K.K.Balu, - (1.) THIS is an application filed under Section 167 of the Companies Act, 1956 ("the Act") seeking directions against M/s Four Square Estates Private Limited ("the Company") to call for the annual general meetings, by a Chairman appointed by this Bench, for the years 1998-1999 to 2003-2004, in view of the reasons set out therein, in support of which Shri Rajesh S. Kutty, learned Counsel submitted as under: 1.1 The Company incorporated in May 1995 with the main object of carrying on real estate business is comprised of eight shareholders. Thomas Mathew, one of the shareholders died on 31.10.2002, upon which the shares held by the deceased shareholder devolved on his two children, namely, Shri Suresh Thomas and Suja George being respondents 2 & 3, with which the total number of shareholders got increased to nine. The applicant, being the widow of (late) Thomas Mathew, is a promoter and subscriber to the memorandum and articles of association of the Company and director of the Company. Besides the managing director, there are eight directors, which include three non-member directors and Mrs. Asha Verghese, yet another daughter of the deceased Thomas Mathew. 1.2 The Company neither convened the board meetings nor the annual general meetings since the year 2001 and is not able to function in terms of the memorandum of association. Consequently, the Registrar of Companies was constrained to initiate prosecution proceedings against the Company and its Managing Director for noncompliance with the statutory requirements, leading to imposition of a penalty of Rs. 7,200/- on them. Nevertheless, there was no compliance of the relevant provisions of the Act. 1.3 By virtue of article 20, the applicant and first respondent will hold office of directors for life, unless, they resign from directorship. All other directors are bound to retire at the annual general meeting and therefore, except the petitioner and first respondent, other directors cannot continue as directors without being re-appointed as directors at the annual general meetings. In view of this, the annual general meeting of the Company has become absolutely necessary to appoint new directors and carry on the business so as to ensure statutory compliance as per Sections 210 and 219 of the Act. 1.4 According to the respondents 6 & 7, they have convened, on behalf of the Company all the annual general meetings and complied with the statutory requirements till 31.03.2004. However, the annual return for the year 2003-2004 has not yet been submitted to the Registrar of Companies. All the copies of notices of annual general meetings, postal certificates, which are contradictory to each other show that such notices and postal certificates are fabricated and forged documents with intent to commit fraud on the Company and its shareholders. Any omission to give notice of the meeting to shareholders prima facie invalidates the meeting, as held in (1962) 2 W.L.R. 374 Mussel White v. C.H. Mussel White & Sons Limited. The Supreme Court held in (2004) CLC 117 M.S. Madhusoodhanam v. Kerala Kaumudi Private Limited that certificates of posting are notoriously "easily" available and what was seen as a possible but rare occurrences in 1981 is now seen as common. No reliance can, therefore, be placed on the certificates of posting made available by the respondents 6 & 7 more so in view of the strained relationship between the parties. No notice of the annual general meeting or postal receipt for the year 2003-2004 has been produced by these respondents. No notice of the annual general meeting as required under Section 172(2)(ii) was sent to the legal heirs of (late) Thomas Mathew, including the respondents 2 & 3, and therefore, the meetings do not enjoy any validity in the eyes of law. The Kerala High Court held in (a) 1971 KLT S.N. 30 K. Kunhirama Menon and Anr. v. State Prosecutor that where the company through its officers had actual knowledge of the death of a shareholder, it cannot rely upon a notice addressed to the deceased member. If the person is dead, to their knowledge, notice will have to be issued to the legal representatives and under such circumstances, notice issued to the dead person knowing that he is dead, is not in compliance with Section 53(5) of the Act; and (b) 1971 KLT S.N. 30 Annamma Kurivilla v. State Bank of Travancore that notice issued by the company to a dead person after the acknowledgment of death without issuing the notices to the legal heirs will not be in compliance with Section 53(5) of the Act. 1.5 The notice dated 19.05.2003 indicates that the annual general meeting for the year 1998-1999 would be conducted at the registered office located at 9D, Katticaran Towers, Katticaran Street, Cochin - 628 018 on 16.06.2003, whereas the registered office came to be shifted, without the knowledge or consent of the shareholders, to a new place with effect from 01.06.2003. None of the shareholders save respondents 