-interim ex parte orders in terms of prayer (a) (i) to (iii) above and make the same absolute after notice to the Respondents.

(c) pass such further and other orders as this Board may deem necessary to secure the ends of justice.”.

3. The petitioner’s case in Writ Petition, as pointed out, was that a shareholder’s statutory rights have been denied, inspection of records has not been allowed fully, incomplete accounts of subsidiary companies of Reliance Industries have been provided giving very less time to the Petitioner to go through the same and raise objections in the AGM to be held on 7.6.2012 at 11 A.M. and hence, the prayers as sought above. My attention was drawn to various e-mails exchanged between the parties. It was pointed out that the petitioner gave a Special Notice u/s 284 of the Companies Act, 1956 (hereinafter referred to as ‘the Act’) on 16.4.2012 to the Company Secretary for removal of Mr. Mukesh Ambani, CMD of Reliance Industries Ltd. from the Board of Directors of the Company, it was pointed out that a copy of e-mail was also sent to Shri Mukesh Ambani and others in the company but the petitioner was surprised to note that the proposed Resolution was not included in the Agenda of the AGM circulated to the members.

4. Drawing my attention to the case law in Gopal Vyas v. Sinclair Hotels of Transportions Ltd. [1990] 68 Comp. Cas. 516 (Cal.) and Karnataka Bank Ltd. v. A.B. Datar[1994] 79 Comp. Cas. 417 (Kar.), it was argued that Section 284 is to be read independent of section 188(2) of the Act.

5. The Petitioner tried to explain his conduct by drawing my attention to the various criminal cases instituted by him against the R-I and R-2. It was reiterated that the petition is made bona fide and is in the interest of justice. It was also stated that 63 petitions pending before the CLB, Mumbai Bench, Mumbai filed under Section 163 of the Act by the Petitioner on account of failure of the Respondents to allow inspection of records have nothing to do with this petition.

6. The counsel for the R-I contended that Company Petition No. 83/284/2012 is not maintainable because there is no provision under which the petitioner can seek such reliefs under section 284 of the Act and because the Petitioner does not have the necessary qualification under sub-section (2) Section 188 of the Act to require the Respondent Company to include circulation of the proposed resolution for removal of Mr. Mukesh Ambani, CMD of the R-I Company. Reading the provisions of Section 188(1) of the Act it was argued that ‘any resolution’ includes resolution u/s 284 of the Act and ‘any business’ includes the issues raised by the Petitioner in CP No.83/284/2012. My attention was drawn to the case law in Amar Nath Malhotra v. MCS Ltd. [1993] 76 Comp. Cas. 469 (Delhi); GHCL Ltd. v. Arun Goenka of High Court of Gujarat at Ahmedabad in Civil Application No.9341 of 2011, in appeal from Order No.316 of 2011, date 1-9-2011 and CLB, Mumbai’s decision in CP No. 10/2010 in the case of Housing Development Finance Corpn. Ltd. v. Sureshchandra Parekh 107 SCL 224 (CLB-Mum.) to contend that Section 284 has to be read with the provisions of Section 188(2) of the Act which prescribes the qualification of minimum shareholding/the number of members for seeking circulation of members’ resolutions for which section 188 is attracted.

7. The Counsel for the R-I further contended that the petitioner has already filed 63 petitions in respect of inspection u/s 163 of the Act. The petitions are already being heard by the CLB.

8. Pointing to the unclean hands of the petitioner my attention was drawn to a long list of criminal cases filed by the Petitioner and by the Respondents. Further, my attention was drawn to a long list of cases of other companies wherein the respective companies had moved the CLB u/s 284(4) of the Act and their petitions were allowed by the CLB against the same petitioner. Certain excerpts of correspondence between the Petitioner and the other companies were read out to support the R-1’s contention that the Petitioner is a black mailer and had been asking for finance in cash/cheque and hence, the petition has been moved with an ulterior motive and deserves to be rejected outrightly.

