Decided on October 05,2016



Ch. Mohd. Sharief Tariq, Member - (1.)Under adjudication are the twin Company Applications, i.e., Nos. 1 and 2 of 2015 which came to be filed by the applicant/respondent in C.P. No. 4 of 2015 which stood transferred to the National Company Law Tribunal, Chennai Bench and re-numbered as T.C.P. No. 156 of 2016. C.A. No. 1 of 2015 was filed on January 29, 2015 which pertains to section 8 of the Arbitration and Conciliation Act, 1996 read with the Company Law Board Regulations, 1991. C.A. No. 2 of 2016 has also been filed by the applicant/respondents on the same date, challenging the maintainability of the company petition. Both of these applications are taken together for disposal by way of passing common order. Both the sides have been heard. The second application, relating to the maintainability, is taken up first for reasons that the order in relation to the maintainability will have a bearing on the first application.
(2.)It is contended by counsel for the applicant/respondent in the application for maintainability of the main petition that the petition in reality has been filed by the creditor, i.e., the State Bank of India in form and in substance. It is not the shareholders' action but an action by the creditor of the petitioner for recovery of dues. The applicant/respondent further stated that the real motive in filing the company petition is for a collateral purpose namely, recovery of money from the applicant/respondents through ingeniously disguised company petition directed against them and such motivated petition for achieving a collateral purpose cannot be entertained.
The counter has been filed by the respondent/petitioner wherein the contentions of the applicant/respondents were denied stating that the extension of time for redemption of preference shares is made unilaterally, oppressively and in a unlawful manner. Further, the increase in the share capital of the first respondent-company is sufficient cause of action for filing the petition. Counsel for the respondent/petitioner contended that though the voting right vested in the respondent/petitioner to the extent of 45.57 per cent of the total voting rights in a general meeting of the first respondent-company, yet without issuing notice of its general meeting, holding and conducting general meeting is totally oppressive and unlawful. The annual general meeting purportedly held on September 14, 2013 is without notice and without considering the voting rights of the respondent/petitioner.

It has further been alleged by the respondent/petitioner that increase in the share capital and further issue of shares have also been made without there being any genuine need and in utter disregard of the shareholders' rights. The resolution authorising such a further issue is not only oppressive of the rights of the respondent/petitioner as a shareholder but is also invalid due to inadequate explanatory statement, lack of notice and invalidity arising from the fact that without the support of the preference shareholder no special resolution could be passed at all. It is further contended that the company petition carry substantial questions springing from statutory rights of shareholder which cannot be brushed aside without looking into the facts and detailed enquiry in accordance with the well-settled principles. This gives a cause of action for invoking the jurisdiction of the Company Law Board under sections 397 and 398 of the Companies Act, 1956, now the National Company Law Tribunal. In addition, it has been pleaded by the respondent/petitioner in the reply that filing of application under section 8 per se is sufficient to dismiss the application in relation to challenging of maintainability of the main petition.

(3.)The perusal of the application in relation to maintainability of the main petition clearly suggest that the respondent/petitioner No. 1 is holding 45.57 per cent, of the total issued, subscribed and paid-up capital of the first respondent-company and is legally entitled to present the company petition under section 399 of the Companies Act, 1956, that confers statutory rights upon the preference shareholders also. Even though in view of further allotment made on September 18, 2013 this stake has been reduced to 39.56 per cent. The extension of the date pertaining to the redemption of the preference shares held by the respondent/petitioner and the increase in equity share capital is stated to be oppressive, illegal and invalid as no notice was issued to the holder of the preference shares who are entitled to voting rights on every resolution. The fact pertaining to the extension of the date for redemption of the preference shares and the increase in the equity share capital are the two aspects which are required to be probed into by this Tribunal in exercise of the powers conferred under the Companies Act, 2013.

Click here to view full judgement.
Copyright © Regent Computronics Pvt.Ltd.