6 & 7 could have attended the annual general meeting at the changed venue. The board minutes dated 26.04.2003 and 19.05.2003 clearly show that the registered office was already moved to a new different place. The board of directors decided at the meeting held on 19.05.2003 and 26.05.2003 to convene the adjourned annual general meeting for the year ended 31.03.1999 and 31.03.2000 on 16.06.2003 and 25.06.2003 respectively at the new registered office, but at the same time, the notice dated 19.05.2003 convening the annual general meeting on 16.06.2003 and the notice dated 26.05.2003 indicate that the annual general meeting for the year ended 31.03.2000 was to be held on 25.06.2003 at the old registered office, which evidence the fact of fabrication of records by the respondents 6 & 7. It has been held in (2000) Vol.102 CC 387 Sikkim Bank Limited v. R.S. Chowdhury that when an annual general meeting was held at a different place from the place mentioned in the notice and when individual notices were not sent nor any notice of change of the venue was given, the annual general meeting is declared to be invalid and illegal. The notice dated 19.05.2003 convening the adjourned meeting for the year 1998-99 was reportedly sent under certificate of posting, which shows that the same was obtained from a post office which is far away from the new registered office of the Company. THIS is in view of the fact that the respondents 6 & 7 could procure the false certificate from the said post office. The certificate contains the names and addresses of seven members, while the postal rule does not permit more than three addresses in any single certificate of posting. Furthermore, the actual number of articles are not mentioned in the certificate issued by the postal department. The certificate shows that no notice was sent to the legal heirs of (late) Thomas Mathew. 1.6 Item No. 5 of the minutes of board meeting held on 26.05.2003 relates to convening of the annual general meeting for the year 1999-2000 on 25.06.2003 and item No. 6 is with regard to shifting of the registered office with effect from 01.06.2003 to a different place. The seventh respondent has been authorised to file Form No. 18 with the Registrar of Companies and the very same seventh respondent issued the notice dated 26.05.2003 calling the annual general meeting for the year 1999-2000, without disclosing the decision to shift the registered office to a new place with effect from 01.06.2003. The board of directors at the meeting held on 16.06.2003 decided to convene the annual general meeting for the year 2000-2001 on 17.07.2003, whereas, the notice reportedly sent to the shareholders shows a different date, namely, 15.07.2003. Thus, the shareholders were not sure, whether the annual general meeting was to be held on 15.07.2003 or 17.07.2003. 1.7 The respondents 6 & 7, further committed fraud by filing false returns with the Registrar of Companies, as if the annual general meeting for the year 2001-2002 was conducted on 25.07.2003 and the annual general meeting for the year 2002-2003 was conducted on 04.08.2003. The notice dated 23.06.2003 for the annual general meeting for the year 2001-2002 and the notice dated 28.06.2003 for the annual general meeting for the year 2002-2003 could not have been sent under the same cover on 23.06.2003 as per the alleged postal certificate stamped on 23.06.2003. The notice dated 28.06.2003 could not have been sent on 23.06.2003, when no such notice was in existence on 23.06.2003. 1.8 The board minutes dated 26.04.2003 'disclose the shifting of the registered office, though the respondents 6 & 7 contend that the decision to shift the registered office was taken on 26.05.2003 and was given effect from 01.06.2003. Thus, the minutes dated 26.04.2003 were subsequently created without cross reference to the alleged decision of the board taken at the meeting held on 26.05.2003. 1.9 The minutes of the alleged board meeting held on 26.04.2003 and produced by the respondents 6 & 7 show that at an extra ordinary general meeting was to be held on 05.05.2003, to appoint a new statutory auditor of the Company. However, no such extra ordinary general meeting was held on 05.05.2003 and no new auditor was appointed in the place of M/s Venkat & Hari, in accordance with Section 224 & 225 of the Act. The Company did not file any Form No. 23, nor the new auditor filed any Form No. 23 B before the Registrar of Companies, as required under Sections 192 & 224 of the Act. Shri K.C. Tharu has no authority to act as the auditor of the Company. However, the directors' report dated 19.05.2003 shows that the new auditor will be appointed at the ensuing annual general meeting on 16.06.2003. At the same time the notice dated 19.05.2005 convening the annual general meting on 16.06.2003 does not contain any agenda for appointment of auditors. The directors' report dated 19.05.2003 for the year ended 31.03.1999 shows that M/s. K.C. Tharu & Co., Chartered Accountant was to be appointed at the adjourned annual general meting, whereas, the auditors' report dated 19.05.2003 is in relation to the annual accounts for the year ended 31.03.1999. At the same time no notice of the annual general meeting was sent to the auditors, as required under Section 172(3) of the Act. The seventh Respondent in collusion with the sixth respondent filed all the returns relating to the annual general meeting for the year 1998-1999 onwards till the year 2002-2003 on 04.08.2003. Hence, the Company Law Board may order convening of Annual General Meetings of the Company for the years from 1998-1999 to 2003-2004.
