C.P. Nos. 36 and 37 of 2012. Case: Krishnamoorthy Srinivasan Vs DBC Port Logistic Ltd.. Company Law Board
| Case Number | C.P. Nos. 36 and 37 of 2012 |
| Counsel | For Appellant: Sureshkumar J. Panicker, Bhavika A. Pitale and Sapana Kadrekar and For Respondents: Rahul Narichania |
| Judges | Ashok Kumar Tripathi, Member (J) |
| Issue | Companies Act, 1956 - Sections 173(2), 181, 182, 192, 31, 38, 397, 398, 402, 403, 404, 82, 9(1), 9(b); Sale Of Goods Act, 1930 - Section 47 |
| Citation | 2014 (123) CLA 48 (CLB) |
| Judgement Date | May 06, 2014 |
| Court | Company Law Board |
Judgment:
Ashok Kumar Tripathi, Member (J), (Mumbai Bench)
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The company petition being C.P. Nos. 36 and 37 of 2012 have been filed by petitioners, viz., Mr. Krishnamoorthy Shrinivasan ('KS') and Mr. Chandrakant Dedhia ('CD'), respectively, under sections 397, 398, 404, 31, 38, 192 read with sections 402 and 403 of the Companies Act, 1956 ('the Act') against the respondent Nos. 2 to 13 therein complaining certain acts of oppression and mismanagement purportedly committed by the respondent Nos. 2 to 13 ('Dubash group'/'respondent group') in the affairs of the respondent No. 1-company ('the company'). The Petitioners have sought various reliefs as contained in their respective petitions. In view of the fact that the pleadings and the reliefs sought for in both the petitions are identical in nature, therefore, both the petitions were clubbed and heard together. They are being disposed of by a common judgment. CP No. 36 of 2012 be treated as a leading case. A copy of this judgment and order may be placed on record of the other company petition being CP No. 37 of 2012. The case of the petitioners is that the petitioner/KS in CP No. 36 of 2012 holds 13.93 per cent shares and the petitioner/CD in C.P. No. 37 of 2012 holds 10.96 per cent shares. Thus, they together hold 22,70,000 number of equity shares in the respondent No. 1-company as on 31st March, 2011, constituting 24.89 per cent of its total paid-up capital and as such they are entitled to file this petition.
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The respondent No-1-company DBC Port Logistics Ltd. was incorporated on 1st January, 1987, as Speedy Transport (P.) Ltd. Later on the name of Speedy Transport (P.) Ltd. was changed to Speedy Multimodes (P.) Ltd. and thereafter the said company was converted into a public limited company on 14th December, 2006. Subsequently, in the year 2011, the name of the said company was changed to DBC Port Logistics Ltd. and a fresh certificate of incorporation dated 25th July, 2011 was issued by the Registrar of Companies ('RoC'), Maharashtra, Mumbai. The Registered office of the company is situated at JNP CFS, Jawaharlal Nehru Port, Sonari Village, Taluka Uran, State of Maharashtra.
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It is further case of the petitioners that both of them were employee of the company and they served for a very long period. Due to their sincere and devoted services they were co-opted as the directors on the respondent No. 1 Board. The petitioner/KS was appointed as a managing director and CD was appointed as joint managing director of the company. According to the petitioners, due to the hard work put by the petitioners the growth of the company reached at very high level in the business world. However, due to unprecedented global recession in the year 2008 and 2009, the turnover of the company was reduced and the company had to face cash financial crunch.
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It is next stated that the respondents, i.e., the Dubash group being promoters thereafter started a non-co-operative attitude and they wanted change of management to cope up with the situation, and, therefore, the Dubash group started exerting pressure upon the petitioners to exit out of them from the company. On account of their pressure, the petitioner/KS suffered a heart attack and he had to undergo a bye-pass surgery, etc. During this period, the Dubash group brought one Mr. Mahendra Puri as a managing director on a salary of Rs. 1.50 crore per annum, whereas the petitioner/KS was getting a remuneration of Rs. 1 crore per annum and the petitioner/CD was getting remuneration of Rs. 60 lakh per annum only. After the recovery of KS, he was told that he is no more required to serve the company as the managing director. It is stated that due to illness of the petitioner/KS he did not attend the Board meeting, etc., and taking advantage of this Dubash group held meetings without proper intimation to KS and in pursuance thereto, Dubash group removed both the petitioners from the Board of directors of the company.
