DHAN RAJ,MEMBER - (1.) IN this case, the Petitioner has filed the Company Petition under Sections 397, 398, 399, 402, 403, 406 and 407 of the Companies Act, 1956 on account of certain alleged acts of oppression and mismanagement on the part of the Respondents and the same is pending for adjudication. In the meantime the Petitioner Advocate has filed the present Company Application being CA No. 108/2015 seeking the order of injunction restraining the Respondents from giving any effect or further effect or acting in terms of or the furtherance to the resolutions adopted at the extra ordinary general meeting held on 5 -1 -2015, notice of Board Meeting dated 19th January, 2015 or from convening a Board Meeting in accordance therewith and also, for the resolution adopted at the Board Meeting dated 27th January, 2015. Precisely speaking, the Petitioner Advocate has submitted that draft balance sheet as circulated by the Respondent No. 2 discloses serious acts of mismanagement in the affairs of the Respondent No. 1 Company by the Respondent No. 2 and despite request, the Respondent No. 2 is not providing any clarification to the Petitioner. In this context, the Petitioner Advocate has reiterated the allegations levelled in the Company Petition as to the contributions to charities etc. of an amount of Rs. 1.25 crores, significant increase in housekeeping expenses from Rs. 11 lakhs to Rs. 48 lakhs and allotment of 21 lakhs Preference Shares to the Respondent No. 12 Company. Further, the Respondent No. 1 Company is stated to have made an application for extension of time to hold the Annual General Meeting on 3rd September, 2014 which came to be rejected vide Order dated 7th October, 2014 issued by the Registrar of Companies. The said Order was challenged by Respondent No. 1 Company by way of Petition under Article 227 of the Constitution of India being Writ Petition No. 23829 of 2014. However, the High Court vide Order dated 22nd December, 2014 permitted the Respondent No. 1 Company to withdraw the Writ Petition with the liberty to raise the issues arising for consideration in the said Writ Petition before this Hon'ble Board. 1.2 The Petitioner Advocate has specifically alleged that the Respondent No. 2 has purported to issue a notice dated 19th January, 2015 under Section 173 of the Companies Act, 2013 and the only objective of the Respondent No. 2 is to somehow cause the Company to adopt the accounts. It has further been alleged that, the said accounts do not reflect the true accounts inasmuch as various unauthorised expenditure undertaken by the Respondent No. 2 has been passed on the Company. Moreover, despite specific question having been asked by the Petitioner in the past in relation to some expenditure, no explanation has been forthcoming from the Respondent No. 2.
(2.) The instant Company Application being CA No. 108/2015 was mentioned on 27th January, 2015 and the arguments/submissions were extended on 27th January, 2015 without filing reply/rejoinder and continued on 28th January, 2015 and 29th January, 2015.
(3.) THE Petitioner/Applicant Advocate argued that amongst other acts of oppression and mismanagement by the Respondent No. 2, the Respondent No. 2 has caused illegal appointment of additional directors including the appointment of the Respondents No. 4, 5 and 6. Further, in the CP No. 102/2014, this Hon'ble Board after being satisfied with the case made out by the Petitioner, has been pleased to pass an order dated 10th July, 2014 restraining such additionally appointed directors from acting as directors of the Respondent No. 1 Company. The Respondents No. 2 and 4 to 6 by various methods admitted to overreach the order dated 10th July, 2014 and in one more of such attempt, the Respondent No. 4 at the behest of the Respondent No. 2 tried to cause an Extra Ordinary General Meeting (EOGM) to be held on 5th January, 2015, However, the Respondent No. 7 challenged the notice for calling such EOGM by filing an Application being CA No. 11/1/2014 and the said Application was disposed of by an order dated 2nd January, 2015. The operative portion of the order has been reproduced below: - "7. Having considered the averments made in the Company Application, submissions/arguments of the Petitioner Advocate, Respondent No. 7/Applicant Advocate, the Advocates for Respondent Nos. 2 & 4 and for Respondent Nos. 5 & 6, it is amply dear that Order dated 10.07.2014 was passed by this Hon'ble Board, wherein direction was passed to put on hold any resolution passed in the Board Meeting scheduled to be held on 12.07.2014 and Respondent Nos. 4 to 7 were restrained from acting as directors of the Company. Further, the perusal of the order dated 10.07.2014, reveals that there was allegation levelled in the Company Petition that Respondent No. 2 purportedly appointed Respondent Nos. 4 to 7 as the additional directors of the Company in a Board Meeting purportedly held on 21.09.2013 and Form 32 was filed with RoC despite the fact that the Petitioner and Respondent No, 9 were in Mumbai from 18.09.2013 to 27.09,2013 and hence, were not present on 21.09.2013 at Bhubaneswar. Consequently, the purported appointment