COMPANY LAW BOARD, MUMBAI BENCH
Torrent Power Ltd.
versus
Sureshchandra V. Parekh
Smt. Vimla yadav, MEMBER
C.P. NO. 71/284 of 2012
JUNE 15, 2012
ORDER
1. In this order I am considering CP No.71/284/2012 filed by Torrent Power Ltd. against the Respondents praying that (a) the Petitioner Company be exempted from the publication, circulation or reading out at the forthcoming General Meeting, the said Notice issued by the Respondents, as the same seeks to abuse the process of law to secure needless publicity for defamatory matter and that direction be passed permanently restraining the Respondents from sending notices under Section 284 of the Act to the Petitioner Company raising the same issues; (b) Direct the Respondents and his/her family members not to indulge in misuse and abuse of the process of law, in future by serving notice under section 284 of the Act, for removal of Mr. Keki M. Mistry, Director of the Company on the same issue; (c) Grant such other reliefs as it may deem proper in the matter and (c) Cost to the Petitioner be allowed.
2. CA No.82/12 was mentioned to amend the CP to incorporate pleadings and prayers to attract the provisions of Section 188 of the Act. The respondents’ objections were heard and rejected on the ground that the objections are not tenable in law and in the facts of this case, the Applicant has rightly attracted the provisions of Section 188 of the Act which are applicable in this matter and even if the Applicant had failed to attract the correct provisions, the petition is to be considered and adjudicated upon applying the correct provisions of the Act. Hence, CA No.82/12 stands allowed and CP No.71/284/2012 stands amended to that effect incorporating the pleadings and prayers in CA No.82/12 into CP No.71/284/2012.
3. The Petitioner’s case is that the Respondents, have vide their letter dated 1st January 2012 sent a notice purportedly being a special notice within the meaning of Section 190 of the Act wherein the respondents have expressed their intention to move, immediately or at the next Annual General Meeting of the Petitioner Company the resolution as ordinary resolution for removal of Mr. Keki M, Mistry, Director of the Petitioner Company, under the provisions of Section 284 of the Act on the alleged/fictitious ground that he is involved in wrong, illegal criminal cases filed at Mumbai against the Respondents. It is pointed out that the Respondents are holding 76 Equity shares of Rs. 10/- each representing 0.00001% of its total issued and paid up share capital of the Petitioner Company, which shareholding is “insignificant holding” and is pertinently below the statutory and numerical requirements of Section 188 of the Act for any. shareholder(s) to move any such resolution at any Annual General Meeting, It was argued that u/s 188(5) of the Act the company in this matter is not bound to publish and circulate the proposed Resolution of the requisitionists. It was pointed out that the Respondents have, in the Notice stated that Housing Development Corporation Limited (HDFC) made allotment of 10 equity shares of Rs. 100/- each under folio No. N 41567 in the public issue in the year 1991. At the request of the Respondents, HDFC split the said certificate of 10 Equity shares into 10 certificates of 1 Equity share each. The Respondents have claimed that they made hand delivery of 8 Equity share certificates of 1 Equity share each and 8 Transfer Deeds which was acknowledged by HDFC on 8th October, 1992. Based on the above documents, HDFC transferred the aforesaid 9 Equity share certificates representing 8 Equity shares as per the name of buyers in the transfer deeds and issued separate folio Nos.51109 to 51116. Subsequently, HDFC also sent its Annual Reports for the above buyers under referred folios for the F.Y. 1992-93. The Respondents have further claimed that HDFC without any intimation, approval or written communication, unilaterally changed the folio Nos.51111 to 51116 as folio No.51110. The Respondents have also alleged that HDFC made corrections subsequently in the Register of Members of HDFC without any approval of the Registrar of Companies and/or Company Law Board as envisaged under the provisions of the Act and has thus committed criminal offence. In the year 1994, HDFC promoted HDFC Bank Limited (hereinafter referred to as “HDFC Bank”) and offered Equity shares of HDFC Bank to the Equity shareholders of HDFC on the basis of their holding in HDFC as on 20th June, 1994. The Respondents alleged that in view of the unilateral decision of HDFC of changing the folios, the Respondents were deprived of 700 Equity shares of HDFC Bank. The Respondents have also alleged that HDFC Bank was required to make allotment of Rs.30.92 crores shares to the members of HDFC. Instead, they allotted Equity shares of Rs.1.55 crores in favour of HDFC thereby depriving the rights of members of HDFC Limited and giving undue advantage/benefit to the promoter of the HDFC Bank, viz. HDFC Limited at the cost of the minority shareholders. The respondents have also levied various allegations against HDFC, HDFC Bank and its Directors in the said Notice.
