Decided on September 27,2016



V. S. R. Avadhani, Member - (1.)The Company Petition is filed under sections 397, 398, 402 and 403 of the Companies Act, 1956 (hereafter called the Act') for (1) to declare the appointment of Respondents 5 to 7 as directors as unlawful and, illegal, null and void; and (2) to declare, the creation of mortgage of the property and fixed assets of the Respondent No. 1 Company to secure term loan and credit limit of Rs. 5 crores 85 lakhs sanctioned by Bank of Baroda -the 8th Respondent, in favour of M/s. Shambhu Steels & Forgings Put Ltd. as unlawful, illegal, null and void and (3) any other reliefs.
Originally the petition was filed before the Company Law Board, New Delhi and consequent upon constitution of this Tribunal under the Companies Act, 2013, the matter has been transferred to this Bench and re-numbered.

(2.)The petitioners 1, 2 and the Respondent No. 2 to 4 are the Directors of the Respondent No. 1 Company holding requisite percentage of equity shares. The main shove of the Petitioners' claim is, without convening any board meeting on 20.03.2015, the Respondents 2 to 4 have illegally inducted Respondents 5 to 7 as 'Directors' of the Company and that the meeting notice and agenda are not served on the petitioners who are directors of the Company, and that the appointment is consequently illegal.
Secondly, it has been contended that the petitioners came to know in the first week of March 2015 that on 5.3.2015 the Bank of Baroda (Respondent No. 8) has served a notice under Sec. 13 (2) of the SARFAESI Act, 2002 wherefrom it came to their notice that the Respondents 2 to 4 representing the Company have given 100% corporate guarantee by creating mortgage on the immovable property of the Company on 21.03.2013 to secure a loan/credit limit of Rs. 5,95,76,764 to M/s. Shambhu Steel & Forgings Pvt. Ltd., and that the Respondents are never authorised to create such mortgage and the alleged Board Meeting of the Company held on 08.03.2013 wherein the authorisation to create. mortgage is said to have been given to the Respondents 2 to 4, is unfounded and no such meeting was ever convened and the mortgage created by the Respondents is without authority. In substance, the petitioners claim that the above narrated acts of the respondents would amount to oppression and mismanagement prejudicial to the interests of the company and the share-holders, particularly the petitioners.

(3.)In reply to the above material assertions, the Respondents 2 to 4 filed a detailed reply. The Bank of Baroda-the Respondent No. 8 is duly served but did not enter appearance. In the reply statement, the Respondents 2 to 4 have totally denied every allegation made in the petition however without making any specific plea. They have affirmed that the mortgage of the properties of the Company was approved in the 'duly convened Board meeting' on 08.03.2013 at its Registered Office and necessary filing was also done with the Registrar of Companies which was hosted on the website. In para 6 of the reply, it is maintained that the petitioners have knowledge of the Board Resolution dated 8.3.2013 and they cannot plead want of knowledge because the statutory Form-8 has been duly filed with the ROC and is available for inspection on the website of Ministry of Corporate Affairs. They further contend that there is no mismanagement in this regard.
So far as the induction of Respondents 5 to 7 as Directors in the company is concerned, it is pleaded in Paragraph 3.8 of the reply statement that the appointment of Respondents 5 to 7 is as per the procedure and norms under the Companies Act and rules thereunder as evidenced by Form DIR-12 filed by the Company with the ROC.

In the rejoinder filed by the petitioners, the assertions made in the reply statement are denied.


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