of Respondent Nos. 4 to 7 as additional directors of the Company was alleged as non -est and void. Considering the documentary evidences placed by the Petitioner as annexures, were so convincing that Order dated 10.07.2014 restrained Respondent Nos. 4 to 7 from acting as directors of the Company. However, at the same time, the Order dated 10.07.2014 does not mean that the Respondent Nos. 4 to 7 have been declared as disqualified to be directors for ever. Further, the argument of the Advocate for Respondent Nos. 5 & 6 is well convincing that the strength of the Board of Directors of the company has fallen below the statutory minimum of 3 numbers and due to failure of the Board to hold the AGM within 30.09.2014, various problems have developed in the running of the Respondent No. 1 Company. Besides, the plea of the requisition's (Respondent No. 4) is also justified that the Respondent Company is comprised of 4 brothers only and hence, the company is a quasi partnership. Under these facts and circumstances, there is urgent need to have proper Board of Directors consisting of at least 3 directors in compliance of Section 149 of the Companies Act, 2013. Apart from this, it is also relevant to highlight that it is settled law that a shareholder's right to hold an EOGM of the Company cannot ordinarily be interfered with. Thus, to maintain the corporate democracy in the Respondent No. 1 Company and also, to facilitate the compliance of Section 149 of the Companies Act, 2013, the EOGM scheduled to be held on 05.01.2015 cannot be restrained in the interest of the Respondent No. 1 Company for its smooth functioning, However, the resolutions proposed in the agenda for the aforesaid EOGM, if passed, will not prejudice the rights of the Petitioner in the Company Petition and in case some resolution(s) is/are considered against the interest of the Company, the same may be agitated by the aggrieved party." 3.1 The Petitioner Advocate has contended that by the aforesaid order, this Hon'ble Board permitted the EOGM to be held on 5th January, 2015. However, to protect the interest of the Petitioner and to preserve the Petitioner's right and contention, the Hon'ble Bench provided therein that resolution passed in such EOGM will not prejudice the rights of the Petitioner in the Company Petition and in case some resolution is considered against the interest of the Company, the same may be agitated by the aggrieved party. It has also been viewed that a case has been made out by the Petitioner In the Company Petition which was accepted by the Hon'ble Company Law Board in its order dated 10th July, 2014 that the Petitioner was always meant to be in control of the Respondent No. 1 Company However, by the order dated 2nd January, 2015, such interest of the Petitioner to the effect that the Petitioner would be in control of the Respondent No. 1 Company was not protected and preserved. In fact, by the appointment of the Respondents No. 4 to 6 as Directors in the Respondent No. 1 Company in the EOGM held on 5th January 2015 the Petitioner's control in the Board of Directors of the Respondent No. 1 Company has been lost and it is the Respondent No. 2 who has gained control Now, the Respondent No. 2 along with the illegally appointed Respondents No. 4 to 6 as the purported Directors of the Respondent No. 1 Company have called for a Board Meeting by way of notice dated 19th January, 2015 with the Agenda to approve and authenticate the Annual Accounts for the year ended 31st March 2014 and to consider holding of Annual General Meeting and to fix time, place and date of the meeting. In this regard the Petitioner/Applicant Advocate has pointed out that in the Board Meeting, the Respondents seek to approve the Balance Sheet prepared by the Respondent No. 2 which purportedly caused serious acts of mismanagement in the affairs of the Respondent No. 1 Company by the Respondent No. 2. Though the Petitioner had on several occasions demanded clarification from the Respondent No. 2 with regard to several entries made in the draft Balance Sheet including a specific allegation against the Respondent No. 10 being the Auditor of the Company, the Respondent No. 10 has assisted, aided and abated in the acts of mismanagement in the affairs of the Respondent No. 1 Company by the Respondent No. 2. In view of this the Petitioner Advocate has also sought for an independent auditor to be appointed for the purpose of carrying out an independent audit in respect of the Respondent No. 1 Company and to file a report before this Hon'ble Board, Furthermore, the account for the year ending 31st March 2013 has also not been prepared so far and hence, there is no question of the accounts for the year ending 31" March, 2014 being passed in the Board Meeting as proposed by the Respondent No. 2. Lastly, it has also been submitted that during hearing, the Hon'ble Board had proposed the appointment of a Special Officer for supervising and running the affairs of the Respondent No. 1 Company. The Petitioner Advocate has strongly supported the proposal of the Hon'ble Board which shall put checks and balances on the functioning of the Respondent No. 1 Company.;