(2.) Shri Philip Mathew, learned Counsel representing the Company submitted: 2.1 By virtue of clause 27 of the articles of association of the Company, the power of the Managing Director, has been delegated to fifth respondent in March, 2003 when the former left India. No annual general or board meetings could be held since the year 2001, on account of non-cooperation of certain directors, namely, Baby Joseph, C. Vinod Babu, Thariam Joseph and Anthia Paul. The auditors of the Company could not prepare the profit and loss account and the balance sheet, since the vouchers and accounts were kept in the custody of Baby Joseph. This resulted in launching of prosecution by the Registrar of Companies against the Company and the Managing Director, who pleaded guilty before the Additional Chief Judicial Magistrate Court, Emakulam. The non-compliance with statutory requirements under Sections 166, 210 & 220 of the act are due to the non-operation among the directors and the faction-fighting which exist at present. 2.2 While the Annual General Meetings for the years from 1998-1999 to 2003-2004 were not held and no notices were received by the petitioner and respondents 2 to 5, the respondents 6 & 7 claim that the Annual General Meetings for all these years were held after notice to the original living shareholders. No notice of the annual general meetings was admittedly sent to the legal heirs of (late) Thomas Mathew, namely, the respondents 2 & 3 as required under Section 172(2)(ii) of the Act. Similarly, no notice of the annual general meeting was sent to the auditors as required under Section 172(2)(iii) of the Act. The registered office of the Company was reportedly shifted with effect from 01.06.2003, but no intimation was ever sent to any of the members. 2.3 The minutes of the board meeting dated 26.04.2003 reveal that the meeting was held at the new registered office of the Company. Nevertheless, the respondents 6 & 7 are not furnished any reason as to why they decided on 26.05.2003 to shift the registered office against with effect from 01.06.2003. 2.4 The minutes of board meeting dated 26.04.2003 show that an extra ordinary general meeting of the Company would be held on 05.05.2003 at the new registered office to appoint an auditor for the Company. However, no notice of any extra ordinary general meeting was sent to the members for the purpose of appointing the auditor of the Company. The directors' report dated 19.05.2003 shows that no new auditors were appointed on 05.05.2003, as claimed by the respondents 6 & 7. 2.5 The notice dated 19.05.2003 convening the annual general meeting for the year ended 31.03.1999 would show that the meeting would be conducted on 16.06.2003 at the old registered office of the Company, whereas the registered office of the Company was reportedly shifted with effect from 01.06.2003, without however, intimating the details regarding the shifting of the registered office to any shareholders of the Company, thereby making it impossible for any shareholder to attend the annual general meeting, at the changed venue of the registered office of the Company. No notice was sent to the legal heirs of (late) Thomas Mathew, as reflected in the certificate of posting by the respondents 6 & 7. Similarly, the notice convening the annual general meeting for the year ended 31.03.2000 was sent on 26.05.2003, without however, indicating any change of the venue consequent upon the decision to shift the registered office of the Company. The minutes of the board meeting dated 26.04.2003 clearly show that the board meeting was held at the new registered office of the Company, whereas the registered office of the Company was reportedly shifted only on 01.06.2003 in terms of the decision taken on 26.05.2003. These events show the manipulation of records at the instance of the respondents 6 & 7. 2.6 The specific assertion of the respondents 6 & 7 is that the board of directors of the Company decided to convene the adjourned annual general meeting for the year 2000-2001 on 17.07.2003, whereas the notice convening the said annual general meeting indicates that the meeting could be held on 15.07.2003. 