9. The counsel for the R-2 contended that the petition is not maintainable. It was pointed out that section 284 is only a subject i.e. removal of Directors, the procedure for meetings and proceedings is a complete code from sections 165 to 197 which includes sections 169 to 173 regarding the members rights in such requisitions and it is sections 188 and 190 which apply in the present case. The petitioner has failed to fulfil the requisite qualification u/s 188(2) of the Act under (a) or (b). It was pointed out that on 19.4.2012 the petitioner had only 2 shares of the R-l company and it was only on 28.4.2012 that 100 shares were purchased and between 5th May to 12th May, 242 shares were purchased and out of which 241 shares were sold by the petitioner leaving him with only total 103 shares(2+100+1) which is only 0.000003376% of the total shareholding of the R-I company which does not give one twentieth of the total voting power of all the members nor that the petitioner has further 99 members to support his case to make 100 members as provided u/s 188(2)(b) of the Act. It is a frivolous and vexatious petition. It was pointed out that the object is not to ask for statutory rights but to extort money. My attention was drawn to a similar notice given by the same Petitioner on 16-02-2008.

10. I have considered the rival submissions and the case law cited. In the facts and circumstances of this case considering the case law applicable it is noted that CP No.83/284/2012 cannot be maintained because the provisions of Section 284 which have been attracted by the Petitioner are not applicable in the present matter, the provisions of Section 284 provide for removal of Directors by a company in certain situations and the procedures to be followed for such removal on receipt of a notice of a resolution to remove a Director under the section and the provision for the company to represent to the CLB in certain cases seeking exemption from publication, circulation or reading out at the forthcoming AGM such proposed resolution to remove Director(s), etc. it does not provide the petitioner any right to move the CLB u/s 284 of the Act. The correct provision to be attracted in case of the petitioner’s proposal for inclusion of circulation of the proposed resolution of removal of Shri Mukesh Ambani, CMD from the Board of Directors of the Company is Section 188 of the Act. The relevant provisions of section 188(1) and 188(2) read as follows:

“Section 188:

(1) Subject to the provisions of this section, a company shall, on the requisition in writing of such number of members as is hereinafter specified and (unless the company otherwise resolves) at the expense of the requisitionists,-

(a)          give to members of the company entitled to receive notice of the next annual general meeting, notice of any resolution which may properly be moved and is intended to be moved at that meeting;

(b)          circulate to members entitled to have notice of any general meeting sent to them, any statement of not more than one thousand words with respect to the matter referred to in any proposed resolution, or any business to be dealt with at that meeting.

(2) The number of members necessary for a requisition under sub-section (1) shall be,-

(a)  such number of members as represent not less than one-twentieth of the total voting power of all the members having at the date of the requisition a right to vote on the resolution or business to which the requisition relates; or

(b)  not less than one hundred members having the right aforesaid and holding shares in the company on which there has been paid up an aggregate sum of not less than one lakh of rupees in all.”

11. A plain reading of the provisions of Section 188 makes it amply clear that a member who intends getting his proposed resolutions included for circulation to members must have not less than one twentieth of the total voting power of all the members at the date of the requisition or must be not less than 100 members in number to exercise such a right. This provision is mandatory. It is noted that petitioner does not fulfil the requisite qualification. It has been rightly argued that his shareholding is only 103 shares which is only 0.000003376% which does not entitle him to insist on inclusion of his proposed resolution in the AGM scheduled for 7.6.2012 at 11A.M. The case law cited by the petitioner also does not help him in this matter. The case of Gopal Vyas (supra) pertains to Section 257 i.e. Right of persons other than retiring directors to stand for Directorship is not applicable in the present matter. The case of Karnataka Bank Ltd. (supra) was decided in November 1993 by the Hon’ble Karnataka High Court. Subsequently similarly decided case of the Hon’ble Karnataka High Court in the case of Prakash Roadlines Ltd.. v. Vijaya Kumar Narang [1995] 83 Comp. Cas. 569 has been considered by the Hon’ble High Court of Gujarat in the matter of GHCL Ltd. (supra) it was held that the provisions of section 284 are not independent of section 188 and are interconnected. It has been rightly pointed out that the procedure for meetings and proceedings is a Complete Code in itself as provided from sections 165 to 197.

12. As regards the conduct of the petitioner, on the basis of the documents on record I find that the respondents have succeeded in making out a case of unclean hands of the petitioner. The petition deserves to be dismissed on this ground alone.

13. In view of the foregoing, CP No.83/284/2012 is hereby dismissed being not maintainable.

14. No orders as to cost.

15. Order dasti.

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