4. It was argued that the Petitioner Company is not connected in any manner, with the disputes raised by the Respondents against HDFC and its Directors. However, in relation to the allotment of 700 Equity shares of HDFC Bank, the Respondents and HDFC have resorted to various criminal, civil and Company cases against each other before Criminal Courts, Civil Courts, Company Law Board, High Courts and Supreme Court. By filing such notice the Respondents want to harass the Company and its independent Director, Mr. Keki M. Mistry. The Respondents have filed various vexatious, unjustified and unsubstantiated litigation against HDFC, HDFC Bank and its Directors and have already wasted an enormous amount of time of various courts, fora and authorities. It was pointed out that the publication and circulation of defamatory material of the Respondents is prejudicial to the interest of the Company and results in wasteful expenditure of the shareholders’ money.
5. It was pointed out by the counsel for the petitioner that the notice is issued just because Mr. Keki M. Mistry is an independent Director of the Company who also happens to be the Vice Chairman & Managing Director of HDFC with whom the Respondents have long history of litigations. The petitioner Company is engaged in the business of generation, transmission and distribution of power, which is very vital for the infrastructural growth. The publication of such notice shall adversely affect the reputation of the Company with its suppliers and clients, without the Company being at any fault whatsoever,
6. It was further pointed out that the Respondents are in the habit of regularly issuing baseless, defamatory and unsubstantiated vexatious notices for inclusion of resolutions under the provisions of Section 284 of the Act and merely seek to abuse the process of law and seek to secure needless publicity for a defamatory matter. The counsel for the petitioner drew my attention to several criminal and other proceedings initiated by and against the respondents to point out their conduct and contended that the petition deserves to be allowed on this ground alone.
7. It was argued that to move any resolution at a general meeting of a Company must necessarily comply as a condition precedent with the requirements of Section 188 of the Act, which stipulates a minimum shareholding requirements for moving any resolution. As a result of non-compliance with the requirements of Section. 188 of the Act, the said Notice is bad in law, illegal and void ab initio.
8. The Respondents’ case is that Section 284 of the Act is not to be read with Section 188(2) of the Act. To support their contentions, the respondents relied upon the decision of the Hon’ble Gujarat High Court given vide Order dated 1-2-2010 in O. J. Appeal No.107/2009 in their case Sureshchandra V. Parekh v. HDFC Ltd., wherein last para reads as under:
“…the aforesaid discussion takes us to the impugned final directions issued by the CLB. The CLB, by the impugned direction, has restrained the appellants from giving notice(s) under Section 284 of the Act for removal of Mr. D.S. Parekh as Director of HDFC on the same issue as mentioned in their notice dated 10.4.2009 for the AGM which was to be held in 2009. It is apparent and obvious that the statements in the notices or the reasons stated in the notices for circulating the resolutions are the ground or justifications for the impugned direction by CLB and not the demand (by the appellants in the notice/resolution) per se. It is also clear, on bare perusal of the impugned direction, that the limited effect of the impugned direction would be that the appellants cannot now keep on giving notice on the same issue which was mentioned in their notice dated 10.4.2009, however, the impugned direction would not come in the way of the appellants and it does not prohibit them from giving notice, including a notice seeking removal of any director or the chairman, on any other issue. Obviously, if the solution, (which may be proposed in the notice by the appellants) do not find favour in the meeting and cannot garner sufficient votes to sail through them it would fail and sink. The CLB has not restrained the appellants from giving any notice under Section 284 of the Act in future even for removal of a director or any ground other than the ground or issue mentioned in their notice dated 10.4.2009. In the facts of the case, we are not inclined to hold that the said direction is unjust or suffers from the vice of non-application of mind, more particularly when a finding of fact has been recorded, after due consideration of the material on record, that the consecutive notices, containing similar grounds and revealing similar purpose.(i.e. the statements made in, or the reasons given in the notices) for circulating the resolutions, amount to abuse of the right (conferred on shareholders by Section 284 of the Act). We are, therefore, not inclined to interfere, under Section 10(F) of the Act, with the impugned direction. For the reasons stated above, the appeal, fails and deserves to be rejected. Consequently, the Appeal is hereby rejected.
……….It is, however, clarified that this judgement and order will not come in the way of present appellants in pursuing, if permissible, any appropriate remedy, in accordance with law, before appropriate forum with regard to their claims or grievances, including the claim for allotment of appropriate number of shares of HDFC Bank Limited on the basis of the allotment originally notified by the opponent HDFC in 1994. This Judgement and order would also not obstruct or hold the appellants from pursuing, in accordance with law, their claim for appropriate action under section 195 of the Criminal Procedure Code, it would be open to the appellants to take out appropriate proceedings in appropriate forum for their grievances or any other claims, in accordance with law