2.7 The notices of the annual general meetings for the years 2001-2002 and 2002-2003 bears the dates 23.06.2003 and 28.06.2003 respectively. Both these notices were reportedly sent under the same envelop as per the postal certificate produced before the Bench. However, the very same postal certificate has been fabricated by correcting the date as 28.06.2003 and produced the same alongwith the counter affidavit filed by the respondents 6 & 7 in C.P. No. 68 of 2005. Thus, the very same postal certificate cannot bear two different dates namely 23.06.2003 and 28.06.2003 for sending the very same notice of the annual general meetings for the years 2001-2002 and 2002-2003. 2.8 The respondents 6 & 7 claim that the annual general meeting for the year 2003-2004 has been duly conducted, but there is no material produced by these respondents showing the dispatch of notice to the shareholders or minutes of the purported annual general meeting. Shri George Cherian, learned Counsel representing the respondents 2 to 4 submitted: 3.1 Shri Thomas Mathew, holding 12500 shares of the Company died on 30.10.2002, leaving behind his widow, son and two daughters. The Company, on a request letter dated 07.11.2002 made by the legal heirs of the deceased Thomas Mathew transmitted on 27.11.2002, 6250 shares in the name of the second respondent and the remaining 6250 shares in favour of the third respondent, being the son and one of the daughters of the deceased Thomas Mathew, thereby, becoming the shareholders of the Company. Mrs. Gracy Thomas, the widow and Asha Varghese, one of the daughters of (late) Thomas Mathew are on the board of the Company. Nevertheless, the respondents 2 & 3 never received any notice of the annual general meeting of the Company as required under 172(i) or Section 172(2)(ii) of the Act despite the fact that they had become the registered shareholders of the Company. Consequently, all annual general meetings held after the death of Thomas Mathew on 30.10.2002 are null and void. 3.2 The annual general meetings for the year 1998-1999 onwards were not conducted. All the notices of the annual general meetings and certificates of posting in respect of the purported annual general meetings are fake records, which belie the claim of the respondents 6 & 7 that the annual general meetings were duly held. The venues of annual general meetings shown in the notices and in certain cases the dates of the meetings found in the notices do not tally. 3.3 The notice dated 19.05.2003 shows that the annual general meeting for the year ended 31.03.1999 would be conducted on 16.06.2003 at the registered office of the company, whereas, the registered office came to be shifted to a different place, with effect from 01.06.2003, without any intimation to any of the shareholders, thereby making it impossible for them to participate in the annual general meeting at the changed venue of the registered office of the Company. The notice dated 26.05.2003 convening the annual general meeting for the year ended 31.03.2003 does not indicate the decision taken on 26.05.2003 to shift the registered office with effect from 01.06.2003. 3.4 The respondents 6 & 7 claim that the annual general meeting for the year 2000-2001 was held on 17.07.2003, but the notice dated 16.06.2003 shows that the annual general meeting was to be held on 15.07.2003, in which case either of the date must be incorrect. 3.5 It is on record that the notice of the annual general meeting for the year 2001-2002 convening the meeting on 25.07.2003 and the notice dated 28.06.2003 of the annual general meeting for the year 2002-2003 convening the meeting on 04.08.2003, were reportedly sent on 23.06.2003 under the same cover and the postal certificate dated 23.06.2003. The notice dated 28.06.2003 could never be sent on 23.06.2003. Thus, both notices and the certificates of posting are fabricated documents. 3.6 The Company never appointed M/s K.C. Tharu & Co., as the auditors of the Company in the place of Venkit and Hari, who are the auditors of the Company and the appointment of M/s K.C. Tharu & Co. is illegal.
(3.) SHRI K.J. Alphones, learned Counsel, representing the fifth respondent, while adopting le arguments made on behalf of the respondents 1 to 4 submitted: 4.1 The respondents 6 & 7 failed to serve notice of the annual general meetings on the legal heirs of (late) Thomas Mathew, in violation of Section 172(2)(ii) of the Act, which has been admitted by the respondents 6 & 7 in their counter filed to the petitioner. Hence, all annual general meetings must be set aside. No notice was either sent as required under Section 172(2)(iii) to the auditor of the Company for the annual general meting for the year ended 31.03.2000, as evidenced from the certificate of posting issued by the postal department on 26.05.2005. The Directors' report dated 19.05.2003 for the year ended 31.03.1999 shows that no auditor was appointed. The auditor was neither appointed at the adjourned annual general meting held on 16.06.2003. All minutes of the annual general meetings are fake ones.;