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It is next stated that since Dubash group did not want to continue KS and CD, therefore, they further planned another game-plan to grab their respective shares held by them in the company. Pursuant thereto, Dubash group initially tried to negotiate with KS and CD for purchase of their shares. However, subsequently finding the value of the shares on a higher side, they dropped the idea of purchasing the shares from both the petitioners.
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It is next stated that as per their pre-plan and conspiracy to grab the shares of the petitioners, the Dubash group on 18th January, 2011, served a demand notice upon the petitioners thereby demanding a sum of Rs. 1.78 crore and Rs. 66.56 lakh, respectively, from KS and CD claiming that both of the petitioners have received the said amount by way of excess remuneration. It is further submitted that on 1st September, 2011, the Dubash group lodged a false FIR against both the petitioners.
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It is next alleged that on 16th November, 2011, the respondents circulated a notice for calling an extraordinary general meeting ('EGM') on 15th December, 2011. It is further alleged that on the said date in the purported EGM, they approved to amend the articles of association ('AoA') of the company though the said EGM was invalid, non est, illegal being held in contravention of the provision of law.
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Next allegation made by the petitioners is that thereafter on 27th March, 2012, the Dubash group held a meeting of the Board of directors, in which they approved a resolution and exercised the lien on the shares held by both the petitioners in the company. Thereafter, on 4th April, 2012, Dubash group served a notice upon the petitioners calling upon them to pay a sum of Rs. 11.99 crore within 14 days failing which they were threatened that their shares would be sold and hence the petitioners approached the Board by way of filing the present petitions challenging the aforesaid oppressive actions taken by the Dubash group with malicious intentions to dislodge the petitioners from their shareholdings.
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The respondents/Dubash group appeared and filed their reply to the CP in which they have denied all the allegations made by the petitioners and justified their decision taken in the alleged EGM and the meetings of the Board of directors. The respondents/Dubash group in their reply have also made counter-allegations upon the petitioners stating that the petitioners were formerly in-charge of the management and administration of the company and were its principal executive officers.
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It is stated by the respondents/Dubash group that upon going through the records and the books of the company, the new management appointed in 2010, comprising of Arvind Dubash, Tushad Dubash, Sarosh Karani, Farhad Hozdar, and Neville Lacra and one Mr. Mahendra Puri who was later appointed as a managing director-cum-executive director, found that the company had been grossly mismanaged by the previous management. In the investigation, it was also revealed that the remuneration that was being paid to the petitioners was excess remuneration that was fixed by the company and some other amounts were also diverted by the said persons without any authority for their personal wrongful gain and wrongful loss to the company. Thereafter, the new management made an extensive examination of the records and found various acts of commission and omission made by both the petitioners for their wrongful gain and wrongful loss as set out in the reply. It is, further, stated that in view of their involvement in the mismanagement of the company and in view of their misconduct, the Board of directors of the company in the meeting held on 2nd December, 2010, recorded their loss of confidence in them and suspended all their power and authority and as such their appointments were terminated. The respondents/Dubash group have also justified their validity in the EGM, the amendment in the articles of association in such EGM and exercise the lien over the shares held by the petitioners.
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Lastly, it is stated that the petition is not maintainable as the petitioners have failed to make out any good ground with respect to alleged oppression and mismanagement in the affairs of the company and, therefore, the same is liable to be dismissed in limine.
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Based on the averments, in my opinion, the following questions have arisen for the consideration and adjudication:-
(i) Whether the EGM under challenge purportedly held on 15th December, 2011 which was called for to amend the AoA of the respondent No. 1-company was conducted in an invalid and an improper manner?
(ii) Whether the amendment in the AoA of the company carried out is ultra vires to the provisions of the Indian Companies Act, 1956?
(iii) Whether the act of amendment in the AoA amounts to an act of oppression as defined under section 397 of the Act?
(iv) Whether the petition is not maintainable as the petitioner has approached the Forum by suppression of material facts and documents?
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Now, I proceed to deal with the first issue. It is contended on behalf of the petitioners that on 15th December, 2011 the petitioners went to attend the EGM, scheduled to be held on the said date at 11.00 AM. According to the learned counsel, the other shareholders except both the petitioners the legal consultant and company secretary of the company had not arrived by the said time. Consequently, the said EGM was adjourned for half an hour due to want of quorum in terms of the article No. 107A of the AoA of the company. However, until 12.00 noon the other shareholders did not reach at the venue. According to the learned counsel for the petitioners, thereafter, the company secretary declared that the EGM is being adjourned for the next week due to want of quorum and it would be held at the same time and at the same venue. The learned counsel submits that upon being informed that the meeting has been adjourned, the petitioners left the premises around 12.00 noon. According to the learned counsel...
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